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Case Overview
In Zaza Okuashvili v. Georgia, the Claimant, a dual British-Georgian national, initiated arbitration against Georgia under the 1995 Georgia-United Kingdom BIT. The dispute, administered by the Stockholm Chamber of Commerce (SCC), centers on allegations that Georgia engaged in a campaign of harassment and expropriatory conduct against the Claimant's investments in the country, primarily the "Omega Group" of companies involved in tobacco, media, and other sectors. The case's jurisdictional phase addressed several complex issues, including the standing of a dual national to bring a claim against one of his states of nationality, the scope of a most-favoured-nation (MFN) clause to import dispute settlement provisions, and the compatibility of the BIT's arbitration clause with European Union law. While the arbitral tribunal initially affirmed its jurisdiction, its award was subsequently set aside by the Svea Court of Appeal in Sweden, a decision which was itself later overturned by the Supreme Court of Sweden, which reinstated the award.
Procedural History
The Claimant filed a Request for Arbitration on May 1, 2019, under the SCC Arbitration Rules (2017). The Claimant appointed Giorgio Mandelli, and the Respondent appointed Rolf Knieper. The SCC Board appointed Georgios Petrochilos as President of the Tribunal. The seat of arbitration was fixed in Stockholm, Sweden. Following Georgia's objections to jurisdiction and admissibility, the proceedings were bifurcated by agreement of the parties. The Tribunal held a virtual hearing on jurisdiction and admissibility from July 19-21, 2021. On August 31, 2022, the Tribunal issued its Partial Final Award on Jurisdiction and Admissibility, dismissing all of the Respondent's objections and affirming its jurisdiction to hear the claims. The award included a concurring and dissenting opinion from Rolf Knieper. Georgia subsequently initiated set-aside proceedings before the Svea Court of Appeal in Stockholm. On November 12, 2024, the Court of Appeal granted Georgia's application and set aside the arbitral award. This decision was appealed to the Supreme Court of Sweden, which, on June 26, 2026, overturned the Court of Appeal's judgment and remanded the case for further proceedings.
Key Issues and Positions
Georgia raised several preliminary objections. First, it argued the Tribunal lacked jurisdiction *ratione personae* because the Claimant, as a dual Georgian-British national, was effectively a domestic investor whose dominant and effective nationality was Georgian, thus falling outside the BIT's protections. Georgia also contended that the Claimant's British nationality was acquired through misrepresentations to UK authorities. Second, Georgia argued that the Claimant could not rely on the MFN clause in the UK-Georgia BIT to import the more favorable dispute resolution clause from the 1993 Georgia-Belgium-Luxembourg BIT, which offers a choice of arbitral fora including the SCC. Georgia's position was that its consent in the UK-Georgia BIT was limited exclusively to ICSID arbitration. Third, Georgia asserted that the arbitration clauses were contrary to and invalid under EU law, following the CJEU's decision in *Achmea*. Finally, Georgia raised admissibility objections, claiming the Claimant had failed to comply with pre-arbitration notice and cooling-off period requirements and that the claim constituted an abuse of process.
Tribunal/Court Reasoning and Holdings
Jurisdiction
The Tribunal dismissed all of Georgia's jurisdictional objections. On the *ratione personae* issue, the Tribunal found that the UK-Georgia BIT does not explicitly exclude dual nationals from its scope. It further determined that the Claimant's British nationality was not tainted by manifest fraud or serious error and that, for the purposes of the dispute, his British nationality was dominant and effective compared to his Georgian nationality. The Tribunal noted the Claimant's long-term residence, family ties, and property in the UK, and his understanding that acquiring British citizenship would lead to the loss of his Georgian nationality under Georgian law. By a majority, the Tribunal held that the MFN clause in Article 3 of the UK-Georgia BIT, which expressly applies to all provisions up to Article 11 (including the dispute settlement provision in Article 8), allowed the Claimant to import the more favorable dispute resolution options from the Georgia-BLEU BIT. This included the option for SCC arbitration, which was critical for the Claimant as his dual nationality barred him from accessing ICSID. The Tribunal rejected Georgia's argument that its consent was exclusively limited to ICSID, finding that the purpose of the broad MFN clause was precisely to allow access to such alternative fora. The Tribunal also dismissed the EU law objection, finding that EU Regulation 1219/2012 explicitly preserves the validity of bilateral investment agreements between EU Member States and third countries, including their dispute settlement provisions. In his concurring and dissenting opinion, Arbitrator Rolf Knieper agreed with the majority on the dual nationality issue but dissented on the application of the MFN clause. He argued that Georgia's consent in the UK-Georgia BIT was a "conscious choice" exclusively for the ICSID system. In his view, the MFN clause could not be used to replace this specific consent with consent to an entirely different arbitral system (the SCC), as this would go beyond importing more favorable procedural rules and would instead create consent where none existed. He distinguished the case from precedents where the underlying treaty already offered a choice of fora, concluding that the Tribunal therefore lacked jurisdiction.
Annulment/Set-Aside
In its judgment of November 12, 2024, the Svea Court of Appeal set aside the Tribunal's award on jurisdiction. The Court focused its analysis on whether the MFN clause could be used to establish consent to SCC arbitration. Echoing the reasoning of the dissenting arbitrator, the Court held that Georgia's consent to arbitration in Article 8 of the UK-Georgia BIT was explicitly and exclusively limited to the ICSID system. It reasoned that extending this consent to a different arbitral institution, the SCC, was not a matter of granting more favorable "treatment" but rather a fundamental alteration of the state's consent to arbitrate. The Court emphasized the principle of state sovereignty, which requires that consent to arbitration must be clear and unambiguous. It found that using an MFN clause to replace an exclusively designated forum with an entirely different one went beyond the clause's intended scope. Having found that the Tribunal lacked jurisdiction on this basis, the Court did not rule on the other jurisdictional objections. Mr. Okuashvili appealed this decision to the Supreme Court of Sweden. In a judgment dated June 26, 2026, the Supreme Court overturned the Svea Court of Appeal's ruling. The Supreme Court held that the MFN clause in the UK-Georgia BIT, by its plain language, explicitly applied to Article 8 (dispute settlement). It reasoned that providing an investor with a choice of arbitral fora (as in the Georgia-BLEU BIT) is objectively more favorable treatment than being restricted to a single forum (ICSID), particularly for a dual national barred from ICSID. The Court concluded that Georgia, by agreeing to the broad MFN clause, had provided clear and unambiguous consent to such an outcome. The Supreme Court therefore set aside the lower court's judgment and remanded the case back to the Svea Court of Appeal to consider Georgia's other grounds for challenge which had not yet been addressed.
Admissibility
The Tribunal also dismissed the Respondent's admissibility objections. It found that the Claimant had satisfied the pre-arbitration requirements under the treaties, as Georgia had been made aware of the dispute through various communications and had sufficient opportunity to seek an amicable settlement. The Tribunal also rejected the abuse of process argument, finding no evidence that the Claimant had acquired British nationality for the instrumental purpose of bringing a treaty claim. It concluded that the Claimant's decision to naturalize was a fundamental life choice made long before the alleged treaty breaches crystallized.
Disposition / Relief
The Svea Court of Appeal initially set aside the Tribunal's Partial Final Award on Jurisdiction and Admissibility. However, this judgment was subsequently overturned by the Supreme Court of Sweden on June 26, 2026. The Supreme Court reinstated the arbitral award and remanded the case to the Court of Appeal for consideration of Georgia's remaining grounds for challenge.
