CYIL vol. 14 (2023)

NIKOLA KURKOVÁ KLÍMOVÁ CYIL 14 (2023) result in permanent dispossession of property, their potential reversibility is a frequently invoked defence by respondent States in the arbitral proceedings. The limited duration does not, nevertheless, represent per se a bar for establishing indirect expropriation because even temporary measures can have such effects where their impact on investment is significant. 37 Generally, the longer freezing and seizure orders persist, the more likely they would severely affect the economic viability of investment projects and decrease the value of assets. In PACC Offshore Services , the tribunal thus dismissed an expropriation claim brought by a Singaporean investor in relation to criminal investigations launched against a Mexican marine charterer for alleged money laundering and fraud during which Mexican authorities issued a detention order seizing vessels provided by the claimant. 38 Noting that the sequestration of vessels lasted only four to five months and was never intended to be permanent, the arbitrators concluded that the measure was not equivalent to expropriation but at the same time admitted that its adoption was arbitrary and unfair. 39 As a result, the tribunal awarded the claimant damages for a breach of the FET standard in the Mexico-Singapore BIT. 40 The aspect of time tends to be arguably more sidelined where temporary impairment of rights to exploit freely assets turns into their complete deprivation. While confiscation amounts by itself to direct taking of assets, its gradual crystallization through freezing and seizure of such assets does not necessarily need to fall completely out of the scope of arbitral review. In an unpublished award, the tribunal in Hydro , for instance, assessed the effects of seizure of investors’ holdings in several companies by Albania that was pursued in the context of extensive tax audits and criminal investigations for alleged financial crimes. 41 Although the tribunal noted that one of such companies, operating broadcasting media, had already substantially lost its value by a series of acts taken by Albanian authorities, it still examined the effects of seizure decisions in the criminal proceedings, arguing that they also contributed to practical destruction of the claimants’ investment and the company’s downfall. 42 Since expropriation clauses are firmly embedded in IIAs, tribunals’ discussions of similar State measures are predominantly guided by rules of public international law rather than domestic law. While arbitrators are largely prone to be deferential to the enforcement of criminal norms by local authorities, such rules can also become relevant as applicable law in the arbitral proceedings where they define strict time limits for lawful restraints on individuals’ property rights. Their violation was intensely criticized in the Valeri Belokon arbitration where the claimant, a Latvian businessman who had acquired through a tendering process shares in the Kyrgyz Manas Bank, filed for damages following a temporary forceful takeover of the 37 S.D. Myers, Inc. v. Government of Canada , UNCITRAL, Partial Award, 13 November 2000, paras. 283–284; LG& E v. Argentina , paras. 193 and 200; Olin Holdings Ltd v. Libya , ICC Case No. 20355/MCP, Final Award, 25 May 2018, para. 165. 38 PACC Offshore Services Holdings v United Mexican States , ICSID Case No. UNCT/18/5, Award, 11 January 2022, paras. 87-88 and 246. 39 Ibid., paras. 246 and 257–259. 40 Ibid., para. 283. 41 DJANIC, V. (2021). Analysis: Hydro v. Albania tribunal upheld jurisdiction over multiparty claim, found that Albania had expropriated a media venture through a politically-motivated campaign, and awarded 100 million EUR in damages. IA Reporter , 30 December 2021, available at: . 42 Ibid.

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