UP and CD Holding Internationale V. Hungary
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INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES UP and C.D Holding Internationale v. Hungary (ICSID Case No. ARB/13/35) AWARD Members of the Tribunal Professor Dr. Karl-Heinz Böckstiegel, President of the Tribunal The Honourable L. Yves Fortier PC CC OQ QC, Arbitrator Sir Daniel Bethlehem KCMG QC, Arbitrator Secretary of the Tribunal Mr. Francisco Abriani Assistant of the Tribunal Dr. Katherine Simpson Date of dispatch to the Parties: 9 October 2018 Table of Contents (Page Numbers) REPRESENTATION OF THE PARTIES ........................................................................................ VI FREQUENTLY USED ABBREVIATIONS AND ACRONYMS ................................................. VII DRAMATIS PERSONAE ................................................................................................................... IX I. INTRODUCTION ....................................................................................................................... 1 A. THE DISPUTE ........................................................................................................................... 1 B. THE TRIBUNAL’S TERMINOLOGY AND REASONING ............................................................. 1 II. THE ARBITRAL TRIBUNAL .................................................................................................. 2 III. PROCEDURAL HISTORY ....................................................................................................... 3 IV. THE PARTIES’ REQUESTS .................................................................................................. 12 A. CLAIMANTS’ REQUESTS ........................................................................................................ 12 B. RESPONDENT’S REQUESTS .................................................................................................... 13 V. STATEMENT OF FACTS ....................................................................................................... 14 A. SUMMARY OF THE FACTS ..................................................................................................... 14 B. FACTUAL ASSERTIONS IN RESPONSE TO TRIBUNAL QUESTIONS ....................................... 33 1. Tribunal Question (f) Regarding the Applicable Tax Rates .................................. 33 (a) Claimants’ Arguments ......................................................................................... 33 (b) Respondent’s Arguments ..................................................................................... 34 (c) The Tribunal’s Considerations ............................................................................ 35 2. Tribunal Question (h) Regarding Evidence Anticipating Changes to the Meal Fringe Benefit System in 2011 .................................................................................. 35 (a) Claimants’ Arguments ......................................................................................... 35 (b) Respondent’s Arguments ..................................................................................... 37 (c) The Tribunal’s Considerations ............................................................................ 39 3. Tribunal Question (i) Regarding Tax Rates on Wages / Salaries vs. Fringe Benefits........................................................................................................................ 40 (a) Claimants’ Arguments ......................................................................................... 40 (b) Respondent’s Arguments ..................................................................................... 40 (c) The Tribunal’s Considerations ............................................................................ 41 VI. JURISDICTION OF THE TRIBUNAL .................................................................................. 41 A. THE DECISION ON PRELIMINARY ISSUES OF JURISDICTION .............................................. 41 B. THE PARTIES’ SUBMISSIONS REGARDING THE ACHMEA DECISION .................................. 42 1. Claimants’ Arguments .............................................................................................. 42 (a) Procedural Objections and Due Process ............................................................. 43 (b) The Relevance of the Achmea Decision ............................................................... 43 (c) Whether Restraint from Jurisdiction Results in Denial of Justice ................... 50 (d) Application of the Forum Prorogatum Principle ................................................ 52 ICSID Case No. ARB/13/35 Page ii 2. Respondent’s Arguments .......................................................................................... 53 (a) Procedural Objections and Due Process ............................................................. 54 (b) The Relevance of the Achmea Decision ............................................................... 54 (c) Whether Restraint from Jurisdiction Results in Denial of Justice ................... 60 (d) Application of the Forum Prorogatum Principle ................................................ 62 3. The Tribunal’s Considerations and Conclusions .................................................... 63 C. TRIBUNAL QUESTION (E) REGARDING OTHER RELEVANT ISSUES IN EU LAW ................ 66 1. Claimants’ Arguments .............................................................................................. 66 2. Respondent’s Arguments .......................................................................................... 67 3. The Tribunal’s Considerations and Conclusions .................................................... 69 VII. APPLICABLE LAW ................................................................................................................ 69 A. RELEVANT TERMS OF THE BIT ............................................................................................ 69 B. ARGUMENTS RELATED TO THE RELEVANCE OF OTHER DECISIONS AND PARTICULARLY THE EDENRED AWARD .......................................................................................................... 70 1. Claimants’ Arguments .............................................................................................. 70 2. Respondent’s Arguments .......................................................................................... 71 3. Tribunal Considerations and Conclusions .............................................................. 72 VIII. RESPONDENT’S LIABILITY PURSUANT TO THE TREATY ....................................... 72 A. EXPROPRIATION / DISPOSSESSION (ART. 5(2) OF THE BIT) ............................................... 72 1. The Existence of a Right Capable of Expropriation / A Vested Right .................. 72 (a) Claimants’ Arguments ......................................................................................... 72 (b) Respondent’s Arguments ..................................................................................... 74 (c) Tribunal Considerations and Conclusions ......................................................... 77 2. Indirect Expropriation / The Existence of a Substantial Dispossession ................ 79 (a) Claimants’ Arguments ......................................................................................... 79 (b) Respondent’s Arguments ..................................................................................... 84 (c) Tribunal Considerations and Conclusions ......................................................... 92 3. The Lawfulness of the Alleged Expropriation ......................................................... 98 (a) Claimants’ Arguments ......................................................................................... 98 (i) Existence of a Public Purpose and Tribunal’s Question (k) Regarding Social or other Reasons for Reform ......................................................... 100 (ii) Proportionality and the Effect of the Measure ........................................ 102 (iii) Discrimination ............................................................................................ 104 (iv) Due Process ................................................................................................. 105 (v) Duty to Compensate ................................................................................... 106 (b) Respondent’s Arguments ................................................................................... 106 ICSID Case No. ARB/13/35 Page iii (i) Existence of a Public Purpose and Tribunal’s Question (k) Regarding Social or other Reasons for Reform ......................................................... 108 (ii) Proportionality and the Effect of the Measures ...................................... 111 (iii) Discrimination ............................................................................................ 115 (iv) Due Process ................................................................................................. 116 (v) Duty to Compensate ................................................................................... 117 (c) Tribunal Considerations and Conclusions ....................................................... 118 B. FAIR AND EQUITABLE TREATMENT (ART. 3 OF THE BIT) ................................................ 120 1. The Legal Standard ................................................................................................. 120 (a) Claimants’ Arguments ......................................................................................