Decision on Jurisdiction
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INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES In the arbitration proceeding between MABCO CONSTRUCTIONS SA Claimant and REPUBLIC OF KOSOVO Respondent ICSID Case No. ARB/17/25 DECISION ON JURISDICTION Members of the Tribunal Professor George A. Bermann, President Mr. Gianrocco Ferraro, Arbitrator Professor Dr. August Reinisch, Arbitrator Secretary of the Tribunal Mr. Francisco Abriani Date of dispatch to the Parties: 30 October 2020 REPRESENTATION OF THE PARTIES Representing Mabco Constructions SA: Representing the Republic of Kosovo: Dr. iur. Christian Schmid MCL Dr. Philipp Wagner Rechtsanwalt / Attorney at Law Dr. Florian Dupuy Uraniastr. 11 Mr. Petrit Elshani 8001 Zürich WAGNER Arbitration Switzerland Hegelplatz 1 10117 Berlin and Germany Ms. Liv Bahner and Ms. Sandra De Vito Bieri Bratschi Ltd. Mr. Qemajl Marmullakaj Bahnhofstrasse 70 Mr. Sami Istrefi 8021 Zürich Mrs. Fëllënza Limani Switzerland Republic of Kosovo Ministry of Justice State Advocacy Office 1sh Pallati 1 Meiava “Rilindja” 10 000 Pristina Republic of Kosovo i TABLE OF CONTENTS I. PROCEDURAL HISTORY ............................................................................................ 1 II. FACTUAL BACKGROUND ........................................................................................ 20 A. Central entities and individuals involved in the dispute............................................ 21 (1) Grand Hotel .................................................................................................... 21 (2) The Privatization Agency of Kosovo ............................................................... 22 (3) Mabco Constructions, S.A. .............................................................................. 22 (4) Mabetex Group Switzerland ............................................................................ 22 (5) Mr. Behgjet Pacolli ......................................................................................... 23 (6) Mr. Selim Pacolli ............................................................................................ 23 (7) Unio Commerce - UTC ................................................................................... 23 (8) Mr. Zelqif Berisha........................................................................................... 24 (9) NTSH Eurokoha-Reisen .................................................................................. 24 (10) Mr. Remzi Ejupi ............................................................................................. 24 (11) Mr. Ahmet Shala............................................................................................. 24 (12) Mr. Shkelzen Lluka......................................................................................... 24 (13) Mr. Naser Osmani ........................................................................................... 24 B. Privatization and the tender of shares in the Grand Hotel ......................................... 24 C. Agreement among Co-Owners................................................................................ 25 D. Transfer of capital .................................................................................................. 27 E. Purchase Agreement .............................................................................................. 29 F. Agreement of Good Understanding......................................................................... 30 H. Legal proceedings in Kosovo.................................................................................. 43 III. STATEMENT OF CLAIM............................................................................................ 45 A. Claimant’s investment under the BIT and the Foreign Investment Law .................... 48 (1) “Investment” within the meaning of the BIT .................................................... 48 (2) “Investment” within the meaning of the Kosovo Foreign Investment Law ......... 50 B. Claimant’s investment under the ICSID Convention................................................ 52 IV. STATEMENT OF DEFENSE ....................................................................................... 53 A. The claim does not arise out of or relate to an investment in Kosovo........................ 56 (1) Claimant never held any assets relating to the Grand Hotel ............................... 56 ii (2) Claimant’s payment of EUR 4m does not constitute evidence of an investment on Claimant’s part ............................................................................................... 90 (3) Claimant did not become an owner of shares by virtue of the AGU................... 99 (4) Claimant did not become an owner of shares by virtue of the Annex Agreement 103 B. Claimant is not a foreign investor ......................................................................... 105 (1) Claimant is not an investor ............................................................................ 105 (2) Even if Claimant were an investor, it was not a foreign investor ..................... 107 C. Even If Claimant had made an investment in Kosovo, it does not constitute a “Protected Investment”......................................................................................... 110 (1) The alleged investment was not made in accordance with domestic law .......... 110 (2) The alleged investment would not contribute to the economic development of Kosovo ......................................................................................................... 116 D. Kosovo has not given its consent to arbitrate the present dispute ............................ 118 (1) Claimant failed to present an “investment dispute,” as required by both the BIT and the Foreign Investment Law .................................................................... 118 (2) Claimant failed to comply with the BIT’s and Foreign Investment Law’s election of remedies clause. ........................................................................................ 119 (3) Claimant failed to satisfy the BIT’s and the Foreign Investment Law’s requirement of prior consultation ................................................................... 125 E. The Tribunal lacks jurisdiction ratione temporis ................................................... 129 (1) Respondent’s Position ................................................................................... 129 (2) Claimant’s Position ....................................................................................... 130 (3) The Tribunal’s Analysis and Findings ............................................................ 132 F. The claim falls outside the scope and purpose of the ICSID Convention ................ 138 (1) The claim is at variance with the purposes of the ICSID Convention............... 138 (2) Mr. Pacolli’s involvement in this proceeding constitutes double-hatting and is procedurally unfair ........................................................................................ 140 G. Claimant has failed to establish a prima facie cause of action ................................ 143 (1) Respondent’s Position ................................................................................... 143 (2) Claimant’s Position ....................................................................................... 144 (3) The Tribunal’s Analysis and Findings ............................................................ 145 V. CONCLUSION .......................................................................................................... 146 VI. COSTS ....................................................................................................................... 147 A. Claimant’s Cost Submissions ............................................................................... 147 iii B. Respondent’s Cost Submissions ........................................................................... 148 C. The Tribunal’s Decision on Costs ......................................................................... 149 VII. DECISION ................................................................................................................. 149 iv TABLE OF SELECTED ABBREVIATIONS/DEFINED TERMS AGU Agreement of Good Understanding Annex Agreement to the AGU dated 28 March Annex Agreement 2012 Kosovo’s Preliminary Objections under Rule Application 41(5) dated 18 December 2017 ICSID Rules of Procedure for Arbitration Arbitration Rules Proceedings 2006 Agreement between the Swiss Confederation and the Republic of Kosovo on the Promotion BIT and Reciprocal Protection of Investments, which entered into force on 13 June 2012 C-[#] Claimant’s Exhibit CL-[#] Claimant’s Legal Authority Claimant’s Post Hearing Brief dated 17 Cl. post-hearing br. February 2020 Claimant’s letter supplementing the Request Cl. Supp. to RfA dated 16 June 2017 Commitment agreement among Mr. Berisha on behalf of UTC, KTA on behalf of SOE Sloga Commitment Agreement and the Grand Hotel LLC attached to the Purchase Agreement Counter-Memorial or Cl. Counter-Mem. on Claimant’s Counter-Memorial on Jurisdiction Jurisd. and Admissibility dated 14 May 2019 Grand Hotel Grand Hotel L.L.C. Hearing on Jurisdiction and Admissibility Hearing held on 23 January 2020 Convention on the Settlement of Investment ICSID Convention Disputes Between States and Nationals of Other States dated 18 March 1965 v International Centre for Settlement of ICSID or the Centre Investment Disputes KTA Kosovo Trust Agency Mabetex Mabetex Group