Sanitek Submits investment claim against Armenia

Sanitek and its shareholders, all foreign investors have completed the next step in their international arbitration claim against the Republic of Armenia. The foreign investors have now submitted a Request for Arbitration in accordance with Article 36 of the Convention on the Settlement of Investment Disputes between States under Article 9 of the Agreement Between the Government of the Republic of Armenia and the Government of the Lebanese Republic on the Promotion and Reciprocal Protection of Investments (the “Lebanon-Armenia BIT”) and Article XIII of the Agreement Between the Government of Canada and the Government of the Republic of Armenia for the Promotion and Protection of Investments (the “Canada-Armenia BIT”). The Request for Arbitration has been filed with the International Centre for Settlement of Investment Disputes in Washington D.C., USA which is a part of the World Bank Group.

The dispute has arisen out of both the Government’s and Yerevan Municipality’s continuing breaches of the Lebanon-Armenia BIT and the Canada-Armenia BIT in relation to Sanitek’s investments in the waste management of the city of Yerevan. More specifically, the dispute stems from the Republic of Armenia’s discriminatory and expropriatory actions, namely the illegal acts of the Yerevan Municipality and other state authorities. Although Sanitek’s work initially achieved high approval ratings from Yerevan residents, the Municipality of Yerevan failed to perform its end of the bargain, and ultimately decided to oust Sanitek and replace it with a government-owned waste collection company while the concession contracts were still in effect. This policy was politically motivated, designed to scapegoat Sanitek for political advantage by blaming the Municipality’s shortcomings in waste management strategy and oversight of the landfill on Sanitek. Indeed, the new state-owned company has benefited from much more favorable conditions than those granted to Sanitek, showing that the Government of Armenia’s treatment of the investors was arbitrary and discriminatory.

Sanitek’s losses as a consequence of both the Government’s and Yerevan Municipality’s illegal acts and omissions are in excess of USD 25 million.

The announcement of Sanitek’s filing of a Request for Arbitration follows the widely reported news in October 2019 that Sanitek had filed a Notice of Intent to Submit a Claim to Arbitration to the Armenian authorities. This Notice of Intent remained unanswered by any state institutions.

The Government of Armenia has shown a hostility to foreign investment, and in particular the new municipal government in Yerevan escalated tensions with Sanitek, pursuing a determined policy to replace it with a municipal company in order to gain political advantage.

In sum, Armenia failed to protect Sanitek’s investments from unreasonable or discriminatory measures and to accord it fair and equitable treatment. Armenia unlawfully expropriated the Claimants’ investments without a legitimate public interest, without due process, on a discriminatory basis, and without paying prompt, adequate, and effective compensation. Sanitek and its investors intend to fully vindicate their rights through arbitration before ICSID.