Procedural Background and Core Dispute

This document is the final Award, including a dissenting opinion, issued by a tribunal constituted under the auspices of the International Centre for Settlement of Investment Disputes (ICSID). The dispute was initiated by a group of Canadian investors and a Cypriot company against the Republic of Serbia, alleging breaches of the Canada-Serbia Bilateral Investment Treaty (BIT) and the Cyprus-Serbia BIT. The claims arose from the termination of a Privatization Agreement concerning a major Serbian agricultural company, BD Agro, and the subsequent seizure of the claimants' alleged beneficial shareholding by Serbia's Privatization Agency.

Jurisdictional Analysis

The Tribunal conducted a detailed jurisdictional analysis, focusing on whether the various claimants had made a qualifying "investment" under the ICSID Convention and the applicable BITs. By a majority, the Tribunal upheld jurisdiction solely over the claims of Mr. William Rand, the ultimate beneficial owner, under the Canada-Serbia BIT. The Tribunal found that Mr. Rand, through a complex ownership structure involving family members and corporate vehicles, was the individual who ultimately committed the capital, bore the financial risk, and exercised control over the investment. Consequently, his interest in the "Beneficially Owned Shares" of BD Agro constituted a protected investment.

Conversely, the Tribunal denied jurisdiction over the claims of all other claimants, including Mr. Rand's family members, his Canadian holding company (Rand Investments Ltd.), and the Cypriot entity (Sembi Investment Limited). The Tribunal reasoned that these claimants had not made a separate contribution of their own; a single economic contribution from the ultimate owner could not be used to establish jurisdiction for multiple claimants in a vertical ownership chain, particularly when claims were brought under different BITs. The Tribunal dismissed Serbia's jurisdictional objections against Mr. Rand's claims, which were based on alleged illegality, non-retroactivity, a three-year time bar, and abuse of process.

Findings on Liability

On the merits of Mr. Rand's claims, the Tribunal found that Serbia had breached the Fair and Equitable Treatment (FET) standard under Article 6(1) of the Canada-Serbia BIT. The Tribunal's central finding was that the Privatization Agency's termination of the Privatization Agreement was unlawful. It determined that the alleged contractual breach by the investor—related to pledging company assets—could not be invoked as a ground for termination because the underlying obligation had expired upon the full payment of the purchase price years earlier. As the termination was unlawful, the subsequent seizure of the Beneficially Owned Shares, which the Tribunal characterized as an exercise of sovereign power and a direct consequence of the wrongful termination, was also a breach of the Treaty.

Decision on Quantum and Costs

To determine compensation, the Tribunal assessed the fair market value of BD Agro as of the date of the seizure. It adopted an asset-based valuation methodology, rejecting a Discounted Cash Flow (DCF) approach due to the company's history of losses. After making several adjustments to the parties' competing valuations concerning land size, price per square meter, and applicable liabilities, the Tribunal calculated the net asset value of the investment. It awarded Mr. William Rand EUR 14,572,730 in damages, plus compounded semi-annual interest. The Tribunal ordered the parties to bear their own legal fees and to share the costs of the arbitration equally. Professor Marcelo G. Kohen appended a dissenting opinion, disagreeing with the majority's conclusions on jurisdiction, liability, and damages.