Anglo-Adriatic Group Limited v. Republic of Albania

Case summary

At a glance

Parties: Anglo-Adriatic Group Limited (British Virgin Islands) v. Republic of Albania
Case no.: ICSID Case No. ARB/17/6
Forum and rules: ICSID Convention arbitration; ICSID Arbitration Rules 2006; place of proceeding Paris
Treaty: Albanian Law No. 7764 of 2 November 1993 on Foreign Investments (Art. 8)
Tribunal: Prof. Juan Fernández-Armesto (President), Dr. Georg von Segesser, Prof. Brigitte Stern
Sector: Privatization vouchers; investment funds
Outcome: Claims dismissed for lack of jurisdiction (unanimous award dispatched 7 February 2019).
Amount: Damages were not reached. The claimant bears all arbitration costs (USD 308,036.50) and must repay Albania's advances. Each side bears its own legal costs: the claimant had claimed USD 961,635.15, and Albania USD 250,000 plus EUR 1,020,000.

The dispute

Anglo-Adriatic Group Limited (AAG), a British Virgin Islands company, claimed an interest in the Anglo Adriatika Investment Fund S.H.A. (AAIF). The AAIF was an Albanian fund licensed in 1996 to collect privatization vouchers from citizens under Albania's mass privatization programme. AAG alleged that Albania refused to let the AAIF use the vouchers it had collected in privatizations. It argued that this amounted to indirect expropriation of the AAIF's value and to discrimination, in breach of the 1993 Law on Foreign Investments (LFI). AAG relied on two investments: beneficial ownership of the AAIF shares that its four foreign directors held under trust deeds, and USD 5.33 million in funding it said it gave the AAIF under an "Ongoing Funding Agreement". Albania objected that AAG had been dissolved when it filed the request for arbitration, that no protected investment existed, that AAG had made no prior attempt to settle the dispute, and that the claim was an abuse of rights.

Key holdings

Under Arts. 1 and 8 LFI, jurisdiction requires a protected investment, a protected investor, and that the claimant owns or holds title to the investment. The claimant bears the burden of proving these facts. ¶¶ 145–149
The AAIF foreign shares were a foreign investment, and AAG qualified as a foreign investor. But the shares belonged to the four foreign shareholders, who were not claimants. The trust deeds named AAG as both settlor and beneficiary, so they did not show any transfer from the shareholders to AAG. Nothing showed a drafting mistake, any registration or disclosure under the Law on Investment Funds, or any consideration paid by AAG. AAG therefore had no standing over the shares. pp. 47–51
The Ongoing Funding Agreement only promised funding "as and when funding is available". The one-page cost spreadsheet assumed the USD 5,334,113 figure it was meant to prove. No accounts or bank records were produced. AAG therefore failed to prove that it made any loan. pp. 55–56
Even if a loan had been made, it would not be protected. Art. 13.1 of the Law on Investment Funds barred funds from borrowing, for a compelling public purpose. Art. 1 LFI protects only investments made in conformity with Albanian law. pp. 57–59
The Centre lacks jurisdiction and the Tribunal lacks competence ratione materiae. The other objections (dissolution of the investor, failure to try to settle, abuse of rights) became moot and were not decided. The Tribunal did not need to decide whether there was an investment under the ICSID Convention. pp. 36, 59
Costs: Albania was the successful party, but the claimant's case was not frivolous. The events were old and evidence may have been lost in a war-ravaged country. The claimant bears the arbitration costs and repays Albania's advances; each party bears its own legal costs. pp. 62–64

Procedural history

29 December 2016ICSID receives the request for arbitration. It is registered on 17 February 2017.
21 July 2017Tribunal constituted.
8 March 2018Decision on Bifurcation: three of Albania's objections are heard as preliminary issues, and the merits are suspended.
5 June 2018Decision on Security for Costs: Albania's application is dismissed, with leave to raise it again at the hearing.
17–19 July 2018Hearing on jurisdiction in Paris.
7 February 2019Award dispatched: the claims are dismissed for lack of jurisdiction.