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Arnold & Porter Obtains Fifth Victory at ICSID on Behalf of Hungary

April 18, 2014

On 16 April 2014, Arnold & Porter LLP obtained a victory on behalf of Hungary at the International Centre for Settlement of Investment Disputes (ICSID), securing dismissal for lack of jurisdiction of the last remaining claim in Emmis International Holding, B.V., Emmis Radio Operating, B.V., MEM Magyar Electronic Media Kereskedelmi és Szolgáltató Kft. v. Hungary. Claimants held shares in Sláger Radio, the former broadcaster on a Hungarian national radio frequency, and alleged that Hungary's 2009 tender for a new license term, which Sláger did not win, amounted to expropriation of Claimants' rights under the terms of Hungary's bilateral investment treaties with the Netherlands and Switzerland.

The arbitral tribunal (composed of Professor Campbell McLachlan QC (president), Hon. Marc Lalonde PC OC QC, and J. Christopher Thomas QC) agreed with Hungary's principal argument that Claimants' allegations did not meet the threshold for an expropriation claim because Claimants failed to establish ownership of a proprietary right capable of being expropriated in connection with the 2009 tender. The Tribunal found that Sláger's broadcasting license was "a right of limited duration" and that Sláger at no point acquired a property right to a new broadcasting license that was capable of being expropriated under international law. The Tribunal also concluded that the various procedural rights afforded to all bidders by virtue of their participation in the 2009 tender could not be the subject of an expropriation claim. The full text of the award is available here.

The expropriation claim was the last remaining claim in the case after the Tribunal granted Hungary's ICSID Arbitration Rule 41(5) objections to the other claims in a March 2013 decision and agreed in a June 2013 decision to address jurisdiction with respect to the expropriation claim in a preliminary phase.

Partners Jean Kalicki and Dmitri Evseev and associates Mallory Silberman, Peter Nikitin, and Csaba Rusznak represented Hungary in close coordination with Hungarian counsel Kende Molnár-Bíró Katona (KMBK).

To date, Arnold & Porter and KMBK are the only law firms to have successfully represented Hungary before ICSID, having also achieved a complete victory on behalf of Hungary in the Telenor case (2006) and in the AES arbitration (2010) and annulment proceeding (2012), and a complete victory on all claims decided to date in the pending Electrabel arbitration.

Arnold & Porter and KMBK also represent Hungary in Accession Mezzanine Capital L.P. et al. v. Hungary, an ICSID case brought on a similar basis to the Emmis case by a different group of claimants. Following decisions on ICSID Arbitration Rule 41(5) and bifurcation parallel to those in Emmis, the Accession case is scheduled for a hearing on jurisdiction in May 2014 with respect to the remaining expropriation claim.

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