On October 2, 2006, the International Centre for Settlement of Investment Disputes (the ICSID, or "CIRDI" in French) ruled in favour of private investors in a case concerning the illegal expropriation of Budapest-Ferihegy International Airport. It ordered the Republic of Hungary to pay a total of over US$83.8 million in compensation, of which US$46 million will go to our client, Aéroports de Montréal.
The grievants were two Cyprus-based partner project companies related to a promoter (ADC) and to Aéroports de Montréal, which was acting as an expert in airport management and had invested approximately US$11 million. In 1997, the Hungarian government retained the two companies to design and construct terminal 2B and renovate terminal 2A of the Budapest-Ferihegy International Airport. Under the terms of the contracts entered into, the companies had to participate in running these terminals for a 12-year period, as of the commissioning thereof in 1998. But on January 1, 2002, these facilities were unilaterally expropriated by the Hungarian government and the grievants appealed to ICSID under the bilateral investment protection treaty between Cyprus and Hungary.
We were involved in the dispute at every stage, including during the evaluation of the available treaties and forums; the preliminary steps to initiating proceedings; the coordination of diplomatic contacts and their potentially negative impact on the application of the treaties; the compiling of evidence and methods of calculating damage sustained; the proceedings; the hearing; and the execution of the arbitral award, which sets a significant precedent in terms of the calculation of compensation.
This case gave Fasken Martineau the opportunity to review all of the bilateral protection treaties, international arbitration procedures and investment protection strategies, as well as develop expertise that is fairly unique in Canada. It would be a pleasure for René Cadieux, Daniel Picotte and other members of the International Dispute Resolution Practice Group to share this expertise.