The dispute involved a large sailing vessel owned by an Ukrainian public entity and operated by
Inmaris—a German company—and its subsidiaries. Under the terms of their agreement, the vessel was to be used part of the year for the education of Ukrainian sailors and for recreational and tourism purposes for the remainder of the year. After three years of operations, the parties agreed that Inmaris would pay for the vessel's extensive renovation. In return, Inmaris received the right to operate the vessel under a bareboat charter contract. After the renovation was completed, Ukraine demanded additional payments from Inmaris. When the latter refused, Ukraine prohibited the vessel from leaving its territorial waters, and the various Inmaris companies subsequently initiated ICSID arbitration proceedings against Ukraine under the Germany-Ukraine BIT. Ukraine objected to the tribunal's jurisdiction, arguing that Inmaris' bareboat charter contract did not constitute a protected investment under the applicable BIT. In particular, Ukraine contended that Inmaris' "claim to performance" under the charter contract did not constitute an investment but merely reflected an ordinary commercial transaction. In so arguing, Ukraine adopted the position that the contractual rights of each Inmaris company had to be analyzed individually and separately, emphasizing their strictly commercial nature. Instead, the tribunal confirmed that a BIT claim could be based on a group of integrated contracts which would collectively constitute an "investment" when taken as a whole. By focusing on substance rather than form, the tribunal concluded that Inmaris' operation of the vessel constituted a protected investment under the BIT, noting that the charter-party was for a period of years, for Inmaris' profit, and entailed a significant contribution from Inmaris in the form of the vessel's renovation. The Inmaris decision represents a positive development for energy traders chartering tankers and carriers in the course of their activities.
Source:
Energy Trading Disputes: Investment Treaty Protection for Hedging Agreements and Charter-party Operations,
Louis-Alexis Bret
Definition of Charterparty
Hire or lease contract between the owner of a vessel (aircraft or ship), and the hirer or lessee (charterer). Under a charterparty, a vessel is rented (in full or in part) for one or more voyages (voyage charter) or for a fixed period (time charter). Normally, the vessel owner retains rights of possession and control while the chartrer has the right to choose the ports of call. Also called charter agreement or charter contract, and written also as charter party.
Source:
Business Dictionary
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