BGP Litigation partner Alexander Vaneev speaks with Vedomosti about mechanisms for protecting investor's rights in an investment dispute (in the context of the pre-arbitration procedure between DTEK Krymenergo and Russia)

"Investment disputes usually involve legal action against the state by an investor that is seeking protection of its investments in the territory of that state, says Alexander Vaneev, partner at BGP Litigation. Such claims may boil down to damages for lost property or for profit not received as a result of actions by the state, he says".

Expanding on his earlier comments regarding the situation, Alexander Vaneev notes that the right to bring such claims is enshrined in international treaties (agreements) on protection of investments.

Investment disputes usually go through several stages, says the BGP Litigation partner. It all starts with an attempt to settle the dispute through negotiations. If that proves unsuccessful, which is usually the case, the investor can file suit in court or initiate international commercial arbitration, seeking compensation. The resolution of such disputes can take quite a long time: three to five years. And in some cases the proceedings can take even longer. 

As a rule, notes Alexander Vaneev, investment disputes tend to be heard by international commercial arbitration tribunals consisting of one or, more often, three arbitrators, who are specialists (scholars or practising lawyers) in the given category of disputes. The proceedings involve detailed examination of the facts in the case, witness and expert testimony and cross-questioning. If the tribunal hearing an investment dispute makes an award in favor of the claimant and the award is not voluntarily complied with by the relevant state, it can be enforced on the basis of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

The main difficulty enforcing arbitral awards in practice is locating state assets against which execution can be levied, says the BGP Litigation partner. The problem is that, generally speaking, state-owned assets are protected from execution and levy by special immunity. So the enforcement of awards rendered in investment disputes often requires that new proceedings be launched in state courts and can take a protracted length of time.

The full article (in Russian) is available here: "ДТЭК будет требовать от России $500 млн".