CYIL 2011

TOMÁŠ FECÁK CYIL 2 ȍ2011Ȏ with original EU Member States concluded in the early 1990’s. The most likely explanation is that at that time the Czech Republic was more or less accepting the models put forward by its stronger and more experienced counterparties. However, the differences are not substantial here – these agreements are mostly based on the European model of a BIT as is the Czech model. Apart from specific wording, substantial differences concern mainly the protection of indirect investors, the presence of umbrella clauses and a more vague formulation of the obligations to be found in some of these agreements. When comparing the texts of various BITs currently in force, it seems that the Czech model has not changed much since the BIT with Hungary was approved as the first model and the differences are to be found only in some details and in the “EU” clauses that will be discussed below. It is also interesting to observe that since the Czech Republic developed its own model, it has apparently been able to negotiate a significant number of BITs based thereon, many of the agreements showing a considerable degree of similarity. 3. Investment disputes against the Czech Republic Contrary to any expectations that may have been associated with the early 1990’s BITs at the time of their conclusion, the Czech Republic has since then become one of the world’s leaders in the number of investment disputes initiated by investors against a host state. According to a report published by UNCTAD, by the end of 2010 the Czech Republic had been a defendant in 18 investment disputes, ranking the country at the 3 rd position worldwide, behind only Argentina and Mexico. 11 Taking other Central European countries with a similar economic and political position as a reference, Poland had been during the same period party to 11 disputes, while Hungary and Slovakia to 6 disputes each. 12 It is estimated that the Czech Republic has so far paid to investors an amount of around CZK 15 billion (approximately EUR 600 million at today’s exchange rate) as either compensation awarded by investment tribunals or under settlement agreements bringing an end to already started proceedings, with related legal fees and expenses. One may ask what the reasons behind these statistics are – why is the number of investment disputes the Czech Republic had to face one of the highest in the world and why is it considerably higher in comparison with other Central European countries? An in-depth analysis of each investment dispute would greatly exceed the scope of this article. It would also be limited factually as a considerable number of awards remains undisclosed to the public and the authorities are pursuing a restrictive information policy. Therefore, the cases will be only shortly overviewed. Two cases, which gave basis to three separate arbitration proceedings, seem to be a particularly important part of the Czech experience and should be mentioned here. The first case concerns the investment of the Dutch company CME Czech Republic N.V. 11 UNCTAD: Latest Developments in Investor– State Dispute Settlement. IIA Issues Note, N° 1, March 2011. For an overview of investment disputes against the Czech Republic, see Annex 2 to this article. 12 ibid.

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