Foley Hoag secured a victory for the Republic of Armenia when an international arbitral tribunal constituted under the auspices of the International Centre for Settlement of Investment Disputes (ICSID) dismissed all claims brought against the Republic of Armenia by Sanitek S.a.r.l., Mr. Sari Haddad, and Mr. Elias Doumet (“Claimants”).

Sanitek, a Lebanese company, held interests in two contracts for waste collection and cleaning services in the western and eastern zones of the capital city of Yerevan. Following a period of sustained and deteriorating contractual performance that precipitated a waste management crisis, the Municipality of Yerevan terminated the contracts. The Claimants initiated arbitration alleging that Armenia had violated the investment treaty between Armenia and Lebanon, and claimed damages in the amount of approximately USD 36 million.

The arbitral tribunal, composed of Mr. Laurence Shore (President), Professor Bernard Hanotiau, and Professor Pierre Mayer, issued a unanimous award in favor of our client, dismissing the Claimants’ case in its entirety. 

In particular, the Tribunal found that Sanitek had failed to discharge its contractual obligation to dispose of waste and clean the streets—services for which it had been paid. The Tribunal emphasized that waste management is a critical public sector that directly implicates public health, and that the failure to properly provide that service endangers the public. In these circumstances, it determined that the Municipality’s decision to terminate the contracts was reasonable and justified. The Tribunal also observed that for the Municipality not to consider alternatives to Sanitek, including by establishing the Municipal Institution to fill service gaps, would have meant failing in its duty to the public. 

The Tribunal therefore concluded that the Municipality’s conduct was consistent with Armenia’s obligations under the treaty and accordingly dismissed Claimants’ request for compensation. 

"We are pleased with the Tribunal's unanimous decision to dismiss all claims against the Republic of Armenia,” said Partner and Global Co-Chair of Foley Hoag’s International Litigation & Arbitration Department Constantinos Salonidis. “The Tribunal affirmed that when a contractor fails to deliver critical public services, a government has not only the right but the responsibility to act in the interest of its citizens, and this award sends a clear message that a State's reasonable exercise of its contractual rights does not give rise to liability under international investment law."

The Foley Hoag team representing the Republic of Armenia was led by Constantinos Salonidis and includes partner Joseph Kingler, and associates Amir Farhadi, Nour Nicolas, Margaux Mery, María Camila Rincón, and Harout Ekmanian.

About Foley Hoag's International Litigation & Arbitration Department
Foley Hoag’s International Litigation & Arbitration Department is known for its unique experience representing States in high-stakes investment arbitration. The firm has been recognized as Band 1 by Chambers Global in the Public International Law category for over a decade, and is further ranked among the top firms in International Arbitration in Global Arbitration Review’s GAR30, as well as Chambers Global, USA, Latin America, and Africa, and Legal 500 USA and Latin America.