November 08, 2016
Latham & Watkins has successfully defended the Republic of Croatia in an arbitration brought under the Rules of the International Centre for Settlement of Investment Disputes (ICSID) concerning the development of a luxury tourist resort on the Adriatic coast. In the award issued on 2 November 2016, the majority of the international tribunal dismissed all claims made against Croatia in an arbitration by members of the van Riet family, Belgian-American real estate investors, who had sought approximately $32 million in damages.
The Claimants alleged that Croatia had violated the Belgium-Croatia bilateral investment treaty (BIT) by failing to provide accurate information on the planning status of land they purchased for the development. In dismissing the claims, the majority of the tribunal rejected the Claimants’ criticisms of Croatia’s planning laws and emphasised that investors must bear the consequences of their failure to engage experts to carry out due diligence before making an investment.
Latham & Watkins represented the Republic of Croatia in obtaining this significant victory, with a team led by Hamburg and London partner Sebastian Seelmann-Eggebert and London partner Charles Claypoole, with Hamburg associate Felix Dörfelt.
Seelmann-Eggebert said: “The Tribunal had to carefully apply the standards of international law while navigating complex Croatian legislation that was enacted during a period of transition. This award confirms that dissatisfied investors cannot turn to BITs as a form of insurance policy.”
Claypoole added: “This decision vindicates the approach adopted by Croatia towards these investors, and we are very happy for everyone who contributed to this victory.”
This latest award marks Latham & Watkins’ second significant victory for Croatia in an investment treaty arbitration, having previously successfully represented Croatia in the UNCITRAL arbitration brought by Adria Beteiligungs GmbH.