International Centre for Settlement of Investment Disputes

International Centre for Settlement of Investment Disputes

International Centre for Settlement of Investment Disputes IOAN MICULA, VIOREL MICULA, S.C. EUROPEAN FOOD S.A., S.C. STARMILL S.R.L. AND S.C. MULTIPACK S.R.L. CLAIMANTS v. ROMANIA RESPONDENT ICSID Case No. ARB/05/20 ___________________________________________________________ AWARD ____________________________________________________________________________ Rendered by an Arbitral Tribunal composed of: Dr. Laurent Lévy, President Dr. Stanimir A. Alexandrov, Arbitrator Prof. Georges Abi-Saab, Arbitrator Secretary of the Tribunal Ms. Martina Polasek Assistant to the Tribunal Ms. Sabina Sacco Date of Dispatch to the Parties: 11 December 2013 TABLE OF CONTENTS I. INTRODUCTION ................................................................................................................................... 9 A. OVERVIEW OF THE DISPUTE .............................................................................................................. 9 B. THE PARTIES ................................................................................................................................... 9 1. The Claimants ......................................................................................................................................... 9 2. The Respondent.................................................................................................................................... 10 II. PROCEDURAL HISTORY .................................................................................................................. 11 A. INITIAL PHASE ................................................................................................................................ 11 B. THE JURISDICTIONAL PHASE .......................................................................................................... 12 C. THE MERITS PHASE ........................................................................................................................ 12 1. Initial procedural steps .......................................................................................................................... 12 2. The written phase on the merits ............................................................................................................ 13 3. Procedural steps predating the hearing on the merits ........................................................................... 24 4. The hearing on the merits and quantum ............................................................................................... 25 5. Procedural matters following the hearing .............................................................................................. 28 a. The Claimants’ Applications for Provisional Measures and the Respondent’s Application for Revocation of Provisional Measures ............................................................................................... 28 b. The Claimants’ Renewed Application for a Site Visit ....................................................................... 35 c. The Claimants’ Revised Request for Relief ..................................................................................... 36 d. Post-hearing briefs and oral closing arguments .............................................................................. 36 e. Closure of the Proceeding and Submissions on Costs .................................................................... 38 III. FACTUAL BACKGROUND ................................................................................................................ 40 A. OVERVIEW ..................................................................................................................................... 40 B. LEGAL FRAMEWORK FOR THE DISFAVORED REGIONS ...................................................................... 41 1. Romania’s efforts to attract investment in the early 1990s .................................................................... 41 2. EGO 24/1998 ........................................................................................................................................ 42 3. Government Decision 194/1999 and the 1999 Methodological Norms ................................................. 45 C. THE CLAIMANTS’ INVESTMENTS ...................................................................................................... 47 1. The Claimants’ initial investments in reliance on previous incentive regimes ....................................... 47 2. The Claimants’ investments in reliance on the EGO 24 incentives ....................................................... 49 3. Permanent Investor Certificates ............................................................................................................ 51 D. ROMANIA’S ACCESSION PROCESS .................................................................................................. 52 1. Early steps: the Europe Agreement and Romania’s application for EU membership ............................ 52 2. Romania’s initial efforts to align its state aid laws ................................................................................. 57 3. Romania and the EU begin formal accession negotiations ................................................................... 62 4. The Decision of the Romanian Competition Council and amendments to the EGO 24 regime ............. 62 5. Romania’s progress towards accession in the period 2000-2001 ......................................................... 64 6. Further amendments to the EGO 24 Regime (2000-2001) ................................................................... 69 7. Parallel developments in the EU and EGO 24 fronts (2002) ................................................................. 70 8. Events leading up to the revocation of EGO 24 .................................................................................... 72 9. Subsequent events ............................................................................................................................... 76 IV. SUMMARY OF THE PARTIES’ POSITIONS ...................................................................................... 77 2 A. THE CLAIMANTS’ POSITION ............................................................................................................. 77 B. THE RESPONDENT’S POSITION ........................................................................................................ 82 V. PRELIMINARY MATTERS .................................................................................................................. 86 A. THE TRIBUNAL’S JURISDICTION....................................................................................................... 86 B. APPLICABLE LAW........................................................................................................................... 87 1. The Claimants' position ......................................................................................................................... 88 a. There is no conflict of treaties, and even if there were, the BIT should prevail ................................ 88 b. Romania’s interpretation of the provisions of the BIT is flawed ....................................................... 89 c. EU law requirements would not justify or excuse breaches of the BIT or international law ............. 89 2. The Respondent's position .................................................................................................................... 91 a. The BIT must be interpreted consistently with EU law..................................................................... 91 b. In any event, the Contracting Parties to the BIT intended European law to prevail ......................... 92 c. EU law is relevant to the determination of wrongfulness ................................................................. 93 3. The Commission’s position ................................................................................................................... 93 4. The Tribunal's analysis.......................................................................................................................... 93 C. THE ENFORCEMENT OF THE ARBITRAL AWARD AND EU LAW ........................................................... 95 1. The Respondent's position .................................................................................................................... 96 2. The European Commission's position ................................................................................................... 96 3. The Claimants' position ......................................................................................................................... 97 4. The Tribunal’s analysis ......................................................................................................................... 97 VI. ANALYSIS OF THE CLAIMANTS’ TREATY CLAIMS ....................................................................... 99 A. UMBRELLA CLAUSE ....................................................................................................................... 99 1. The Claimants’ position ......................................................................................................................... 99 a. Nature and scope of the BIT’s umbrella clause ............................................................................... 99 b. The EGO 24 regime gave rise to a specific obligation vis-à-vis the Claimants .............................

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