Arbitration Tribunal Rejects $331 Million Claim Against Armenia from 'Rasia FZE'

The arbitration tribunal has rejected the claim for the recovery of approximately $331 million against the Republic of Armenia. The information was provided by the office of the Representative of Armenia in international legal matters.

On August 3, 2018, an arbitration case titled 'J. Borkovski and Rasia FZE vs. the Republic of Armenia' was registered with the International Center for Settlement of Investment Disputes (ICSID).

After nearly three years, on January 20, the arbitration tribunal issued a ruling fully rejecting the claims of the plaintiffs. Furthermore, the tribunal ordered the claimants to compensate the Republic of Armenia approximately $2.8 million for incurred legal fees and other expenses.

It is noteworthy that on September 4, 2018, the then Minister of Transport, Communications, and Information Technologies Ashot Hakobyan announced at a press conference that 'Rasia FZE' had filed a suit against the Republic of Armenia. The company was supposed to design, finance, construct, and operate the southern railway of Armenia. On January 18, 2013, Borkovski signed a memorandum of understanding on behalf of 'Rasia FZE' with the Armenian government, represented by then-Minister of Transport and Communications Gagik Beglaryan. It was announced that the 'Southern Railway of Armenia' would run through the Syunik, Vayots Dzor, and Gegharkunik regions, becoming a missing key link in the 'North-South' international transport corridor, facilitating the shortest route for shipments from the ports of the Black Sea to those of the Persian Gulf.

In January 2017, the Armenian government dissolved the 'Railway Construction Directorate' LLC, thereby 'closing' the railway construction theme.

In 2018, Minister Ashot Hakobyan stated that the Armenian side would not remain idle, and an internationally recognized organization was engaged by the government to protect Armenia's interests. According to him, 'Rasia FZE' is highly suspicious and a 'fake' company.

It should be mentioned that the company was registered in Dubai in 2013. As Hakobyan noted during the press conference, it lacks a biography, there are no contact details, 'it occupies a small office in some office building and has taken on the implementation of a project worth $3.5 billion to $5 billion for the construction of the Iran-Armenia railway.'

The arbitration case was initiated based on the agreement on mutual encouragement and protection of investments between the Republic of Armenia and the United States, as well as on the concession agreements signed between the mentioned company and the Armenian government in 2012.

The claimants asserted that Armenia had violated a number of obligations undertaken under the concession agreements, as well as under the mentioned agreement on mutual encouragement and protection of investments.

They demanded that approximately $225 million be recovered from Armenia, in addition to interest accrued from March 18, 2015, until the issuance of the arbitration ruling, amounting to around $106 million.