CYIL 2011

COMMENT ON AWARD ON JURISDICTION IN THE BINDER CASE …

COMMENT ON AWARD ON JURISDICTION IN THE BINDER CASE APPEALED AT CZECH COURTS 1

Vladimír Balaš

Abstract: Comment deals with jurisdictional phase of investment dispute under Treaty concerning the encouragement and reciprocal protection of investments between Federal Republic of Germany and Czech and Slovak Federal Republic, signed at Prague on October 2, 1990 (with protocol and exchange of notes dated 10 January and 13 February 1991), entered into force on August 2, 1992, i.e. 30 days after the exchange of the instrument of ratification, which took place at Bonn on 3 July 1992 in accordance with article 13 (2) (hereinafter BIT) in which German investor Rupert Joseph Binder claimed against the Czech Republic unspecified sum ranging from CZK 2,3 billion to 5 billion (USD 136 mil – to 195 mil) due to damage caused to Mr. Binder’s investment by alleged bullying by Czech Customs Authorities. Such systematic pressure has, according to investor, led to factual liquidation of his business. Author presents brief outline of the facts of the case, followed by commented decision of District Court which is split in two parts, one dealing with claimed termination of Czech-German BIT by accession of the Czech Republic to EU and the other with the issue of dual residency. Last part looks into the decision of the Municipal Court setting aside the decision of the court of first instance. In this part, submissions of parties to the dispute are dealt with, followed by the issue on which the decision of the appellate court is grounded, i.e. Inadmissibility to set aside Award on Jurisdiction under the Czech Law and last issue deals with the view of Appellate Court on the issue of termination of BIT. The District Court decision touches two issues, though, its decision is grounded on one of them only. The first, is the issue of termination of Czech-German BIT by the accession of the Czech Republic to the EU, the second, is the fact that investor as a national of the Czech Republic, permanently residing in Prague, Czech Republic, did not comply with requirements of Czech-German BIT Art. 1(3), under which “the term ‘investor’ refers to an individual having a permanent place of residence in the area covered by this Agreement, or a body corporate having its registered office therein, authorized to make investment” because he could not be considered an investor of the other Contracting Party as it is required in Articles 2, 3, 4 and 5 of BIT. Similarly, as the District Court, Appellate Court seemingly dealt with two issues. As we can see from the reasoning below, Municipal court omitted completely the

1 This article was elaborated as part of the research task of GA ČR 407/09/0760 “International Law of the Investment Protection and Its Impact on the Czech Republic”.

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