News overview:

Ukraine has won the international investment arbitration dispute upon the claim of AMTO, a company incorporated in Latvia.

It is the first dispute with participation of Ukraine under the Energy Charter Treaty. The arbitration proceedings in the case has lingered for over two years. The dispute was examined pursuant to the Regulations of the Arbitration Institute of the Stockholm Chamber of Commerce by an arbitration tribunal consisting of Mr. Bernardo M. Cremades (Spain) as the Chairman, Mr. Per Runeland (Great Britain) as the arbiter designated by the Claimant and Mr. Christer Soderlund (Sweden) as the arbiter designated by the Respondent. The stated claims of AMTO, which, as the arbitration tribunal has ascertained, was controlled by a Russian citizen, pertained to the alleged violations by Ukraine of its obligations under the Energy Charter Treaty due to allegedly unlawful actions of the Ukrainian courts in the bankruptcy proceedings against State Enterprise “Energoatom”, and due to the actions of SE “Energoatom” in respect of AMTO and Elektroyuzhmontazh-10, a significant part of the shares in which had been purchased by AMTO. The key reason for the dispute between the investor and the State consisted in the difficulties of Elektroyuzhmontazh-10 in recovering the debt, as adjudged by the Ukrainian courts, from SE “Energoatom” under a number of agreements on technical maintenance by Elektroyuzhmontazh-10 of Zaporizhzhya Nuclear Power Plant.

The amount of the stated claims of AMTO had been repeatedly altered in the course of the arbitration proceedings, predominantly towards reduction, and made at length more than EUR 20 million.

On March 26, 2008, the arbitration tribunal rendered a unanimous award, in which award it acknowledged its jurisdiction, in spite of a number of the Respondent’s objections, and dismissed the Respondent’s counterclaim. At the same time, the arbitration tribunal unanimously denied all of the stated claims on the merits of the dispute - regarding violations, as alleged by the Claimant, of Articles 10(1) and 10(12) of the Energy Charter Treaty. The arbitration tribunal also rendered an award to the effect that each of the Parties should independently bear its own legal fees and a half of the arbitration costs, as determined by the Stockholm Arbitration Institute.

It is the fifth completed investment dispute with participation the State of Ukraine under international investment agreements. Three previous disputes upon the claims of investors from the USA were completed in two agreements of the parties of the dispute settlement without monetary compensation on the part of the State (the first cases being J. Lemire Case in 2000 and Western NIS Enterprise Fund Case in 2006). In 2003, Ukraine won its first victory in a dispute upon the claim of the American Company Generation Ukraine, Inc., the claim amount in which was one of the largest in the world history of arbitration disputes exceeding USD 9 billion. In addition, in 2007, Ukraine won its second victory in an ICSID case upon the claim by the Lithuanian Company Tokios Tokeles.

In AMTO Case these were such Ukrainian law offices as “Grischenko & Partners” (S.A.Voytovich, D.I.Grischenko, D.A.Shemelin) and Proxen & Partners (A.G.Alekseyev, O.V.Shevchuk) that acted as legal counsels of the Ministry of Justice of Ukraine. Mannheimer Swartling (Professor Kaj Hobér) and Advokatfirman Svahnström (Sverre B. Svahnström) are the Swedish law firms that acted as the Claimant’s legal counsels.