GRAND EXPRESS Non-Public Joint Stock Company v. Republic of Belarus

At a glance

Parties

GRAND EXPRESS Non-Public Joint Stock Company (Russia) v. the Republic of Belarus

Case no.

ICSID Case No. ARB(AF)/18/1; Russian insolvency case No. А40-46865/24

Forum and rules

ICSID Additional Facility Arbitration Rules 2006; seat Geneva, Switzerland. The published documents are Russian court rulings in Grand Express's insolvency.

Court

Arbitration Court of the City of Moscow (first instance); Ninth Arbitration Appellate Court; Arbitration Court of the Moscow District (cassation)

Underlying award(s)

ICSID Additional Facility award of 25 January 2024: some claims outside jurisdiction, the rest inadmissible for fraud; costs awarded to Belarus

Tribunal

Laurent Lévy (President), Stanimir A. Alexandrov, J. Christopher Thomas

Sector

Railway carriage manufacturing

Outcome

The Russian courts admitted Belarus's claim under the costs award to Grand Express's register of creditors, upheld that ruling on appeal and in cassation, and declared Grand Express bankrupt.

Amount

Claimed in the arbitration: USD 234.1 million, or alternatively USD 146.3 million. Costs awarded to Belarus: USD 10,154,006.37, plus 8% interest a year compounded annually. Claim admitted in the Russian insolvency: RUB 877,726,404.77 principal.

The dispute

Grand Express, a Russian company, and the Belarusian state association Belarusian Railway were shareholders in the joint closed joint-stock company Osipovichi Carriage Building Plant (OVZ) in Belarus. In 2018 Grand Express brought an investment claim against Belarus under the ICSID Additional Facility Rules 2006, alleging breaches of Belarus's international-law obligations to protect foreign investments. It sought USD 234.1 million, or alternatively USD 146.3 million. On 25 January 2024 the tribunal declined jurisdiction over some claims. It held the remaining claims inadmissible because Grand Express and related persons had carried out a fraudulent scheme to strip assets from OVZ, and it ordered Grand Express to pay Belarus's costs. Grand Express did not pay, and Belarus filed the costs award as a creditor claim in Grand Express's Moscow insolvency. Grand Express argued that the tribunal lacked impartiality and jurisdiction, that the costs were excessive, that no separate recognition ruling had been made, that interest could not be included, and that Belarus had abused its rights by enforcing in Belarus.

Key holdings

1. No lack of impartiality. A Russian Supreme Court ruling presumes partiality in arbitrators from 'unfriendly' States. Here Belarus has its own list of unfriendly States, which includes EU members, Canada and Switzerland, so both parties stood in an equal position. Grand Express had itself appointed Stanimir A. Alexandrov, and the president, Laurent Lévy, was chosen by agreement of both parties. No breach of public policy was found. Ninth Arbitration Appellate Court ruling, p. 3
2. The tribunal had power to award costs even though it did not reach the merits. By starting the arbitration under the Additional Facility Rules, Grand Express accepted Article 58(1), which lets the tribunal allocate costs. Under Article 58(2) a costs decision forms part of the award whether or not the merits are decided. Belarus was the prevailing party. Ninth Arbitration Appellate Court ruling, p. 4
3. The costs were not unreasonable. The VETA survey of Russian court-litigation fees was neither relevant nor admissible evidence. Grand Express had itself claimed USD 7,493,827.27 in costs and had stressed the tribunal's broad discretion. The tribunal awarded only two-thirds of Belarus's costs and explained the higher spending by the work needed to uncover the fraud. Ninth Arbitration Appellate Court ruling, p. 5
4. No separate recognition order was needed. Once observation (supervision) proceedings have begun, a claim based on a foreign arbitral award is examined within the insolvency case. Admitting the claim to the register amounted in substance to recognising the award under the New York Convention. Ninth Arbitration Appellate Court ruling, p. 6
5. The award set no deadline for payment, so the 8% interest is not a penalty for late payment. It is a charge for the use of money, similar to interest on a commercial credit under Article 823 of the Russian Civil Code. It was therefore properly included in the third priority rank together with the principal. Ninth Arbitration Appellate Court ruling, pp. 6–7
6. Enforcing the award in Belarus was not an abuse of rights. The Ministry of Justice acted as Belarus's representative, and the claim in Russia was reduced by the BYN 1,350,000 already recovered there. Ninth Arbitration Appellate Court ruling, p. 7
7. Cassation dismissed. The cassation court found that the lower courts had correctly applied the public-policy test, including the principle that civil liability must be proportionate. The appeal only sought a new assessment of the evidence, which a cassation court cannot make. Arbitration Court of the Moscow District ruling, pp. 6–10

Procedural history

1. 2018Grand Express commenced ICSID Additional Facility arbitration against Belarus.
2. 25 January 2024Award: some claims outside jurisdiction and the rest inadmissible for fraud. Costs of USD 10,154,006.37 plus interest awarded to Belarus.
3. 20 February 2024Belarus invited Grand Express to pay voluntarily (letter No. 07-27/233). Grand Express did not respond or pay.
4. 19 April 2024The Economic Court of Minsk Region issued a court order naming the Republic of Belarus, represented by the Ministry of Justice, as creditor.
5. 11 June 2024The Arbitration Court of the City of Moscow opened observation (supervision) proceedings against Grand Express and appointed Pavel Vasilyevich Novikov as interim manager.
6. 10 September 2024Grand Express property worth BYN 1,350,000 was transferred in Belarus to the Ministry of Sports and Tourism.
7. 5 November 2024The Arbitration Court of the City of Moscow admitted Belarus's claim of RUB 877,726,404.77 to the third priority rank of the register.
8. 5 February 2025The Ninth Arbitration Appellate Court dismissed Grand Express's appeal (operative part announced 23 January 2025).
9. 4 April 2025The Arbitration Court of the City of Moscow declared Grand Express bankrupt, opened bankruptcy proceedings for six months and appointed Kirill Olegovich Nogotkov as bankruptcy trustee. It refused the RUB 900,000 cost of the VETA financial analysis.
10. 29 April 2025The Arbitration Court of the Moscow District dismissed the cassation appeal (operative part announced 23 April 2025).

Tribunal, counsel and experts

Decided by

• Laurent Lévy President — appointed by the parties jointly
• Stanimir A. Alexandrov Co-arbitrator — appointed by the claimant
• J. Christopher Thomas Co-arbitrator
• A.N. Grigoryev Judge, Ninth Arbitration Appellate Court (presiding judge)
• O.V. Gazhur Judge, Ninth Arbitration Appellate Court
• A.A. Duranovsky Judge, Ninth Arbitration Appellate Court
• Darya Vasilyevna Sulieva Judge, Arbitration Court of the City of Moscow
• D.V. Kamenetsky Judge, Arbitration Court of the Moscow District (presiding judge)
• Yu.V. Troshina Judge, Arbitration Court of the Moscow District
• N.S. Kalinina Judge, Arbitration Court of the Moscow District

For the claimant

A.O. Kharlamov

For the respondent

A.T. Goretsky · O.N. Kotel

For other participants

M.A. Desyatnik · E.L. Volkova · A.V. Albrandt · E.V. Ishbaev

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Keywords

• enforcement
• recognition
• New York Convention
• costs award
• ICSID Additional Facility
• fraud
• inadmissibility
• public policy
• unfriendly states
• arbitrator impartiality
• insolvency
• register of creditors
• interest on costs
• Osipovichi Carriage Building Plant
• Belarusian Railway
• Russia
• Belarus
• railway carriages

Summary generated with AI from the published documents — refer to the award for the authoritative text.