Procedural Background

This document is an Emergency Award on Interim Measures issued by a sole Emergency Arbitrator, Mr. Fredrik Andersson, under the Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce (SCC). The Claimant, Mr. Zaza Okuashvili, a dual national of the United Kingdom and Georgia, sought urgent relief to prohibit the Respondent, the Republic of Georgia, from executing enforcement proceedings against his assets and those of his companies, primarily LLC OGT, to satisfy an outstanding tax liability.

Jurisdictional Analysis on a Prima Facie Basis

The Emergency Arbitrator first addressed the threshold issue of jurisdiction on a prima facie basis. The Respondent contested jurisdiction on two primary grounds: (1) that the UK-Georgia Bilateral Investment Treaty (BIT) refers disputes exclusively to ICSID arbitration, and the ICSID Convention excludes jurisdiction over claims by dual nationals against their home state; and (2) that the Most-Favoured-Nation (MFN) clause in the BIT could not be used to import the SCC arbitration clause from the Belgo-Luxembourg-Georgia BIT to create jurisdiction where none existed. The Claimant countered that the BIT does not explicitly exclude dual nationals and that the MFN clause expressly applies to dispute settlement provisions.

Applying the high standard that a lack of jurisdiction must be manifest to deny interim measures, the Emergency Arbitrator found that the Claimant had demonstrated a prima facie case. He reasoned that the Claimant's arguments regarding the scope of the BIT's nationality definition and the application of the MFN clause were not without merit and required full consideration by a constituted arbitral tribunal. Accordingly, he concluded that he possessed prima facie jurisdiction to rule on the request for interim measures.

Analysis of the Request for Interim Measures

The Emergency Arbitrator assessed the request for interim relief against a three-part test derived from the UNCITRAL Model Law: (i) a risk of harm not adequately reparable by damages if the measure is not ordered urgently; (ii) the harm to the applicant substantially outweighs the harm to the respondent; and (iii) a reasonable possibility of success on the merits. He found that the Claimant met this test with respect to the assets of LLC OGT, reasoning that a compulsory sale of the company's core assets would likely lead to its destruction, constituting irreparable harm that is not purely financial. However, he denied relief concerning the Claimant's personal real estate, finding that any harm from its sale could be adequately compensated by damages.

The Arbitrator also found the proportionality requirement was met, as the requested relief was a temporary stay of enforcement, and the harm to the Claimant from the destruction of his business outweighed the prejudice to Georgia from a delay in collecting a tax debt. Finally, he determined there was a reasonable possibility of success on the merits (a low threshold), based on preliminary evidence suggesting Georgia may have failed to consider OGT's application for tax deferral in accordance with its own laws, which formed a basis for the Claimant's BIT claims.

Decision and Order

The Emergency Arbitrator partially granted the Claimant's request. He issued an award ordering the Republic of Georgia to refrain from taking further steps to execute the enforcement proceedings against LLC OGT until the award ceased to be binding under the SCC Rules. All other requests for interim relief were denied. The Arbitrator ordered Georgia to bear the full costs of the emergency arbitration and to pay GBP 60,000 towards the Claimant's legal costs.