An award was adopted by ICSID*, World Bank’s dispute resolution forum, in favour of Hungary on 29 June, 2012 in an investment protection dispute started by AES Summit and AES Tisza. The committee that heard the case closed the invalidation proceedings by upholding the September 2010 award of the ICSID arbitration tribunal, which ruled that Hungary had not violated the provisions of the Energy Charter Treaty by regulating power plant prices.

On completion of the invalidation proceedings, the case was definitively decided in favour of Hungary. It is considered as an especially great success that, in agreement with the Hungarian motion, the committee hearing the case ordered AES to reimburse the defendant also for the Hungarian legal costs. AES Tisza Erőmű Kft. and its owner, AES Summit Generation Ltd. started litigation against the Hungarian State before the international arbitration tribunal seated in Washington. In their position by regulating power plant prices in 2006, Hungary violated the provisions of the Energy Charter Treaty. In the plaintiffs’ opinion the company’s investments had been injured because the regulated prices were considerably lower than those fixed in the agreement concluded in 2001 between AES Tisza and MVM Zrt. In the justification of the award adopted by the international tribunal in September 2010 it was highlighted that none of the measures taken by Hungary in relation to the price control violated the provisions of the Energy Charter Treaty. The tribunal found all claims made by AES Summit Generation Ltd., including plaintiff’s indemnification claim exceeding USD 30 million, unsubstantiated and dismissed them. *ICSID (International Centre for Settlement of Investment Disputes) is a special international arbitration tribunal of World Bank, set up for resolving legal disputes between states and investors. It was established by the so-called Washington Treaty signed in 1965, for judging international investment protection cases. As the number of investment protection cases started directly by investors increased in the past two decades, ICSID has become the most influential forum for the resolution of investment protection disputes. Its awards are considered to have an effect equal to those of the highest court of every state that has signed a contract with the tribunal.

(Ministry of National Development Communication Department)