Summary

Vernietigings- en herroepingsprocedure. Arbitrale uitspraken gedaan naar aanleiding van gebeurtenissen op de Krim in 2014 op grond van een bilateraal investeringsverdrag gesloten tussen Oekraïne en de Russische Federatie.

JSC CB PrivatBank v. The Russian Federation - PCA Case No. 2015-21

...

"Herewith a letter from Mr.. .., Deputy Director of the Department of International Law and Cooperation, Ministry of Justice of the Russian Federation, is conveyed to the Permanent Court of Arbitration.

Nothing in the attached letter of the Ministry of Justice of the Russian Federation can be interpreted as consent of the Russian Federation to constitution of an arbitral tribunal, participation in arbitration proceedings, or as procedural actions taken in the framework of the proceedings on the claims of Aeroport Belbek LLC and Mr. [betrokkene 1] and of PJSC CB PrivatBank and Finance Company Finilon LLC against the Russian Federation, or as waiver by the Russian Federation of the jurisdictional immunities in respect of itself and its property in relation to any judicial or administrative proceedings or procedures, connected directly or indirectly with these claims, including immunity from court jurisdiction and immunity from any measures of constraint that can be connected directly or indirectly with these claims, regardless of the jurisdiction (national or supranational) under which they are initiated."

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"We return you herewith the Notices of Arbitration on the arbitration proceedings initiated under Article 9 of the Agreement between the Government of the Russian Federation and the Cabinet of Ministers of Ukraine on the Encouragement and Mutual Protection of Investments before the Permanent Court of Arbitration by the Aeroport Belbek LLC and Mr. [betrokkene 1] vs. the Russian Federation (...) and by the PJSC CB PrivatBank and the Finance Company Finilon LLC vs. the Russian Federation (...).

It is manifest that such claims cannot be considered under the Agreement mentioned above and, therefore, the Agreement cannot serve as a basis for composing an arbitral tribunal to settle these claims.

In accordance with paragraph 1 Article 1 of the Agreement the term "investment" means every kind of movable and immovable and intellectual property invested by an investor of one Contracting Party in the territory of the other Contracting Party in accordance with the legislation of the latter contracting Party. The property in question which is the matter of the claims is situated in the territory of the Crimea and Sevastopol, i.e. in the territory that was a part of Ukraine but at the present time pursuant to the will of people forms an integral part of the territory of the Russian Federation and cannot be regulated by the Agreement.

On the basis of the abovementioned the Russian Federation does not recognize the jurisdiction of an international tribunal at the Permanent Court of Arbitration in settlement of the abovementioned claims."

... Interim Award. ..

"For the foregoing reasons, the Tribunal finds that:

1. the Russian Federation has assumed obligations under the Treaty in respect of the Claimants and their claimed investments in the Crimean Peninsula as of 21 March 2014

2. there is a dispute between the Parties arising in connection with what the Claimants allege to constitute "investments" under the Treaty and

3. the Claimants have satisfied the notice and negotiation requirements under Article 9 of the Treaty.

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§98 "(i) cash (ii) USD 830 million worth of secured and unsecured loans title or leases to a network of bank branches and offices (ii) title or leases to a network of bank branches and officies (iii) other physical assets, such as ATMs, self-service banking portals and computers and (iv) their "business"- namely their "rights under Russian law to carry out banking operations in [the Crimean Peninsula] after the Annexation."

"§143. The Tribunal observes that its jurisdiction derives from the Treaty alone. It is not an inter- State tribunal of general jurisdiction. While the Tribunal has an incidental jurisdiction under the Treaty to address ancillary issues that are properly engaged by the proceedings of which it is seised and which are necessary for its decisions, its jurisdiction does not in principle go beyond that conferred upon it by the Contracting Parties under Article 9 of the Treaty. Given the circumstances of this case, the Tribunal emphasises these limits on its jurisdiction, which it considers to be axiomatic.

§144. In this regard, the Tribunal notes that this Interim Award does not reach any view on the legality or illegality under international law of the incorporation of the Crimean Peninsula by the Russian Federation or on the sovereignty claims of Ukraine and the Russian Federation in respect of the Crimean Peninsula. None of the findings contained in this Interim Award are intended to take any position on such matters."

§157. .. "As it informed the Parties by letter from the PCA dated 19 March 2016, the Tribunal considers that it is required to determine its jurisdiction and the admissibility of the claims whether or not objections have been raised by the respondent".

§252 "In particular, the Tribunal defers to the next phase consideration of the issues of whether: (i) the Claimants are "investors" for the purposes of Article 1 of the Treaty, including in the light of PrivatBank's nationalization by Ukraine (ii) the Claimants' "investments" fall within the definition of that term in Article 1(1) and (iii) the dispute between the Parties arose "in connection with"

those investments."

... Partial Award. ..

"For the foregoing reasons, the Tribunal finds that:

1. the Tribunal has jurisdiction over PrivatBank's claims under the Treaty

2. PrivatBank's claims are admissible and

3. the Russian Federation has breached Article 5 of the Treaty in respect of PrivatBank's investments.

The issue of compensation due in the light of this finding of liability and any decision of the costs of arbitration are deferred to the next phase of the arbitration."

§199 "From the perspective of Russian law, on 21 March 2014, PrivatBank's Crimean investments were situated on Russian territory and were therefore subject to the entire body of Russian law.

At the same time, in the very same federal constitutional law by which it incorporated the Crimean Peninsula into the Russian Federation (the Incorporation Law), the Russian Federation made specific provisions for the integration of the new constituent entities into the Russian Federation."

... Procedural Order no. 7. ..

"2.11 In any event, having reviewed the jurisdictional objections summarized in the Respondent's recent correspondence, as well as the Respondent's Set Aside and Revocation Writs, the Tribunal considers that its Awards address both the threshold jurisdictional issue of the application of the Treaty between the Russian Federation and Ukraine in respect of the Crimean Peninsula in the period from February 2014 onwards, and all other applicable jurisdictional and admissibility requirements under the Treaty.

2.12 That said, the Tribunal notes that, in support of its argument that "PrivatBank does. .. not qualify as an investor within the meaning of Article 1(1) of the [Treaty] who has made investments within the meaning of Article 1(2) of the [Treaty], because PrivatBank obtained its investments through corruption, fraud and violence, among other things"(the "Illegality Objection"), the Respondent has put forward in its Set Aside and Revocation Writs a set of arguments and factual evidence that was neither put before the Tribunal by the Claimant, nor addressed by the Tribunal in its Awards. Although the Respondent could have raised this issue at an earlier stage of these proceedings, the Tribunal considers that, in view of the substantial new evidence now adduced by the Respondent, as well as the serious nature of its allegations, it would be appropriate to allow the Respondent to make submissions on its Illegality Objection, should it wish to do so. In order to minimize any delay resulting from such submissions and given that the Respondent's arguments and evidence in respect of the Illegality Objection will likely also be relevant to the damages issues in these proceedings, the Tribunal considers that any such submissions should be made in the Respondent's submissions on compensation (as to which, see paragraph 2.24 below).

2.13 The Tribunal accordingly denies the Respondent's request for permission to make written and oral submissions on jurisdiction, save that in its submissions on compensation (as to which, see paragraph 2.24 below) the Respondent may make submissions in respect of its Illegality Objection."

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