Parallel ECT and BIT Claims: What is the Rationale?


The following blog post is one of the reasons why I established a blog in the first place. As I was reading the neat UNCTAD report on Recent Developments in Investor-State Dispute Settlement from April 2014 I encountered a list of all known investment arbitrations initiated in 2013 in its Annex on pages 26 and 27. It includes the 6 mammoth photovoltaic cases against the Czech Republic, which were not consolidated into a single arbitration because of the Czechs’ stubbornness. In any case, one of these cases is Antaris Solar GmbH and Dr. Michael Göde v. The Czech Republic and the claimant alleges claims under the Czech Republic/Germany BIT and the Energy Charter Treaty. Similarly, in EVN AG v. Republic of Bulgaria (ICSID Case No. ARB/13/17) the alleged legal instruments are Austria-Bulgaria BIT and the Energy Charter Treaty. This made me think – is it possible to claim a violation of both the Energy Charter Treaty (“ECT”) and a particular BIT in a single arbitration? And consequently, would I object to something like that if I had been the respondent? Here is what I came up with.

I stumbled upon an article from Skadden, where the authors claim that in case where an investment is protected by both the ECT and a particular BIT, the investor can maximize its dispute strategy by invoking both. In their words:

an investor can decide to start proceedings under both treaties and seek to have them heard by the same tribunal.

They add that this has happened in at least two cases so far: Plama v. Bulgaria (Plama Consortium Limited v. Republic of Bulgaria, ICSID Case No. ARB/03/24) and Kardassopoulos v. Georgia (Ioannis Kardassopoulos v. The Republic of Georgia, ICSID Case No. ARB/05/18). In respect of the first one, I believe that claimant only wanted to use the MFN clause to import a more favorable dispute resolution clause containing ICSID and is thus not completely what I am looking for. The second case however – Kardassopoulos v. Georgia – is a different story. Before give a brief summary, Skadden was actually representing the claimants in that case, so their interpretation of parallel/subsidiary claims under the ECT and a particular BIT is not entirely objective.

In any case, as far as I can tell from the awards, the claimants claimed unlawful expropriation under art. 13(1) of the ECT (1), unfair treatment of claimants’ investment under art. 10(1) of the ECT, art. 2(2) of the Georgia/Greece BIT and art. 2(2) of the Georgia/Israel BIT (2) and respective damages for these violations  (3) (Kardassopoulos v. Georgia, Award, par. 66). The tribunal concurred and stated in par. 693 (operative part of the award) that:


  1. The Respondent has unlawfully expropriated Mr. Kardassopoulos’ investment and failed to pay him the compensation due on the taking of his investment, in breach of Article 13(1) of the ECT;
  2. The Respondent has breached the fair and equitable treatment standard applicable to Mr. Fuchs’ investment under Article 2(2) of the Georgia / Israel BIT and failed to pay him the compensation due on the taking of his investment;


Nowhere in the overviews of procedure in the Decision on Jurisdiction or the Award did I find information that Georgia would object to the claimants’ referral to parallel ECT and BIT claims arising out of three different instruments (ECT, Georgia/Greece BIT and later even Georgia/Israel BIT). Therefore, the tribunal did not address this issue at all. I am however positive that Georgia could have objected that a tribunal can be constituted either under the ECT or under the Georgia/Greece BIT, not under both. In fact, art. 26(1,2) of the ECT literally states that a tribunal constituted under the ECT decides

Disputes between a Contracting Party and an Investor of another Contracting Party relating to an Investment of the latter in the Area of the former, which concern an alleged breach of an obligation of the former under Part III shall, if possible, be settled amicably […].

Therefore, such a tribunal can only declare a violation of the ECT. At the same time, no other international legal body is allowed to rule on violations of ECT. Those are at the sole discretion of a tribunal constituted under art. 26 of the ECT. The same goes mutatis mutandis for the Georgia/Greece BIT. It states in art. 9(1,2) that tribunals constituted under this article deal with:

Disputes between an investor of a Contracting Party and the other Contracting Party concerning an obligation of the latter under this Agreement […].

Again, and I could not stress this further, the tribunal only decides violations of the obligation under the Georgia/Greece BIT.

The question for me thus arises – is there a tribunal, which can decide upon violations of the ECT and at the same time on the violations of a particular BIT – parallel ECT and BIT claims? My answer is no because there is no legal basis, from which it can derive its jurisdiction. If it is constituted under art. 26 of the ECT, it decides ECT claims and if it is constituted for example under art. 9 of the Georgia/Greece BIT, it can decide violations under that regulatory regime. I strongly believe that this answer is not undermined by the fact that both instruments provide for similar protection. The reason is simple – a tribunal constituted under the ECT simply cannot legally declare violations of a BIT and vice versa. The only way this could hypothetically function is, in my opinion, if two arbitrations (one ECT and one BIT) were initiated under say, the UNCITRAL Rules and these would later be consolidated based on the agreement of the parties. This agreement would then be the legal basis, from which the tribunal derives its jurisdiction to decide violations of both instruments. Such an agreement cannot just be implied from the respondent’s non-objection to the initial request.

I think that if Georgia had objected against Kardassopoulos’s “double request”, it would have been successful in separating the arbitration into two distinct proceedings. One under the ECT and the other one under the Georgia/Greece BIT. The Czech Republic essentially did the same by separating the photovoltaic claim into six non-consolidated proceedings. The reason was of course not the difference in legal basis but in the different claimants. Nevertheless, I think that the logic applies. Therefore the reason why Georgia did not object in my opinion is that they were not willing to financially withstand two investment arbitrations and were afraid of potential double recovery of damages. However, I do not think that anything like that was in stake. It is clear that both the ECT and the Georgia/Greece BIT offer an almost identical set of substantive standards. And therefore, had there been two arbitrations, Georgia could essentially stop one of them by bringing forth the lis pendens objection.

This brings me to my concluding remark. Why would a claimant invoke both the ECT and a particular BIT provided that both of them offer the same substantive protection and dispute resolution processes? Perhaps someone can answer in the comments.

written by Peter Plachy



  1. Parties bring ECT claims so they can seek consolidation, but also bring under a specific BIT, because the ECT has a tax carve-our and a broad denial-of-benefits clause that may be invoked against them. When it comes to renewable energy producers, some of the measures are akin to taxes and claimants face a serious hurdle to their strongest (FET) claims under the ECT.

  2. Hey Peter, many thanks for shedding some light upon this exigent topic.

    The rationale of instigating parallel ECT and BIT proceedings is rather clear to me, i.e. to maximize the pressure upon the Respondent in order to end up in an amicable settlement agreement. In general, commencement of different proceedings is indeed a very fruitful gambit in field of investment/arbitration proceedings; however, such a separation must be based on different petitum and different causa pretendi.

    If two parallel proceedings would be based upon the same petitum and causa pretendi, the Claimant risks having the arbitral award set aside at its enforcement stage due to the breach of lis pedens doctrine, principle of res judicata and/or violation of due process.

    An Arbitral Tribunal, in my opinion, may not concurrently decide upon violations of the ECT and of an applicable BIT. I believe that, if pleaded/objected properly, the Respondent could easily bifurcate the proceedings which would thereafter result in denial of jurisdiction under the latter instrument.

    However, others may have diverse views upon this.


  3. Parvan, thank you for your clarification. The consolidation makes sense but it still seems to me a bit odd to include two separate “actions” in one statement of claim. For me, it makes more sense to launch arbitration under a one of the instruments and then include the tax carve-out and the denial of benefits clause from the other instrument through the MFN clause. At the end of the day – any claimant can only obtain damages for one violation of FET, not two or three.

    J, I completely agree that one tribunal just cannot decide upon both claims if they are framed in the same way (unless the parties explicitly agree to it- party autonomy is above all). I am happy that I am not alone in this 🙂

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