Alcor Holdings Ltd. v. The Czech Republic

Case summary

At a glance

Parties: Alcor Holdings Ltd. (UAE) v. the Czech Republic
Case no.: PCA Case No. 2018-45
Forum and rules: UNCITRAL Arbitration Rules 1976, administered by the PCA; seat The Hague
Treaty: Czech Republic–UAE BIT of 23 November 1994
Tribunal: Sir Christopher Greenwood (Presiding Arbitrator), Richard Wilmot-Smith, Donald McRae
Sector: Real estate; land under municipal roads
Outcome: Claim dismissed for lack of jurisdiction (2 March 2022). The Claimant had sold its investment before it started the arbitration.
Amount: Claimed: CZK 482,703,229.80 (approx. USD 21 million), plus interest and costs. Awarded: nothing. The Claimant must pay EUR 146,267.97 for Tribunal and PCA costs and EUR 637,225 for the Respondent's legal costs, with 6% interest compounded twice yearly after 60 days.

The dispute

Alcor Holdings Ltd., a UAE company, owned 99% of Alcor Holdings CZ s.r.o. (Alcor CZ). Between January 2010 and June 2011, Alcor CZ bought 13 plots of land in Prague on which the City of Prague operated roads and other utilities, paying CZK 25,702,310. Alcor CZ sued the City for unjust enrichment. It argued that compensation should follow the rental rates in the City's Resolution No. 2141 of 2004, which set the rent the City charges third parties for using its own land. The Czech courts awarded compensation at the lower rates capped by the Ministry of Finance assessments, and the City paid CZK 17,470,442.27. In February 2016, before the first-instance judgment, Alcor sold its shares in Alcor CZ to Mizar Limited and reserved its treaty claims. In 2018 it claimed under the BIT for breach of fair and equitable treatment, full protection and security, Article 2(1), 2(4) and 2(10), and national and most-favoured-nation treatment. The Czech Republic objected that Alcor was no longer an investor and had made no investment. It also argued that the claims were an abuse of process, sought supranational review of Czech court judgments and pursued double recovery, and it denied liability on the merits.

Key holdings

The Respondent raised its jurisdictional objections in time. Article 21(3) of the 1976 UNCITRAL Rules requires them only by the statement of defence, and Procedural Order No. 1 expressly provided for them there. ¶¶ 233–236
Jurisdictional requirements must be met on the date the proceedings start. The treaty's offer to arbitrate is made to a defined class of investors and can be accepted only by someone who falls within that class at the moment of acceptance. ¶¶ 251–254
Unless there are special circumstances, or the treaty provides otherwise, the claimant must still hold the investment when it starts the arbitration. The Tribunal followed Aven v. Costa Rica rather than Daimler v. Argentina. Owning a right to bring a claim is not itself an investment. ¶¶ 256–273
The Tribunal found Daimler distinguishable in any event. No BIT dispute existed before the sale; the BIT appears never to have been mentioned. The court failures the Claimant alleged all took place after it sold its shares to Mizar. ¶¶ 264–272
No special circumstances applied. The sale was not an expropriation or a forced sale: the owner was tired of the process and wanted cash to invest elsewhere. Reserving treaty claims in the Share Transfer Agreement is not a special circumstance. The first jurisdictional objection was upheld, so the Tribunal did not consider the other objections or the merits. ¶¶ 274–283
Costs follow the event. The Claimant bears all Tribunal and PCA costs and pays EUR 146,267.97 to the Respondent. It also reimburses the Respondent's full legal costs of EUR 637,225, which the Tribunal found reasonable. ¶¶ 288–293

Procedural history

19 June 2011Alcor CZ sues the City of Prague in the 10th District Court of Prague.
24 February 2016Alcor sells its shares in Alcor CZ to Mizar Limited for USD 1,000,000.
30 June 2016Alcor notifies the Czech Republic of a dispute under the BIT.
27 September 2017The District Court awards Alcor CZ CZK 13,577,363.86 plus interest. The Municipal Court of Prague upholds the judgment on 4 May 2018.
3 May 2018Alcor serves its Notice of Arbitration, dated 17 April 2018.
21 September 2018The tribunal is constituted when the co-arbitrators appoint Sir Christopher Greenwood as presiding arbitrator.
17 December 2019The Czech Supreme Court dismisses Alcor CZ's extraordinary appeal. The Constitutional Court rejects Alcor CZ's constitutional complaint on 2 June 2020.
14–16 December 2020Hearing held by video link.
2 March 2022Award: no jurisdiction; costs ordered against the Claimant.