Procedural Posture and Decision

This document is the final Award rendered by an ICSID tribunal in an arbitration initiated by Mr. Edmond Khudyan, a U.S. national, and Arin Capital & Investment Corp., a U.S. company, against the Republic of Armenia under the U.S.-Armenia Bilateral Investment Treaty (BIT). The Tribunal ultimately dismissed all claims for lack of jurisdiction, finding that it lacked jurisdiction ratione personae over Mr. Khudyan and jurisdiction ratione materiae over the claims of Arin Capital.

Analysis of Jurisdiction Ratione Personae

The Tribunal bifurcated its analysis of personal jurisdiction for the two Claimants. Regarding Mr. Khudyan, the Respondent argued that as a dual U.S.-Armenian national, he was barred from bringing a claim against Armenia under Article 25(2)(a) of the ICSID Convention. The Tribunal conducted a comprehensive analysis of Armenian nationality law, concluding that Mr. Khudyan did not lose his pre-existing Armenian (formerly ASSR) citizenship upon Armenia's independence, the enactment of the 1995 Citizenship Law, or his subsequent naturalization as a U.S. citizen. The Tribunal found that under Armenian law, loss of citizenship required a formal renunciation or deprivation procedure, which never occurred. Consequently, the Tribunal held that Mr. Khudyan was a national of Armenia on the critical dates and declined jurisdiction over his claims.

In contrast, the Tribunal affirmed its jurisdiction ratione personae over the corporate claimant, Arin Capital. It rejected Armenia's argument to "pierce the corporate veil" based on Mr. Khudyan's ownership and control. The Tribunal held that the applicable test for corporate nationality under both the BIT and the ICSID Convention was the place of incorporation. As Arin Capital was incorporated in California, it qualified as a U.S. national. The Tribunal found no evidence of abuse of process that would warrant disregarding its formal nationality.

Analysis of Jurisdiction Ratione Materiae

Despite finding personal jurisdiction over Arin Capital, the Tribunal dismissed its claims for lack of subject-matter jurisdiction. The Tribunal undertook a detailed factual analysis of the alleged investments, which primarily concerned interests in a real estate development project in Yerevan. It found that the Claimants failed to discharge their burden of proving that Arin Capital owned or controlled any of the assets alleged to constitute its investment. The evidence indicated that legal title to the relevant properties and shares in the local project company (Arin Armenia) was held by Mr. Khudyan in his personal capacity. The Tribunal was not persuaded by the argument that Mr. Khudyan acted as an agent for Arin Capital or that the corporate entity exercised the requisite indirect control. Lacking any established ownership or control over a qualifying investment, Arin Capital's claims were dismissed.

Decision on Costs

Having dismissed all claims on jurisdictional grounds, the Tribunal ordered the Claimants to bear the full costs of the arbitration. It directed the Claimants to reimburse the Respondent for its share of the advances paid to ICSID, amounting to USD 337,466.34, and to make a further contribution of USD 400,000 towards the Respondent's legal fees and expenses.