EuroGas Inc. and Belmont Resources Inc. v. Slovak Republic

Case summary

At a glance

Parties: EuroGas Inc. (United States) and Belmont Resources Inc. (Canada) v. Slovak Republic
Case no.: ICSID Case No. ARB/14/14
Forum and rules: ICSID Convention; ICSID Arbitration Rules 2006; place of proceeding Paris
Treaty: US–Czech and Slovak Federal Republic BIT (in force 19 December 1992); Canada–Slovakia BIT (in force 14 March 2012)
Tribunal: Prof. Pierre Mayer (President), Prof. Emmanuel Gaillard, Prof. Brigitte Stern
Sector: Mining (talc)
Outcome: Jurisdiction declined over both claimants (Award of 18 August 2017), with a dissenting opinion by Emmanuel Gaillard. Belmont's annulment application was discontinued on 31 October 2019 because Belmont did not pay the advance on costs.
Amount: Damages were to be quantified in a later phase; nothing was awarded. Arbitration costs of USD 850,524.71 were split as advanced: USD 425,262.35 by the Respondent, USD 269,332.82 by Belmont and USD 155,929.53 by EuroGas. Each party bears its own legal costs.

The dispute

The case concerned Rozmin s.r.o., a Slovak company that held mining rights over the Gemerská Poloma talc deposit, one of the largest in the world. EuroGas claimed an indirect 33% interest in Rozmin through EuroGas GmbH; Belmont claimed a 57% interest it had bought in 2000. In January 2005 the District Mining Office relied on the 2002 amendment to the Mining Act (a three-year inactivity rule) and reassigned the mining area to Economy Agency RV s.r.o. The Slovak Supreme Court twice found the procedure unlawful, but the mining area was reassigned to VSK Mining in 2008 and again in 2012. The claimants alleged expropriation and breaches of fair and equitable treatment, full protection and security, the bar on arbitrary measures, and specific commitments. Slovakia objected to jurisdiction: (1) EuroGas (incorporated in 2005) was not the 1985 company that had held the investment and had gone through bankruptcy; (2) Slovakia had denied EuroGas the treaty's benefits; (3) Belmont's dispute arose more than three years before the Canada–Slovakia BIT entered into force; (4) Belmont had sold its Rozmin shares in 2001.

Key holdings

The claims over the 2005 reassignment (the "Talc/Reassignment Claims") belonged to the 1985 company (EuroGas I) from 18 May 2004. Either Trustee Marker abandoned them, or Trustee Loveridge abandoned them nunc pro tunc under her agreement with EuroGas II, which the Bankruptcy Court approved. The Tribunal therefore did not need to decide whether the original abandonment was valid. Award ¶¶ 383–385
Under Utah law, a dissolved company could in principle merge in order to wind up its affairs. But the 2008 Joint Resolution of the directors did not create a valid merger. No articles of merger were filed, and the common-law "de facto merger" theory is not an independent legal basis for merging. The claims therefore never passed to EuroGas II. Award ¶¶ 401, 413–420
The McCallan share transactions made no difference. The right to compensation under the US–Slovakia BIT arose in 2005, remained with EuroGas I and was not carried with the EuroGas GmbH shares. The Tribunal lacks jurisdiction over EuroGas and did not need to decide the denial-of-benefits objection. Award ¶¶ 422–424
Slovakia was not estopped from relying on the time limit in Article 15(6) of the Canada–Slovakia BIT. Its letter of 2 May 2012 contained no admission that the treaty applied, and the treaty's temporal scope depends only on the intention of the two States that concluded it. Award ¶¶ 430–433
Belmont's dispute crystallised with Mr. Agyagos's letter of 3 November 2005, which threatened claims under investment treaties. That was well before the critical date of 14 March 2009. The later decisions of the mining authorities refused to undo a single alleged breach; they did not create a new dispute (Jan de Nul distinguished; Lucchetti approved). The Tribunal lacks jurisdiction over Belmont and did not need to decide whether Belmont still owned its Rozmin shares. Award ¶¶ 446–461
Costs: Slovakia won on jurisdiction, but the jurisdictional issues were complex and it was not unreasonable for the claimants to pursue the case. The arbitration costs stay where the parties advanced them, and each party bears its own legal costs. Award ¶¶ 473–476
Emmanuel Gaillard signed the Award subject to a separate dissenting opinion. Its text is not among the documents provided. Award, signature page