ICSID Case No. ARB/15/28
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INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES In the arbitration proceeding between HYDRO S.R.L. COSTRUZIONI S.R.L. FRANCESCO BECCHETTI MAURO DE RENZIS STEFANIA GRIGOLON LILIANA CONDOMITTI Claimants and REPUBLIC OF ALBANIA Respondent ICSID Case No. ARB/15/28 AWARD Members of the Tribunal Dr. Michael C. Pryles, President Mr. Ian Glick QC, Arbitrator Dr. Charles Poncet, Arbitrator Secretary of the Tribunal Mr. Francisco Abriani Assistant to the Tribunal Mr. Timothy Maxwell Date of dispatch to the Parties: 24 April 2019 REPRESENTATION OF THE PARTIES Representing Hydro S.r.l. and others: Representing Republic of Albania: Mr. Philippe Pinsolle Mr. Artur Metani - State Advocate General Mr. Alexander G. Leventhal Ms. Brunilda Lilo - Head of Arbitration Office Quinn Emanuel Urquhart & Sullivan UK LLP State Advocate General 6, rue Lamennais State Advocacy Office 75008 Paris, France Ministry of Justice and Blv Zogu I Dr. Tai-Heng Cheng Tirana, Albania Quinn Emanuel Urquhart & Sullivan LLP and 51 Madison Avenue, 22nd Floor Mr. Michael Darowski New York, NY 10010, U.S.A. Ms. Karen O’Connell and Ms. Anna Packwood Mr. Alexandre de Fontmichel Gowling WLG (UK) LLP Avocat à la Cour 4 More London Riverside 2, rue Lord Byron London SE1 2AU 75008 Paris, France United Kingdom and and Prof. Andrea Saccucci Mr. Siddharth Dhar Saccucci Fares & Partners Studio Legale Mr. Peter Webster Internazionale Mr. Felix Wardle Via Lisbona, 9 Essex Court Chambers I-00198 Rome, Italy 24 Lincoln's Inn Fields and London WC2A 3EG Mr. David Rivkin United Kingdom Ms. Catherine Amirfar Mr. Christopher K. Tahbaz Ms. Ina C. Popova Mr. Romain Zamour Debevoise & Plimpton LLP 919 Third Avenue New York, NY 10022, U.S.A. i TABLE OF CONTENTS REPRESENTATION OF THE PARTIES ...................................................................................... I TABLE OF CONTENTS ................................................................................................................ II FREQUENTLY USED ABBREVIATIONS AND DEFINED TERMS................................... VIII INTRODUCTION ................................................................................................................. 1 THE PARTIES....................................................................................................................... 2 The Claimants ................................................................................................................. 2 Hydro Srl ................................................................................................................. 2 Costruzioni Srl ........................................................................................................ 3 Francesco Becchetti ................................................................................................ 5 Mauro De Renzis .................................................................................................... 5 Stefania Grigolon .................................................................................................... 6 Liliana Condomitti .................................................................................................. 6 The Respondent .............................................................................................................. 7 PROCEDURAL HISTORY................................................................................................... 7 FACTUAL BACKGROUND .............................................................................................. 30 The Kalivaç Concession Agreement ............................................................................ 30 Terms of the original Concession Agreement ...................................................... 31 Implementation of the Concession Agreement and further Vjosa River projects 36 Albaniabeg’s Waste Management Concession ............................................................ 39 Deutsche Bank Joint Venture and the Second Addendum ........................................... 40 Terms of the Second Addendum........................................................................... 41 Decision No. 363 Approving the Second Addendum ........................................... 44 Expressions of interest in developing other plants ............................................... 44 The Kalivaç Project from 2007 to 2013 ....................................................................... 45 Work on the Project .............................................................................................. 45 Application for permission to build a submarine cable ........................................ 46 Funding for the Project and disputes with Deutsche Bank ................................... 46 a. Shareholder loan and political insurance ....................................................... 46 b. Disputes with Deutsche Bank ........................................................................ 47 c. Albania’s communications regarding funding obligations ........................... 52 Communications with the Albanian authorities about other aspects of the Project 53 ii a. Environmental permit .................................................................................... 53 b. Expropriation ................................................................................................. 53 c. Flooding ......................................................................................................... 55 Application to develop a wind farm ............................................................................. 56 The end of the Kalivaç Project ..................................................................................... 56 Commencement of Digital Broadcasting and the Creation of Agonset ....................... 58 The historical Albanian television market and broadcasting regulation ............... 58 a. The development of a commercial market .................................................... 58 b. The start of the change to digital broadcasting .............................................. 60 Establishment of Agonset ..................................................................................... 61 The 2013 Media Law ............................................................................................ 63 The Launch of Agonset ......................................................................................... 65 Allocation of Digital Licenses and the Development of Agonset ................................ 66 Introduction of the 2013 beauty contest regulation .............................................. 66 Challenges to the validity of the Contest Regulation............................................ 68 Change of national government and of the composition of the AMA .................. 69 Development of Agonset in 2014 and 2015 ......................................................... 71 a. Agon Channel Albania .................................................................................. 71 b. Agon Italy ...................................................................................................... 72 The 2015 Contest Regulation and awarding of licenses ....................................... 73 The Tax Authorities’ Treatment of the Claimants and Agonset .................................. 75 KGE’s VAT refunds ............................................................................................. 75 Tax Audit 8159 of KGE ........................................................................................ 77 a. Process ........................................................................................................... 77 b. Findings: alleged alteration of invoices and other documents ...................... 78 c. Findings: alleged failure to comply with the “tax representative rule” ......... 79 d. KGE’s appeal ................................................................................................ 80 Energji’s tax set-off with KGE ............................................................................. 80 Customs exemptions ............................................................................................. 82 2013 Audit of Agonset .......................................................................................... 83 Investigation of Cable System and 400 KV .......................................................... 84 The Claimants’ initial response ............................................................................ 84 Audit 3525 of Energji ........................................................................................... 86 iii Refusal of Agonset’s Application for VAT Exemptions ...................................... 87 Cable System audit ............................................................................................... 89 Further audits of KGE and Energji ....................................................................... 89 The criminal investigation ............................................................................................ 90 The first allegations of money laundering ............................................................ 90 Orders for document production ........................................................................... 90 International letters rogatory ................................................................................. 93 Prosecution of Mr. Becchetti for incident at Tirana Airport ................................. 94 Expert investigations