ESTONIA Law and Practice Contributed by: Maria Pihlak, Carri Ginter, Raul Kartsep and Katariina Kuum, Sorainen
Award rendered in 2025 Facts of the case
tions that its ownership would be maintained or respected. Discrimination claims • ELA claimed discrimination or persecution, alleging that its treatment was different compared to others, or that Estonia treated investor rights in a discrimi- natory manner. Illegality/bad faith • Estonia asserted that some of ELA’s claimed rights were acquired illegally or in bad faith (eg, through transfers that were themselves unlawful or invalid under domestic or post-occupation law). The issue was whether rights acquired under such circum- • Estonia raised objections to jurisdiction (eg, about whether the claimant was the proper entity, wheth- er ownership/control was proven, whether claimed rights were timely, etc). However, the tribunal rejected these objections and proceeded to exam- ine the merits. Outcome • On 21 February 2025, the tribunal issued its final award, dismissing all of ELA’s claims. • The tribunal rejected the jurisdictional objections raised by Estonia and found that the claims were admissible and that the claimant had satisfied the thresholds to proceed. • On the merits, the tribunal found in favour of the state, namely that: (a) Estonia had acted lawfully in reclaiming the Seaplane Harbour property; (b) Estonian courts’ decisions invalidating ELA’s title were valid; and (c) there was no violation of the investor’s rights as claimed (no discrimination, no breach of fair and equitable treatment, etc). Legal significance • The case clarifies that investor expectations rooted in rights or titles that are ultimately held to be inva- lid under domestic law do not necessarily give rise to treaty protections, at least if the rights were not lawfully acquired. stances are protected under the BIT. Jurisdictional objections/admissibility
• The dispute concerned the ownership of historic military seaplane hangars in Tallinn (now part of the Estonian Maritime Museum. The claimant, ELA U.S.A., Inc., a US company, claimed investment in the Seaplane Harbour (Lennusadam) in Tallinn, including operations such as timber processing and cargo transport. • ELA alleged that Estonia’s domestic courts invali- dated its titles, that they asserted unlawful trans - fers of property originally associated with the Russian military, and that Estonia had persecuted the claimant’s officers, thereby breaching invest- ment treaty obligations under the US–Estonia BIT. Estonia rejected these claims, asserting that the investor had never lawfully acquired ownership. • The dispute has its roots in the aftermath of Esto- nia regaining independence: during the Soviet/ Russian military presence, certain property trans- fers allegedly occurred under dubious circum- stances; over time, ELA (and its associated entities) acquired control over companies said to have held title to the property. The state, after protracted legal proceedings, regained control of the property in 2006 and later converted part of it into a muse- um (2012). ELA initiated the arbitration in 2018, seeking over EUR200 million in damages. Key legal principles Definition of “investment” and ownership/validity of title • Whether ELA and/or its subsidiaries were suffi- ciently established that they held a legally recog- nised title or control over the property in a manner protected by the BIT. • Whether transfers of the property (especially under the Soviet/Russian military presence) were lawful, and whether ELA could reasonably expect respect for illegitimate or defectively acquired rights. Fair and equitable treatment (FET) • Whether Estonia’s restoration of state rights over the property, judicial rulings invalidating title, or other measures amounted to a breach of FET – for example, whether ELA had legitimate expecta-
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