Data

Date:
29-03-2005
Country:
Arbitral Award
Number:
Court:
Arbitration Institute of the Stockholm Chamber of Commerce
Parties:
Petrobart v Kyrgyz Republic

Keywords

STATE CONTRACTS - LONG-TERM CONTRACTS - GAS SUPPLY CONTRACT - BETWEEN A GIBRALTAR COMPANY AND A KYRGYZ STATE OWNED COMPANY -REFERENCE TO UNIDROIT PRINCIPLES TO INTERPRET APPLICABLE LAW (INTERNATIONAL LAW)

BUYER'S FAILURE TO PAY THE PRICE DUE TO INSOLVENCY CAUSED BY INTERFERENCE BY ITS COUNTRY'S GOVERNMENT - GOVERNMENT LIABLE FOR DAMAGES VIS-A-VIS SELLER

INTEREST - TO BE CALCULATED ON THE BASIS OF INTERNATIONAL RULES - APPLICATION OF ART. 7.4.9 UNIDROIT PRINCIPLES CONSIDERED BY ARBITRAL TRIBUNAL "TO BE AN APPROPRIATE BASIS FOR DETERMINING THE INTEREST"

Abstract

Plaintiff, a trading company registered in Gibraltar entered into a contract with a State-owned Company X of the Kyrgyz Republic, for the supply of gas condensate over the course of a certain period of time on a monthly basis. While Plaintiff regularly fullfiled its obligations under the contract, Company X, after paying the first invoices, stopped making payments. When some months later the Government of the Kyrgyz Republic set up a new State-owned Company Y to replace Company X for the domestic supply of gas and transferred to Company Y the assets but not the debts of Company X, Plaintiff brought an action against the Kyrgyz Republic for the payment of the outstanding invoices and damages. According to Plaintiff Defendant, by depriving Company X of its assets and thereby causing that company's insolvency, had violated its obligation under the 1994 Energy Charter Treaty to ensure foreign investors fair and equitable treatment.

The Arbitral Tribunal decided in favour of Plaintiff and awarded damages to compensate the loss Plaintiff suffered by not being able to receive payment from Company X of its outstanding invoices. The Arbitral Tribunal also awarded interest which it held should be calculated on the basis of international rather than national rules: in this respect the Arbitral Tribunal referred to Article 7.4.9 of the UNIDROIT Principles which, with no further explanation, it considered "to be an appropriate basis for determining the interest".

Fulltext

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