Durres Kurum Shipping SH. P.K. and others v. Republic of Albania

Case summary

At a glance

Parties: Durres Kurum Shipping SH.P.K. (DKS) and Durres Container Terminal SH.A (DCT) (Albania), Metal Commodities Foreign Trade Corp. (MCTC) (United States) and Altberg Developments LP (United Kingdom) v. Republic of Albania
Case no.: ICSID Case No. ARB/20/37
Forum and rules: ICSID Convention arbitration; ICSID Arbitration Rules in effect from 10 April 2006; place of proceedings Paris
Treaty: UK–Albania BIT (30 March 1994) and US–Albania BIT (11 January 1995)
Tribunal: Prof. Dr. Maxi Scherer (President), Mr. Fernando Mantilla-Serrano, Ms. Loretta Malintoppi
Sector: Port and container terminal concession (Port of Durres)
Outcome: Final Award of 26 July 2024: no jurisdiction over MCTC because Albania validly denied it the benefits of the US–Albania BIT; jurisdiction upheld over DKS, DCT and Altberg, but all their claims dismissed on the merits.
Amount: Claimants sought compensation, including USD 6,848,134 paid for the Durres Shipyard lease and USD 10 million in moral damages. Awarded: nothing. Claimants ordered to pay 70% of Albania's costs: USD 370,542.55 and EUR 1,583,512.00. Total costs of the arbitration: USD 869,293.00.

The dispute

DKS held a 35-year concession, concluded with Albania on 22 June 2011, which its subsidiary DCT used to run the container terminal at the Port of Durres. DKS was owned by the US company MCTC from 23 December 2014 and by the UK partnership Altberg from 23 August 2016. The Ministry served a Notice of Default on 22 January 2015 and applied to the courts on 3 April 2015 to have the concession terminated. The Tirana Court of First Instance ordered termination on 13 March 2017, the Court of Appeal confirmed it on 12 February 2019, and a bailiff took over the Terminal on 3 February 2020. The Claimants argued that Albania breached fair and equitable treatment, full protection and security and the protection against unreasonable or discriminatory measures, denied them due process and unlawfully expropriated their investment; they withdrew an umbrella clause claim at the hearing. Albania raised eight jurisdictional objections (among them illegality, purely contractual claims, denial of benefits, abuse of rights and the nationality of DKS and DCT) and argued that the termination was a lawful exercise of contractual rights confirmed by its courts.

Key holdings

Neither BIT nor the ICSID Convention contains an express or implied legality requirement, so the illegality objection fails. The Tribunal noted that Albania had included express legality clauses in other BITs concluded around the same time. ¶¶ 226–228
The claims are not purely contractual. As pleaded, they allege conduct beyond that of an ordinary contracting party, including bailiff irregularities and the use of contractual rights as a pretext, and this is enough for jurisdiction. Each Claimant also made a substantial contribution. ¶¶ 264–266, 303
Albania validly denied MCTC the benefits of the US–Albania BIT under Article XII(b). There was no evidence of MCTC business activity in the United States after 7 October 2013, so it had none at any possibly relevant date. The BIT sets no time limit for denying benefits, and the denial made on 10 November 2021 was timely under Rule 41. The Tribunal therefore lacks jurisdiction over MCTC. ¶¶ 341, 352, 356–357
The abuse-of-rights objection against Altberg fails. A dispute was foreseeable when Altberg invested in 2016, but there was no evidence that the purchase was driven by a wish to gain treaty access, since DKS and DCT were already protected under the US–Albania BIT. The creditor-evasion objection was also rejected. ¶¶ 387–394, 399
DKS and DCT qualify as US nationals under Article 25(2)(b) of the ICSID Convention through Article IX(8) of the US–Albania BIT. The offer in that article was accepted when the arbitration was filed. The parties to a dispute may agree on a date for assessing foreign control other than the date of consent. Foreign control existed both immediately before the Notice of Default (control by MCTC) and at the date of consent (control by Altberg). ¶¶ 429–430, 451–455
All merits claims fail. The Tirana courts found the termination lawful under the Concession Agreement, and no timely denial of justice claim was made. DCT had notice and a chance to cure, the bailiff acted regularly, and the takeover was not rushed. The legitimate expectations claim was not particularised for each Claimant, and no pretext or improper motive was proven. Where domestic courts have upheld a measure and no denial of justice is shown, the Tribunal will not find that the measure breached the treaty. ¶¶ 523, 607, 660, 695–699
On costs, Albania prevailed overall, adjusted for the Claimants' partial success on jurisdiction. The Claimants bear 70% of Albania's costs, USD 370,542.55 and EUR 1,583,512.00. The Tribunal refused Albania's request for interest on costs. ¶¶ 713, 718–720

Procedural history

7 September 2020ICSID receives the Request for Arbitration.
23 September 2020ICSID registers the dispute. The award states the year as 2019 at ¶ 8 and as 2020 at ¶ 324.
15 June 2021Tribunal constituted. Prof. Philippe Sands, first appointed by Albania, had withdrawn his acceptance and was replaced by Ms. Loretta Malintoppi.
7 February 2022Procedural Order No. 4 dismisses Albania's request for bifurcation.
11 February 2022Procedural Order No. 5 dismisses Albania's application for security for costs.
4–6 December 2023Hearing dates agreed by the parties (7 December 2023 in reserve).
26 July 2024Final Award: no jurisdiction over MCTC; the claims of DKS, DCT and Altberg dismissed; costs awarded to Albania.

Tribunal, counsel and experts

Decided by: Maxi Scherer President — appointed by the institution (appointed by the Chairman of the ICSID Administrative Council)
Fernando Mantilla-Serrano Co-arbitrator — appointed by the claimant
Loretta Malintoppi Co-arbitrator — appointed by the respondent (appointed after Prof. Philippe Sands withdrew his acceptance on 27 January 2021)
For the claimant: Derains & Gharavi · Durres Container Terminal (in-house)
For the respondent: State Advocates Office · Freshfields Bruckhaus Deringer
Experts: Fair Links (claimant) · Anastasia Malyugina (respondent)