CYIL vol. 10 (2019)

MARTINA POHANKOVÁ

CYIL 10 ȍ2019Ȏ

IN SEARCH OF THE PERFECT DENIAL OF BENEFITS CLAUSE Martina Pohanková

Abstract: Denial of benefits clauses are perceived as means that can protect against the undesirable practice of treaty shopping in international investment law. However, a handful of application problems materialised when investment tribunals deliberated on how the clauses operate. As a result, states were not successful in invoking the denial of benefit clause even in cases where it was possible to interpret the situation as a clear example of treaty shopping. This is mainly due to the wording of the clauses, or more precisely due to their gaps. This article will examine whether states succeeded to reflect those application problems in their newly concluded investment agreements. Resumé : Zahrnout do mezinárodní investiční dohody doložku o odmítnutí výhod je po- važováno za jednu z možností, jak zabránit riziku nežádoucího treaty shoppingu. Je ovšem pravdou, že kdykoliv se této doložky stát u arbitrážního tribunálu dovolával, vyvstala celá řada otázek týkajících se její aplikace. Státy proto nebyly vždy úspěšné s vyvoláním účinků této klauzule, a to i v případech, které zahrnovaly zcela zřejmý treaty shopping. Nejasnosti lze přikládat zejména mezerám a nedostatkům ve znění jednotlivých doložek. Článek zkou- má, zda byly státy schopny reflektovat vyvstalé aplikační problémy v jejich nově uzavíraných investičních dohodách a zdokonalit textaci doložek o odmítnutí výhod. Key words : BITs, denial of benefits clause, DoB, IIAs, investment agreements, treaty shopping About the Author : JUDr. Martina Pohanková is a PhD candidate at the Faculty of Law, Charles University, Department of International law. In her academic research, she focuses mainly on the area of international investment law and international arbitration. Introduction In 2015 two companies – WCV Capital Ventures Cyprus Limited and Channel Crossings Limited (“ WCV ”) commenced investment arbitration proceedings against the Czech Republic regarding an alleged breach of the Cyprus–Czech bilateral investment treaty (“ BIT ”), following the cancellation of video lottery terminal licences owned by the companies’ Czech subsidiary – SYNOT. 1 On the first sight, this appears to be a typical investment arbitration claim. But once the details of the ownership structure of the companies are looked at, controversies emerge. The two Cypriot companies clearly are merely holding companies ultimately owned by the Czech national Ivo Valenta used for the initiation of international arbitration. 2

1 UNCTAD. WCV and Channel Crossings v. Czech Republic [online]. UNCTAD Division on Investment and Enterprise, 2015 [cit. 24. 3. 2019]. Accessible on: https://investmentpolicyhub.unctad.org/ISDS/Details/694. 2 Information is apparent from repeated statements and interviews with Mr. Valenta in the Czech media, see for example: https://www.seznamzpravy.cz/clanek/ze-se-soudim-se-statem-muze-si-za-to-sam-rika-senator-valenta-7314, https://domaci.ihned.cz/c1-63674560-senator-valenta-kazdy-spravny-chlap-ma-mit-nejaky-skraloup or https:// www.e15.cz/byznys/ostatni/valenta-ma-prvni-vitezstvi-v-arbitrazi-proti-cesku-1346522

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