Award in Burimi SRL and Eagle Games SH.A v. Albania (ICSID Case No. ARB/11/18), by José Ángel Rueda

On 29 May 2013 ICSID dispatched to the parties the award rendered by an arbitral tribunal[1] in Burimi SRL and Eagle Games SH.A v. Albania (ICSID Case No. ARB/11/18).[2] 

The dispute arose out of the alleged investment made by the claimants, an Italian company (Burimi) and an Albanian company (Eagle Games), in the gambling business in Albania as well as the revocation of a permit granted to Eagle Games after the adoption of the 2007 Gambling Law.[3] The claimants pursued their claims under the Italy-Albania BIT as well as the Albanian Foreign Investment Law.

The interest of this award relies on the interpretation given by the tribunal to the jurisdictional requirements set out at Article 25(1) and (2) of the ICSID Convention that reads as follows:

Article 25

(1) The jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment, between a Contracting State (or any constituent subdivision or agency of a Contracting State designated to the Centre by that State) and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the Centre. When the parties have given their consent, no party may withdraw its consent unilaterally.

(2) “National of another Contracting State” means:

(a) any natural person who had the nationality of a Contracting State other than the State party to the dispute on the date on which the parties consented to submit such dispute to conciliation or arbitration as well as on the date on which the request was registered pursuant to paragraph (3) of Article 28 or paragraph (3) of Article 36, but does not include any person who on either date also had the nationality of the Contracting State party to the dispute; and

(b) any juridical person which had the nationality of a Contracting State other than the State party to the dispute on the date on which the parties consented to submit such dispute to conciliation or arbitration and any juridical person which had the nationality of the Contracting State party to the dispute on that date and which, because of foreign control, the parties have agreed should be treated as a national of another Contracting State for the purposes of this Convention.

The tribunal found it had no jurisdiction to hear the claims pursued by the claimants for different reasons. For Eagle Games it found it had no jurisdiction ratione personae. For Burimi it found it had no jurisdiction ratione materiae.

a)      Eagle Games

The tribunal found that Eagle Games was a legal entity incorporated in Albania and, as such, it did not qualify as a national “of a Contracting State other than the State party to the dispute” under the first clause of Article 25(2)(b).[4]

However, it left open the possibility for Eagle Games to qualify as an investor under the second clause of Article 25(2)(b), “by way of exception (…) if “because of foreign control, the parties have agreed” that it would be treated as such.”[5]

The tribunal underlined that the requirement of “foreign control” is not expressly defined in the ICSID Convention.[6] It then considered whether the parties to the dispute had agreed that Eagle Games was under foreign –Italian– control and thereby qualified as a national of Italy.[7]

As there was no agreement linking Eagle Games to Albania (such an investment contract),[8] the Tribunal looked at the definition of investor included in the Italy-Albania BIT. Article 8(2)(c) thereof states: “[…] For the purposes of Article 25 of the Washington Convention March 18, 1965 and as of the date on which this will be applicable for both Contracting Parties, a company having legal nationality of a Contracting Party to the dispute, but with a majority of capital owned by investors [of] the other Contracting Party or other third party, will be considered as having the nationality of the latter.”[9]

The tribunal found that a dual national of Italy and Albania was the majority shareholder of Eagle Games who was, therefore, “the relevant party for determining whether Eagle Games can be treated as a national of a Contracting State other than the State party to the dispute because it is under “foreign control””.[10]

The tribunal rejected its jurisdiction over Eagle Games by relying on the legal principle contained in Article 25(2)(a) of the ICSID Convention whereby a national of State A cannot suit State A at ICSID even if that national is also a national of State B:

119. While Claimants did not make this argument in its written submissions, the conclusion that Mr. Ilir Burimi—a dual national of Italy and Albania—is the majority shareholder of Eagle Games raises an important question about whether a dual national may rely on his “foreign” nationality—that is, the nationality other than the nationality of the Contracting State party to the dispute—for the purposes of establishing “foreign control” over a company bringing a claim before ICSID.

120. The ICSID Convention makes it very clear that a dual national may not invoke one of his two nationalities to establish jurisdiction over a claim brought in his own name under Article 25(2)(a). Indeed, it is for this very reason that Mr. Ilir Burimi was required to withdraw as a Requesting Party from the Request for Arbitration dated June 16, 2011.[[11]]

121. While neither the ICSID Convention nor relevant precedents address the potential for a dual national invoking one of his two nationalities to establish jurisdiction over a claim brought in the name of a juridical person under the second clause of Article 25(2)(b), it strikes the Tribunal as anomalous that the principle against use of dual nationality in 25(2)(a) would not transfer to the potential use of dual nationality in 25(2)(b). Otherwise, any dual national who is a national of the Contracting State to a dispute could circumvent the bar on claims in Article 25(2)(a) by establishing a company in that state and asserting foreign control of that company by virtue of his second (foreign) nationality. Accordingly, the Tribunal finds that for the purposes of considering whether Eagle Games could be treated as a national of another Contracting State (i.e., Italy) because of “foreign control,” Mr. Ilir Burimi cannot invoke his Italian nationality to establish “foreign control” of Eagle Games.[12]

b)      Burimi SRL

The tribunal did not hesitate in affirming its jurisdiction ratione personae over Burimi SRL under Article 25(2)(b) of the ICSID Convention.[13] In particular, the tribunal rejected to apply the “pierce the veil” doctrine under Article 8(2)(c) of the BIT, as requested by Albania:

132. Respondent mistakenly argues that piercing the corporate veil—as is required by Article 8(2)(c) of the Italy-Albania BIT—is necessary to determine the nationality of a company that already has the nationality of a State other than the State party to the dispute. The purpose of Article 8(2)(c), however, is to determine whether companies with the nationality of the State party to the dispute (Albania), can be considered under foreign control and therefore should be treated as a “national of another Contracting State” for the purposes of the ICSID Convention.[14]

However, the tribunal ultimately found that it had no jurisdiction ratione materiae over Burimi SRL under Article 25(1) of the ICSID Convention. The tribunal examined the facts and concluded that the existing agreements between Burimi and Eagle Games’ shareholders did not constitute an investment in Albania.[15]

Furthermore, the tribunal found that the dispute at hand did not arise out of any government measure affecting Burimi SRL’s agreement with one of Eagle Games’ shareholders:

The financing and pledge agreements are free-standing contracts between [the shareholder] and Burimi SRL, and exist independently of Eagle Games’ gambling business. Burimi SRL’s claims in this dispute arise out of its agreement with [the shareholder] and do not arise out of the investment in question, namely, the enterprise of Eagle Games.”[16]

**

This award deserves a short remark. The tribunal arrived at its conclusions on jurisdiction referred to above without apparently relying on any ICSID precedent interpreting Article 25 of the ICSID Convention, despite it being the most frequently interpreted provision in ICSID arbitration. Moreover, the tribunal included just a single reference to legal doctrine in its reasoning: the Hague course rendered by Dr. Aron Broches in 1972[17] that, notwithstanding its quality, was published around the date in which the first ICSID case was registered.[18]


[1] Members of the Tribunal: Daniel M. Price, President (United States of America), Bernardo Cremades (Spain) and Ibrahim Fadlallah (Lebanon/France).

[3] Award, para. 36.

[4] Award, para. 110.

[5] Award, para. 111.

[6] Award, para. 112.

[7] Award, para. 112.

[8] Award, para. 113.

[9] Award, para. 114 (emphasis added by the tribunal).

[10] Award, para. 118.

[11] See Award, paras. 44-48, in particular the screening power of the ICSID Secretary-General under Article 36 of the ICSID Convention.

[12] Award, paras. 119-121 (footnote omitted).

[13] Award, paras. 128-133.

[14] Award, para. 132.

[15] Award, paras. 143-144.

[16] Award, para. 145.

[17] “The Convention on the Settlement of Investment Disputes between States and Nationals of Other States”, R. des C., vol. 136, 1972, pp. 331-410.

[18] Holiday Inns S.A. and others v. Morocco (ICSID Case No. ARB/72/1), registered on 13 January 1972.

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