The Czech Republic Wins an Investment Arbitration Regarding a German Investor’s $100 Million Claim

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    On 29 May 2012, an international tribunal in Paris ruled in favor of the Czech Republic on a claim brought by German investor, InterTrade Holding GmbH, under the Czech-German Bilateral Investment Treaty. The Czech Ministry of Finance, Squire Sanders, and Noerr s.r.o. successfully defended the Czech Republic against the claim.

    InterTrade brought the claim in 2008, alleging that the Czech Republic acted improperly in tender proceedings concerning the forestry sector held in 2005, the purpose of which was to transform the Czech forestry sector and to introduce more competitive market mechanisms. Intertrade complained that the Czech Republic manipulated the proceedings against its local investment, CE Wood, in breach of the Treaty, seeking over $100 million in damages.

    Squire Sanders became involved in the dispute following InterTrade’s reply memorial to assist the Czech Ministry of Finance and Noerr s.r.o. in responding to new arguments asserted therein. The matter went to a hearing in December 2010 in Paris and was followed by several post-hearing submissions.

    In its award of 29 May 2012, the international tribunal rejected all of Intertrade’s claims and ruled in favor of the Czech Republic.  The tribunal accepted the Czech Republic’s argument that the alleged acts of the state enterprise that conducted the tender, Lesy Ceske Republiky, were not attributable to the Czech Republic under international law.

    The Tribunal’s decision represents an important development in international law on the question of State attribution.

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