London, April 11, 2011… Latham & Watkins has secured a landmark victory in a high profile bilateral investment treaty dispute, GEA v. Ukraine. In an award issued on 31 March, the Tribunal, which consisted of Professor Albert Jan van den Berg (President), Toby Landau QC and Professor Brigitte Stern, rejected all of GEA’s claims and ordered GEA to reimburse Ukraine all of its costs, including its legal fees. The ruling is particularly noteworthy for the number of important statements the award contains regarding international investment law and its finding on costs.

The case concerned investments made by GEA and related companies in Oriana, a Ukrainian State-owned petrochemicals plant. GEA alleged that 125,000 tons of petrochemical products went missing in Ukraine and that Ukraine was responsible for this. GEA claimed almost $80 million in damages and interest under the bilateral investment treaty (BIT) between Germany and Ukraine. GEA alleged that Ukraine had breached the BIT on several counts. The Tribunal dismissed each of GEA’s allegations.

The award contains several important statements on international investment law, in particular whether the refusal of the Ukrainian courts to recognise and enforce international arbitration awards can amount to a breach of a BIT. On the facts of this case, the Tribunal rejected GEA’s argument that the Ukrainian courts’ refusal to recognise an International Chamber of Commerce (ICC) award amounted to an expropriation or a denial of justice in breach of the BIT. Given the distinguished reputations of the Tribunal members, the award in GEA v. Ukraine is likely to be cited as an important authority on the relationship of international commercial arbitration awards and BIT protection.

The Tribunal’s order that GEA pay all of Ukraine’s costs is particularly noteworthy. In the absence of findings of fraud, abuse of process or similar wrongdoing on the part of a claimant, it is highly unusual for a respondent State to recover all of its costs in an ICSID arbitration.

Latham & Watkins represented Ukraine in obtaining this significant victory. The Latham team consisted of attorneys from the firm’s London and Hamburg offices led by partner Sebastian Seelmann-Eggebert, with associates Charles Claypoole, Jan Erik Spangenberg and Hussein Haeri. Counsel was also provided by partner Serhii Sviriba and associate Dmytro Marchukov of Magisters in Kyiv.

Latham partner Sebastian Seelmann-Eggebert said: “We are pleased with the decision and delighted that our client was awarded full costs. This ruling will be an important precedent showing that States can recover their costs in investment arbitrations.”

Sebastian Seelmann-Eggebert and Charles Claypoole are also representing Ukraine in another BIT arbitration which is conducted under the UNCITRAL Rules.

For more information please contact Sebastian Seelman-Eggebert: +49 40 41403259, or Charles Claypoole: +44 2077101178.

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