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- Headnote
- Decision [eng]
- i Frequently Used Abbreviations and Acronyms
- ii The Parties’ Submissions
- iii Short Titles for Certain Agreements
- iv Dramatis Personae
- I Introduction and Parties
- II Procedural History
- III Facts
- 52
- A Heating in Rēzekne and the 2004 Gas Supply Agreement (2004)
- B The Original Arrangements And Main Events (End Of 2004–2005)
- (1) The Decision by the Rēzekne Municipality to Have Recourse to a Foreign Investor in Order to Provide Heating Services (2004)
- (2) The Incorporation of Latgales Enerģija (20 December 2004)
- (3) The Guarantee Agreement (30 December 2004)
- (4) The Agreement for Lease, Renovation and Operation of Long-Term Assets (28 January 2005) (The “Long-Term Agreement”)
- (5) The February 2005 Agreement (10 February 2005)
- (6) E Energija’s Further Investment in the Capital of Latgales Enerģija (February–May 2005)
- (7) Loans by E Energija to Latgales Enerģija (From February 2005 Onwards)
- (8) Rēzeknes Siltumtīkli’s Assets and Employees Taken Over by Latgales Enerģija (25 February 2005)
- (9) Rēzeknes Siltumtīkli’s Short-Term Debts Taken Over by Latgales Enerģija (From February 2005 Onwards)
- (10) Local Elections in Latvia (March 2005)
- (11) Latgales Enerģija’s Licences (30 May 2005)
- (12) The First Amendment of the Gas Supply Agreement with Latvijas GĀze (1 June 2005)
- (13) Fresh Local Elections in Rēzekne (20 August 2005)
- (14) Rēzeknes Siltumtīkli’s Long-Term Debts Taken Over by Latgales Enerģija (From August 2005 Onwards)
- (15) First References to a Heat Supply Development Plan (October 2005)
- (16) Latgales Enerģija’s Applications to the Regulator for a New Tariff (13 October 2005 and 10 November 2005) — The Regulator’s Decisions
- (17) Rēzekne Heating System Converted to Use Natural Gas (November 2005)
- (18) The Third Amendment of the Gas Supply Agreement with Latvijas GĀze (19 December 2005)
- C The Operation of the Heating System by Latgales Enerģija and Main Events in 2006
- (1) Latgales Enerģija’s “Guidelines for the Development of the Rēzekne City Heat Supply System” (20 January 2006)
- (2) The Amended Long-Term Agreement (10 February 2006)
- (3) The Agreement on Mutual Operations with the Aim to Decrease Energy Rate in the City of Rēzekne (10 february 2006)
- (4) Latgales Enerģija’s Application to the Regulator for a New Tariff (12 June 2006) — The Regulator’s Decision (13 October 2006) — The Decisions by the Latvian Administrative Courts (17 November 2007 and 15 April 2009)
- (5) Further Steps Towards a “Heat Supply Development Plan” (2006)
- (6) Rēzeknes Siltumtīkli’s Claims against Latgales Enerģija Relating to the Depreciation of the Leased Assets
- (7) Supplementing Certain Arrangements Made in 2005
- 196
- (A) Further Loans by E energija to Latgales Enerģija
- (B) Further Investment by E energija in Latgales Enerģija (8 June 2006)
- (C) Loan from JSC Sampo Banka to Latgales Enerģija — E energia’s Guarantee and Pledge (30 November 2006)
- (D) Rēzeknes Siltumtīkli’s Long-Term Debts Taken Over by Latgales Enerģija
- D The Energy Crisis Declared by the Rēzekne City Council and Other Main Events In 2007
- (1) Further Steps Towards a “Heat Supply Development Plan” or “Strategy” (January-September 2007)
- (2) Latgales Enerģija’s Application to the Regulator for a New Tariff (29 May 2007) and the Regulator’s Decision (11 June 2007) — Latgales Enerģija’s application to the Regulator for a New Tariff (5 November 2007) and the Regulator’s Decisions (9 November 2007 and 7 December 2007)
- (3) Towards the Declaration of an Energy Crisis by the Rēzekne City Council (9 October 2007)
- (4) The Energy Crisis in Rēzekne (From 9 October 2007 Onwards)
- 267
- (A) Towards the Regulator’s Decision Taking over Latgales Enerģija’s Zone (11 October 2007)
- (B) The Appointment of Rēzeknes Enerģija as the Person Responsible to Provide Heating Services in Rēzekne (12 October 2007)
- (C) The Rēzeknes Enerģija Gas Supply Agreement (17 October 2007)
- (D) The October 2007 Agreement (25 October 2007)
- (E) Latgales Enerģija’s Answer to the Regulator’s Warning (4 October 2007)
- (F) The 2007 Assignment Agreement (4 December 2007)
- (5) The Proceedings Brought by Rēzeknes Siltumtīkli against Latgales Enerģija (20 September 2007) and the Attachment of Latgales Enerģija’s Bank Account (21 September 2007)
- (6) The Proceedings Brought by Rēzeknes Enerģija Against Latgales Enerģija (27 December 2007)
- (7) Supplementing Certain Arrangements Made in 2005 and 2006 — New Arrangements
- (A) Further Loans by E energija to Latgales Enerģija
- (B) Restructuring of E Energija’S Loans to Latgales Enerģija (24 August 2007)
- (C) Contracts between the Claimant and the European Bank for Reconstruction and Development (September/December 2007)
- (D) The Agreement between the Claimant and Rēzeknes Siltumtīkli (25 October 2007)
- E Main Events in 2008
- (1) Towards the Revocation of Latgales Enerģija’s Licences by the Regulator (3 June 2008)
- (2) The Revocation of Latgales Enerģija’s Licences by the Regulator (3 June 2008)
- (3) The Rēzekne City Council’s Temporary Appointment of Rēzeknes Siltumtīkli and Rēzeknes Enerģija as the Producer and the Distributor/Seller of Thermal Energy (13 June 2008)
- (4) Rēzekne City Council’s Request to have the Leased Assets Transferred to Rēzeknes Siltumtīkli and Rēzeknes Enerģija (27 June 2008)
- (5) Rēzekne City Council’s Order that Latgales Enerģija Provide Access to the Boiler Houses and Surrender the Leased Assets (14 July 2008)
- (6) The Claimant’s Notice of Dispute (1 September 2008)
- (7) Termination of the Long-term Agreement by Rēzeknes Siltumtīkli (10 September 2008)
- (8) The Taking over of the Leased Assets by Rēzeknes Siltumtīkli and the Further Course of the Dispute
- (9) The Proceedings Brought by Rēzeknes Siltumtīkli Against Latgales Enerģija
- (10) The Proceedings Brought by Rēzeknes Enerģija Against Latgales Enerģija
- (11) The Proceedings Brought by Rēzeknes Siltumtīkli Against Latgales Enerģija and the Claimant (13 August 2008)
- (12) Supplementing Certain Arrangements Made in the 2005–2007 Period — New Arrangements
- F Main Events in 2009 and Beyond
- (1) The Civil Proceedings Brought by Rēzeknes Enerģija against Latgales Enerģija
- (2) The Civil Proceedings Brought by Rēzeknes Siltumtīkli against Latgales Enerģija
- (3) Dismissal of Latgales Enerģija’s Challenge against the Regulator’s Decision to Revoke the Licences (3 June 2008) and the Judgment of 16 June 2009 (6 May 2010)
- (4) Dismissal of Latgales Enerģija’s Challenge against the Regulator’s Decision No. 12 dated 11 June 2007 (15 April 2009)
- (5) Dismissal of Latgales Enerģija’s Complaint against the Enforcement of the Council’s Decision No. 316 of 14 July 2008 by Forcible Means (2 July 2009)
- (6) Dismissal of Latgales Enerģija’s Challenge against the Council’s Decision No. 316 of 14 July 2008 (25 May 2010)
- (7) Dismissal of Latgales Enerģija’s Challenge against the Regulator’s Decision No. 35 Dated 7 December 2007 and the Judgment Dated 30 October 2009 (23 September 2010)
- (8) Dismissal of Latgales Enerģija’s Challenge against the Regulator’s Decision No. 26 Dated 11 October 2007 and the Judgment Dated 31 March 2010 (24 November 2011)
- (9) The Civil Proceedings Brought by Rēzeknes Siltumtīkli against Latgales Enerģija and the Claimant
- (10) Supplementing Certain Arrangements Made in the 2005–2008 Period — New Arrangements
- G The Lithuanian Decisions Relied on by the Respondent (From 2005 to 2011)
- H The Negotiations between the Parties from 1 September 2008 Onwards
- IV The Parties’ Requests for Relief
- V Jurisdiction
- 449
- A The Parties’ Prayers for Relief on Jurisdiction and the Respondent’s “Preliminary Objections”
- B The Claimant’s Position on Jurisdiction
- (1) Jurisdiction Ratione Personae
- (2) Jurisdiction Ratione Materiae
- 461
- (A) An “Investment” within the Meaning of the BIT
- (B) An “Investment” Within the Meaning of Article 25 of the ICSID Convention
- (C) A “Dispute Concerning Investment” Within the Meaning of the BIT
- (D) A “Legal Dispute Arising Directly out of an Investment” Within the Meaning of Article 25 of the ICSID Convention
- C The Respondent’s Objections to Jurisdiction
- D The Claimant’s Reply to the Respondent’s “Preliminary Objections” to Jurisdiction
- E The Reasons for the Tribunal’s Decision on Jurisdiction
- 484
- 485
- (1) Jurisdiction Ratione Personae
- (2) The Parties’ Consent to ICSID Jurisdiction
- (3) Jurisdiction Ratione Materiae
- F The Tribunal’s Decision on Jurisdiction
- VI The Respondent’s Application for Termination, and, Alternatively, for a Stay of the Proceedings
- 554
- A The Parties’ Prayers for Relief on the Stay of Proceedings
- B The Respondent’s Position
- C The Claimant’s Position
- D The Reasons for the Tribunal’s Decision on the Respondent’s Application for a Stay and Termination of the Proceedings
- E The Tribunal’s Decision the Respondent’s Application for Termination, and, Alternativey, a Stay of the Proceedings
- VII Liability
- 574
- A The Parties’ Prayers for Relief on Liability
- B The Claimant’s Case on Liability
- 579
- 580
- 581
- (1) Specific Issues
- 582
- (A) The Application of Principles of European Contract Law, Unidroit Principles of International Commercial Contracts and Translex Principles
- (B) The Functional and Legal Independence Between the Different Parts of the “Concession Arrangement”
- (C) The Duty to Pay for The Natural Gas Supplied by Latvijas Gāze
- (D) The Outstanding Lease Payments
- (E) The Risks Allegedly Assumed by the Claimant
- (F) The Influence Brought to Bear by the Municipality on the Regulator
- (G) The Review of Tariffs by the Regulator
- (H) The Development Plan
- (I) The Revocation of Latgales Enerģija’s Licences to Produce, Transmit and Sell Thermal Energy
- (2) Attribution
- (3) Expropriation
- (4) Fair and Equitable Treatment
- (5) Full Protection and Security
- (6) Arbitrary or Discriminatory Measures
- (7) Breaches of the Most Favoured Nation Clause
- C The Respondent’s Case on Liability
- 710
- (1) General Denial and Overall Response to the Claimant’s Position
- (2) Specific Issues
- 717
- (A) The Application of Principles of European Contract Law, Unidroit Principles of International Commercial Contracts and Translex Principles
- (B) The Functional and Legal Independence Between the Different Parts of the “Concession Arrangement”
- (C) The Duty to Pay for the Natural Gas Supplied by Latvijas Gāze
- (D) The Outstanding Lease Payments
- (E) The Influence Allegedly Brought to Bear by the Municipality on the Regulator
- (F) The Development Plan
- (G) The Review of the Tariffs by the Regulator
- (H) The Revocation of Latgales Enerģija’s Licences to Produce, Transmit and Sell Thermal Energy
- (3) attribution
- (4) The Respondent’s Arguments With Respect to the Alleged Breaches of the BIT
- D The Reasons for the Tribunal’s Decision on Liability
- 789
- (1) Applicable Law
- (2) The Issue of Attribution
- (3) Claims for Breach of Article 3(1) of the Treaty (Fair and Equitable Treatment, Full Protection and Security; No Arbitrary or Discriminatory measures with Respect to the Investment)
- 831
- (A) The Applicable Standard of Treatment
- (B) Whether the Respondent is in Breach of Article 3(1) of the BIT
- 842
- 843
- (i) The Claim Rested on a Breach by the Respondent of the Claimant’s Expectations Based on the Long-Term Agreement
- (ii) The Claim Based on Delay by the Municipality in the Adoption of a Heat Supply Development Plan for the City of Rēzekne
- (iii) The Claim Based on the Municipality’s Refusal to Consent to Investments into the Heating System
- (iv) The Claims Based on the Regulator’s Repeated Refusals to Set a new Tariff
- 899
- 900
- The Regulator’s Decision of 13 October 2006.
- The Tribunal’s Conclusion and Finding.
- The Regulator’s Decision of 11 June 2007.
- The Tribunal’s Conclusion and Finding.
- The Regulator’s Decisions of 9 November and 7 December 2007.
- The Tribunal’s Conclusion and Finding.
- The Regulator’s Alleged Failures to Set a New Tariff Taking into Account the Increase in Electricity and Natural Gas Prices.
- The Tribunal’s Conclusion and Finding.
- (v) The Claims Based on the Municipality’s and the Regulator’s Conduct in Connection with the Energy Crisis
- 923
- 924
- a The failure by the Municipality to pay the balance of Latvijas Gāze’s invoices to Rēzeknes Siltumtīkli prior to mid-September 2007
- b The interview given by the Mayor of the City of Rēzekne on 13 September 2007 and the Municipality’s alleged attempts to attract a new investor in the summer of 2007
- c The steps taken by the Municipality to set up Rēzeknes Enerģija and to obtain a loan from the Treasury in an amount of LVL 4 million (28 September/9 October 2007)
- d The attachment of Latgales Enerģija’s assets obtained by Rēzeknes Siltumtīkli (21 September 2007) and the failure by the Rēzekne City Council to have the attachment lifted
- e The declaration of an energy crisis by the Rēzekne City Council on 9 October 2007
- f The Regulator’s decision taking over Latgales Enerģija’s zone (11 October 2007)
- g The Rēzekne City Council’s decision to appoint Rēzeknes Enerģija as the person in charge of providing thermal energy (12 October 2007)
- (vi) The Claims Based on the Warning and the Revocation of the Licences by the Regulator (4 October 2007/3 June 2008)
- (vii) The Claims Based on the Municipality’s Conduct Subsequent to the Revocation of the Licences (From 3 July 2008 Onwards)
- 1028
- a The appointment of Mr. Locis by the Municipality as the person in charge of organising district heating (13 June 2008) and the appointment of Rēzeknes Siltumtīkli and Rēzeknes Enerģija as the temporary producer, respectively provider and seller of thermal energy (13 June 2008)
- b The decision ordering Latgales Enerģija to provide immediate access to the leased assets (14 July 2008)
- c The Municipality’s decision authorising the forcible recovery of the assets (15 September 2008)
- d The forcible recovery of the buildings and boilers (16 September 2008)
- (viii) The Cumulative Effects of the Respondent’s Individual Actions
- (C) The Tribunal’s Finding
- (4) Claim for Expropriation Under Article 4(1) of the Treaty
- (5) Claims for Breach of the Most Favoured Nation Clause Under Article 3(2) of the Treaty
- E The Tribunal’s Decision on Liability
- VIII Quantum
- IX Costs
- X Award
- Dissenting Opinion on Costs
- Decision PDF [eng]
- [3.239.51.78]
- 3.239.51.78
