Author

Ms Lorraine de Germiny

Counsel - LALIVE

Editors
See all

Complete and Unconditional Legal Protection

I. Introduction

1.

Certain investment treaties guarantee “complete and unconditional legal protection” to qualifying investments. For instance, Article 2(2) of the Russia-Ukraine BIT provides: “Each of the Contracting Parties guarantees in accordance with its legislation the complete and unconditional legal protection of investments made by investors of the other Contracting Party.”

II. Treaty practice

III. Relationship with other standards of protection

3.

The assurance of “complete and unconditional legal protection” to qualifying investments often co-exists within a given treaty with that of fair and equitable treatment.2

IV. Interpretation by arbitral tribunals

4.

The notion of “complete and unconditional legal protection” appears to have surfaced in only two (publicly available) investment arbitration awards.

5.

In Bogdanov v. Moldova, a Russian investor and owner of a company importing and exporting chemicals out of Moldova argued that Moldova had breached the Russia-Moldova BIT by improperly requiring the company to pay additional customs duties and fees.3 He argued that the change in law was contrary to statutory stabilization clauses and that the respondent had thus failed to provide his investments with complete and unconditional legal protection.4 In his 2010 award, the Sole Arbitrator agreed.5 He further held that the respondent had failed to provide the foreign investor with fair, equitable, and non-discriminatory treatment.6 In this short (22-page) award, the Sole Arbitrator did not, however, comment on the meaning and scope of the phrase “complete and unconditional legal protection.” Nor did he comment on the relationship between that standard of protection and that of fair and equitable treatment.

6.

In the 2014 award in OAO Tatneft v. Ukraine, the tribunal deemed the analysis of claims relating to those two standards of protection as “inseparable.” The claimant had argued that Ukraine had failed to provide the claimant’s investments with complete and unconditional legal protection through various acts and omissions of different State entities, including those of State courts and prosecutors.7 The tribunal found that while “there [we]re no grounds for a finding of denial of justice,” compliance with “the BIT standards … is open to greater doubt as there are elements of the factual record that could lead in the direction of a breach as far as the compliance with domestic law is concerned, but not so in respect of the effective means standard as the court system has been generally available...”8 The tribunal, however, cut short this discussion by noting that it was “inseparable” from the discussion concerning the fair and equitable treatment standard, which it concluded had been breached.

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