On 31 May 2017, an ICSID tribunal accepted jurisdiction over a claim brought by a Chinese company, Beijing Urban Construction Group Co. Ltd. (BUCG), against the Republic of Yemen under the Yemen-China BIT (the BIT).
In the arbitration, Yemen raised a number of objections to jurisdiction, including that: (1) BUCG does not qualify as a “national of another Contracting State” under Article 25(1) of the ICSID Convention because it is a “State-owned entity, […] an agent of the Chinese Government and discharges governmental functions even in its ostensible commercial undertakings”; (2) BUCG does not have a qualifying investment under Article 25(1) of the ICSID Convention; (3) Yemen’s consent to arbitration under the BIT is limited to disputes concerning the amount of compensation payable for expropriation of the claimant’s investment; and (4) BUCG’s claim is a contractual claim (not a treaty claim).
The tribunal rejected almost all of the respondent’s objections, determining that, “in the fact-specific context” of the case, the claimant’s “functions” were that of a “commercial contractor”. The tribunal found no evidence that the claimant was “discharging a PRC governmental function rather than a commercial function”. The tribunal also determined that the claimant had a qualifying investment under the BIT and the ICSID Convention and that the claimant had initiated treaty claims (not contractual claims).
Finally, the tribunal decided that, under the BIT, Yemen had provided its consent to submit to arbitration “disputes relating to whether or not an expropriation had occurred”. The respondent was partially successful, however, in that the tribunal refused to use the most-favoured-nation clause in the BIT to import a broader dispute resolution clause from the Yemen-UK BIT (which would have provided the tribunal jurisdiction over non-expropriation claims under the BIT).