Arnold & Porter Obtains Sixth Victory at ICSID For Hungary and 20th Positive ISDS Outcome For States

June 30, 2015

A year and a day after its victory in Emmis v. Hungary, Arnold & Porter obtained another complete victory for Hungary at the International Centre for Settlement of Investment Disputes (ICSID) in Accession Mezzanine L.P. and Danubius Kereskedöház Vagyonkezelö v. Hungary. As in Emmis, the arbitral tribunal (composed of Professor Arthur W. Rovine [president], Hon. Marc Lalonde PC OC QC, and Professor Zachary Douglas QC) declined to exercise jurisdiction over the last remaining claim in the case.

The claim concerned an alleged expropriation contrary to Hungary's bilateral investment treaty with the United Kingdom due to the conduct of a 2009 radio frequency tender in which Danubius Radio, a Hungarian broadcaster owned by the Claimants, failed to secure a new broadcasting license.

In what it said was "a close case in the sense of reaching or not reaching the merits," the Tribunal agreed with Hungary's argument that the Claimants' allegations did not meet the threshold for an expropriation claim because the Claimants failed to establish ownership of a proprietary right capable of being expropriated in connection with the 2009 tender. The Tribunal found that Danubius "never had any rights" to the broadcasting license that amounted to an "asset" capable of "expropriation" for the purposes of the bilateral investment treaty. As in Emmis, the Accession Tribunal also concluded that the various procedural rights afforded to all bidders in a tender could not be the subject of an expropriation claim, a point it said was "manifestly clear." The full text of the award is available here.

The expropriation claim was the last  claim in the case after the Tribunal granted Hungary's ICSID Arbitration Rule 41(5) objections to the Claimants' non-expropriation  claims in a January 2013 decision and agreed in an August 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, Csaba Rusznak, Pedro Soto and Bart Wasiak represented Hungary in close coordination with Hungarian counsel Kende Molnár-Bíró Katona (KMBK).

The Accession award is the sixth on the list of victories on behalf of Hungary by the Arnold & Porter and KMBK tandem, which includes complete victories Telenor (2006), AES arbitration (2010) and annulment proceeding (2012), Emmis (2014) and a complete victory on all claims decided to date in the pending Electrabel arbitration (2012). The award also represents the 20th consecutive positive result obtained by Arnold & Porter for its sovereign clients in investor-State arbitral proceedings.

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