Russia's Termination of Mitsui's and Mitsubishi's Interests in Sakhalin-2: Navigating the Labyrinth of Enforcing International Arbitral Awards Against Rogue States
Russia’s Termination of Mitsui’s and Mitsubishi’s Interests in Sakhalin-2:
Navigating the Labyrinth of Enforcing International Arbitral Awards Against Rogue States
Antonius R. Hippolyte
 
ABSTRACT: On 30 June 2022, Russia issued an Executive Decree which terminated the participation of Mitsui Corporation and Mitsubishi Corporation in the Sakhalin-2 gas project. This measure appears to violate, inter alia, Articles 3(1) and 5 for the Japan-Russia BIT due to its apparent discriminatory nature, what appears to be a retaliatory countermeasure against Japan who froze Russian assets in protest of its invasion of Ukraine. Mitsui and Mitsubishi have not initiated any investment arbitration proceedings against Russia before ICSID, a right which Article 11 of the BIT affords them. Based on past investor-state dispute settlement jurisprudence, Mitsui and Mitsubishi appear to have solid claims, which are likely to result in awards in their favour. Under normal circumstances, in a bid to demonstrate to its commitment to the rule of law to other watchful investors, Russia would have compensated these investors. However, judging by Russia’s recent invasion of Ukraine, which led many developed countries to sanction it, Russia does not appear to have any desire to appease investors and to demonstrate its respect for the rules of international law. Article 3 of the New York Convention and Article 54 of the ICSID Convention provide avenues for enforcement in courts in Japan and in third countries. However, because of the operation of the international law principles of sovereign immunity and the difficulty involved in enforcing arbitral awards against State assets, this article submits that despite the apparent breaches of the BIT, these investors will encounter significant difficulties in enforcing any eventual arbitral awards handed down by a tribunal.

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