In recent years, Moldova has seen a rise in the number of investment arbitrations filed against it. As its judicial system struggles to eliminate corruption and inefficiency, international arbitration is seen as an important tool and a guarantee for international investors.
The protection of foreign investments is an important issue in the Moldovan political agenda, since one of its goals is to attract more foreign investment (see Invest in Moldova). Moldova’s ranking in the Doing Business report published by the World Bank has been improving significantly in recent years: ranked 82nd in 2014, in 2016, Moldova ranks 52nd place out of 189.
Moldovan legislation on investments (Law No. 81-XV of 18 March 2004) provides that investment disputes should be resolved by mutual agreement and if no agreement is found, by arbitration. However, international arbitration is available only if the parties agreed mutually to submit their dispute to arbitration, meaning that Moldova’s consent to arbitration is not automatic.
“Article 14. Resolution of Investments Disputes
(1) Investment disputes shall be resolved by mutual agreement.
(2) In the event of failure to resolve the dispute by mutual agreement the latter shall be subject to resolution by a competent court instance of the Republic of Moldova or, upon mutual consent of the parties, by arbitration.
(3) If the parties agreed to resolve the dispute by arbitration, they shall expressly confirm this fact, specifying, if necessary, procedural rules, selected in compliance with Law No. 23-XVI of 22 February 2008 regarding Arbitration and Law No. 24-XVI of 22 February 2008 regarding International Commercial Arbitration.”
Moldova’s Consent to Resolve Disputes through Arbitration
The consent to solve a dispute opposing a foreign investor and the Moldovan State is found more often in the Bilateral Investment Treaties (BIT) to which Moldova is a party. Moldova currently has 39 BITs in force which allow investors from signatory countries to bring claims before an international tribunal in case of an alleged infringement of rights protected under the relevant BIT. Many capital exporting nations have signed bilateral investment treaties with Moldova: USA-Moldova BIT, Turkey-Moldova BIT (a new treaty is being negotiated), Switzerland-Moldova BIT, Spain-Moldova BIT, Romania-Moldova BIT, Russia-Moldova BIT, Netherlands-Moldova BIT, Italy-Moldova BIT, Israel-Moldova BIT, Germany-Moldova BIT, France-Moldova BIT, China-Moldova BIT, Belgium-Luxembourg Economic Union-Moldova BIT, Austria-Moldova BIT.
Moldova is also a party to various multilateral investment protection agreements providing for the resolution of disputes through arbitration. The most well-known and frequently-invoked is the Energy Charter Treaty (ECT).
By ratifying the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) in 2011, Moldova undertook to recognise any award issued by an ICSID Arbitral Tribunal and committed to ensuring the enforcement of the pecuniary sanctions imposed by the award on its territory.
Moldova is also a signatory to the convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention), meaning local courts must enforce international arbitration awards that meet certain conditions.
In addition, Moldova is a party to the Geneva European Convention on International Commercial Arbitration of 21 April 1961, and the Paris Agreement relating to the application of the European Convention on International Commercial Arbitration of 17 December 1962.
Investment Cases against Moldova
Moldova has been involved in ten known investment arbitrations, some of which overlap, out of which three are ongoing.
The ongoing cases include:
Zbigniew Piotr Grot and others v. Republic of Moldova, ICSID Case No. ARB/16/8.
Evrobalt LLC v. The Republic of Moldova, SCC Case No. 2016/082, Award on Emergency Measures of 30 May 2016.
Kompozit LLC v. Republic of Moldova, SCC Case.
Closed cases include:
State Enterprise “Energorynok” (Ukraine) v. The Republic of Moldova, SCC Case No. V2012/175, Award of 29 January 2015.
TSIKinvest LLC v. Republic of Moldova, SCC Emergency Arbitration No. EA2014/053, Emergency Decision on Interim Measures of 29 April 2014.
Energoalians TOB v. Republic of Moldova, UNCITRAL, Award of 23 October 2013.
Yuri Bogdanov and Yulia Bogdanova v. Republic of Moldova, SCC Case No. V091/2012, Award of 16 April 2013.
Mr. Franck Charles Arif v. Republic of Moldova, ICSID Case No. ARB/11/23, Award of 8 April 2013.
Yury Bogdanov v. Republic of Moldova, SCC Arbitration No. V 114/2009, Award of 30 March 2010.
Iurii Bogdanov, Agurdino-Invest Ltd. and Agurdino-Chimia JSC v. Republic of Moldova, SCC,
Award of 22 September 2005.
Link-Trading Joint Stock Company v. Department for Customs Control of the Republic of Moldova, UNCITRAL, Award of 18 April 2002.