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AES v. Hungary

Type of decisionAward
Date of decision23 September 2010
Tribunal
Claus von Wobessr (President)
Brigitte Stern
William Rowley
Legal instrumentEnergy Charter Treaty
Related decision(s)Decision of the ad hoc commitee on the application for annulment, 29 June 2012
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Statements from this decision

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Regimes established by international treaties have a dual nature; they are part of international and national law
If a state's measure is motivated by a legal obligation arising from European Union law, it constitutes a rational public policy measure
The law of the European Union has to be considered as a fact by a tribunal
Article 351 TFEU is applicable to agreements between member states and non-member states only
The question whether respondent was obliged to a certain measure under European Union law is relevant only when considering the "rationality", "reasonableness", "arbitrariness" or "transparency" of the measure in light of the IIT
In international arbitration, national laws are to be considered as facts
IITs must be interpreted using the rules of interpretation laid down in the VCLT
An expropriation requires a certain degree of interference with the investment; a substantial deprivation of the investor is necessary
The FET standard is not a standard of perfection; a measure has to be manifestly unfair or unreasonable to constitute a violation of the standard
Legitimate expectations can only be created at the moment of the investment
The duty to provide a stable legal and business framework has to be interpreted in light of the applicable law; due to the states' right to regulate, any analysis must depend on the specific case, i.e. whether specific commitments were made
The fact that an issue becomes a political matter does not mean that a rational policy does not exist
A state measure forcing a private party to change its contractual rights violates the standard of protection from unreasonable measures; a measure may, however, affect contractual rights as long as it is based on public policy and not aimed at the contractual rights only
A measure is not unreasonable or discriminatory if a rational policy exists and the state's act is reasonable in relation to that policy; a policy is rational if it is taken following a logical explanation and in the public interest
Discrimination implies according a different treatment in comparison with the generality
The full protection and security standard is not a strict liability standard
While the standard of full protection and security can extend beyond a protection of physical security, it does not protect against a state's right to regulate
A state measure forcing a private party to change its contractual rights violates the standard of protection from unreasonable measures; a measure may, however, affect contractual rights as long as it is based on public policy and not aimed at the contractual rights only
If no frivolous claim was filed and no bad faith was observed from the parties, a tribunal may conclude that each party shall bear its own costs and expenses
IITs must be interpreted using the rules of interpretation laid down in the VCLT
A dispute is a disagreement on a point of law or fact, a conflict of legal views or interest between parties; it must relate to clearly identified issues between the parties
In treaty-based arbitration, the agreed rules of law within the meaning of Article 42(1) ICSID Convention are those of the treay

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