"2. When such agreement is absent an investment dispute between the authorized governmental bodies of the Kyrgyz Republic and a foreign investor shall be settled, if possible through consultations between the parties thereto. If the parties thereto cannot come to a peaceful settlement of the dispute during three months from the first written application for such consultations the dispute shall be settled through arbitration in accordance with one of the following procedures:
Regulation of Arbitration Court under the Chamber of Industry and Commerce of the Kyrgyz Republic;
Convention for the settlement of investment disputes between the states and citizens of any other states, ("Convention ICSID" signed in Washington DC on March 19,1965) if applicable;
Arbitration (Auxiliary) regulations of the International Center for the settlement of the investment disputes (ICSID), if applicable;
Arbitration regulations of the Commission of the United Nations Organizations on International Trade Law (UNCITRAL Regulation); in this case the appointing body shall be General Secretary of ICSID.
3. The Kyrgyz Republic in the person authorized governmental body shall consent to the transfer of the investment dispute for the arbitration settlement by virtue of this law. A foreign investor’s agreement may be given at any time through a written application to the State Body effectuating the attraction of investments or at the moment of application to the arbitration."
(i) finding that the Arbitral Tribunal has jurisdiction over the Republic;
(ii) ordering the Republic to pay to Petrobart the principal debt owing under the contract amounting to USD 1,499,143.00;
(iii) ordering the Republic to pay to Petrobart the accrued legal costs for the proceedings in Kyrgyzstan amounting to USD 83,020.00;
(iv) ordering the Republic to pay interest on the above amounts during the following time periods, and at the following rates:
• 15 Feb 99-15 Feb 00 8,125%
• 16 Feb 00-15 Feb 01 9,167%
• 16 Feb 01 - 15 Feb 02 6,386%
• 16 Feb 02-30 Jun 02 4.75%
(v) ordering the Republic to pay Petrobart’s legal fees for the court actions in Kyrgyzstan and these arbitral proceedings in an amount of USD 672,746.00;
(vi) ordering the Republic to pay post-award interest on any amount awarded at an annual rate of 9 per cent.
(i) finding that it has no jurisdiction over the dispute between Petrobart and the Republic; or
(ii) finding that Petrobart suffered no compensable damages; or
(iii) finding that the Republic is indebted to Petrobart in no amount; and
(iv) ordering that Petrobart take nothing and that Petrobart reimburse the Republic for its costs herein expended, amounting to USD 373,527.00.
(i) Petrobart submitted its Notice of Arbitration, dated 2 March 2000
(ii) Petrobart submitted its Statement of Claim, dated 26 March 2001
(iii) The Republic submitted its Statement of Defence, dated 23 May 2001
(iv) Petrobart submitted its Reply to the Statement of Defence, dated 27 June 2001
(v) The Republic submitted its Rejoinder to the Reply to the Statement of Defence, \/ -dated 17 September 2001
(vi) Petrobart submitted written witness statements and expert reports, dated 19 March 2002
(vii) The Republic submitted written witness statements, dated 12 April 2002, 15 April 2002, 3 May 2002 and 5 May 2002
(viii) Petrobart submitted a supplementary brief, dated 1 May 2002
(ix) On 7 - 8 May 2002, the final hearing was held in Stockholm (the "Hearing"). At the Hearing, the parties referred to documentary evidence and relied on testimonies of the following persons:
in the case of Petrobart :
Mr. Ratko Zatezalo, Mr. Josif Todorovski, Mr. Akhmal Saipov
in the case of the Republic:
Mr. Sagynbek Kochetov
At the Hearing the services of court reporters were employed, resulting in daily transcripts from the Hearing (the "Transcripts");
(x) The Republic submitted its Post-Hearing Witness Statements, dated 13 May 2002
(xi) Petrobart submitted its Post-Hearing Exhibits, dated 12 June 2002
(xii) Petrobart submitted its Post-Hearing Brief and Statement of Cost, dated 3 July 2002
(xiii) The Republic submitted its Post-Hearing Brief and Statement of Cost, dated 12 August 2002
Both Parties have had the opportunity to present their respective cases. Such presentations have been made in the written submissions of the Parties and in their oral submissions at the hearing.
"Taking into account the critical financial situation of Kyrgyz Gazmunaizat State JSC and in order to give it a chance to reach an operational stability, I kindly request you to show understanding for the current situation and assist in granting a deferral for the enforcement of the decision taken by the Arbitration Court of Bishkek City."
"An investment can be either the asset that one invests (or "contributes") or the asset that one obtains by making such a contribution. Money, for example, which is an investment under the FIL, is an asset that is itself invested, whereas property rights, rights under contracts and rights to activity based on State licenses, which are also investments under the FIL, are not assets that are "contributed" into Kyrgyz entities but rather are assets that are acquired through investment in Kyrgyzstan, and which are to be protected by the FIL".
"... the only limitation sought in defining what would constitute a "Foreign Investment" under the New FIL was to ensure that the category of protected investments was limited to contributions in the Kyrgyz Republic, i.e. assets properly within the territory of the Kyrgyz Republic."
"Upon the signing of this Contract, all previous relations and correspondence between the Parties in relation to this matter shall be null and void."
"[...] your difficulties for payments for gas condensate will not effect our plans for long term cooperation. [...] With this letter we would like to confirm our readiness to continue our business relations in the directions which we already agreed on our meetings in Tashkent in February.[...] When your payments will be effected we are ready to step further and buy shares from your Refinery in Kant as you proposed to us in Tashkent."
"No legislative act of the Kyrgyz Republic worsening the legal regime of foreign investors established by this Law shall not [sic] be retroactive."
"If a foreign investor has incurred losses as a result of activity or inactivity of the Kyrgyz Republic’s officials and such activities contradict the legislation of the Kyrgyz Republic or norms of international law, the foreign investor has the right to compensation in accordance with the provisions of Article 5 of this Law."
"... execution of a court judgment is permitted up until the moment that the specific moratorium in the Civil Code Article 103 (or LOB Article 22) applies on "commencement". I understand that the parties do not dispute that the commencement of bankruptcy occurred only after the asset transfers."
• 15 Feb 99-15 Feb 00 8,125%
• 16 Feb 00-15 Feb 01 9,167%
• 16 Feb 01-15 Feb 02 6,386%
• 16 Feb 02-30 Jun 02 4.75%
"Foreign Investment - a long-term tangible or intangible investment into objects of economic activity to realize a profit in the forms of envisaged by the legislation of the Kyrgyz Republic: money, movable and immovable property, property rights, shares and other forms of participation in a legal entity, profits or revenues derived from foreign investments, [and] concessions based on the law, that is a contribution with the aim of gaining income into any enterprise into socioeconomic programs, into innovation projects etc."
"A civil law transaction between two business entities in respect of supplying goods (services) where the purchaser is obliged to pay for the supplied goods (services) does not fall under the definition of foreign investment."
"This is so because the Claimant knew that KGM was insolvent at the time Claimant effected its seizure of KGM’s assets [...] and as such, the seizure of KGM’s assets as of that time was subject to avoidance by a Special Administrator. Rule 6.3.2 of the Bankruptcy Rules [...] unambiguously sets forth the degree of knowledge of insolvency on the part of a creditor such as Claimant that activates the prohibition set forth in Article 21 of the Bankruptcy Law."
"FOREIGN INVESTOR means: [...] any legal entity which is either: founded or registered in accordance with the legislation of a foreign state; or [...]."
"INVESTMENTS mean tangible and non tangible assets, in particular; money; moveable and immovable property; property rights (mortgages, liens, pledges and others); stock and other forms of participation in a legal entity; bonds and other debenture liabilities; rights (claims) to money, goods services and any other claims to performance under a contract; right to intellectual property including goodwill, copyrights, patents. Trade marks, industrial designs, technological processes, trade names, and know-how; any right to activity based on a license or in other form given by State agencies; concessions based on Law including concessions for search, development, mining or exploitation of natural resources; profit from investment and re-invested on the territory of the Kyrgyz Republic.
A form in which a property is invested, or change of this form does not influence its nature as investments."
"The parties shall be jointly and severally liable to pay reasonable compensation to the arbitrators for work and expenses. However, where the arbitrators have stated in the arbitral award that they lack jurisdiction to try the dispute, the party that did not request arbitration shall be liable to pay only to the extent that special circumstances so require."
Petrobart Limited USD 50,000 12 March 2001
USD 50,000 27 March 2001
USD 50,000 4 September 2002
The Kyrgyz Republic USD 50,000 25 October 2002
Interest USD 31,5 04
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