INVESTMENT TREATIES AND THE RUSSIAN FEDERATION
Russia relatively immune
In the May 2008 issue of Business Law International (Volume 9, No 2, pp. 100-113), an article by Noah Rubins and Azizjon Nazarov was published. In this article, ‘Investment Treaties and the Russian Federation: Baiting the Bear?‘, the authors look at international treaties for the encouragement and protection of foreign investment such as the Energy Charter Treaty 1994 (ECT) as well as bilateral investment treaties (BITs).
The Energy Charter Treaty provides, a.o., that each Contracting Party shall encourage and create stable, equitable, favorable and transparent conditions for Investors (as defined in the ECT) of other Contracting Parties to make investments in its Area (Article 10(1) of the ECT). The ECT contains provisions that aim at the protection of such international investments.
In 1995, Russia signed this treaty, but it was never submitted to the Duma for ratification, which is an essential prerequisite for the treaty entering into force. Russia has signed dozens of BITs, but only 30 were ratified by the Duma. However, the terms of these treaties create additional complexity when considering an arbitration claim.
According to the authors, the Russian Federation has been relatively immune from the effects of the investment protection treaties it has signed. However, there are several cases pending, including claims related to the shutdown and auctioning of Yukos and its assets. The arbitration cases may prove a testing ground for the effectiveness of Russia’s investment treaties.
Karel Frielink
Attorney (Lawyer) / Partner
