Procedural Background

This document is the Arbitral Tribunal's Decision on Jurisdiction in an ICSID arbitration initiated by Tradex Hellas S.A. against the Republic of Albania. The decision addresses several jurisdictional objections raised by Albania following the Claimant's Request for Arbitration, which alleged expropriation of its investment in an agricultural joint venture in Albania.

Jurisdictional Objections and Parties' Positions

The Claimant, Tradex, asserted jurisdiction based on two instruments: the 1991 Greece-Albania Bilateral Investment Treaty (BIT) and Albania's 1993 Foreign Investment Law (the "1993 Law"). Albania contested jurisdiction on multiple grounds. It argued that: (i) the dispute was a commercial matter between Tradex and its state-owned joint venture partner, T.B. Torovitsa, not the State; (ii) the 1993 Law, which contained Albania's consent to ICSID arbitration, could not be applied retroactively to a dispute that arose in 1992-1993; (iii) Tradex was no longer a "foreign investor" under the 1993 Law as its investment was liquidated before the law entered into force; (iv) Tradex failed to make a good faith effort to settle the dispute amicably, a purported precondition to arbitration; (v) the alleged acts did not constitute an "expropriation," a requirement for ICSID jurisdiction under the 1993 Law; and (vi) the BIT was not in force when the arbitration was commenced.

The Tribunal's Analysis

The Tribunal first dismissed jurisdiction under the BIT, finding that the treaty entered into force on January 4, 1995, after the Request for Arbitration was filed on November 2, 1994. The Tribunal held that jurisdiction must be established at the time a claim is filed.

The Tribunal then analyzed jurisdiction under the 1993 Law. It rejected Albania's argument that the dispute was purely commercial, clarifying that the claim was directed at the State for its alleged acts of expropriation. It also found that Tradex qualified as a "foreign investor" under the express terms of the 1993 Law, which covered investments made from July 31, 1990, onwards. The Tribunal further held that, assuming an amicable settlement attempt was required, Tradex's five letters to the Albanian Ministry of Agriculture in 1992 and 1993 constituted a sufficient good faith effort.

The central issue was the temporal application of Albania's consent to ICSID in Article 8 of the 1993 Law. The Tribunal concluded that the law's text and the progressive evolution of Albania's investment legislation indicated an intent to apply the new, more protective dispute settlement mechanism to pre-existing investments and disputes. It interpreted the phrase "if the dispute arises" as establishing a substantive condition (i.e., the dispute must relate to expropriation) rather than a strict temporal one that would bar disputes arising before the law's enactment. However, the Tribunal determined that the question of whether the alleged conduct actually constituted an "expropriation" was a mixed issue of fact and law, inextricably linked to the merits.

Decision

The Tribunal affirmed its jurisdiction to hear the dispute based on Albania's consent in the 1993 Law. Pursuant to ICSID Arbitration Rule 41(4), it joined the objection regarding the existence of an "expropriation" to the merits of the case. The proceedings were ordered to continue to the merits phase, where the Claimant would bear the burden of proving that an expropriation had occurred.