Arnold & Porter Obtains Another Complete Investment Treaty Victory for Republic of Hungary

Washington, DC and London, UK, December 17, 2015 -- Arnold & Porter recently obtained a complete victory for Hungary at the International Centre for Settlement of Investment Disputes (ICSID) in Electrabel SA v Hungary, a case that was originally filed over eight years ago. The award represents the firm's seventh victory for Hungary in a series of investment treaty claims in which its London and Washington, DC offices have been representing the State. It is also the firm's 22nd positive result on behalf of various other States in investment treaty cases.

In an earlier 2012 decision, the Electrabel Tribunal found that Hungary did not breach the Energy Charter Treaty (ECT) in terminating the Power Purchase Agreement (PPA) of Electrabel's Dunamenti Power plant as ordered by the European Commission. In doing so, the Tribunal ruled that EU law is part of the applicable law in an intra-EU Energy Charter Treaty dispute and that, in such a case, EU law must prevail over the ECT in to the extent of any inconsistency. In the most recent award, the Tribunal addressed the one remaining issue in the case, namely whether Hungary breached the fair and equitable treatment standard of the Energy Charter Treaty by failing to compensate Dunamenti's "stranded costs," i.e., investment costs that could not be recovered following termination of Dunamenti's PPA and liberalization of Hungary's electricity market. The Tribunal ruled that no principle of international law required Hungary to compensate "stranded costs" to the maximum possible extent allowed by EU law. The full text of the award is available here.

The Arnold & Porter legal team representing Hungary over the course of the proceedings included Jean Kalicki, Dmitri Evseev, Mara Senn, Luc Gyselen, Peter Nikitin, Bart Wasiak, Mallory Silberman and Csaba Rusznak. The Arnold & Porter team worked in close coordination with Hungarian counsel Dr. János Katona and Dr. Gábor Puskas.