International arbitration tribunal made a decision on AS Tallinna Vesi´s and United Utilities (Tallinn) B.V.’s claims against the Republic of Estonia

Yesterday, on 21 June 2019, an international arbitration tribunal made a decision on AS Tallinna Vesi´s and United Utilities (Tallinn) B.V.’s claim in the proceedings against the Republic of Estonia for compensation for losses caused by a breach of the Agreement on the Encouragement and Reciprocal Protection of Investments between the Kingdom of the Netherlands and the Republic of Estonia. A majority of the arbitration tribunal decided to dismiss AS Tallinna Vesi´s and United Utilities (Tallinn) B.V.’s claims.

The tribunal decided that the claimants shall cover 25% of respondent´s legal costs, fees and expenses and 25% of the expended portion of respondent´s share of the advance costs of the arbitration. 25% of respondent’s legal costs is approximately €500,000 and 25% of the respondent’s share of the advance costs is approximately €165,000. The exact amount to be paid by AS Tallinna Vesi is yet to be determined.   

AS Tallinna Vesi will now conduct a legal analysis of the decision. 

Background:

In October 2014, AS Tallinna Vesi and its shareholder United Utilities (Tallinn) B.V., registered in the Kingdom of the Netherlands, commenced international arbitration proceedings against the Republic of Estonia for breach of the Agreement on the Encouragement and Reciprocal Protection of Investments between the Kingdom of the Netherlands and the Republic of Estonia (the Treaty). The Company claimed compensation for the total loss in revenue caused by the inability to charge tariffs according to the Services Agreement between 2011-2020.

As a signatory to the Treaty, the Republic of Estonia undertook to ensure “the fair and equitable treatment” of investments protected by the Treaty. AS Tallinna Vesi claimed that the Republic of Estonia had breached the requirement by changes to the law and activities of the public authorities which deprived AS Tallinna Vesi of tariffs approved according to the Services Agreement concluded as part of the privatisation in 2001.

International arbitration is a procedure where an independent, international tribunal issues a final ruling on the dispute. Pursuant to the Treaty, arbitration was carried out through the International Centre for the Settlement of Investment Disputes (ICSID), which is part of the World Bank Group.

Riina Käi
Chief Financial Officer

AS Tallinna Vesi
(+372) 626 2262
[email protected]