Procedural Background and Relief Sought

This decision addresses an application for provisional measures filed by the Claimants, Smart Energy B.V. and PJSC Ukrgazvydobutok, pursuant to Article 47 of the ICSID Convention. The Claimants sought an order restraining Ukraine from taking actions that could interfere with their investment, including the potential transfer of assets to the Ukrainian National Agency for Detection Search and Management of Assets (ARMA), the invalidation of a December 2022 share transfer, and other related criminal and confiscation proceedings. The Claimants argued that these actions posed an urgent and irreparable risk to their substantive rights under the Netherlands-Ukraine BIT and to the integrity of the arbitral process.

Parties' Principal Arguments

The Claimants contended that the standard for provisional measures required a showing of prima facie jurisdiction and merits, necessity, urgency, and proportionality. They argued that Ukraine's actions, initiated after the arbitration commenced, were designed to expropriate their investment and would prejudice their ability to present their case. Ukraine countered that a heightened standard of “exceptional circumstances” or “bad faith” should apply to measures interfering with its sovereign authority to conduct criminal investigations and protect national security, particularly in a wartime context. The Respondent challenged the Tribunal's prima facie jurisdiction, arguing for piercing the corporate veil to reveal the ultimate beneficial owner and alleging that the investment was tainted by illegality and sanctions evasion. Ukraine asserted that the alleged risks were hypothetical, not imminent, and that any harm was purely economic and reparable by damages.

Tribunal's Analysis and Findings

The Tribunal first confirmed that it possessed a prima facie basis for jurisdiction, deferring complex questions regarding corporate personality and illegality to the merits phase. On the substantive conditions for provisional measures, the Tribunal rejected a mandatory requirement of bad faith but affirmed that caution is necessary when measures could interfere with a state's judicial process or national security. The central test applied was whether the measures were necessary to prevent an urgent risk of irreparable harm to a party's rights or the integrity of the proceedings, and whether they were proportionate.

The Tribunal systematically analyzed the four categories of risk alleged by the Claimants and found that the condition of urgency was not met for any of them. It determined that: (i) the potential transfer of assets to ARMA was not imminent, as the prosecutor's motion had been withdrawn and any future action would be subject to court review; (ii) the SSU proceedings to invalidate share transfers did not pose an urgent risk of irreparable harm to the Claimants themselves, as the direct effect would be on non-parties (trustees and beneficiaries); (iii) potential confiscation proceedings were too remote as no such proceedings were currently underway; and (iv) the ongoing criminal investigation did not, at its current stage, present a sufficient risk to the Claimants' rights.

Decision

The Tribunal dismissed the Claimants' application for provisional measures, having concluded that none of the actions relied upon met the requirement of an urgent risk to the Claimants' rights or the integrity of the arbitration. However, the Tribunal required both parties to keep it informed of any material changes, granted the Claimants leave to file a new application in the event of a material change in circumstances, and reminded the parties of their obligation to litigate in good faith and refrain from aggravating the dispute. The question of costs was reserved for the final award.