Procedural Posture and Background

This document is an Award rendered by an ICSID Tribunal in a dispute between JCDecaux SE (Claimant) and the Czech Republic (Respondent) under the France-Czech Republic Bilateral Investment Treaty (BIT) and the ICSID Convention. The dispute concerns the alleged expropriation and impairment of the Claimant's indirect investment in Rencar, a Czech advertising agency. The Claimant acquired a controlling stake in Rencar, whose primary asset was a long-term lease contract (the Rencar Contract) with the Prague public transport company, Dopravní podnik hl. m. Prahy (DPP). The Claimant alleged that the Respondent breached the BIT when DPP wrongfully terminated the Rencar Contract and subsequently reallocated the advertising spaces to competitors through public tenders.

Jurisdictional Objections

The Respondent raised several jurisdictional objections. First, it argued that the Rencar Contract was invalid under Czech law and thus could not constitute a protected investment. The Tribunal rejected this, holding that the Claimant's primary investment was its indirect shareholding in Rencar, which was validly acquired, and that the validity of the underlying contractual assets was a matter for the merits. Second, the Respondent contended that the investment violated Czech public procurement law and international public policy. The Tribunal dismissed these objections, finding that the initial acquisition of shares was lawful and that alleged subsequent procurement violations regarding contract amendments did not deprive the Tribunal of jurisdiction. The Tribunal also rejected the Respondent's allegations of fraudulent practice, noting the lack of sufficient evidence to establish fraud or corruption that would vitiate jurisdiction. Finally, the Tribunal dismissed the objection that the Claimant lacked standing as an investor, confirming the continuity of its indirect shareholding.

Attribution and Merits

On the merits, the central issue was whether DPP's conduct in terminating the Rencar Contract was attributable to the Czech Republic under Articles 5 or 8 of the ILC Articles on State Responsibility. The Claimant argued that DPP exercised governmental authority and acted under the instruction, direction, or control of the City of Prague. The Tribunal found that DPP's provision of mass transportation and management of advertising space were commercial activities, not exercises of governmental authority under Article 5. Under Article 8, while acknowledging the City's ownership and influence over DPP, the Tribunal concluded that DPP's Board of Directors acted within its ordinary commercial discretion when terminating the contract. The Tribunal found insufficient evidence that the City of Prague or political figures instructed or controlled the specific decision to terminate the Rencar Contract.

Decision and Costs

Having found that DPP's conduct was not attributable to the Respondent, the Tribunal dismissed the Claimant's claims in their entirety. In allocating costs, the Tribunal noted that while the Respondent prevailed on the merits, the Claimant had successfully defeated numerous complex jurisdictional objections. Consequently, the Tribunal ordered the Claimant to bear 75% of the Respondent's legal costs for the non-bifurcated phase and 75% of the arbitration costs, resulting in an order for the Claimant to pay EUR 1,038,258.03, CZK 2,211,238.94, and USD 284,447.41, plus compound interest.