From: Oxford Public International Law (http://opil.ouplaw.com). (c) Oxford University Press, 2013. All Rights Reserved. Subscriber:
Universite de Geneve; date: 25 January 2015
Date:	14	August	2007
Citation(s):	ICSID	Case	No	ARB/05/8
(Official	Case	No)
IIC	302	(2007)	(OUP	reference)
Product:	Oxford	Reports	on	International
Law	[ORIL]
Module:	International	Investment	Claims
[IIC]
Despatched:	11	September	2007
Content	type:	Arbitral	Awards
Jurisdiction:	International	Centre	for
Settlement	of	Investment	Disputes	[ICSID]
Parkerings-Compagniet	AS	v	Lithuania,	Award	on
jurisdiction	and	merits,	ICSID	Case	No	ARB/05/8,	IIC
302	(2007),	14th	August	2007,	despatched	11th
September	2007,	International	Centre	for	Settlement
of	Investment	Disputes	[ICSID]
Parties: 	Parkerings-Compagniet	AS	(Norway	[no])
Lithuania
Judges/Arbitrators: 	Julian	Lew	QC	(Claimant	appointment);	The	Honourable	Marc	Lalonde	PC,	OC,	QC
(Respondent	appointment);	Laurent	Lévy	(President)
Counsel	for	Party	One: 	David	W	Rivkin	(Debovoise	&	Plimpton	LLP);	Gaëtan	J	Verhoosel	(Debovoise
&	Plimpton	LLP);	William	H	Taft	V	(Debovoise	&	Plimpton	LLP);	Zilvinas	Kvietkus	(Norcous	&	Partners);
Carita	Wallgren	(Roschier	Holmberg,	Attorneys	Ltd)
Counsel	for	Party	Two: 	Petras	Baguska	(Minister	of	Justice);	Paulius	Koverovas	(State	Secretary	of
the	Ministry	of	Justice);	Alexander	A	Yanos	(Freshfields	Bruckhaus	Deringer	LLP);	Lucy	Reed	(Freshfields
Bruckhaus	Deringer	LLP);	Constantine	Partasides	(Freshfielsd	Bruckhaus	Deringer	LLP);	Noah	Rubins
(Freshfields	Bruckhaus	Deringer	LLP);	Renata	Beržanskienè	(Law	Office	Adamonis,	Beržanskienè	and
partners	Sorainen	Law	Offices)
Procedural	Stage: 	Award	on	jurisdiction	and	merits
Arbitral	Rules: 	Convention	on	the	Settlement	of	Investment	Disputes	Between	States	and	Nationals	of
Other	States	(18	March	1965)	575	UNTS	159,	entered	into	force	14	October	1966
Governing	Law: 	Agreement	between	the	Government	of	the	Republic	of	Lithuania	and	the
Government	of	the	Kingdom	of	Norway	on	the	Promotion	and	Mutual	Protection	of	Investments
(Lithuania/Norway),	16	June	1992;	International	Law;	Law	of	Lithuania
Subject(s):
Expropriation	of	contract	rights	—	Indirect	expropriation	—	Investment	defined	in	treaties	—	Arbitrary
(unreasonable)	&	discriminatory	treatment	standard	—	Fair	and	equitable	treatment	standard	—	Full
protection	and	security	—	Legitimate	expectations	—	Most-favoured-nation	treatment	(MFN)	—	National
treatment,	in	like	circumstances	(or	likeness)	—	International	Centre	for	the	Settlement	of	Investment
Disputes	(ICSID)	—	Attribution	—	Ordinary	meaning	(treaty	interpretation	and)	—	Arbitral	rules	&
institutions	—	Contract	claims	—	Treaty	claim
Core	Issue(s):
Whether	‘equitable	and	reasonable’	has	the	same	meaning	as	‘fair	and	equitable’.
From: Oxford Public International Law (http://opil.ouplaw.com). (c) Oxford University Press, 2013. All Rights Reserved. Subscriber:
Universite de Geneve; date: 25 January 2015
On	what	basis	can	arbitrary	conduct	be	attributed	to	the	state.
Whether	termination	of	a	contract	can	amount	to	a	breach	of	the	fair	and	equitable	treatment	standard.
Whether	a	failure	by	a	municipality	to	advise	an	investor	of	possible	changes	to	state	law	prior	to	the
conclusion	of	an	agreement	between	the	two	frustrated	the	investor's	legitimate	expectations.
What	factors	should	be	considered	when	determining	whether	two	investors	are	in	like	circumstances
for	the	purposes	of	applying	the	Most	Favoured	Nation	treatment	standard.
Whether	a	breach	of	contract	could	have	amounted	to	an	indirect	expropriation.
Oxford	Reports	on	International	Investment	Claims	is	edited	by:
Ian	Laird,	Crowell	&	Moring	LLP,	Washington,	DC
From: Oxford Public International Law (http://opil.ouplaw.com). (c) Oxford University Press, 2013. All Rights Reserved. Subscriber:
Universite de Geneve; date: 25 January 2015
Facts
F1		Following	Lithuania's	gradual	transition	between	1991	and	1997	from	a	Soviet	Republic	to	a
candidate	for	EU	membership,	the	Municipality	of	the	City	of	Vilnius	(the	‘City’)	announced	a	tender
for	the	purpose	of	the	design	and	operating	of	a	parking	system.
F2		Parkerings-Compagniet	AS,	a	Norwegian	company,	incorporated	Baltijos	Parkingas	UAB	(‘BP’),	a
wholly	owned	Lithuanian	subsidiary,	which	entered	into	a	consortium	with	an	existing	bidder	called
Egapris	(the	‘Consortium’).	On	19	August	1999,	the	City	awarded	the	bid	to	the	Consortium.
F3		During	negotiation	of	a	contract,	the	parties	agreed	to	introduce	a	hybrid	fee	system—whereby
the	Consortium	would	collect	fees	consisting	of	a	local	parking	fee	component	for	the	City	and	a
service	fee	component	for	itself.
F4		The	parties	sought	legal	opinions	from	local	firms	which	discussed	the	legality	of	the	hybrid	fee.
The	City's	lawyers	found	it	could	be	found	contrary	to	the	law;	the	Consortium's	lawyers	found	it
was	in	accordance	with	the	law.	The	Consortium	was	not	provided	with	the	City's	legal	opinion.
F5		On	29	December	1999,	the	City	approved	the	draft	agreement	and	on	30	December	1999,	the
Consortium	and	the	City	signed	an	Agreement	between	the	City	of	Vilnius	and	the	Egapris
Consortium	(the	‘Agreement’)	which	provided	BP	with	a	13-year	exclusive	concession	to	operate
the	City's	street	parking	(to	collect	parking	fees	and	enforce	parking	regulations	through	clamping)
and	to	construct	10	multi-story	car	parks	(‘MSCPs’)—each	Consortium	partner	to	propose	sites	for
construction	of	the	same.
F6		On	9	March	2000,	the	local	representative	of	the	national	Government	in	the	City	commenced
judicial	proceedings	to	challenge	the	legality	of	the	parking	fee.	Various	public	bodies	also	began
to	publicly	oppose	BP's	proposed	construction	of	a	MSCP	at	Gedimino	that	extended	into	the	Old
Town	of	Vilnius	(‘Old	Town’).
F7		The	Lithuanian	Parliament	also	amended	several	laws	that	affected	the	Agreement.	The	Law	on
Local	Fees	and	Charges	was	modified	on	13	June	2000,	the	Decree	on	Clamping	was	amended	on
5	September	2000	and	the	Law	on	Self-	Government	was	modified	on	12	October	2000.	As	a	result
of	these	amendments,	the	hybrid	fee	provision	was	cancelled	by	a	Vilnius	District	Court	ruling
dated	24	February	2001,	the	Consortium	was	prevented	from	receiving	an	important	part	of	its
income,	and	the	Agreement	was	brought	into	conflict	with	Lithuanian	law	because	of	restrictions
that	were	introduced	on	the	ability	of	municipalities	to	enter	into	agreements	with	private	entities.
F8		On	21	January	2004,	the	City	terminated	the	Agreement	on	the	grounds	that	the	Consortium
failed	to	fulfil	its	contractual	obligations.	BP	filed	its	Request	for	Arbitration	on	11	March	2005.
F9		BP	argued	that	Lithuania	breached	its	obligation	under	Article	III	of	the	Agreement	between	the
Government	of	the	Republic	of	Lithuania	and	the	Government	of	the	Kingdom	of	Norway	on	the
Promotion	and	Mutual	Protection	of	Investments	dated	16	June	1992	(the	‘BIT’)	to	accord	BP's
investment	‘equitable	and	reasonable’	treatment.	BP	argued	that	Lithuania:	(a)	engaged	in	arbitrary
conduct	and	acted	with	a	complete	lack	of	transparency	through	its	failure	to	disclose	a	legal
opinion	questioning	the	viability	of	the	hybrid	parking	fee	prior	to	execution	of	the	Agreement;	(b)
frustrated	BP's	legitimate	expectations	that	it	would	protect	the	legal	and	economic	integrity	of	the
Agreement	by	failing	to	advise	BP	of	any	likely	changes	to	Lithuanian	law	which	would	negatively
effect	its	investment.
F10		BP	argued	that	Lithuania	violated	the	MFN	treatment	standard	under	Article	IV	of	the	BIT
because	it	authorised	Pinus	Proprius	(‘PP’),	a	company	in	like	circumstances,	to	build	a	MSCP	at
Gedimino	and	entered	into	a	Joint	Activity	Agreement	between	Lithuania	and	Pinus	Proprius	(‘JAA’)
with	PP,	when	it	refused	to	do	both	with	BP.
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F11		BP	argued	that	Lithuania	illegally	expropriated	its	investment	under	Article	VI	of	the	BIT
because	it	destroyed	the	value	of	BP's	investment	on	repudiation	of	the	Agreement.
F12		Lithuania	argued	that	most	of	BP's	claims	fell	outside	of	the	Tribunal's	jurisdiction	under	the	BIT
since	they	concerned	commercial	and	not	BIT	disputes,	BP	was	not	a	party	to	the	Agreement	and
had	no	rights	thereunder,	Lithuania	was	not	responsible	for	the	acts	of	its	agencies	unless	they	had
legal	effects	on	an	international	level,	and	BP	and	the	Municipality	agreed	to	submit	all	disputes
arising	under	the	Agreement	to	the	Lithuanian	courts.	Lithuania	further	argued	that	it	had	not
breached	Article	III	of	the	BIT	because:	(a)	it	had	not	engaged	in	arbitrary	conduct	as	it	had	made	it
clear	that	provisions	in	the	Agreement	could	have	been	subject	to	legal	challenges	and	that	the
conduct	alleged	by	BP	was	merely	an	allegation	of	contractual	breach;	(b)	it	had	not	frustrated	BP's
legitimate	expectations	as	Lithuania	never	induced	BP	to	invest	by	making	representations	as	to	the
stability	of	the	legal	regime—eg	there	was	no	stabilisation	clause.
F13		Lithuania	argued	that	it	had	not	breached	Article	IV	of	the	BIT	because	the	difference	in
treatment	between	PP	and	BP	was	due	to	clear	differences	in	the	projects.
F14		Lithuania	argued	that	termination	of	a	contract	could	only	amount	to	an	expropriation	on
satisfaction	of	certain	criteria—none	of	which	were	satisfied.
Held
H1		Although	Lithuania	was	correct	to	distinguish	between	disputes	arising	out	of	contract
breaches	and	disputes	under	the	BIT,	there	was	no	obstacle	here	as	Parkerings	had	alleged	that
Lithuania	had	violated	its	obligations	under	the	BIT.	The	fact	that	Parkerings	was	not	a	party	to	the
Agreement	was	irrelevant	because	the	Tribunal	was	not	ruling	on	breaches	of	the	Agreement,	but
breaches	of	the	BIT.	Although	the	Tribunal	had	no	jurisdiction	over	the	claims	based	on	the
commercial	Agreement,	it	had	jurisdiction	over	any	disputes	related	to	the	investment	under	the
BIT.	The	alleged	violations	of	the	BIT	by	Lithuania	fell	into	this	category.	As	the	claims	fell	under	the
BIT,	the	question	of	whether	Parkerings	should	have	submitted	the	dispute	before	the	Lithuanian
courts	was	not	relevant	at	the	jurisdictional	stage.
H2		On	their	ordinary	meaning,	‘equitable	and	reasonable’	and	‘fair	and	equitable’	standards	were
to	be	identically	interpreted.	(paragraphs	276–8)
H3		The	failure	to	disclose	the	legal	opinion	may	have	been	a	breach	of	good	faith,	but	had	not
amounted	to	a	breach	of	international	law.	The	information	was	publicly	available	and	it	would	have
been	foolish	for	a	foreign	investor	in	Lithuania	to	believe	that	it	would	be	proceeding	on	stable	legal
grounds,	given	the	considerable	ongoing	political	and	economic	changes.	(paragraph	307)
H4		A	substantial	breach	of	contract	could	have	amounted	to	a	breach	of	fair	and	equitable
treatment,	but	here	no	breach	had	occurred	because:	(a)	BP	had	failed	to	show	that	the	City
terminated	the	Agreement	wrongfully	and,	even	if	it	had,	(b)	BP	failed	to	show	that	its	right	to
complain	about	the	breach	had	been	denied	by	the	Lithuanian	courts.	(paragraphs	317–9)
H5		BP	had	not	had	a	legitimate	expectation	that	Lithuania	would	respect	the	legal	integrity	of	the
Agreement	by	not	passing	new	laws	which	would	harm	its	investment.	An	expectation	was
legitimate	if	the	investor	received	an	explicit	promise	or	guaranty	from	the	host-state	or	implicit
assurances	in	making	an	investment	or,	where	no	representation	or	assurance	was	made,	the
circumstances	surrounding	the	conclusion	of	the	Agreement	were	decisive	to	determine	that	an
expectation	was	legitimate—this	had	not	occurred.	Given	the	political	environment,	BP	took	a
business	risk	that	it	could	face	changes	in	laws	that	would	be	detrimental	to	its	investment.
(paragraphs	331–7)
H6		The	contractual	obligation	of	the	City	to	inform	BP	of	any	future	modification	of	the	law	was	not
constitutive	of	a	legitimate	expectation	for	BP	that	Lithuania	would	respect	and	protect	the
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economic	and	legal	integrity	of	the	Agreement.	Lithuania's	failure	to	advise	BP	of	the	potential
changes	had	not	amounted	to	a	breach	of	the	BIT	although	it	may	have	been	a	breach	of	the
Agreement.	(paragraphs	245,	342)
H7		Where	a	Most	Favoured	Nation	(‘MFN’)	clause	had	been	incorporated	within	a	bilateral
investment	treaty,	establishing	discrimination	under	the	standard	of	‘fair	and	equitable’	treatment
may	not	have	been	necessary.	(paragraph	291)	MFN	clauses	are	very	similar	to	National	Treatment
clauses—both	will	in	effect	bar	discrimination	against	foreign	nationals	investing	in	a	foreign
country.	To	violate	international	law,	discrimination	had	to	be	unreasonable	or	lacking
proportionality,	it	had	to	be	inapposite	or	excessive	to	achieve	an	otherwise	legitimate	objective.
H8		The	essential	condition	for	a	breach	of	an	MFN	clause	was	the	existence	of	a	different
treatment	accorded	to	another	foreign	investor	‘in	like	circumstances’.	Three	conditions	were	to	be
met	to	determine	if	BP	was	in	like	circumstances	with	PP:	(1)	PP	had	to	be	a	foreign	investor;	(2)
both	had	to	be	in	the	same	economic	or	business	sector;	(3)	BP	and	PP	had	to	be	treated
differently,	but	the	different	treatment	must	not	have	been	related	to	a	legitimate	objective.
H9		The	City	had	not	breached	the	MFN	clause	by	approving	the	PP	Gedimino	project	and	rejecting
the	BP	Gedimino	project	because	BP	and	PP	were	not	in	like	circumstances.	The	BP	Gedimino
project	was	considerably	bigger	and	extended	further	into	the	Old	Town	which	resulted	in	much
more	public	opposition.	Because	of	these	differences,	the	City	had	legitimate	grounds	to	treat	the
projects	differently.	(paragraph	396)
H10		The	City	had	not	discriminated	against	BP	by	refusing	to	enter	into	a	cooperation	agreement
with	it,	and	entering	into	one	with	PP.	There	were	two	key	differences	between	the	projects	which
could	have	justified	the	different	treatment:	(1)	PP	had	a	contractual	obligation	to	sell	the	MSCP	to
the	City	on	completion	of	the	construction—BP	had	not;	(2)	the	City	had	already	entered	into	a	JAA
with	PP	before	deciding	to	conclude	the	cooperation	agreement,	whereas	BP	had	never	concluded
any	Joint	Activity	Agreement	with	the	City	so	that	the	conclusion	of	a	cooperation	agreement	with
BP	would	have	required	the	conclusion	of	a	new	agreement	and	not	simply	the	modification	of	an
existing	and	possibly	binding	agreement.
H11		No	indirect	expropriation	had	occurred.	A	breach	of	contract	could	be	elevated	to	the	level	of
an	indirect	expropriation	if	three	cumulative	conditions	were	met:	(1)	the	state	used	its	sovereign
power	to	breach	the	agreement;	(2)	the	investor	was	prevented	from	bringing	its	complaint	before
the	forum	contractually	chosen;	(3)	the	breach	gave	rise	to	a	substantial	decrease	in	the	value	of
the	investment.	The	first	two	criteria	were	not	met	as	Lithuania	had	not	appeared	to	act	differently
than	another	contracting	party	would	have	done	in	breaching	the	agreement,	and	BP	had	never
brought	the	dispute	before	the	Lithuanian	Courts.
Date	of	Report:	14	March	2008
Reporter(s):	Christina	Loucas
Analysis
A1		The	dispute	illustrated	well	the	issues	often	faced	by	a	tribunal	arbitrating	a	case	involving	a
party	which	had	invested	in	a	country	with	a	changing	economy	and	political	system—ie	the	need
to	balance	the	protection	afforded	to	an	investor	by	a	Bi	Lateral	Investment	Treaty	against	the
business	risk	it	voluntarily	assumed	by	investing	in	a	country	in	a	period	of	transition.
A2		The	award	was	noteworthy	for	its	explanation	of	whether	and	how	a	contractual	breach	may
have	amounted	to	an	indirect	expropriation.	Although	the	analysis,	in	line	with	previous	awards
addressing	the	issue	(see	Waste	Management,	Inc	v	Mexico,	ICSID	Case	No	ARB(AF)/00/3;	IIC	270
(2004),	30	April	2004,	Azurix	Corp	v	Argentina,	ICSID	Case	No	ARB/01/12;	IIC	24	(2006),	14	July
2006,	Siemens	v	Argentina,	ICSID	Case	No	ARB	02/08),	placed	emphasis	on	a	sovereign	versus
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non-sovereign	breach	distinction,	it	seems	to	go	one	step	further	because	of	the	cumulative	criteria
listed.	In	contrast	to	the	above	cases	which	focused	on	the	sovereign	versus	non-sovereign
breach	distinction,	the	tribunal	here	also	required	that	for	a	contractual	breach	to	have	amounted
to	an	indirect	expropriation,	the	investor	should,	as	a	general	rule,	have	submitted	its	contractual
dispute	to	the	domestic	courts—even	where	the	state	had	breached	the	contract	using	its
sovereign	capacity,	which	did	not	appear	to	be	a	necessary	criterion	in	the	awards	listed	above.
Having	said	that,	this	requirement	seemed	in	line	with	the	following	decisions	which	arguably	could
be	interpreted	by	some	to	suggest	that	a	tribunal	may	consider	the	fact	that	an	investor	had	not
submitted	its	contractual	dispute	before	a	domestic	court	in	deciding	whether	an	expropriation	or
breach	of	fair	and	equitable	treatment	occurred	where	a	state	had	breached	a	contract	in	a
sovereign	or	non-sovereign	capacity:	Generation	Ukraine	Inc	v	Ukraine,	ICSID	Case	No	ARB/00/9;
IIC	116	(2003),	15	September	2003,	(20),	(30),	Compaña	de	Aguas	del	Aconquija	SA	and	Vivendi
Universal	SA	v	Argentina,	ICSID	Case	No	ARB/97/3;	IIC	70	(2002),	3	July	2002,	(113),	Waste
Management,	Inc	v	Mexico,	dissenting	opinion	of	Keith	Highet,	2	June	2000,	SGS	Société	Générale
de	Surveillance	SA	v	Philippines,	ICSID	Case	No	ARB/02/6;	IIC	224	(2004),	29	January	2004.
A3		Although	the	award,	like	others,	placed	emphasis	on	the	sovereign	versus	non-sovereign
breach	distinction,	it	was	still	unclear	how	exactly	this	distinction	should	have	been	drawn—
perhaps	guidance	may	have	been	found	in	sovereign	immunity	jurisprudence,	which	had
previously	distinguished	between	sovereign	and	non-sovereign	actions.
A4		The	award	highlights	an	issue	often	faced	by	tribunals—how	should	a	tribunal	interpret	the
specific	wording	of	a	Bi	Lateral	Investment	Treaty	if	it	varied	from	commonly	used	treaty	language.
When	faced	with	differences	in	wording	(eg	‘equitable	and	reasonable’	versus	‘fair	and	equitable’,
‘protection’	versus	‘full	protection	and	security’).	In	this	instance,	the	tribunal	placed	little
importance	on	the	variation	in	wording.	It	found	that	the	variation	in	wording	had	not	seemed	to
make	a	significant	difference	in	the	level	of	protection	the	host	state	was	to	provide.
A5		The	award	highlights	the	role	of	the	non-discrimination	principle	in	determining	whether	there
had	been	a	breach	of	fair	and	equitable	treatment	standard,	the	most-favoured-nation	treatment
standard	and	national	treatment	standard.	It	provided	a	detailed	explanation	of	what	was	meant	for
investors	to	be	in	‘like	circumstances’	and	to	be	‘treated	differently’.	In	particular,	the	tribunal
placed	importance	on	the	size	of	the	project	and	amount	of	protest	from	public	bodies	the	projects
faced	as	differentiating	features.	One	may	query	whether	those	features	were	truly	‘differentiating’.
If	one	of	the	purposes	behind	a	Bi	Lateral	Investment	Treaty	was	to	provide	protection	of	an
investor's	investment	from	political	influences,	then	perhaps	using	the	degree	of	political	protest	as
a	differentiating	feature	ran	against	this	purpose.	Having	said	that,	it	did	not	appear	that	this
political	opposition	was	created	in	order	to	reject	BP's	project,	although	this	presumes	that	it	was
possible	to	differentiate	between	types	of	political	protest.
The	views	expressed	herein	are	entirely	those	of	the	author.
Date	of	Analysis:	14	March	2008
Analysis	by:	Christina	Loucas
Instruments	cited	in	the	full	text	of	this	decision:
International
Convention	on	the	Settlement	of	Investment	Disputes	Between	States	and	Nationals	of	Other	States
(18	March	1965)	575	UNTS	159,	entered	into	force	14	October	1966
Vienna	Convention	on	the	Law	of	Treaties	(23	May	1969)	1155	UNTS	331;	8	ILM	679	(1969);	63	AJIL
875	(1969),	entered	into	force	27	January	1980
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Agreement	between	the	Government	of	the	Republic	of	Lithuania	and	the	Government	of	the
Kingdom	of	Norway	on	the	Promotion	and	Mutual	Protection	of	Investments	dated	16	June	1992,
Articles	III,	IV,	VI,	IX
Joint	Activity	Agreement	between	Lithuania	and	Pinus	Proprius
Domestic
Law	on	Local	Fees	and	Charges
Decree	on	Clamping
Law	on	Self-Government
Agreement	between	the	City	of	Vilnius	and	the	Egapris	Consortium
Cases	cited	in	the	full	text	of	this	decision:
International	Centre	for	Settlement	of	Investment	Disputes
Azinian	and	ors	v	Mexico,	ICSID	Case	No	ARB(AF)/97/2;	IIC	22	(1999),	18	October	1999
Metalclad	Corporation	v	Mexico,	ICSID	Case	No	ARB(AF)/97/1;	IIC	161	(2000),	30	August	2000
Compaña	de	Aguas	del	Aconquija	SA	and	Vivendi	Universal	SA	v	Argentina,	ICSID	Case	No
ARB/97/3;	IIC	70	(2002),	3	July	2002
Tecnicas	Medioambientales	Tecmed	SA	v	Mexico,	ICSID	Case	No	ARB(AF)/00/2;	IIC	247	(2003),	29
May	2003
Generation	Ukraine	Inc	v	Ukraine,	ICSID	Case	No	ARB/00/9;	IIC	116	(2003),	15	September	2003
SGS	Société	Générale	de	Surveillance	SA	v	Philippines,	ICSID	Case	No	ARB/02/6;	IIC	224	(2004),
29	January	2004
Waste	Management,	Inc	v	Mexico,	ICSID	Case	No	ARB(AF)/00/3;	IIC	270	(2004),	30	April	2004
MTD	Equity	Sdn	Bhd	and	MTD	Chile	SA	v	Chile,	ICSID	Case	No	ARB/01/7;	IIC	174	(2004),	25	May
2004
CMS	Gas	Transmission	Company	v	Argentina,	ICSID	Case	No	ARB/01/8;	IIC	65	(2005),	12	May	2005
Azurix	Corp	v	Argentina,	ICSID	Case	No	ARB/01/12;	IIC	24	(2006),	14	July	2006
To	access	full	citation	information	for	this	document,	see	the	Oxford	Law	Citator	record
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Decision	-	full	text
Original	Source	PDF
1.		The	Parties
1.1		The	Claimant
1.2		The	Respondent
2.		The	Arbitral	Tribunal
2.1		Co-Arbitrator	Nominated	by	the	Claimant
2.2		Co-Arbitrator	Nominated	by	the	Respondent
2.3		Chairman	of	the	Arbitral	Tribunal
3.		Summary	of	the	Arbitral	Proceedings
3.1		Initiation	of	the	arbitration	and	constitution	of	the	Arbitral	Tribunal
3.2		First	Session	of	the	Tribunal
3.3		Pre-Hearing	Written	Phase
3.4		The	Evidentiary	Hearing
3.5		The	Post-Hearing	Briefs
4.		Main	Facts	Relating	to	the	Merits	of	the	Dispute
4.1		The	Tender
4.1.1		The	Bidders
4.1.2		Parkerings
4.1.3		The	Award	of	the	Bid	to	the	Egapris	Consortium
4.2		The	Agreement	between	the	Egapris	Consortium	and	the	Vilnius	Municipality
4.2.1		The	Negotiations	Regarding	the	Agreement
4.2.2		The	Agreement
4.2.2.1		The	Consortium's	Obligations	under	the	Agreement
4.2.2.2		The	Municipality's	Obligations	under	the	Agreement
4.2.2.3		Revenue	Sharing	Mechanism	under	the	Agreement
4.2.3		The	incorporation	of	the	Operator
4.3		Legality	of	the	agreement	and	modifications	of	laws
4.3.1		The	legality	of	the	parking	fee
4.3.2		The	new	Law	on	Fees	and	Charges
4.3.3		The	new	Law	on	Clamping
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4.3.4		The	amendment	of	the	Law	on	Self-Government
4.4		The	performance	of	the	agreeement
4.4.1		The	submission	of	Parking	Plans
4.4.2		The	Joint	Activity	Agreement
4.4.3		The	Pinus	Proprius	Project
4.4.4		The	modification	of	the	Agreement	of	30	December	1999
4.4.5		The	termination	of	the	Agreement	by	the	Municipality
5.		Position	of	the	Parties
5.1		The	Claimant
5.1.1		On	jurisdiction
5.1.2		On	the	merits
5.1.2.1		Breach	of	the	duty	to	grant	equitable	and	reasonable	treatment
5.1.2.2		Breach	of	the	obligation	of	protection
5.1.2.3		Breach	of	the	duty	to	afford	no	less	favourable	treatment
5.1.2.4		Breach	of	the	duty	not	to	expropriate	without	compensation
5.1.2.5		Damages
5.1.3		Prayers	for	relief
5.2		The	Respondent
5.2.1		On	jurisdiction
5.2.2		On	the	merits
5.2.2.1		Lithuania	has	not	frustrated	Claimant's	legitimate	expectations
5.2.2.2		There	has	been	no	expropriation	by	Lithuania
5.2.2.3		Lithuania	has	not	violated	its	duty	to	grant	Claimant	protection
5.2.2.4		The	Claimant	was	not	subject	to	any	discrimination
5.2.2.5		The	Claimant	is	not	entitled	to	compensation
5.2.3		Prayers	for	relief
6.		Issues	to	be	Determined	by	the	Tribunal
7.		Jurisdiction
7.1		Issues	for	determination
7.2		The	parties'	position
7.2.1		Parkerings
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7.2.2		The	Republic	of	Lithuania
7.3		Discussion	on	the	Tribunal's	jurisdiction
7.3.1		The	Claimant's	Investment
7.3.2		Did	the	claims	fall	under	the	Treaty?
8.		Merits
8.1		Claims	for	violation	of	the	duty	of	equitable	and	reasonable	treatment	(article	III	of
the	Treaty)
8.1.1		The	distinction	between	the	notions	of	fair	and	reasonable
8.1.2		Was	the	Treatment	“unfair	and	discriminatory”?
8.1.2.1		The	position	of	the	parties
8.1.2.2		Discussion
8.1.3		Was	the	conduct	or	the	Respondent	“arbitrary”	?
8.1.3.1		Position	of	the	parties
8.1.3.2		Discussion
a)		The	Sorainen	Memo
b)		The	Force	majeure
c)		The	termination	of	the	Agreement
8.1.4		Legitimate	expectations
8.1.4.1		Position	of	the	parties
8.1.4.2		Discussion
a)		Did	Lithuania	frustrate	Parkerings'	legitimate	expectation	that	it	would
respect	and	protect	the	legal	integrity	of	the	Agreement	?
8.2		Claims	for	violation	of	the	obligation	of	protection	(article	III	of	the	Treaty)
8.2.1		Position	of	the	parties
8.2.2		Discussion
8.3		Claims	for	violation	of	the	obligation	to	accord	treatment	no	less	favorable	than	the
Treatment	accorded	to	investments	by	investors	of	a	third	State	(article	IV	of	the
Treaty)
8.3.1		Position	of	the	parties
8.3.1.1		The	situation	of	the	Gedimino	MSCP
8.3.1.2		The	situation	of	the	Pergales	MSCP
8.4		Expropriation
8.4.1		Position	of	the	parties
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8.4.2		Discussion
9.		The	Issue	of	Costs
10.		The	Award
1.		The	Parties
1.1		The	Claimant
1.		Parkerings-Compagniet	AS	(“Parkerings”	or	“the	Claimant”)	is	a	corporation	organized	and
existing	under	the	laws	of	Norway.
2.		Parkerings'	principal	business	activity	consists	in	the	development	and	operation	of	public	and
private	parkng	facilities,	including	the	collection	of	parking	fees	and	the	enforcement	of	parking
regulations.
3.		Its	corporate	headquarters	are	located	at:
Økernveien	145,	9.	etg.
PO	Box	158	Økern
N-0509	Oslo,	Norway
4.		The	Claimant	is	represented	in	this	arbitration	by:
Mr.	David	W.	Rivkin
Mr.	Gaëtan	J.	Verhoosel
Mr.	William	H	Taft	V
Debevoise	&	Plimpton	LLP
919	Third	Avenue
New	York,	NY	10022
USA
Mr.	Zilvinas	Kvietkus
Norcous	&	Partners
A.	Goštauto	str.	12	A
01108	Vilnius
Lithuania
Ms.	Carita	Wallgren
Roschier	Holmberg,	Attorneys	Ltd.
Kreskuskatu	7A
00100	Helsinki
Finland
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1.2		The	Respondent
5.		The	Respondent	is	the	Republic	of	Lithuania	(“Lithuania”	or	“the	Respondent”).
6.		The	Respondent	is	represented	in	this	arbitration	by:
Mr.	Petras	Baguska,	Minister	of	Justice
Mr.	Paulius	Koverovas,	State	Secretary	of	the	Ministry	of	Justice
Ministry	of	Justice
Gedimino	pr.	30/1
011104	Vilnius
Lithuania
Mr	Alexander	Yanos
Freshfields	Bruckhaus	Deringer	LLP
520	Madison	Avenue,	34th	floor
New	York	NY	10022
USA
Ms.	Lucy	Reed
Mr.	Constantine	Partasides
Mr	Noah	Rubins
Freshfields	Bruckhaus	Deringer	LLP
2,	rue	Paul	Cézanne
75008	Paris
France
Ms.	Renata	Beržanskienè
Law	Office	Adamonis,	Beržanskienè	and	partners	Sorainen	Law	Offices
Jogailos	4
01116	Vilnius
Lithuania
2.		The	Arbitral	Tribunal
2.1		Co-Arbitrator	Nominated	by	the	Claimant
7.		Nominated	by	the	Claimant	in	its	Request	for	Arbitration	dated	11	March	2005:
Dr	Julian	D.	M.	Lew,	Q.C.
20	Essex	Street
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London	WC2R	3AL
United	Kingdom
2.2		Co-Arbitrator	Nominated	by	the	Respondent
8.		Nominated	by	the	Respondent	by	letter	dated	9	September	2005:
The	Honorable	Marc	Lalonde	P.C.,	O.C.,	Q.C.
1155	René-Levesque	Blvd	West
33 	floor
Montreal,	QC	H3B	3V2
Canada
2.3		Chairman	of	the	Arbitral	Tribunal
9.		Jointly	appointed	by	the	parties	by	letter	dated	3	October	2005:
Dr.	Laurent	Lévy
Schellenberg	Wittmer
15	bis,	rue	des	Alpes
P.O.	Box	2088
1211	Geneva	1
Switzerland
3.		Summary	of	the	Arbitral	Proceedings
3.1		Initiation	of	the	Arbitration	and	Constitution	of	the	Arbitral	Tribunal
10.		On	11	March	2005,	the	Claimant	filed	its	Request	for	Arbitration	with	the	Secretary-General	of
the	International	Centre	for	Settlement	of	Investment	Disputes	(“ICSID”).	With	respect	to	the
“method	of	appointment	of	the	Tribunal	and	appointment	of	arbitrator,”	¶	72	of	the	Request	set
forth	the	following:
The	Treaty	does	not	set	forth	any	particular	method	of	appointment	of	the	Tribunal.
Having	regard	to	Article	37	of	the	Convention	and	Rule	2	of	the	ICSID	Arbitration	Rules,
Parkerings	proposes	that	the	Tribunal	consist	of	three	arbitrators,	one	appointed	by	each
party	and	the	President	of	the	Tribunal	appointed	by	agreement	of	the	parties.
11.		Under	¶	73	of	the	Request	for	Arbitration,	the	Claimant	appointed	as	its	arbitrator	Dr.	Julian	D.
M.	Lew,	Q.C.	On	21	June	2005,	ICSID	informed	the	parties	that	Dr.	Lew	had	accepted	his
appointment	as	arbitrator.
12.		On	17	March	2005,	ICSID	addressed	to	the	Respondent	a	copy	of	the	Request	for	Arbitration.
13.		On	22	April	2005,	ICSID	requested,	in	accordance	with	Rule	2(1)(c)	of	the	Rules	of	Procedure
for	the	Institution	of	Conciliation	and	Arbitration	Proceedings	(Institution	Rules),	that	the	Claimant
communicate	to	the	Centre,	on	the	one	hand,	“information	concerning	the	consent	of	Parkerings-
Compagniet	AS	to	submit	the	dispute	with	the	Republic	of	Lithuania	to	ICSID,”	and,	on	the	other
hand,	“evidence	of	entry	into	force	of	the	bilateral	investment	treaty	between	the	Government	of
rd
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the	Republic	of	Lithuania	and	the	Government	of	the	Kingdom	of	Norway	of	June	16,	1992.”	The
Claimant	provided	the	requested	information	by	letter	dated	29	April	2005.
14.		On	16	May	2005,	the	Secretary-General	of	ICSID	issued	a	“Notice	of	Registration,”	stating	that
the	Request	for	Arbitration,	as	supplemented	by	counsel	for	the	Claimant's	letter	of	29	April	2005,
had	been	registered	in	the	Arbitration	Register.	He	also	invited	the	parties	to	“communicate	[…]
any	provisions	agreed	by	them	regarding	the	number	of	arbitrators	and	the	method	of	their
appointment.”
15.		By	letter	dated	27	May	2005,	the	Respondent	informed	ICSID	that	“it	raises	no	objection	to	the
Parkerings-Compagniet	AS	proposal	regarding	the	Arbitral	Tribunal	consisting	of	three
arbitrators.”
16.		By	letter	dated	8	August	2005,	the	Respondent	requested	an	extension	of	the	15	August	2005
deadline	for	the	constitution	of	the	Tribunal	to	15	September	2005.	By	letter	dated	12	August	2005,
the	Claimant	declared	that	it	did	not	object	to	such	time	extension.
17.		By	letter	dated	9	September	2005,	counsel	for	the	Respondent	appointed	the	Honorable	Marc
Lalonde	P.C.,	O.C.,	Q.C.	as	arbitrator.	On	15	September	2005,	ICSID	informed	the	parties	that	Mr.
Lalonde	had	accepted	his	appointment.
18.		On	3	October	2005,	counsel	for	the	parties	jointly	informed	ICSID	of	the	parties'	agreement	to
appoint	Dr	Laurent	Lévy	as	President	of	the	Tribunal.	By	letter	dated	10	October	2005,	Dr	Lévy
accepted	his	appointment.
19.		On	12	October	2005,	ICSID	informed	the	parties	that	all	three	arbitrators	had	accepted	their
appointment	and	that	the	Arbitral	Tribunal	was	deemed	to	have	been	constituted	and	the
proceedings	to	have	begun	on	that	same	day.
3.2		First	Session	of	the	Tribunal
20.		The	Arbitral	Tribunal	held	a	first	session	on	25	November	2005	in	London,	UK.	In	addition	to	the
Members	of	the	Tribunal	and	the	Secretary,	the	following	persons	attended	the	hearing:
(i)		Representing	Parkerings:
•		Ms.	Carita	Wallgren,	Roschier	Holmberg,	Attorneys	Ltd.,
•		Mr.	Gaëtan	J.	Verhoosel,	Debevoise	Plimpton	LLP,	and
•		Mr.	Zilvinas	Kvietkus,	Norcous	&	Partners.
(ii)		Representing	Lithuania:
•		Mr.	Paulius	Koverovas,	State	Secretary	of	the	Ministry	of	Justice	of	the	Republic	of
Lithuania,
•		Mr.	Constantine	Partasides,	Freshfields	Bruckhaus	Deringer	LLP,
•		Mr.	Noah	Rubins,	Freshfields	Bruckhaus	Deringer	LLP,	and
•		Ms.	Renata	Beržanskienè,	Law	Office	Adamonis,	Beržanskienè	and	partners
Sorainen	Law	Offices.
21.		A	sound	recording	was	made	of	the	hearing,	copies	of	which	were	sent	to	the	parties.	The
Secretary	also	prepared	summary	minutes	of	the	session,	a	certified	copy	of	which	was	sent	to	the
parties	on	18	January	2006.
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22.		At	the	outset	of	the	hearing,	a	number	of	procedural	issues	were	dealt	with.	In	particular,	it	was
agreed	that,	pursuant	to	Article	44	of	the	ICSID	Convention,	the	proceedings	would	be	conducted	in
accordance	with	the	ICSID	Arbitration	Rules	in	force	since	1	January	2003.	It	was	also	agreed	that
the	place	of	the	proceedings	would	be	Paris,	France,	and	that,	in	accordance	with	Article	22	of	the
ICSID	Arbitration	Rules,	the	language	of	the	proceeding	would	be	English.	During	the	course	of	the
session,	the	parties	acknowledged	that	the	Tribunal	has	been	duly	constituted.
23.		The	Arbitral	Tribunal	and	the	parties	agreed	on	the	following	time	table:
The	Claimant	shall	file	its	memorial	on	the	merits	by	February	10,	2006;
The	Respondent	shall	file	its	counter-memorial	on	the	merits,	any	jurisdictional
objections	and	any	request	for	bifurcation	of	the	proceeding	by	June	12,	2006;
The	Claimant	shall	file	its	observations	on	the	Respondent's	request	for	bifurcation,	if
any,	by	July	3,	2006;
A	pre-hearing	conference	limited	to	pending	procedural	questions	will	be	held	in	Paris	on
August	28,	2006;	and
A	hearing	on	the	merits	or	on	jurisdiction	or	on	both	will	be	held	in	Paris	on	November	6–
10,	2006.
3.3		Pre-Hearing	Written	Phase
24.		On	17	January	2006,	the	Claimant	filed	a	request	for	the	production	of	documents.
25.		On	20	January	2006,	the	Respondent	acknowledged	receipt	of	the	Claimant's	document
production	request,	and	filed	its	comments	thereon.
26.		On	24	January	2006,	the	President	of	the	Tribunal	invited,	on	the	one	hand,	the	Claimant	to
submit	its	reply	to	the	Respondent's	observations	within	four	days,	and,	on	the	other	hand,	the
Respondent	to	submit	its	rejoinder	within	four	days	of	the	reply.	The	President	of	the	Tribunal	also
invited	the	Respondent	to	gather	and	communicate	to	the	Claimant	all	the	documents	that	it
accepted	to	produce	without	awaiting	a	decision	from	the	Tribunal.
27.		By	letter	dated	27	January	2006,	counsel	for	the	Claimant	informed	the	Tribunal	that	the	parties
had	agreed	upon	the	following	production	schedule,	subject	to	the	agreement	of	the	Tribunal:
1.		By	February	6,	2006,	Respondent	shall:	(i)	produce	to	Claimant	the	documents
responsive	to	categories	(a),	(b),	(d),	(e),	(f),	(g),	and	(h)	of	the	Application;	and	(ii)	inform
Claimant	whether	and,	if	so	by	when,	it	expects	to	be	in	a	position	to	produce	to	Claimant
the	documents	responsive	to	categories	(c),	(i),	(j),	(k),	(l),	and	(m)	of	the	Application.
2.		If	by	February	6,	2006,	Respondent	confirms	a	schedule	for	the	production	of	the
documents	responsive	to	categories	(c),	(i),	(j),	(k),	(l),	and	(m),	the	parties	shall	endeavor
to	reach	an	agreement	on	any	adjustments	to	the	schedule	of	the	arbitral	proceedings
required	by	such	proposed	schedule,	on	the	understanding	that:	(i)	any	such	adjustments
shall	not	affect	the	August	28,	2006	pre-hearing	conference	or	the	evidentiary	hearing
scheduled	for	November	6–10,	2006;	(ii)	Claimant's	Memorial	shall	be	due	by	a	date	no
earlier	than	February	17,	2006;	and	(iii)	any	extension	accorded	to	Claimant,	at	a
minimum,	shall	not	diminish	the	amount	of	time	allotted	to	Respondent	for	the	submission
of	its	Counter-Memorial.
3.		Should	the	parties	have	any	dispute	over	the	scope	or	schedule	of	production	proposed
by	Respondent	by	February	6,	2006	in	accordance	with	¶¶	1	or	2	above,	they	shall	promptly
submit	such	dispute	to	the	Tribunal	for	resolution.	The	parties	agree	that,	should	such	a
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dispute	arise,	Claimant's	Memorial	shall	be	due	by	a	date	no	earlier	than	February	17,	2006,
and	the	parties	shall	consult	to	agree	on	a	mutually	acceptable	schedule	for	submissions,
again	with	the	understanding	that	the	August	28,	2006	prehearing	conference	and	the
evidentiary	hearing	scheduled	for	November	6–10,	2006	shall	not	be	affected	and	that	such
schedule,	at	a	minimum,	shall	not	diminish	the	amount	of	time	allotted	to	Respondent	for	the
submission	of	its	Counter-Memorial.
28.		Counsel	for	the	Claimant	added	that	“in	light	of	the	[…]	agreed	Schedule,	Claimant	withdraws
the	Application	at	this	time.	Claimant's	right	to	revive	the	Application	in	whole	or	in	part	is
reserved	in	accordance	with	¶	3	of	the	Schedule.”
29.		By	letter	dated	17	February	2006,	counsel	for	the	Claimant	informed	the	Tribunal	that	the
parties	had	agreed	on	the	following	further	adjustments	to	the	schedule	of	the	arbitral	proceedings,
subject	to	the	agreement	of	the	Tribunal:
•		Claimant	shall	submit	its	Memorial	on	February	24,	2006.
•		Respondent	shall	submit	its	Counter-Memorial	on	June	26,	2006.
•		Claimant	shall	file	its	observations	on	Respondent's	request	for	bifurcation,	if
any,	by	July	17,	2006;
The	dates	scheduled	for	the	pre-hearing	conference	(August	28,	2006)	and	the
evidentiary	hearing	(November	6–10,	2006)	remain	unchanged.
30.		On	17	February	2006,	the	Secretary	wrote	to	the	parties	to	confirm	the	new	schedule	for	the
submission	of	written	pleadings	as	agreed	upon	by	the	parties.
31.		On	27	February	2006,	the	Secretary	received	the	Claimant's	Memorial,	with	accompanying
documentation	(two	witness	statements,	one	expert	report,	exhibits	numbered	CE	1	through	CE
259,	and	authorities	numbered	CA	1	through	CA	57),	under	cover	of	a	letter	dated	24	February
2006
32.		By	letter	dated	5	June	2006,	the	Claimant	filed,	in	agreement	with	the	Respondent,	the	following
additional	documents	to	complement	its	submission	of	24	February	2006:
(i)		a	supplemental	statement	by	Mr.	Carlos	Lapuerta	responding	to	corrected	parking
revenue	data	provided	by	Respondent	following	submission	of	Mr.	Lapuerta's	expert	report
on	February	24,	2006;
(ii)		four	new	exhibits	(CE	260–263)	consisting	of	documents	produced	by	Respondent	on
May	22,	2006	in	response	to	a	supplemental	document	request	by	Claimant,	including
excerpted	translations;	and
(iii)		in	accordance	with	Arbitration	Rule	25,	the	annexed	list	of	corrections	of	accidental
errors	in	Claimant's	February	24,	2006	submission,	as	well	as	corrected	versions	of	four
exhibits	submitted	with	Claimant's	Memorial	and/or	their	translations	(CE	21,	54,	70	and
247).	This	list	and	these	corrected	exhibits	were	previously	provided	to	Respondent	on
May	4,	2006.
33.		By	letter	dated	27	June	2006,	counsel	for	the	Respondent	sought	“the	Tribunal's	approval	of
the	parties'	agreement	to	grant	the	Republic	an	extension	for	the	filing	of	its	Counter-Memorial
until	July	24,	2006,	subject	to	the	following	two	conditions:	(i)	the	Republic's	commitment	not	to
seek	any	bifurcation	of	the	proceedings;	and	(ii)	the	maintenance	of	the	remainder	of	the
schedule	as	agreed	at	the	procedural	hearing	(including	the	dates	of	the	August	2006	pre-
hearing/preliminary	conference	on	procedural	questions	and	the	November	2006	hearing	on	the
merits).”	Counsel	for	the	Respondent	further	confirmed	that	“the	Republic	will	comply	with	the
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above	conditions	and	will	be	filing	its	Counter-Memorial	within	the	agreed	deadline.”
34.		By	email	of	28	June	2006	and	letter	dated	30	June	2006,	the	Secretary	informed	the	parties	of
the	Tribunal's	approval	of	their	agreement	to	extend	the	time	limit	for	the	filing	of	the	Counter-
Memorial	until	24	July	2006.
35.		On	25	July	2006,	counsel	for	the	Respondent	filed	its	Counter-Memorial	and	accompanying
documents	(two	witness	statements,	one	expert	report,	exhibits	numbered	RE	1	through	RE	94,	and
authorities	numbered	RA	1	through	RA	49).
36.		On	28	August	2006,	the	Tribunal,	the	parties,	and	the	Secretary	held	a	pre-hearing	telephone
conference,	at	the	close	of	which	the	President	of	the	Tribunal	issued	directions	regarding	the
parties'	opening	statements	and	the	evidence	that	counsel	for	the	parties	would	wish	to	present
during	the	hearing.	The	President	of	the	Tribunal	further	authorized	the	Claimant	to	file,	by	15
September	2006	at	the	latest,	two	additional	statements	of	new	witnesses	as	well	as	new	exhibits,
provided	that	the	issues	discussed	in	the	additional	witness	statements	and	the	new	exhibits	be
strictly	limited	to	rebuttal	of	allegations	made	by	the	Respondent	in	its	written	submission	or	by	the
Respondent's	witnesses,	and	do	not	pertain	to	allegations	already	made	by	the	Claimant	or
contemplated	by	its	witnesses	in	prior	submissions.	The	President	also	authorized	the	Respondent
to	file,	by	20	October	2006	at	the	latest,	additional	statements	of	new	witnesses	(in	principle,	no
more	than	two)	or	supplemental	statements	of	existing	witnesses,	as	well	as	additional	exhibits,
provided	that	the	facts	discussed	in	these	additional/supplemental	witness	statements	and	exhibits
be	strictly	limited	to	rebuttal	of	allegations	made	by	the	Claimant's	new	witnesses	or	of	the	contents
of	the	Claimant's	additional	exhibits.	The	President	of	the	Tribunal	invited	the	parties	to	inform	the
Tribunal,	by	27	October	2006	at	the	latest,	which	additional	witness(es)	would	be	called	for	oral
examination	and	which	adjustments	would	need	to	be	made	with	respect	to	the	sequence	and
timing	of	witness	examination.	Finally,	the	President	of	the	Tribunal	issued	the	following	additional
directions:
•		Witnesses	will	be	allowed	in	the	hearing	room	at	any	time	(i.e	before	and	after	their
examination).	Either	party	may,	however,	apply	for	the	exclusion	of	one	or	more	witnesses
from	the	hearing	room,	at	certain	or	all	times.	To	avoid	wasting	time	on	procedural	issues
during	the	hearing	week,	counsel	are	invited	to	confer	before	filing	any	such	application.
•		The	issue	whether	counsel	shall	have	the	opportunity	to	make	oral	closing	statements
and/or	to	file	post-hearing	briefs	shall	be	discussed	at	the	hering.	The	Tribunal	shall	issue
a	determination	in	this	respect	by	Wednesday	12	November	2006	at	the	latest,	upon
request	from	the	parties,	if	not	ex	officio.
•		Upon	agreement	between	the	parties,	the	hearing	shall	end	on	Friday	at	1:30	p.m.	at	the
latest.
37.		On	15	September	2006,	Parkerings	filed:
•		two	additional	statements	of	new	witnesses	(Björn	Öberg	and	Sigitas	Burnickas);
•		two	new	legal	authorities	that	had	allegedly	only	been	issued	and	become	available	after
Parkerings'	submission	of	24	February	2006	(CA	58	and	CA	59);	and
•		37	new	exhibits	(CE	264-CE	300).
38.		On	20	October,	Lithuania	filed:
•		two	additional	statements	of	new	witnesses	(Jonas	Endriukaitis	and	Ingrida	Simonyte);
•		two	new	legal	authorities	(RA	50	and	RA	51);	and
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•		9	new	exhibits	(RE	95-RE	103).
39.		On	the	same	date,	Parkerings	filed	five	additional	documents	(CE	301-CE	305).
40.		On	30	October	2006,	Lithuania	wrote	that	it	had	no	objection	to	the	Claimant's	submission	of
Exhibits	301-305.	On	the	same	date,	Lithuania	filed	additional	documents	(RE	104	—	RE	108).	The
Claimant	did	not	object	to	the	new	exhibits.
3.4		The	Evidentiary	Hearing
41.		On	27	October	2006,	the	Claimant	addressed	to	the	Tribunal	a	letter	regarding	the	witnesses	it
would	put	forward	at	the	hearing.	On	30	October	2006,	the	Respondent	filed	a	similar
communication	in	this	respect.
42.		The	evidentiary	hearing	was	held	in	Paris	on	6,	7,	8,	9	and	10	November	2006,	in	the	course
of	which	the	following	witnesses	and	experts	were	heard:
1.		Mr.	Bjørn	Havnes
2.		Mr.	Sigitas	Burnickas
3.		Mr.	Jonas	Tamulis
4.		Mr.	Björn	Oberg
5.		Professor	Gintautas	Bartkus
6.		Mr.	Robertas	Staskevicius
7.		Mr.	Raivydus	Rukstele
8.		Mr.	Jonas	Endriukaitis
9.		Ms.	Ingrinda	Šimonyt?
10.		Mr.	Carlos	Lapuerta
11.		Mr.	Tim	Giles
43.		During	the	hearing,	the	Claimant	filed	additional	documents	(CE	306	—	CE	311)	and	two
additional	authorities	(CA	60	and	CA	61)
44.		Shortly	after	the	hearing,	the	Arbitral	Tribunal	and	the	parties	agreed	on	the	procedural	follow-
up	to	the	hearing.	In	particular,	they	agreed	that	the	parties	would	file	simultaneous	post-hearing
briefs	on	8	December	2006;	the	parties	would	file	simultaneous	reply	post-hearing	briefs	consisting
in	a	short	letter	response	within	one	week	of	the	first	submission;	and	the	parties	would	submit	their
respective	statements	on	costs	jointly	with	their	post-hearing	briefs	and	a	statement	summarizing
the	costs	by	22	December	2006.
3.5		The	Post-Hearing	Briefs
45.		The	parties	simultaneously	filed	their	first	post-hearing	briefs	on	8	December	2006.
46.		On	15	December	2006,	Parkerings	sent	a	letter	to	the	Tribunal	which	identified	errors	in
Lithuania's	Counter-memorial	and	Lithuania's	post-hearing	brief.
47.		On	22	December	2006,	the	parties	filed	their	statement	of	costs.
48.		On	19	January	2007,	the	Tribunal	informed	the	parties	that	it	did	not	find	necessary	to	hold	an
additional	hearing.
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49.		On	9	May	2007,	Parkerings	filed	a	revised	statement	of	costs.
50.		On	25	May	2007,	the	Tribunal	declared	the	proceedings	closed	in	accordance	with	Rule	38(1)
of	the	Arbitration	Rules.
4.		Main	Facts	Relating	to	the	Merits	of	the	Dispute
4.1		The	Tender
51.		Following	Lithuania's	gradual	transition	between	1991	and	1997	from	a	Soviet	Republic	to	a
candidate	for	EU	membership	and	a	market	economy,	the	Municipality	of	the	City	of	Vilnius	decided
to	create	a	modern,	integrated	parking	system	for	the	City	of	Vilnius,	in	order	to	control	traffic	and
protect	the	integrity	of	the	City's	historic	Old	Town.
52.		The	Municipality	announced	a	tender	(the	“Vilnius	Tender”)	for	the	purpose	of	obtaining
private	investment	in	connection	with	the	design	and	operation	of	this	parking	system,	including	the
construction	of	two	multi-storey	car	parks	(“MSCP”).
53.		On	13	November	1997,	the	“Organisation	of	Investment	Development	Tender	Regulations”
was	approved	by	the	Board	of	Vilnius	City	by	Decision	No.	1819V	(RE	7).	The	Mayor	charged	the
“Commission	on	Organization	of	Tenders	for	the	Lease	of	Land	Plots”	with	the	organization	of
investment	development	tenders,	and	appointed	his	advisor,	Robertas	Staskevicius,	as	“head	of
the	working	party”	(RE	7).	The	Commission	retained	the	services	of	a	Dutch	consulting	firm,
Tebodin	Consultants	and	Engineers	(“Tebodin”),	for	technical	advice	on	the	tender	process.
4.1.1		The	Bidders
54.		Of	the	seven	potential	bidders	which	responded	to	the	City's	tender	and	expressed	an	interest
in	the	construction	of	MSCP	(RE	8),	only	two	returned	signed	letters	of	intent	to	the	City	(RE	9	and
RE	10).	These	two	bidders	(the	“Bidders”)	were	Egapris,	a	Lithuanian	waste	management	company,
and	the	“Getras	Consortium”	composed	of	Getras,	a	French	investor	acting	through	its	Lithuanian
subsidiary,	UAB	Getras	Lietuva,	and	three	Lithuanian	partners,	namely	AB	Ekinsta,	Bank	Hermis,
and	UAB	Savy.
55.		Together	with	a	Swiss	company,	Egapris	submitted	a	proposal	(“Investment	Project	Vilnius
Parking	System”)	to	construct	“automated	car	parking	lots	and	garages.”	More	specifically,
according	to	Egapris'	proposal,	the	funds	were	to	be	invested,	inter	alia,	in	ticket	machines,	MSCP,
and	various	equipments	and	tools	(RE	13).
56.		The	Getras	Consortium,	on	the	other	hand,	proposed,	in	its	business	plan	on	the
“development	and	exploitation	of	car	parking	lot	system	in	Vilnius	city,”	the	construction	of	two
underground	parking	lots	near	the	Opera	and	Ballet	Theatre,	on	the	one	hand,	and	the	Railroad
Station,	on	the	other	hand.	The	Getras	Consortium	predicted	that	the	construction	of	the	facilities
could	be	completed	within	six	years	(RE	12).
57.		On	7	July	1998,	Tebodin	issued	an	“Evaluation	of	Proposals	for	the	Parking	System	in	Vilnius
—	Final	Report”	(RE	16).	In	this	Final	Report,	Tebodin	concluded	that	“the	Egapris	proposal
generates	higher	risk	to	Vilnius	Municipality.	The	quality	provided	to	Vilnius'	residents	a[n]d
other	system	users	will	be	lower	and	the	risk	of	inconvenience	is	therefore	higher.	The	parking
offered	by	GETRAS	may	be	constructed	without	any	increased	risk,	following	the	rules	for	parking
design	(by	the	European	Parking	Association).[…]”
58.		A	new	commission	created	by	the	City,	known	as	the	“Investment	Development	Commission”
(the	“Commission”),	in	turn,	issued	the	following	recommendation:
Considering	evaluation	done	by	international	experts,	to	suggest	to	Vilnius	city	Board	to
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approve	consortium	Vilniaus	miesto	urbanistinis	vystymas	(enterprise	Getras,	share
company	Ekinsta,	private	limited	liability	company	Savy,	share	company	bank	Hermis,
Lietuvos	vystymo	bankas)	as	a	further	negotiation	partner	in	the	contest	of	Investment
Development	regarding	creation	of	Vilnius	city	parking	lots	system	[(RE	16)].
59.		The	City	thereafter	instructed	that	a	second	stage	of	negotiations	take	place	with	the	above-
mentioned	two	entities	(Egapris	and	the	Getras	Consortium)	under	the	existing	tender.	Indeed,	on
10	September	1998,	the	Board	of	Vilnius	City	issued	the	following	Decision	No.	1709V:
1.		To	approve	the	consortium	Vilniaus	miesto	urbanistinis	vystymas	(company	Getras,	public
company	Ekinsta,	private	company	Savy,	share	company	bankas	Hermis,	Lithuanian
Development	Bank)	and	private	company	Egapris	as	further	partners	of	negotiations	in	the
Investment	development	tender	for	the	development	of	Vilnius	city	car	parking	system.
2.		To	obligate	the	commission	for	organization	of	investment	development	tenders	to
select,	by	10	October	1998,	one	object	at	a	time	from	the	1st	stage	of	Multi-storey	parking
investment	project	program	for	technical	planning	in	the	following	manner:	1)	consortium
Vilniaus	urbanistinis	vystymas,	2)	private	company	Egapris	[(RE	19)].
60.		The	City	then	transferred	the	responsibility	of	the	tender	process	to	the	Commission	and
replaced	Tebodin	with	a	Geran	firm,	MAS	Consult,	which	was	to	provide	services	with	respect	to
further	submissions	by	Egapris	and	the	Getras	Consortium	(RE	22).
61.		In	the	course	of	a	meeting	held	in	March	1999,	the	Bidders	advised	the	City	that	they	did	“not
agree	to	construct	multi-storey	parking	lots	without	being	entitled	to	manage	the	on-street
parking	system”	(RE	24).	The	City	agreed	to	grant	to	the	Bidders	the	management	of	the	on-street
parking	system	as	well.
4.1.2		Parkerings
62.		Parkerings	was	established	in	1996.	The	founder	and	managing	director	of	Parkerings	since
1999	is	Roger	Skaug.	Parkerings'	majority	shareholder,	through	the	majority	holding	in	Indre	by
Eindom	AS,	is	Skips	AS	Tudor	(“Skips”),	an	investment	firm	with	a	diversified	industrial	portfolio
ultimately	controlled	by	Mr.	Wilhelm	Wilhelmsen.	Mr.	Wilhelmsen	is	a	well-known	Norwegian
entrepreneur	and	chairman	of	the	Wilh.	Wilhelmsen	Group,	a	publicly	listed	conglomerate	and	a
global	leader	in	the	car	carrier	industry.	Skips	acquired	its	participation	in	Eindom	AS/Parkerings
from	Conceptor,	a	Norwegian	development	company,	in	December	2000.
63.		With	a	view	to	participating	in	the	Vilnius	Tender,	Parkerings	incorporated	Baltijos	Parkingas
UAB	(“BP”),	its	wholly-owned	Lithuanian	subsidiary	(CE	195).
64.		On	8	April	1999,	Egapris	informed	the	City	that	BP	would	join	the	Egapris	bid.	A	power	of
attorney	signed	on	that	date	indicated	that	Egapris	authorized,	inter	alia,	“Mr.	Jonas	Tamulis	—	the
consultant	of	UAB	‘Baltijos	Parkingas’,	”	and	“Mr.	Roger	Skaug	—	the	director	of	‘Parkerings	—
Compagnies	AS”	to	“lead	negotiations	regarding	‘Vilnius	City	on-street	parking	and	construction
of	multi-storey	car	parks	and	creation	of	a	unified	system’	conducted	by	the	municipality”	(RE
25).	A	consortium	agreement	(the	“Consortium	Agreement”)	was	signed	by	Egapris	and	BP	on	14
April	1999.	Egapris	and	BP	thereafter	formed	the	“Egapris	Consortium”	(RE	26).	The	Consortium
Agreement	provided,	inter	alia,	the	following:
1.		By	this	agreement	the	Parties	agree	to	establish	a	consortium	and	to	participate	jointly
as	consortium	in	the	tender	for	the	design,	establishment	and	implementation	of	Vilnius
City	parking	system	announced	by	Vilnius	City	municipality,	in	such	a	way	broadening
financial	and	technical	possibilities	to	satisfy	the	tender	requirements.
2.		The	Parties	agree	that	from	now	on	the	Consortium	shall	participate	in	the	tender,	shall
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render	offers	and	carry	on	negotiations	as	indivisible	person,	instead	of	UAB	“Egapris”,	all
the	rights	and	obligations	whereof	related	with	the	participation	in	the	tender,	shall	be
transferred	to	the	Consortium.
3.		The	Parties	undertake	to	jointly	participate	in	negotiations	with	the	representatives	of
Vilnius	City	municipality,	taking	into	account	the	possibilities	and	aims	of	each	other,	by
giving	the	preference	to	reasonable	agreement	to	render	efforts	to	the	municipality	only
after	agreement	on	the	joint	implementation,	financial	and	technical	sources	thereof.	The
negotiations	shall	be	carried	out	by	the	joint	negotiation	group	[…].
4.		The	shareholders	of	UAB	“Baltijos	parkingas”	—	Parkerings	Compagniet	AS,	a
Norwegian	enterprise,	shall	render	technical	consultations	to	consortium	and	provide	the
consortium	with	know-how,	necessary	for	the	successful	completion	of	negotiations	and
implementation	of	the	agreement	with	the	City.	UAB	“Baltijos	parkingas”	shall	be
responsible	for	preparing	all	information	and	proposal	as	required	by	Vilnius	City
Municipality.	UAB	“Egapris”	shall	provide	all	required	information	on	the	company	and
technical	information	on	equipment	planned	to	be	used.	[…]	[(RE	26)]
65.		In	April	1999,	UAB	Savy	left	the	Getras	Consortium.
4.1.3		The	Award	of	the	Bid	to	the	Egapris	Consortium
66.		On	25	May	1999,	the	Getras	Consortium,	on	the	one	hand,	and	the	Egapris	Consotium,	on	the
other	hand,	submitted	summary	letters	outlining	the	terms	of	their	final	proposals.
67.		The	proposal	prepared	by	the	Getras	Consortium	read	as	follows:
6.		Investment	obligations
6.1		The	construction	of	multi-storey	car	parks:
6.1.1		The	Consortium	obliges	to	construct	approximately	14	multi-
storey	car	parks,	i.e.	to	create	approximately	5300	multi-storey
parking	places,	taking	into	consideration	the	prepared	Vilnius	city
parking	plan.
6.1.2		The	Consortium	obliges	to	project	and	construct	not	less	than	a
minimal	number	(2)	of	multi-storey	car	parks	within	one	year	from	the
beginning	of	the	construction	works.
6.1.3		The	Consortium	obliges	to	construct	approximately	14	multi-
storey	car	parks	within	8	years	from	the	beginning	of	the	construction
of	the	first	two	car	parks,	taking	into	consideration	the	prepared	Vilnius
city	parking	plan	and	the	commercial	validity.
6.1.4		The	Consortium	obliges	to	invest	necessary	funds,	not	less	than
120	million	Litas,	into	the	construction	of	multi-storey	car	parks	during
the	defined	period.
6.1.5		The	Consortium	obliges	to	perform	all	necessary	investments
and	works	related	to	the	construction	of	multi-storey	car	parks	under
the	approved	parking	plan	and	schedule.
6.2		The	Consortium	obliges	to	install	ticket	machines,	serving	for	on-street
parking	places	in	Vilnius	city	under	the	plan	and	requirements,	approved	by
the	Municipality.
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6.2.1		The	Consortium	obliges	to	install	1	ticket	machine	for	15	on-
street	parking	places.	Ticket	machines	will	be	installed	within	3
months	after	the	signing	of	the	Agreement,	after	interception	of
parking	activities	from	SP	UAB	“Komunalinis	ukis”.	[(emphasis	added)]
6.2.2		The	Consortium	obliges	to	perform	all	other	investments	related
to	on-street	parking	under	the	parking	plan,	approved	by	the
Municipality.
6.2.3		The	Consortium	obliges	to	invest	not	less	than	1800	Litas	for
one	available	and	to	be	created	in	the	future	on-street	parking	place.
6.3		The	Consortium	obliges	to	invest	into	the	development	of	car	parks,
transferred	under	the	exploitation	agreement.
6.4		All	investments	into	the	development	of	the	parking	system,	established
in	the	Agreement,	will	be	performed	by	declaring	contests	(including	for
constructional	works	and	machinery	supply).
[…]	[(RE	27)]
68.		In	turn,	the	proposal	dated	25	May	1999,	prepared	by	the	Egapris	Consortium	read	as	follows:
6.		Investment	obligations
6.1		Construction	of	multi-storey	car	parks:
6.1.1		The	Consortium	undertakes	to	construct	not	less	than	10	multi-
storey	car	parks,	i.e.	to	develop	not	less	than	3000	multi-storey
parking	places.
6.1.2		The	Consortium	undertakes	to	start	designing	a	minimum
number	(2)	of	multi-storey	car	parks	immediately	after	the	Signature	of
this	Agreement	and	to	commence	their	construction	immediately	after
receipt	or	permits	from	relevant	institutions	and	the	Municipality.
6.1.3		The	Consortium	undertakes	to	construct	not	less	than	two	multi-
storey	car	parks	each	year	starting	from	2000,	subject	to	the	general
parking	plan.
6.1.4		During	a	defined	period	of	time,	the	Consortium	undertakes	to
invest	in	the	construction	of	multi-storey	car	parks	not	less	than	LTL
140	million.	This	period	will	depend	on	the	terms	for	approval	of	the
general	parking	plan,	the	results	of	the	pre-project	works	and	the
possibility	to	obtain	requisite	building	permits	from	relevant
institutions.
6.1.5		The	Consortium	undertakes	to	make	all	necessary	investments
and	to	perform	the	works	all	in	connection	with	the	constitution	of
multi-storey	parking	lots	according	to	the	approved	parking	plan.
6.2		The	Consortium	undertakes	to	install	ticket	machines	serving	the	on-
street	parking	places	in	the	city	of	Vilnius	according	to	the	requirements
approved	by	the	Municipality,	ensuring	the	possibility	to	make	settlements
in	cash	and	by	different	types	of	cards.
6.2.1		The	Consortium	undertakes	to	install,	within	6	months	as	from
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the	signature	date	of	the	Agreement,	requisite	number	of	ticket
machines	in	the	currently	existing	on-street	parking	places.
6.2.2		The	Consortium	undertakes	to	install	in	Vilnius	city,	within	24
months	as	from	the	signature	date	of	the	Agreement,	not	less	than	350
ticket	machines	according	to	the	parking	plan	approved	by	the
Municipality.
6.2.3		The	Consortium	undertakes	to	install	in	total	not	less	than	350
ticket	machines	in	Vilnius	city	and	to	place	1100	parking	signs
according	to	the	parking	plan	approved	by	the	Municipality,	upon
receipt	of	relevant	permits	from	the	Municipality,	the	Police	and	other
institutions.
6.2.4		The	Consortium	undertakes	to	make	other	investments	relating
to	the	onstreet	parking	according	to	the	parking	plan	approved	by	the
Municipality.
6.2.5		The	Consortium	undertakes	to	invest	not	less	than	LTL	10,3
million	in	the	on—street	parking.
6.2.6		The	Consortium	will	seek	to	build	not	less	than	6000	on-street
parking	lots	within	the	5	years	period.
6.3		All	investment	in	the	development	of	the	parking	system	contemplated	in
this	Agreement	will	be	made	by	way	of	tender	(Including	tenders	for
construction	and	equipment	supply	works).
[…]	[(RE	28)]
69.		MAS	Consult	thereafter	issued	a	report	recommending	that	the	City	refrain	from	naming	a
winner	(RE	29).	With	respect	to	the	technical	aspects	of	the	project,	MAS	Consult	stated	that	“it	is
foreseen	that	the	awarded	tender	will	have	to	construct	and	develop	3,000	multi-storey	parking
spaces,	as	well	as	to	automate	and	manage	6,000	on-street	parking	spaces	(the	data	may	be
corrected	in	the	process	of	preparation	of	the	parking	layout)”	(RE	29).
70.		On	6	June	1999,	the	Commission,	on	the	other	hand,	“approve[d]	the	position	suggested	by
the	negotiation	group	to	orientate	in	further	negotiations	to	a	10-year	agreement	validity	term
[…]”	(RE	30).	The	Commission	concluded	that	“taking	into	consideration	the	agreement	validity
terms	suggested	by	the	consortium	of	UAB	Egapris	and	UAB	Baltijos	parkingai	and	the
consortium	Vilniaus	miesto	urbanistinis	vystymas	[…],	and	having	adopted	the	initial	position
regarding	the	agreement	validity	term	[mentioned	above],	the	proposal	of	the	consortium	of	UAB
Egapris	and	UAB	Baltijos	parkingai	[was]	more	favourable	to	Vilnius	City	Municipality”	(RE	30).
The	Commission	therefore	resolved	to	“recommend	to	the	committees	of	Vilnius	City	Council	and
the	Board	of	Vilnius	City	to	consider	the	possibility	of	negotiations	on	the	conditions	of	the
agreement	with	the	consortium	of	UAB	Egapris	and	UAB	Baltijos	parkingai,	and	to	familiarize
them	with	the	proposals	made	by	the	consortium	Vilniaus	miesto	urbanistinis	vystymas”	(RE	30).
71.		On	29	July	1999,	the	Egapris	Consortium	sent	to	the	City	a	first	draft	agreement	(the	“First
Draft”	).	Article	7.3	read:	“The	Municipality	undertakes	to	insure	the	investments	of	the	Consortium
partners	against	political	risk”	(RE	33).
72.		By	decision	No.	1478V	issued	on	19	August	1999,	the	Board	of	the	City	of	Vilnius	“approve[d]
the	Consortium	of	UAB	Egapris	and	UAB	Baltijos	parkingas	as	further	partner	of	negotiations
regarding	the	creation	of	conditions	for	development	of	Vilnius	city	parking	system”	(RE	35),	thus
awarding	the	bid	to	the	Egapris	Consortium.
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4.2		The	Agreement	between	the	Egapris	Consortium	and	the	Vilnius	Municipality
4.2.1		The	Negotiations	Regarding	the	Agreement
73.		In	the	course	of	a	negotiation	meeting	held	on	19	October	1999,	the	representatives	of	the
Municipality,	UAB	Komunalinis	ukis,	MAS	Consult,	and	the	Egapris	Consortium	discussed	the	issue	of
the	“collection	of	parking	fee	and	distribution	thereof	between	the	Municipality	and	the
Consortium”	(RE	36).	According	to	the	minutes	of	this	meeting,	it	was	“proposed	to	divide	the
parking	fee	in	pay	parking	places	into	two	parts	—	local	charges	for	the	Municipality	and	the	fee
for	the	Consortium;	the	relative	part	of	the	local	charge,	as	compared	to	the	total	fee,	will	be
defined	in	further	stages	of	negotiation;	it	will	be	approved	by	Vilnius	City	Council;	[…]”	(RE	36).
The	solution	proposed	for	the	on-street	parking	concession	was	thus	that	of	a	hybrid	fee,
according	to	which	the	parking	fee	would	be	divided	into	a	local	parking	fee	component,	on	the	one
hand,	which	the	Egapris	Consortium	would	collect	for	the	City	and	give	to	the	latter	in	its	entirety,
and	a	service	fee	component,	on	the	other	hand,	which	would	not	be	a	parking	fee	and	which	the
Egapris	Consortium	would	therefore	be	entitled	to	keep.
74.		During	meetings	held	on	23	and	28	October	1999,	the	issue	of	the	“mechanism	and	legal
grounds	for	granting	land	to	the	Consortium	for	construction	of	multi-storey	car	parks”	was
discussed	(RE	37	and	RE	38).
75.		According	to	the	minutes	of	the	meeting	of	23	October	1999,	it	was	resolved	that	“the
negotiation	group	of	VCM	[“Vilnius	City	Municipality”]	[would]	analyse	the	draft	‘Basic	provisions
of	the	Joint	Venture	Agreement’	submitted	by	the	Consortium,	defining	the	proposals	of	the	latter
regarding	granting	of	land	for	the	construction	of	multi-storey	car	parks,	and	[would]	submit	its
comments	and	recommendations”	(RE	37).
76.		At	the	meeting	of	28	October	1999	regarding	the	“use	of	land	plots	intended	for	multistorey
car	parks	and	the	obligations	of	VCM	and	the	Consortium	relating	thereto,”	“VCM	propose[d]	that
all	multi-storey	car	parks	be	considered	as	infrastructure	objects	and	that	formation	of	land	plots
in	the	location	of	the	parking	lots	be	postponed	until	the	expiry	of	the	agreement	with	the
Consortium.	The	Consortium	[,	in	turn]	wishe[d]	that	VCM	prepared	a	project	anticipating	the
mechanism	of	such	land	use,	which	would	be	analysed	by	the	Consortium	and	which	would	be
discussed	in	the	course	of	further	negotiations”	(RE	38).
77.		On	20	December	1999,	MAS	Consult	issued	a	“Report	on	negotiations	with	the	Consortium	of
UAB	Egapris	and	UAB	Baltijos	Parkingas”.	The	report	provided	that	(RE	39):
2.3.1		The	Consortium	shall:
—		work	out	the	parking	plan	on	the	basis	whereof	the	parking	system	will	be
developed;
—		develop	the	parking	system	in	the	manner	defined	in	the	Agreement	and	the
parking	plan	as	approved	by	the	Municipality:
•		Building	at	least	450	ticket	machines;
•		Building	of	at	least	10	multi-storey	car	parks
•		Co-ordination	of	all	actions	with	the	Municipality	and	performance	thereof	in
the	manner	prescribed	by	the	European	Standards;
2.3.2		The	Municipality	shall:
—		consider	and	determine	the	changes	in	the	level	of	public	parking	order	and	the
fees,	consider	and	adopt	the	decisions	regarding	the	normative	acts	and	issues
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relating	to	parking,	adopt	the	decision	on	the	approval	of	the	parking	plan;
—		provide	the	Consortium	with	the	full	information	requisite	for	the	preparation	of
the	parking	plan,	as	well	as	the	information	concerning	the	existing	parking	system,
give	necessary	assistance	and	ensure	participation	of	its	employees	in	the
preparation	of	the	parking	plan;
—		transfer	the	right	to	the	Consortium	allowing	to	collect	local	charges	in	the	street
parking	place	and	set	the	limits	of	the	extra	fee	that	can	be	collected	by	the
Consortium	for	the	parking.
78.		On	28	December	1999,	the	Sorainen	Law	Office	issued,	at	the	City's	request,	a	legal	opinion
(the	“Sorainen	Memo”),	based	on	the	“legal	acts	of	the	Republic	of	Lithuania	which	were	in	effect
on	December	27,	1999”	(CE	11).	This	Memo	discussed,	in	particular,	the	issue	of	the	legality	of	the
hybrid	fee,	stating,	in	substance,	that	Lithuanian	courts	were	likely	to	view	both	components	of	the
parking	fee	as	a	unitary	whole	and,	therefore,	to	consider	them	as	being	regulated	by	the	Law	on
Fees	and	Charges.	According	to	the	Sorainen	Memo,	if	the	fee	were	to	be	treated	as	a	unitary
whole,	then	the	collection	of	money	by	the	Egapris	Consortium	would	be	contrary	to	the	law,	due	to
the	fact	that	the	initial	tender	did	not	provide	for	such	payment	to	be	made	to	the	concessionaire
by	the	City	Indeed,	with	respect	to	this	issue,	the	Sorainen	Memo	opined	the	following:
[…]	In	view	of	the	provisions	of	Article	5.1.3	of	the	Agreement,	a	conclusion	should	be
drawn	that	the	local	fee,	which,	in	accordance	with	Articles	2	and	3	of	the	Law	on	[sic]	of
the	Republic	of	Lithuania	on	Local	Fees,	may	be	fixed	for	the	time	vehicles	were	parked
in	the	on-street	parking	places	designated	by	the	Vilnius	City	Council,	will	be	comprised
partly	for	the	vehicle	parking	time	in	the	public	on-street	parking	places	designated	by
the	Vilnius	City	Council.	In	this	instance,	the	legal	basis	of	the	remaining	part	of	the	fee
for	the	vehicle	parking	time	in	the	on-street	parking	places	designated	by	the	Vilnius
City	Council,	which	in	accordance	to	Article	5.1.3	of	the	Agreement	goes	to	the
Consortium,	becomes	questionable.
We	are	of	the	opinion	that	any	tax,	fee	or	payment	of	any	kind,	which	is	paid	or	is
demanded	to	be	paid,	including	the	exceptions	applied	to	certain	person	categories,	for
the	vehicle	parking	time	in	on-street	parking	places	designated	by	the	Vilnius	City
Council,	is	the	regulatory	subject-matter	of	the	aforementioned	Law	on	the	Republic	of
Lithuania	on	Local	Fees,	and	should	be	considered	the	local	fee,	as	it	is	defined	in	Article
2	of	the	same	Law	with	all	the	ensuing	consequences	(Article	7	of	the	aforementioned
Law).
While	analyzing	the	legality	of	the	commitment	of	the	Municipality	to	transfer	the	right
to	collect	a	fee	for	vehicle	parking	time	and	for	violations	of	the	Parking	Regulations	for
onstreet	parking	places	designated	by	the	Vilnius	City	Council,	we	draw	the	conclusion
that	the	legal	acts	of	the	Republic	of	Lithuania	do	not	create	any	legal	obstacles	to	make
such	a	commitment	and	exercise	its	existing	right,	which	is	a	precondition	of	such
obligation.
Whereas	the	legal	basis	of	the	fee,	which	goes	to	the	Consortium	according	to	articles
5.1.3–5.1.7	of	the	Agreement	for	the	vehicle	parking	time	for	on-street	parking	places
designated	by	the	Municipality	Council,	raises	doubts.	Such	conclusion	shall	be	drawn
due	to	the	following	reasons,	listed	hereinafter:
1)		Vehicle	parking	lots	are	the	property,	which	belongs	to	the	Municipality	by	the
Public	property	right,	which	was	obtained	by	basis	of	the	Law	on	State	property
transfers	to	the	property	of	Municipalities	based	on	Law	or	created	anew;
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2)		The	Consortium	does	not	obtain	ownership	of	vehicle	parking	lots	on	the
grounds	of	the	Law	on	Lease	or	other	grounds	to	administrate	the	property,	for	the
usage	of	which	the	arbitrary	fee	may	be	collected	from	users	of	parking	places.
3)		Any	fee	or	other	payment	for	vehicle	on-street	parking	places	designated	by
the	Vilnius	City	Council,	in	our	opinion,	is	the	regulatory	subject-matter	of	the	Law
of	the	Republic	of	Lithuania	on	Local	Fees,	and	should	be	considered	a	local	fee,	as
it	is	defined	in	Article	2	of	the	same	Law.
In	view	of	what	was	presented	in	clause	3	hereinbefore,	we	would	take	the	view	that	the
legal	acts	of	the	Republic	of	Lithuania	and	contractual	deeds	and	obligations,	indicated
in	21/96	the	Agreement	of	the	Municipality	and	the	Consortium,	do	not	create	sufficient
and	clear	legal	ground	for	the	Consortium	to	have	a	right	to	collect	a	portion	of	the	fee
for	vehicle	parking	time	for	on-street	parking	places	designated	by	the	Municipal	Council,
which	is	derived	from	the	entire	fee,	established	in	Article	5.1.3,	less	local	charges
approved	by	the	Municipality	Council.	[…]	[(CE	11)]
79.		On	the	other	hand,	a	legal	opinion	prepared	of	29	December	1999	by	Lideika,	Petrauskas,
Valiunas	ir	Partneriai	(or	“Lawin”	firm),	the	Lithuanian	legal	counsel	of	the	Egapris	Consortium,
provided	that	the	hybrid	fee	was	in	accordance	with	the	law.	Indeed,	this	opinion	provided	the
following:
Following	your	request,	we	would	like	to	comment	the	legal	situation	relating	to
collection	of	payment	for	car	parking	in	places	designated	by	the	Municipality	(streets
and	squares).	The	agreement	between	Vilnius	City	Municipality	and	the	Consortium
establishes	that	such	payment	will	consist	of	local	charges	and	the	portion	of	payment
falling	on	the	Consortium.
The	portion	of	payment	falling	on	the	Consortium	is	to	be	legally	qualified	as	payment
for	service,	which	will	be	rendered	by	the	Consortium	to	car	drivers.	The	scope	of	this
service	is	the	development	of	parking	system	in	the	city	and	its	administering.	Car
parking	in	pay	place	is	to	be	qualified	as	a	behaviour	of	a	driver	expressing	his/her	will
to	use	the	service	rendered	by	the	Consortium	and	to	pay	for	it	according	to	the	rate	set
by	the	Consortium	[(RE	40)].
80.		On	29	December	1999,	the	Vilnius	City	Council	adopted	Decision	No.	482,	approving	the	draft
agreement	between	the	parties,	and	authorizing	Mayor	Imbrasas	to	sign	the	agreement	with	the
Egapris	Consortium	on	behalf	of	the	Municipality	(CE	12).	On	the	same	day,	the	City	also	adopted
Decision	No.	483	regarding	the	performance	of	the	Agreement	(RE	41).
4.2.2		The	Agreement
81.		On	30	December	1999,	the	Egapris	Consortium	and	the	Municipality	signed	an	agreement
(“the	Agreement”)(CE	13).	The	Agreement	was	signed	by	each	of	the	Egapris	Consortium
members.	According	to	the	Agreement,	BP	and	Egapris	were	jointly	and	severally	liable	for	the
Egapris	Consortium's	performance	of	the	Agreement	(Article	1.2	of	the	Agreement).
82.		The	Agreement	pertained	to	the	creation,	development,	maintenance	and	enforcement	of	the
public	parking	system	in	the	City	of	Vilnius.	More	specifically,	the	Agreement	provided	for	an
exclusive	concession	to	operate	the	city's	street	parking	and	to	operate	ten	MSCP.
83.		The	Consortium	was	granted	an	exclusive	right	to	act	as	a	“sole	partner	of	the	Municipality”
for	the	organization,	maintenance,	development	and	enforcement	of	the	public	parking	system	in
the	areas	of	the	City	of	Vilnius	designated	by	the	Agreement.	Article	1.2	of	the	Agreement	defined
the	terms	“sole	partner	of	the	Municipality”	as	“a	person,	that	is	granted	the	exclusive	rights	to
collect	local	charges	and	penalties	for	violation	of	parking	regulations	in	the	streets	and	squares
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Universite de Geneve; date: 25 January 2015
as	established	in	the	city	Council,	and	to	construct	multi-storey	car	parks	in	the	locations
specified	in	Annex	No.	1	to	this	Agreement.”
84.		Thus,	the	Egapris	Consortium	was	granted	an	exclusive	thirteen-year	right	to	operate	all	the
street	parking,	that	is	specifically	to	collect	the	parking	fees,	and	to	enforce	the	parking	regulations
namely	through	the	clamping	of	vehicles.	With	respect	to	the	Consortium's	right	to	enforce	parking
regulations	through	clamping,	the	Agreement	foresaw	the	transition	to	a	fine	system	as	soon	as	the
applicable	legislation	would	have	been	passed	(Article	5.3.4	of	the	Agreement).
85.		With	respect	to	the	parties'	liability,	Article	7.2.1	of	the	Agreement	provided	the	following:
The	liability	of	the	Parties	deriving	from	the	terms	and	conditions	of	the	present
Agreement	is	understood	as	responsibility	for	the	actions	of	the	Party	itself	or	failure	to
perform	such	actions	due	to	which	the	undertakings	of	the	Party	will	not	be	properly,	fully
and	in	due	time	fulfilled.	Neither	Party	shall	be	liable	and	no	sanctions	shall	be	imposed
on	it	if	the	breaches	of	this	Agreement	will	occur	due	to	the	actions	or	failure	to	act	by
the	other	Party	or	any	other	third	party,	as	well	as	due	to	irresistible	forces	(force
majeure),	as	defined	in	the	Government	Resolution	No.	840	“On	the	Approval	of	Rules	for
Release	from	Liability	due	to	Irresistible	Forces	(force	majeure)”	dated	15	July,	1996.
86.		The	latter	Resolution	provided	the	following:
1.		The	term	“force	majeure”	shall	serve	to	define	extraordinary	circumstances	that
cannot	be	foreseen	or	avoided,	or	removed	by	using	any	means.
[…]
2.		A	party	shall	not	be	financially	held	liable	for	failure	to	perform	any	of	its	obligations
if	it	is	capable	of	proving	that:
2.1		it	has	failed	to	fulfill	the	obligations	due	to	the	obstacle	being	beyond	its	control;
2.2		it	cannot	be	anticpated	that	at	the	moment	of	entering	into	the	contract	the	party
could	have	foreseen	that	obstacle	or	its	[e]ffect	on	the	ability	to	perform	the	obligations;
2.3		it	could	not	avoid	or	overcome	the	obstacle	or	at	least	its	effect;
3.		The	obstacles,	mentioned	in	clause	2	hereof,	may	arise	as	a	result	of	the	following
events	below:
[…]
3.5		lawful	or	unlawful	acts	of	state	government	institutions	(except	for	those	acts	which,
pursuant	to	other	contractual	provisions,	were	taken	by	a	party	requesting	release	from
liability	[…]	[(RE	5)].
4.2.2.1		The	Consortium's	Obligations	under	the	Agreement
87.		Under	the	Agreement,	the	Consortium	was	to	comply,	inter	alia,	with	the	following	main
obligations.
88.		First,	the	Consortium	was	to	“initiate,	prepare,	co-ordinate	and	submit	to	Vilnius	city	Council
for	approval	a	plan	of	public	parking	system	in	Vilnius	city	[(the	“Parking	Plan”)]	[…]”	(Article
1.4.2	of	the	Agreement;	see	also	Article	2.1.1	of	the	Agreement).	The	Parking	Plan	was	to	“include
parking	signs,	parking	zones,	the	recommended	fee	structure,	parking	control	and	regulations,
and	conditions	and	priorities	for	construction	of	multi-storey	car	parks.	Upon	preparation	and
approval	of	the	Parking	plan	the	Parties	[were	to]	agree	upon	its	implementation	schedule”
(Article	1.4.2	of	the	Agreement).	“	The	objective	of	the	Parties	[was]	to	design	a	plan	which
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[could]	provide	the	basis	for	a	detailed	regulation	of	traffic	flow	and	parking”	(Article	2.1.3	of	the
Agreement).
89.		The	Consortium	was	to	create,	manage	and	operate	the	“public	parking	system	for	Vilnius
city,	including	installation	of	ticket	machines	and	construction	of	multi-storey	car	parks,
complying	with	the	Standards;	[…]	invest	into	the	present	parking	system	in	order	to	establish
the	public	parking	system	and	structure	of	Vilnius	city	in	accordance	with	the	approved	plan,
terms	and	conditions	of	this	Agreement;	[and]	plan	and	design	the	modifications	of	the	current
parking	system	in	accordance	with	the	Agreement	and	the	approved	Parking	plan	and	carry	out
the	investments	related	thereto”	(Article	1.4.2	of	the	Agreement).
90.		The	key	elements	of	the	so-called	“Investment	Program”	were	the	following:
—		the	Consortium	constructs	multi-storey	car	parks	—	no	less	than	10	in	total;
—		the	Consortium	improves	the	current	street	parking	system	(purchases	and	installs
equipment,	trains	the	employees,	purchases	other	equipment,	including	IT	hardware,
vehicles	etc.);
—		the	Consortium	installs	450	new	ticket	machines	with	the	terms	established	in	the
schedule	of	implementation	of	the	Parking	plan;
—		the	Consortium	installs	new	parking	signs	and	traffic	flow	control	signs	—
approximately	1050	signs;
—		the	Consortium	creates	integrated	parking	information	system;
—		the	Consortium	develops	the	street	parking	system	according	to	the	Standards	and	this
Agreement;
—		the	Consortium	develops	the	street	infrastructure	according	to	this	Agreement,	the	Joint
Activity	Agreement	and	the	approved	Parking	plan	(Sub-Clause	4.1.1	of	the	Agreement).
(CE	13,	Article	4.1.1)
91.		With	respect	to	MSCP,	the	Consortium	had	to	“plan,	design,	and	construct	multi-storey	car
parks	in	accordance	with	the	laws	and	regulations	of	the	Republic	of	Lithuania	and	in	a	line	with
this	Agreement,	the	Parking	plan	and	its	implementation	schedule	in	order	to	develop	an
adequate	car	parking	structure	and	capacity”	(Sub-Clause	1.4.2	of	the	Agreement).	The
Consortium	was	to	construct	no	less	than	ten	MSCP	in	the	city	of	Vilnius,	“two	[…]	every	year
during	the	life-time	of	this	Agreement,	except	for	the	first	year”	(Article	4.4.5	of	the	Agreement),
in	the	locations	specified	in	Annex	No.	1	to	the	Agreement.	The	full	ownership	of	the	MSCP	was	to
be	retained	by	the	Consortium	(CE	13).
92.		The	Agreement	provided	the	following	with	respect	to	the	planning	and	construction	process
of	the	MSCP:
4.4.2		After	the	Municipaity	issues	the	full	collection	of	the	design	conditions,	in	each
individual	case	the	parties	shall	sign	the	Joint	Activity	Agreement,	[…]	in	the	form	of	Annex
No.	8.	[setting	forth	the	time	allocated	for	the	design	and	construction	of	the	MSCP]	[…].
4.4.3		Not	later	than	within	9	months	after	the	Joint	Activity	Agreement	is	signed,	unless
the	shorter	term	is	established	in	the	Joint	Activity	Agreement,	the	Consortium	shall
prepare	and	co-ordinate	the	design	project	of	a	multi-storey	car	park	[which]	shall	be
submitted	to	the	Municipality.	After	the	design	projects	are	approved,	the	Municipality,
with	the	participation	of	the	Consortium,	shall	obtain	construction	permits	in	the	name	of
itself	and/or	the	Consortium,	or	the	Consortium,	with	the	participation	of	the	Municipality,
shall	obtain	construction	permits	in	the	name	of	itself	and/or	the	Municipality.
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4.4.4		After	the	Municipality	obtains	the	construction	permits	in	the	name	of	the
Municipality	and/or	Consortium	[…],	the	[latter]	shall	construct	said	car	parks	in
accordance	with	this	Agreement	and	the	Joint	Activity	Agreement	[…],	and	shall	ensure
that	the	multi-storey	car	parks	are	constructed	and	made	ready	for	use	pursuant	to	the
Procedure	for	Approving	of	the	Constructions	for	Use	STR.1	1.01:1996,	approved	by	Order
No.	108	of	the	Ministry	of	Construction	and	Urban	Development	as	of	23	August	1996,	and
not	later	than	within	24	months	after	the	construction	permits	were	issued,	unless	the	Joint
Activity	Agreement	provides	for	the	shorter	period.
[…]
4.4.8		Within	[twenty]	one	day	after	the	date	of	this	Agreement,	the	Consortium	shall
evaluate	the	preliminary	locations	for	construction	of	multi-storey	car	parks	specified	in
Annex	No.	1,	and	shall	indicate	two	locations	for	which	the	detailed	plans	are	already
prepared	and	shall	file	applications	for	the	issue	of	design	conditions.	The	Municipality	of
Vilnius	City	shall,	upon	receipt	of	the	application	submitted	by	the	Consortium,	issue	to	the
Consortium	the	collections	of	the	design	conditions	for	the	specified	locations,	whereupon
the	Consortium	shall	commence	the	design	works	under	the	terms	of	this	Agreement.
93.		With	respect	to	street	parking,	“the	Consortium	[undertook]	to	install	450	new	ticket
machines	within	the	period	established	in	the	schedule	of	implementation	of	the	Parking	plan	in
the	spaces	of	the	streets	and	squares	of	Vilnius	City	which	locations	are	defined	by	the	Decision
of	the	Vilnius	city	Council	and	correspond	to	the	parking	program.	[…]	The	additional	locations	of
the	streets	and	squares	where	the	Consortium	shall	be	granted	the	right	to	collect	payments	for
the	parking	of	vehicles,	shall	be	established	by	the	Decision	of	the	Vilnius	City	Council	in
accordance	with	the	Parking	plan	approved	according	to	the	established	procedure	after	the
ticket	machines	in	the	above	mentioned	places	are	installed	by	the	Consortium	accordingly	with
the	schedule	of	implementation	of	the	parking	plan”	(Articles	4.3.1	and	4.3.2	of	the	Agreement).
4.2.2.2		The	Municipality's	Obligations	under	the	Agreement
94.		Article	1.5.1	of	the	Agreement	provided	that	“in	order	to	achieve	its	aims	and	create
favourable	conditions	for	the	Consortium	to	fulfill	its	obligations	under	this	Agreement,	the
Municipality	shall,	within	the	[?]	time	limits	of	its	competence,	undertake	the	following:”
—		to	consider	and	establish	the	public	parking	order	in	the	city	and	the	adjustments	of
parking	fee	level	taking	into	account	suggestions	and	recommendations	made	by	the
Consortium	and	the	needs	of	the	city's	population;
—		to	refrain	from	any	amendments	to	the	present	city	parking	order	that	would	deteriorate
the	Consortium's	possibilities	and	conditions	for	implementing	of	its	obligations	hereunder.
This	obligation	does	not	include	the	adjustments	to	local	duties	if	such	adjustments	are
made	before	March	1,	2000,	in	accordance	with	the	conditions	of	this	Agreement;
—		to	assign	to	the	Consortium	the	rightto	collect	local	charges	established	by	the	Vilnius
city	Municipality	Council,	including	penalties	imposed	for	the	violation	of	the	parking	order,
in	the	streets	and	squares	as	defined	by	the	Vilnius	city	Council	in	accordance	with	the
conditions	of	this	Agreement	and	the	approved	parking	plan;
—		within	one	month	from	the	date	of	coming	into	force	of	the	Agreement	to	hand	over	to
the	Consortium	all	necessary	information	(agreements	for	use	of	the	parking	spaces)
related	to	the	parking	in	the	streets	and	squares	specified	in	Annex	No.	4	to	this
Agreement	[(Annex	No.4:	list	of	streets	and	squares	in	which	car-parks	have	been	equipped
pursuant	to	the	established	procedure	and	in	which	the	Consortium,	consisting	of	UAB	Baltijos
parkingas	and	UAB	Egapris,	will	have	the	right	to	collect	local	duty,	clamp	vehicles	for	the
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non-observance	of	the	provisions	relating	to	the	Collection	of	Charges	established	for	the
owners	of	the	vehicles	(drivers)	for	the	use	by	the	latter	of	watched	car-parks	in	the	streets
and	squares	of	Vilnius	and	to	collect	charges	for	the	unclamping	of	the	vehicles)];
—		timely	and	in	accordance	with	appropriate	procedure	to	consider	legislative	and
regulatory	issues	related	to	parking,	including	parking	signs,	penalty	level	and	structure
(clamping,	other	means	of	blocking	of	the	vehicle	or	a	fine	charge	notice);
—		in	accordance	with	the	terms	and	conditions	of	this	Agreement	and	valid	legal	acts	to
consider	and	make	decisions	regarding	the	approval	of	the	public	parking	system	plan	as
worked	out	by	the	Consortium;
—		to	ensure	the	way	of	use	of	the	land	plots,	permits	and	approvals	necessary	for	the
construction	of	multi-storey	car	parks	in	accordance	with	the	conditions	of	the	Joint	Activity
Agreement	attached	as	Annex	No.	8	hereto;
—		to	consider	and	determine	the	fee	structure	and	fee	rates	for	street	and	ground	parking
in	accordance	with	the	conditions	and	procedure	established	by	this	Agreement;
—		to	ensure	the	service	rendering	according	to	the	city	maintenance	and	cleaning	rules;
—		to	use	all	its	efforts	in	order	to	ensure	that	the	necessary	decisions	of	the	institutions
not	subordinated	to	the	Municipality	are	taken	for	successful	development	of	the	parking
system	(including	appropriate	modifications	of	the	laws	and	other	statutory	acts,	relevant
traffic	signs,	fee	levels	and	structure,	use	of	land	and	other	relevant	issues);
—		to	provide	the	Consortium	with	all	information	necessary	for	drawing	up	of	the	Parking
plan	which	information	is	defined	in	Annex	No.	3,	or	provide	with	a	possibility	to	get	access
to	such	information	and	photocopy	it,	and	to	ensure	the	participation	of	appropriate
Municipality's	subdivisions	within	the	limits	of	their	competence	in	the	process	of	the
drawing	up	of	such	plan.	The	Parties	understand	that	the	Municipality	does	not	possess	all
the	information	necessary	for	the	drawing	up	of	the	plan	and	that	this	may	affect	the
quality	of	the	Parking	plan;
—		not	to	extend	agreements	concluded	prior	to	the	Agreement,	if	that	does	not	constitute
the	breach	of	such	agreement,	and	to	refrain	from	making	any	new	agreements	that	would
impede	creation	of	the	unified	parking	system	in	the	city	according	to	the	conditions	of	this
Agreement;
—		to	provide	the	Consortium	with	the	possibility	to	use	the	city	GIS	in	the	process	of
drawing	up	the	Parking	plan;
—		to	fulfill	all	other	obligations	under	this	Agreement.
95.		The	Agreement	specifically	provided,	under	Article	1.5.2	in	fine,	that	“undertakings	of	the
Municipality	shall	be	limited	to	the	scope	of	its	competence,	or	the	competence	of	institutions
subordinated	to	it.”
4.2.2.3		Revenue	Sharing	Mechanism	under	the	Agreement
96.		The	Consortium	—	which	had	to	prepare	the	Parking	Plan	—	was	responsible	for	the	equity	and
debt	financing	for	the	construction	of	the	MSCP	and	the	establishment	of	the	Parking	Plan.	In	order
to	ensure	that	the	Consortium	would	obtain	a	reasonable	return	on	its	investments,	Article	5	of	the
Agreement	provided	that	the	proceeds	of	the	maintenanc	and	enforcement	of	the	Vilnius	public
parking	system	would	be	shared	among	the	parties	to	the	Agreement.	The	Consortium	was	entitled
to	three	different	income	streams.
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97.		First,	in	accordance	with	its	exclusive	right	to	operate	for	thirteen	years	all	the	street	parking
in	the	city,	collect	the	parking	fees,	and	enforce	the	parking	regulations	through	the	clamping	of
vehicles,	the	Consortium	was	entitled	to	a	service	fee	portion	of	the	public	parking	fee	that	it	was	to
collect.	The	public	parking	fee	indeed	consisted	contractually	of	two	elements:	a	local	charge	for
the	Municipality	and	a	service	fee	for	the	Consortium.
98.		With	respect	to	the	determination	of	the	local	charge	and	the	service	fee,	Articles	5.1.1,	5.1.2,
and	5.1.3	of	the	Agreement	provided	that	“the	Consortium	shall	collect	charges	established	by
the	Vilnius	City	Council	for	the	duration	of	parking	in	the	places	of	streets	and	squares	that	are
determined	by	the	Municipality	Council,	and	shall	transfer	such	charges	to	the	account	indicated
by	the	Vilnius	City	Municipality.	[…]	The	local	charges	for	the	parking	time	of	the	vehicles	in	the
places	of	streets	and	squares	that	are	determined	by	the	Municipality	Council	shall	be	fixed	by
the	Vilnius	City	Council	according	to	the	Law	On	Local	Charges	for	the	Republic	of	Lithuania.	[…]
The	local	charges	constitute	a	part	of	the	parking	fee	for	the	parking	time	in	the	places	of	streets
and	squares	that	are	determined	by	the	Vilnius	City	Council.	The	other	part	of	the	parking	fee
falls	upon	the	Consortium.”	The	part	of	the	fee	that	was	allowed	to	the	Consortium	thus	depended
on	the	amount	of	the	local	charge	for	one	hour	of	parking	established	by	the	Vilnius	City	Council,	its
ceiling	being	fixed	in	the	Agreement	under	Article	5.1.3.
99.		The	service	fee	was	to	be	fixed	either	by	the	Consortium,	in	which	case	it	was	to	be	calculated
in	accordance	with	the	provisions	of	Articles	5.1.3.1	through	5.1.3.5	of	the	Agreement,	or	by
separate	agreement	between	the	parties,	in	which	case	it	was	to	be	calculated	in	accordance	with
Article	5.1.4	of	the	Agreement.	The	Consortium	was	to	collect	the	entire	amount	and	then	transfer
the	portion	corresponding	to	the	local	charges	to	the	Municipality.
100.		Second,	the	Consortium	was	entitled	to	the	full	amount	of	the	parking	fees	it	would	collect	in
MSCP.
101.		In	this	respect,	Article	3.1.5	of	the	Agreement	provided	that	“multi-storey	car	parks
constructed	shall	not	be	transferred	to	the	Municipality,	and	they	will	remain	the	property	of	the
Consortium	or	its	members.	All	rights	regarding	management	and	operation	of	the	multi-storey
car	parks	shall	be	retained	by	the	Consortium	or	the	companies	established	by	it.“	According	to
the	Agreement,	there	was	no	time	limitation	on	the	right	to	operate	MSCPs.	Furthermore,	Article	5.1.9
of	the	Agreement	stipulated	that	“the	parking	fee	for	the	parking	time	in	the	multi-storey	car	parks
owned	by	the	Consortium	shall	be	fixed	by	the	Consortium.”
102.		Third,	the	Consortium	was	entitled	to	seventy	percent	of	unclamping	charges.	It	was	the
Consortium's	right	to	enforce	parking	regulations	thus	generating	an	independent	revenue	stream.
Indeed,	the	Agreement	granted	to	the	Consortium	the	right	to	collect	“clamping	fees”	for	the
release	of	each	clamped	vehicle,	seventy	per	cent	of	which	the	Consortium	was	entitled	to	keep,
the	remaining	thirty	per	cent	going	to	the	Municipality.
103.		In	this	respect,	Articles	5.1.11,	5.1.12,	and	5.1.13	of	the	Agreement	provided	the	following:
The	Consortium	shall	as	from	the	day	it	is	granted	the	right	to	collect	local	charges	in
accordance	with	Item	5.1.6,	be	obliged	to	clamp	the	vehicle	by	technical	means	or	limit
the	usage	of	the	vehicle	by	other	means	established	by	statutory	acts,	if	the	vehicle
owner	has	failed	to	pay	according	to	the	established	procedure	prescribed	for	parking	in
the	payable	parking	places	or	has	parked	the	vehicle	in	violation	of	the	rules	of	parking
established	for	th	places	specified	in	Annex	No.	4	to	this	Agreement.	The	Consortium
shall,	as	from	the	day	on	which	it	is	entitled	to	collect	legal	charges	according	to	Item
5.1.6	hereof,	collect	the	fee	from	vehicle	owners	in	the	streets	and	squares	as	indicated
in	Annex	No.	4	to	this	Agreement	for	unclamping	of	the	vehicles,	which	fee	shall	be
based	on	tariffs	approved	by	the	Vilnius	City	Council	[…].	The	Consortium	shall	be
obliged	to	transfer	30	per	cent	of	the	collected	fee	for	unclamping	to	the	account
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indicated	by	the	Vilnius	City	Municipality	for	every	month	in	arrears	until	the	tenth	day
of	the	next	month.
104.		The	Agreement	provided	that	the	transition	to	a	fining	system	would	occur	“as	soon	as	there
is	a	legal	base	and	the	technical	means	of	state	authorities	create	appropriate	conditions”
(Article	5.3.4	of	the	Agreement).
105.		In	accordance	with	the	above,	the	Consortium	thus	undertook	to	pay	to	the	City:
•		a	fixed	fee	of	LTL	200,000	(EUR	57,924)	to	be	paid	in	equal	monthly	installments	(Article
5.1.14	of	the	Agreement);
•		thirty	percent	of	the	fees	collected	by	the	Consortium	in	connection	with	the	unclamping	of
vehicles	that	would	have	failed	to	pay	the	parking	fees;
•		Additionally,	Article	5.1.15	of	the	Agreement	provided	that
In	case	the	aggregated	sum	of	the	revenues	received	in	the	financial	year	by	the
Municipality	under	Items	5.1.1,	5.1.13	and	5.1.14	of	this	Agreement	is	less	than
1.000.000	Litas,	the	fixed	amount	established	in	Item	5.1.14	shall	be	increased	by
such	amount	that	the	annual	revenue	of	the	Municipality	received	under	Items
5.1.13	and	5.1.14	equals	to	1.000.000	Litas.	The	consortium	undertakes	within	30
days	after	the	end	of	the	financial	year	to	transfer	to	the	account	indicated	by	the
Vilnius	City	Municipality	the	sum	equal	to	the	amount	by	which	the	fixed	amount
established	in	Item	5.1.14	is	increased.
4.2.3		The	incorporation	of	the	Operator
106.		According	to	the	Agreement,	the	Consortium	was	to	establish	a	management	company	that
would	run	the	street	parking	concession.
107.		Article	1.2	of	the	Agreement	defined	the	“management	company”	as
a	private	company	incorporated	by	the	Consortium	in	accordance	with	Item	3.1.3	of	[the]
Agreement	that	shall	own	the	ticket	machines	installed	in	accordance	with	the
Agreement,	integrated	management	information	system	and	other	resources	needed	for
operation	of	the	parking	system	and	collection	of	the	local	charge	for	the	public	parking
of	vehicles	in	the	city	of	Vilnius.
108.		On	28	January	2000,	BP	and	Egapris	entered	into	an	Agreement	on	Business	Principles	(the
“ABP,”	CE	14)	to	allocate	to	each	of	the	Consortium	members	the	functions,	responsibilities	and
liabilities	related	to	the	exercise	of	the	Consortium's	rights	and	obligations	under	the	Agreement.
One	of	the	purposes	of	the	ABP	was	to	provide	a	determination	on	the	issue	of	ownership	of	the
above-mentioned	management	company.
109.		The	ABP	granted	BP	the	right	to	incorporate	and	operate	the	project	management	company
that	would	be	responsible	for	the	performance	of	all	of	the	obligations	of	the	Egapris	Consortium
under	the	Agreement,	except	the	construction	of	MSCP.	The	Consortium's	rights	and	duties	relating
to	the	construction	of	the	MSCP	were	to	be	equally	shared	by	its	members.	Once	duly	delivered,	all
the	MSCP	would	be	leased	to	the	project	management	company.
110.		It	was	agreed	in	the	ABP	that	BP	would	incorporate	the	management	company	Vilniaus
Parkavimo	Kompanija	(“VPK”).
111.		Pursuant	to	Sub-Clause	1.3	of	the	ABP,
With	effect	from	the	date	of	the	Company's	registration	and	up	until	the	execution	by
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EGAPRIS	of	the	Call	Option	referred	in	clause	2	below,	BP	shall	be	sole	and	lawful
successor	to	all	the	rights	and	obligations	assumed	by	Consortium	under	the	Agreement
with	Municipality	in	respect	to	management	operation	of	the	Management	Company.
112.		It	was	agreed	that	Egapris	would	have	the	right	to	purchase	49	percent	of	VPK	from	BP	for
LTL	1,960,000	(EUR567,655)	(Call	Option)	(Article	2.4	of	the	ABP).
113.		Egapris	could	also	waive	its	right	to	purchase	the	VPK	shares	in	exchange	for	a	payment
from	BP	of	LTL	4,000,000	(EUR	1,200,000)	(Article	2.11	of	the	ABP).	Article	2.12	of	the	ABP	further
provided	that,	should	BP	fail	to	pay	Egapris	the	amount	due	in	case	of	waiver	of	Egapris'	right	to
participate,	“out	of	1	000	000	(one	million)	Litas	initially	contributed	by	BP	for	the	shares	of	the
Company,	500	000	(five	hundred	thousand)	Litas	will	be	deemed	as	a	penalty	for	non-
performance	and	will	count	as	having	been	made	for	the	benefit	of	Egapris	as	its
contribution/payment	for	50%	of	the	shares	in	the	Company.	Notwithstanding	the	above,	the
rights	of	the	shareholder	holding	50%	(fifty	percent)	of	the	shares	in	the	Company	will	be	granted
to	Egapris	only	upon	contribution	by	BP	and	Egapris	in	equal	sums	—	1	500	000	(one	million	five
hundred	throusand)	Litas	each	—	of	the	remaining	Company's	share	issue	price.”
114.		On	17	February	2000,	BP	registered	VPK	as	the	project	management	company	in	accordance
with	the	“Articles	of	Association	of	the	Private	Company	‘Vilniaus	Parkavimo	Kompanija’”	(the
“Articles	of	Association	of	VPK,”	CE	23),	paying	LTL	4	million	into	VPK's	capital.
115.		On	1 	February	2000,	Egapris	notified	that	it	irrevocably	and	unconditionally	waived	its	right
to	claim	compensation	under	Article	2.11	of	the	ABP	and	also	irrevocably	declared	its	decision	not
to	elect	to	exercise	its	Call	Option	provided	under	Article	2.2	of	the	ABP	(RE	43).
116.		In	January	2001,	Egapris	purported	to	exercise	the	call	option.	BP	however	refused	to	tender
the	shares.	The	dispute	was	taken	to	court,	and	on	19	November	2003,	the	Vilnius	district	court
ruled	as	follows:
The	court,	upon	hearing	the	case,
(…)
DECIDED:
Not	to	examine	a	part	of	the	law	suit	where	the	Claimant	requested:
1)		to	acknowledge	a	non	performance	by	the	Defendant	UAB	Baltijos	Parkingas	of
the	obligations	set	forth	in	Clauses	2.5,	2.10,	2.11	and	2.12	of	the	Agreement	on
Business	principles	made	between	UAB	Egapris	and	UAB	Baltijos	Parkingas	on
January	28,	2000,	for	which	reason	the	said	Agreement	was	not	implemented;
2)		to	obligate	the	Defendant	to	perform	the	obligations	set	forth	in	Clause	2	of	the
Agreement	on	Business	Principles	to	execute	the	agreement	on	purchase-sale	of
50%	of	the	shares	of	UAB	Vilniaus	Parkavimo	Kompanija;
3)		to	restitute	the	violated	rights	of	UAB	Egapris	to	acquire	50%	of	the	shares	of
UAB	Vilniaus	Parkavimo	Kompanija;
4)		to	repeal	the	Loan	Agreement	No.	144000902069/22	and	pledge	of	50%	of
shares	of	UAB	Vilniaus	Parkavimo	Kompanija,	which	transactions	were	made	in
violation	of	the	Agreement	on	Business	Principles	between	UAB	Egapris	and	UAB
Baltijos	Parkingas,	as	of	January	28,	2000.
To	reject	the	remaining	part	of	the	law	suit.
st
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[…]
This	Decision	may	be	appealed	against	before	the	Lithuanian	Court	of	Appeals	by	appeal
filed	via	this	court	within	30	days	[(CE	187)].
117.		On	1	July	2004,	however,	the	Court	of	Appeals	repealed	the	decision	of	the	court	of	first
instance,	and	instructed	“Defendant	UAB	‘Baltijos	parkingas’	[…]	to	perform	the	obligation,	i.e.	to
conclude	the	agreement	with	Plaintiff	UAB	‘Egapris’	[…]	regarding	sale-purchase	of	fifty	percent
(50%)	of	shares	in	UAB	‘Vilniaus	parkavimo	kompanija’	[…]	in	accordance	with	the	terms	laid
down	in	clauses	3.12	and	2.13	of	the	Agreement	on	Business	Principles	(made	between	UAB
‘Egapris’	and	UAB	‘Baltijos	parkingas’	on	January	28,	2000)	and	in	exchange	of	consideration	of
LTL	1	500	000”	(CE	216).
118.		On	1	March	2000,	the	Municipality	adopted	Decision	No.	519,	determining	“that	the
collection	of	local	fees	and	charges	shall	be	effected	by	UAB	Vilniaus	Parkavimo	Kompanija,
established	by	the	Consortium,	constituted	by	UAB	Baltijos	Parkingas	and	UAB	Egapris,”	and	that
“the	collecton	of	fees	and	charges	shall	be	executed	by	the	employees	of	UAB	Vilniaus
Parkavimo	Kompanija	holding	the	certificates	of	UAB	Vilniaus	Parkavimo	Kompanija”	(CE	25).
4.3		Legality	of	the	Agreement	and	Modifications	of	Laws
4.3.1		The	legality	of	the	parking	fee
119.		By	letter	dated	8	February	2000,	the	local	representative	of	the	National	Government	in
Vilnius 	(the	“Government	Representative”)	wrote	to	Mayor	Imbrasas,	stating	that	“certain
provisions	of	the	[…]	Agreement	approved	by	Vilnius	City	Council's	Decision	No	482	[were]	in
contradiction	with	effective	laws	and	regulatory	acts”	(CE	17).	This	Government	Representative
therefore	requested	that	at	the	next	meeting	of	the	Vilnius	City	Council,	the	issue	of	the	amendment
or	revocation	of	Decision	No	482,	which	approved	the	Agreement,	be	discussed	(CE	17;	see	also
CE	18).	More	specifically,	the	Government	Representative	raised	the	following	three	issues	and
provided	the	following	explanations:
[…]	Income	received	on	local	fees	and	charges	must	be	accounted	for	in	the	Municipal
budget	item	as	“other	payments”.	However,	under	the	approved	Agreement,	the
Consortium	is	granted	the	right	to	collect	a	local	charge,	fixed	by	the	Vilnius	City
Council,	for	the	duration	of	parking.	Local	charge	is	treated	as	a	constituent	element
comprising	the	tax	for	the	duration	of	parking	in	the	places	specified	by	the	Municipality.
Another	portion	of	the	tax	goes	to	the	Consortium;	the	portion	of	the	tax	is	defined	by
the	Consortium	itself.	However,	the	Law	of	the	Republic	of	Lithuania	on	Local	Fees	and
Charges	does	not	provide	for	the	possibility	that	collection	of	local	charges	might	be
delegated	to	enterprises;	moreover,	it	does	not	provide	for	the	possibility	that
enterprises	shall	fix	the	portion	of	the	local	charge	that	goes	to	them.
[…]
Under	the	Agreement	on	Joint	Activity,	the	Municipality	undertakes	to	ensure	that	any
free	plots	of	state-owned	land	located	in	the	construction	place	of	the	infrastructure
object	will	not	be	formulated	and	those	plots	of	land	will	not	go	to	land	sales	or	lease
auctions	following	the	procedure	established	by	the	Government	Resolution	No	692	“On
Sales	and	Lease	of	New	Plots	of	State-owned	Land	Designated	for	Non-agricultural
Purposes	(activity)”	as	of	2	June	1999,	and	none	of	the	third	persons	will	be	authorized	to
use	land	in	the	above	area	or	to	hindrance	management	and	use	of	the	mentioned	land.
In	addition,	the	Municipality	undertakes	to	provide	the	Consortium	with	a	possibility	to
construct	the	infrastructure	object	in	the	specified	place.	The	Law	of	the	Republic	of
Lithuania	on	Construction	prescribes	that	the	right	of	the	builder	shall	be	exercised	in
1
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cases	when	the	builder	owns	a	plot	of	land	or	holds	and	uses	it	on	other	grounds
established	by	the	laws	of	the	Republic	of	Lithuania,	and	the	builder	has	a	prepared,	in	a
prescribed	manner,	and	approved	design	documentation	of	a	construction	work,	and
builder	has	a	construction	permit	issued	in	the	prescribed	manner.	Since	the	Municipality
will	not	formulate	new	plots	of	land,	and	construction	permits	are	issued	by	the
Inspection	of	Construction	of	a	Construction	Work	of	Administration	of	County	Governor,
it	might	be	maintained	that	construction	of	multi-storey	car	parks	is	in	general
impossible	[(emphasis	added)].
The	main	Agreement	prescribes	that	the	Consortium	shall	be	sole	partner	of	the
Municipality,	which	is	entitled	with	an	exclusive	right	to	collect	a	local	charge	and	be
engaged	in	construction	of	multi-storey	car	parks	in	the	places	specified	by	the
Municipality.	However,	the	Law	of	the	Republic	of	Lithuania	on	Competition	prescribes
that	any	arrangement	with	the	purpose	to	restrict	competition	or	any	arrangement	which
restricts	or	might	restrict	competition	shall	be	prohibited	and	therefore	null	and	void
[(emphasis	added)].	[…][(CE	17)]
120.		In	the	course	of	a	meeting	held	on	11	February	2000,	the	Vilnius	City	Council	rejected	the
Government	Representative's	request	and	voted	to	uphold	Decision	No.	482	(CE	19).	By	letter
dated	25	February	2000,	Mayor	Imbrasas	informed	the	Government	Representative	of	the	Vilnius
City	Council's	decision	to	uphold	Decision	No	482	(CE	24).
121.		This	decision	was	supported	by	a	report	issued	by	the	Municipality's	legal	counsel	(CE	20).
122.		On	8	March	2000,	notwithstanding	the	decision	of	11	February	2000	of	the	Vilnius	City
Council,	the	Ministry	of	Justice	of	the	Republic	of	Lithuania	stated	the	following	in	a	letter	to	the
Government	of	the	Republic	of	Lithuania:
[…]	it	is	assumed	that	a	fee/charge	and	a	tax	by	nature	are	different	categories.
Consequently,	local	fee/charge	cannot	be	treated	as	a	constituent	element	of	tax.
Moreover,	
	Granting	of	exclusive	rights	normally	restricts	competition	within	a	certain
field	of	activity.	Therefore,	it	is	maintained	that	granting	of	exclusive	rights	should
neither	be	in	contradiction	with	the	interests	of	other	economic	entities	nor	restrict
competition.	Therefore,	the	statements	of	the	Government	Representative	in	Vilnius
County,	produced	in	presentation	No	2T	as	of	8	February	2000,	with	respect	to	treating	a
local	charge	as	a	constituent	element	comprising	the	tax,	with	respect	to	delegating	to	a
private	legal	entity	the	right	to	collect	local	charges,	with	respect	to	granting	a	private
legal	entity	exclusive	rights,	in	our	opinion	are	based	on	the	Law	on	Local	Fees	and
Charges	and	the	Law	on	Competition	[(emphasis	added)]	[(CE	27)].
123.		Arguing	that	“certain	provisions	of	the	Contract	approved	by	Vilnius	City	Municipal	Council
Decision	No.	482	are	inconsistent	with	the	applicable	laws	and	secondary	legislation,”	the
Government	Representative	filed,	on	9	March	2000,	a	complaint	with	the	Administrative	Court	of
Vilnius	District,	requesting	that	the	latter	“satisfy	the	complaint	and	[…]	recognis[e]	as	invalid	and
repeal	Decision	of	29	December	1999	of	Vilnius	City	Council”	(CE	28).	The	Government
Representative	reiterated	the	explanations	provided	in	his	letter	of	8	February	2000,	as	follows:
[…]	the	approved	Contract	grants	the	right	to	the	Consortium	to	collect	the	local	charge
established	by	Vilnius	City	Municipal	Council	for	car	parking	time.	The	local	charge	is
treated	as	a	component	part	of	the	fee	for	car	parking	time	in	the	areas	established	by
the	Council	of	the	Municipality.	The	other	part	of	the	charge	is	received	by	the
Consortium	who	determines	on	its	own	discretion	the	amount	of	charge	due	to	it.
However,	the	Republic	of	Lithuania	Law	on	Fees	and	Charges	does	not	provide	for	the
possibility	to	delegate	the	collection	of	local	charges	to	companies,	let	alone	the	right	to
the	laws	do	not	grant	private	legal	entities	the	right	to	collect	local	fees/charges	defined	by	the
Municipal	Council.
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determine	the	amount	of	such	local	charge	by	such	companies	themselves.
[…]	The	Law	of	the	Republic	of	Lithuania	promulgates	that	the	builder's	right	shall	be
realized	after	the	available	land	plot	acquired	by	right	ownership,	lease	of	any	other
right	provided	for	by	law	is	prepared,	the	construction	project	is	coordinated	and	a
construction	authorization	is	acquired	in	the	established	manner.	In	view	of	the	fact	that
the	Municipality	will	not	form	new	land	plots,	and	authorizations	are	issued	by	the
Constructions	Building	Inspectorate	of	the	County	Governor's	Administration,	in	general,
construction	of	multi-storey	parking	areas	should	be	considered	as	not	possible.
According	to	the	Framework	Contract,	the	Consortium	will	be	a	single	partner	of	the
Municipality	enjoying	exclusive	right	to	collect	local	charge	and	construct	multi-storey
parking	areas	on	the	sites	dsignated	by	Vilnius	City	Council.	The	Republic	of	Lithuania
Law	on	Competition	promulgates	that	all	agreements	aimed	at	limiting	competition	or
which	limit	or	might	limit	competition,	shall	be	prohibited	and	recognized	as	null	and
void	as	from	the	moment	of	their	drafting.	[…]	[(CE	28)]
124.		On	19	May	2000,	the	Vilnius	District	Administrative	Court	issued	a	decision	in	which	it
“resolved	[…]	to	satisfy	petition	by	Government's	Representative	in	Vilnius	District	in	part	[and]
repeal	the	Decision	No.	482	of	Vilnius	City	Council	as	of	29	December	1999	Regarding	Approval
of	the	Agreement	between	Vilnius	City	Municipality	and	Consortium	formed	between	UAB	Baltijos
Parkingas	and	UAB	Egapris	to	the	extent	approving	Paragraphs	2.4.1,	5.1.3,	5.1.3.1,	5.1.3.2,
5.1.3.3,	5.1.3.4,	5.1.3.5,	5.1.4	and	5.1.13	of	the	Agreement,	as	well	as	paragraph	1	of	Article	5	of
Joint	Activity	Agreement	under	Annex	No.	8	hereof”	(CE	33).
125.		Although	this	Court	rejected	the	Government	Representative's	claim	that	Lithuanian	law
prevented	the	Municipality	from	giving	the	parking	fee	collection	service	into	private	concession
(the	Court	stressed	that	Articles	4.2	and	6.1	of	the	Law	on	Local	Fees	and	Charges	grant	the
Municipal	Council	the	right	to	delegate	collection	of	local	charges	to	other	entities),	the	Court	found
the	hybrid	parking	fee	to	be	inconsistent	with	existing	laws	and	regulations.	The	Court
consequently	annulled	Decision	No	482	to	the	extent	that	it	authorized	the	Municipality	to	include	in
the	Agreement	provisions	considered	inconsistent	with	Lithuanian	law,	on	the	basis	of	the	following
considerations:
Under	the	Agreement	between	Vilnius	City	Municipality	and	Consortium	a	local	charge	is
treated	as	a	component	part	of	the	fee	(tax)	for	car	parking	time	in	the	areas	established
by	the	Council	of	the	Municipality.	Such	treatment	does	not	correspond	to	the
provisioning	of	the	Law	on	Tax	Administration	and	the	Law	on	Local	Fees	and	Charges.
[…]
The	Law	on	Local	Fees	and	Charges	does	not	provide	for	a	possibility	to	split	a	local
charge	into	two	means	of	payment	—	local	charge	and	parking	fee	(tax)	—	[and
paragraph	4	of	Article	3	of	the	said	law]	treats	the	local	charge	as	a	single	and	indivisible.
[Besides,	according	to	Article	7]	of	the	said	law,	income	received	from	local	fees	and
charges	shall	be	credited	to	the	item	of	other	payments	of	the	budget	of	the
municipality.	Therefore,	a	part	of	Paragraph	2.4.1	of	the	Agreement	establishing	transfer
from	the	municipality	to	the	Consortium	of	the	right	to	collect	parking	fees,	as	well	as	a
part	of	Paragraph	5.1.3	establishing	that	a	local	charge	is	a	component	part	of	the
parking	fee	(tax)	and	that	the	other	part	of	the	charge	is	received	by	the	Consortium	who
determines	in	its	own	discretion	the	amount	of	charge	due	to	it,	as	well	as	Paragraphs
5.1.3.1,	5.1.3.2,	5.1.3.3,	5.1.3.4,	5.1.3.5	and	5.1.4	establishing	ratio	between	the	local
charge	due	to	the	municipality	and	the	fee	due	to	the	Consortium	are	not	compatible
with	the	law.
[…]	the	said	fee	for	unclamping	shall	be	treated	as	a	variety	of	the	local	charge	and	shall
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be	subject	to	collection	and	accounting	rules	governing	local	charges.	Therefore,
Paragraph	5.1.13	of	the	Agreement,	to	the	extent	establishing	contribution	of	30	per	cent
of	the	collected	fee	for	unclamping	to	the	account	of	municipality,	is	not	compatible	with
the	Law	on	Tax	Administration	and	the	Law	on	Local	Fees	and	Charges.	[…]	[(CE	33)]
126.		The	Municipality	appealed	the	decision	of	the	Vilnius	District	Administrative	Court,	which	was
repealed	in	April	2001	by	the	Supreme	Administrative	Court,	for	lack	of	jurisdiction	of	the	lower
court.	The	Supreme	Administrative	Court	decided	to	“repeal	the	Decision	passed	by	Vilnius
Administrative	Court	and	hand	over	the	case	for	a	hearing	by	Vilnius	First	County	Court”	(CE	85).
4.3.2		The	new	Law	on	Fees	and	Charges
127.		On	13	June	2000,	the	Parliament	adopted	a	new	Law	on	Fees	and	Charges	the	“new	Law	on
Fees	and	Charges”),	which	replaced	the	1996	Law	(see	Article	18	of	the	new	Law	on	Fees	and
Charges)	(CE	136).	The	new	Law	on	Fees	and	Charges	provided,	in	its	Article	11(2)	—
authorizations	subject	to	local	fees	and	charges	—	that	“a	payer	of	local	fees	and	charges	may
not	be	required	to	pay	for	an	object	on	which	local	fees	or	charges	are	levied	in	any	other	way
than	by	paying	a	local	fee	or	charge”.	This	new	Law	further	provided,	in	its	Article	13.2,	that	“the
rates	of	local	fees	and	charges	shall	be	established	in	LTL	in	round	numbers.”
4.3.3		The	new	Law	on	Clamping
128.		On	5	September	2000,	the	Government	passed	Decree	No.	1056	Regarding	Authority	to
Define	and	Approve	Procedures	for	Forced	Removal	or	Clamping	of	Vehicles	Using	Clamping
Devices.	This	Decree	“authorize[d]	the	Ministry	of	Interior	to	define	and	approve	before	the	1 	of
October	2000,	the	Procedures	for	Forced	Removal	or	Clamping	of	Vehicles	Using	Clamping
Devices.”	Decree	No.	1056	nullified	the	Decree	of	29	July	1991	Regarding	Approval	of	Regulations
of	Forced	Removal	or	Clamping	of	Vehicles	(CE	41).
129.		On	24	November	2000,	the	Mayor	of	the	Municipality	of	Vilnius	wrote	to	the	Government	of
the	Republic	of	Lithuania	(CE	56):	“Upon	the	entering	into	force	of	the	present	Resolution	[the
decree	No.	1056],	municipalities	lose	their	legal	basis	to	block	vehicle	running	gear	in	cases	of
paid	parking	rules	violations;	rights	and	functions	of	municipalities,	defined	by	the	Law	on	Local
Fees	[…]	are	violated”.	The	Municipality	requested	the	Government	to	re-authorize	the
municipalities	to	regulate	clamping	on	their	territory.
130.		On	27	November	2001,	the	Government	adopted	Decree	No.	1426	(CE	97).	This	Decree	re-
authorized	clamping,	provided	that	clamping	be	done	in	the	presence	of	a	police	officer.	Indeed,
Article	14	of	the	Decree	provided	that	“in	cases	specified	in	paragraph	13.1	above	the	vehicles
shall	be	clamped	by	the	police	officer	using	clamping	devices,	and	in	cases	specified	in
paragraph	13.2	—	by	police	officer	together	with	the	person	authorized	so	by	municipality	by
taking	use	of	the	clamping	devices	provided	by	municipality.”
131.		On	3	December	2001,	BP	alleged	that	it	was	losing	substantial	amounts	of	money	as	a	result
of	this	change	in	the	regulatory	system.	BP	characterized	the	legislative	changes	with	respect	to
clamping	as	a	force	majeure	(CE	98).
132.		On	10	April	2002,	the	Vilnius	City	Council	implemented	Decree	No.	1426	through	its	Decision
No.	542	Regarding	Partial	Amendment	of	the	Vilnius	City	Council's	Decision	No.	151	of	11
September	1996	Regarding	Imposition	on	Vehicle	Owners	(Drivers)	of	Duty	for	the	Use	of	Pay	Car
Parking	Spaces	and	Parking	Lots	(CE	115).	Article	12	of	this	Decision	provided	that	“vehicles
ignoring	the	pay	parking	regulations	[…]	shall	be	clamped	using	mechanical	devices.	Clamping
of	vehicles	shall	be	undertaken	by	a	police	officer,	acting	concertedly	with	an	employee	of	UAB
Vilniaus	Parkavimo	Kompanija	possessing	a	special	authorization	certificate	[…].”
4.3.4		The	amendment	of	the	Law	on	Self-Government
st
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133.		On	12	October	2000,	the	Law	on	Self-Government	was	amended	(CE	47).	Until	then,	this	Law
did	not	establish,	at	least	not	expressly,	any	restrictions	on	the	ability	of	municipalities	to	enter	into
Agreements	on	Joint	Activity	(JAAs)	with	private	entities.	Article	9	of	the	October	2000	version	of	the
Law	on	Self-Government	reads	as	follows:
1.		Municipalities	may	exercise	other	State	functions	(public	administration	and	public
service	rendering),	which	are	not	provided	for	in	this	Law,	under	contracts	concluded	with
State	institutions	or	agencies.	A	municipality	may	conclude	such	contracts	only	in	the
event	that	the	municipal	council	gives	its	consent.	[…]
2.		For	general	purposes	a	municipality	may	conclude	joint	activity	contracts	or	public
procurement	contracts	with	State	institutions	and	(or)	other	mnicipalities.
134.		Thus,	in	this	new	version,	the	Law	on	Self-Government	restricted	the	right	of	municipal
authorities	to	conclude	JAAs	to	other	public	counterparties	only.
4.4		The	performance	of	the	agreeement
4.4.1		The	submission	of	Parking	Plans
135.		In	the	course	of	a	meeting	held	on	28	January	2000,	the	Consortium	submitted	to	the
Municipality	a	“list	of	information	necessary	to	draft	the	parking	plan”	(CE	15).
136.		Also	in	January	2000,	“the	Consortium	submitted	a	tender	to	the	Vilnius	Development
Department	of	the	Vilnius	Municipality	tender	on	issuing	the	technical	requirements	of
construction	of	the	underground	parking	lot	next	to	the	Opera	and	Ballet	Theatre”	(CE	15).	Each
Consortium	partner	proposed	its	first	site	for	the	construction	of	a	MSCP.	BP	proposed	a	site	near
the	Pergales	Movie	Theatre	(the	“Pergales	MSCP”)	and	asked	the	Municipality	to	issue	a	list	of	the
conditions	for	the	design	(CE	30).	Egapris	proposed	another	location	for	its	own	MSCP.
137.		The	Municipality's	Development	Department	asked	BP	to	start	planning	work	for	a	second
MSCP	in	Gedimino	site	instead	of	the	Pergales	MSCP.
138.		On	24	August	2000,	BP	addressed	to	the	Municipality	a	draft	Parking	Plan	(CE	37)	and	on	1
September	2000,	completed	draft	parking	plans	were	officially	submitted	(CE	40).
139.		On	6	October	2000,	the	Municipal	Enterprise	Vilniaus	Planas	proposed	that	(CE	44)	“the	draft
in	essence	could	be	approved	provided	certain	supplements	and	adjustments	were	made	[…]”.
140.		On	11	October	2000,	the	Municipality's	Energy	and	Facility	Department	suggested	that	the
draft	should	be	adjusted.	The	Department	observed	that	(CE	45)	“[…]	some	elements	in	terms	of
scope	of	the	parking	plan	as	defined	an	Annex	2	of	the	Agreement	between	Vilnius	city
municipality	and	the	consortium	[…]	were	missing	[…]”.
141.		On	13	October	2000,	the	Municipality's	Transport	Council	discussed	the	Plans	and	resolved
(CE	48):
1.1		Reconstruction	of	Pylimo	street	as	a	segment	comprising	the	Old	City	ring	under	the
draft	Vilnius	City	Parking	Plan,	by	introducing	two-ways	traffic	is	not	supported	by	any
calculations.	[…]	Calculation	should	be	produced	that	would	substantiate	advantages	of
the	proposed	alterations	of	the	traffic	organisation	when	compared	with	current	situation.
1.2		The	street	net	and	traffic	organisation	provided	in	the	draft	is	not	quite	definite.
Detailed	planning	of	the	street	net	is	necessary.
1.3		The	draft	should	be	supplemented	by	a	scheme	of	public	transport	communication
system.
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142.		On	20	October	2000,	the	National	Monument	Protection	Commission	(“NMPC”)	objected	to
the	parking	plan.	The	NMPC	decided	to	object	to	the	project	of	construction	of	the	parking	for	the
following	reason	(CE	49):
Projects	of	such	type	and	scale	like	the	project	of	the	construction	of	planned
underground	garages	in	the	Old	Town	of	Vilnius	should	be	developed	concurrently	taking
into	consideration	the	possible	direct	and	indirect	environmental	impact	of	planned
works	and	also	the	impact	on	cultural	properties.	In	the	opinion	of	the	State	Monumental
Protection	Commission,	the	planned	garages	[…]	would	change	the	character	of	the	Old
Town	of	global	value;	destroy	large	areas	of	unexplored	cultural	layer.	Also,	the	intensity
of	traffic	and	air	pollution	in	the	Old	Town	is	likely	to	increase.	The	Old	Town	might
become	less	attractive	in	terms	of	tourism	and	to	the	residents	and	visitor,	and	this
would	be	a	great	loss.
143.		On	24	November	2000,	the	Environmental	Protection	Department	of	Vilnius	Region	stated	that
(CE	57):
The	plan	does	not	contain	the	assessment	of	consequences	of	solutions	from	the
viewpoint	of	environment.
Based	on	the	first	assessment,	we	do	not	approve	of	the	construction	of	underground
garages	in	Sereikiskiu	Park.	Their	need	in	this	place	is	not	sufficiently	grounded,	and	the
territory	is	unique	and	valuable	both	from	environmental	and	other	aspects.	[…]
Opinion:	We	do	not	in	essence	object	to	the	Vilnius	city	car	parking	plan.	In	further
project-making	stages,	to	assess	environmental	impact,	project	the	means	of
compensation	for	cutting	down	greenery	and	built-up	squares.
144.		On	12	December	2000,	the	Vilnius	Urban	Development	Department	stated	(CE	60)	that	“the
division	approves	of	the	main	ideology	stated	by	the	preparers	of	the	plan	with	regard	to	the
organisation	and	management	of	the	traffic	in	the	city's	historical	centre,	vehicle	parking	on	the
streets,	and	the	necessity	of	construction	of	underground	(multistorey)	garages,	and,	essentially,
to	their	positioning	as	specified	in	the	plan.”
145.		On	22	December	2000,	the	Vilnius	Territorial	Division	underlined	that	(CE	61):
1.1		the	solutions	presented	in	the	referred	documents	directly	affect	a	cultural	monument
old	city	of	Vilnius	[…];
1.2		the	delivered	document	was	drafted	without	having	obtained	under	the	established
procedure	the	conditions	with	regard	to	special	planning	document	formulation	issued	by
the	Department	of	Cultural	Heritage	protection	(Vilnius	Territorial	Division)	and	without
having	implemented	the	requirements	established	by	the	procedures	and	rules	with
respect	of	special	planning	documents	formulation	as	prescribed	by	relevant	laws	of	the
Republic	of	Lithuania	and	other	legal	acts,	i.e.:
1.2.1		the	requirements	with	respect	of	formulation	of	certain	purpose	special
planning	as	prescribed	by	the	Law	on	the	Territorial	Planning;
1.2.2		the	requirement	with	respect	to	formulation	of	certain	purpose	special
planning	laid	down	in	the	general	regulations	for	formulation,	coordination	and
approval	of	special	planning	documents;
1.2.3		the	requirements	with	respect	to	formulation	of	certain	purpose	special
planning	laid	down	in	the	regulations	for	formulation	and	issue	of	the	conditions	with
respect	to	territorial	planning	documents.	[…]
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146.		Despite	all	the	oppositions,	the	Municipality	decided,	on	4	January	2001,	to	“permit	to	the
UAB	to	design	an	underground	parking	lot	on	the	Gedimino	Ave.	section	from	Jogailos	Str.	to
Katedros	SQ”	(CE	67).	On	26	January	2001,	the	Mayor	of	Vilnius	City	Arturas	Zuokas	(CE	70)
“approves	the	construction	of	the	underground	garage	in	Gedimino	Avenue	between	Odmiiniu
and	Savivadybes	Squares	and	notifies	that	the	Municipality	will	provide	the	required	assistance
to	realize	this	project”.
147.		However,	on	12	March	2001,	the	State	Monument	Protection	Commission	of	the	Republic	of
Lithuania	issued	unfavorable	opinions	regarding	the	project	and	stressed	that	(CE	81)	“upon
installation	of	garages,	a	big	portion	of	archaeological	heritage	of	the	old	city	of	Vilnius	will	be
destroyed;	use	of	multiple	up-to-date	materials	and	technologies	will	damage	the	authenticity	of
the	old	city	of	Vilnius	[…]”.	Nevertheless,	the	Ministry	of	Environment	of	the	Republic	of	Lithuania
wrote	that	(CE	84)	“while	being	well-aware	of	the	importance	of	the	Old	Town	of	Vilnius	and	the
need	to	preserve	the	cultural	and	natural	heritage,	we	are	of	the	opinion	that	it's	too	early	to
declare	the	loss	of	authenticity	of	the	Old	Town	of	Vilnius.	Similar	parking	areas	have	been
constructed	in	the	centres	of	many	cities	throughout	Europe	while	reconciling	the	needs	of
heritage,	modern	economy	and	social	development”.	[…]
148.		Finally,	the	Municipality	changed	its	mind	and	decided,	on	22	March	2001,	to	develop
exclusively	the	Pergales	MSCP	(see	RE	63).
149.		Two	weeks	after	the	decision	to	abandon	the	Project	of	MSCP	on	Gedimino	Avenue,	the
Mayor	Arturas	Zuokas,	in	a	letter	of	27	April	2001,	reminded	BP	that	the	first	Parking	Plan	(near	the
Pergales	Theater)	“after	coordination,	public	debate	and	checking	by	the	territorial	planning
supervisory	authority	had	to	be	furnished	to	the	Council	of	Vilnius	on	11	08	2000”	(CE	86).
150.		The	Mayor	added	“[w]e	hereby	propose	the	6-month	term	calculated	from	the	receipt	of
this	official	letter	for	urnishing	the	parking	Plan	coordinated,	deliberated	and	checked	in	the
established	manner	for	approval	to	the	council	of	Vilnius	city.	In	the	Event	of	the	failure	to
submit	the	Parking	Plan	by	the	specified	deadline,	the	Municipality	or	Vilnius	City	will	terminate
the	Contract	with	the	consortium	[…]”	(CE	86).
151.		During	a	meeting	of	19	June	2001	with	the	Vilnius	City	Development	Department	Commission
for	the	Construction	of	Underground	Garages,	BP	argued	that	(CE	87)	on	the	initiative	of	the	heads
of	the	City	it	was	decided	to	implement	the	project	of	Gedimino	Avenue	which	did	not	justify
itself,	and,	as	a	result	realization	of	the	project	for	construction	of	multi-storey	underground
parking	areas	was	delayed.
152.		In	September	2001	(CE	90),	BP	submitted	its	second	Parking	Plan.
153.		During	a	meeting	of	the	Working	Group	(see	¶	161)	on	22	November	2001,	the	City	accused
BP	of	non-compliance	with	its	contractual	obligation,	that	is	the	delivery	of	concrete	plans	for	the
construction	of	the	Pergales	MSCP	as	stated	on	27	April	2001	(CE	96	and	RE	70).	In	its	letter	dated	3
December	2001,	BP	alleged	that	the	delay	was	also	due	to	the	City's	delay	in	taking	the	necessary
action	to	procure	the	necessary	land	and	in	the	delivery	of	the	design	conditions	for	the	Pergales
Parking	(CE	98).
154.		In	February	2002,	Mayor	Zuokas	requested	BP	to	“provide	written	reasons	of	the	failure	to
submit	within	the	established	deadlines	the	parking	plan”	(CE	106).
155.		On	20	March	2002,	BP	wrote	to	Mayor	Zuokas	(CE	108).	In	its	letter,	BP	explained	that
“the	main	reasons	to	the	delayed	approval	of	the	parking	plan	are	as	follows:
a)		the	city	had	not	all	the	necessary	information,	and	it	had	to	be	collected
separately;
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b)		the	technical	task	was	submitted	to	the	company	with	a	long	delay;
c)		discussions	of	the	plan	in	committees	were	not	properly	organized;
d)		terms	of	heritage	preservation	were	submitted	just	in	March	2001;
e)		the	Municipality	changed	its	position	regarding	the	car	parks	under	Gedimino
Avenue	and	car	parks	in	the	Old	Town	in	March	2001;
f)		the	Municipality	has	still	not	made	a	clear	decision	on	the	ways	of	solution	of
parking	problems	(construction	of	car	parks)	in	the	Old	Town.
We	would	like	to	draw	your	attention	to	that	the	approved	parking	plan	is	the	company's
concern	first	of	all,	and	very	important	one.	The	plan	is	necessary	for	the	company	in
order	to	plan	a	proper	and	effective	parking	system,	to	know	and	evaluate	the	business
development,	the	required	investments,	terms	and	return.	[…]
We	are	enclosing	the	prepared	parking	plan	to	this	letter	once	again.	In	the	plan,	you
find	two	alternative	versions,	basically	of	the	uncertainty	concerning	the	Old	Town”.
156.		In	his	response	of	19	April	2002,	Mayor	Zuokas	stated	that	“delayed	preparation	of	the
Parking	Plan	may	not	be	substantiated	by	absence	of	the	technical	task,	because	legal	acts
regulating	territorial	planning	establishes	that	the	technical	task	is	not	necessary	for	the
preparation	of	the	special	plan.	Provisions	of	the	Contract	and	Law	on	Territorial	Planning	require
furnishing	the	Municipality	with	the	Parking	Plan	after	its	coordination,	public	debates	and
verification	by	the	territorial	planning	supervisory	authority.	The	Municipality	is	not	obligated	to
deliberate	the	Parking	Plan	which	does	not	satisfy	this	requirement,	and	submission	of	such	plan
may	not	be	considered	a	proper	discharge	of	the	Consortium's	obligation.	The	term	of	the
preparation	of	the	Parking	Plan	should	not	be	influenced	by	the	Municipality's	position	on	the
construction	of	multi-storey	parking	areas	in	the	sites	other	than	those	specified	in	Annex	No.1
to	the	Contract.	By	virtue	of	Clause	2.2.2	of	the	Contract,	the	Parking	Plan	shall	be	prepared	in
observance	of	sites	specified	in	the	Annex.	No.1	for	the	construction	of	multi-storey	parking
areas	and	their	detailed	plans.	Neither	decision	of	the	Municipality	regarding	the	ways	of
settlement	of	parking	problems	in	the	Old	Town	of	public	transport	system	development	strategy
is	an	obstacle	for	the	discharge	of	the	consortium's	obligation	to	prepare	the	Parking	Plan”	[(CE
16)].
4.4.2		The	Joint	Activity	Agreement
157.		A	form	of	Agreement	on	Joint	Activity	(“JAA”)	was	appended	to	the	Agreement	as	Annex	No.
8	(CE	13).	The	JAA	pertained	among	others	to	the	transfer	to	the	Consortium	of	land	for	the
construction	of	the	MSCP.
158.		On	26	March	2002,	Mayor	Arturas	Zuokas	sent	to	the	Consortium	a	draft	of	Joint	Activity
Agreement	for	the	Pergales	parking	(CE	110)	emphasizing:
Construction	of	over	ground	building	with	commercial	functions	[…]	is	not	a	priority	of
the	Municipality	of	the	City	of	Vilnius,	is	not	foreseen	in	the	Main	Agreement	and	existing
detailed	plans	of	sites,	and	should	not	be	foreseen	in	the	joint	activity	agreements	on
multi-storey	underground	parking	constructions.
159.		On	9	April	2002,	BP	sent	a	revised	draft	of	Joint	Activity	Agreement	in	which	all	references	to
construction	above	the	Pergales	parking	were	deleted	(CE	113).
160.		However,	the	Municipality	refused	to	sign	the	Joint	Activity	Agreement,	given	that,	in	the
meantime,	the	legislation	of	Lithuania	seemed	to	have	taken	a	negative	view	of	JAAs	with	private
parties	(see	CE	104;	the	Republic	of	Lithuania's	Counter-Memorial,	¶¶	121–122	and	the	Claimant's
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Memorial,	¶¶	107–108).	On	5	July	2002,	the	Mayor	Zuokas	wrote	to	BP	(CE	126):
Construction	of	the	multi-storey	parking	lots	is	one	of	the	major	obligations	of	the
Consortium	consisting	of	UAB	Baltijos	Parkingas	and	UAB	Egapris	foreseen	by	the
agreement	signed	on	30	December	1999	by	the	Municipality	an	the	Consortium.	The
agreement	foresees	that	the	multi-storey	parking	lots	will	be	constructed	on	the	basis	of
joint	activity	agreements.	However,	according	to	the	Local	Autonomy	Law	of	the
Republic	of	Lithuania	(edition	of	12	October	2000)	Article	9	Part	2	the	Municipality	can
make	joint	activity	agreements	or	common	public	purchase	agreements	with	the	state
institutions	and	(or)	other	municipalities	for	common	purposes.	This	provision	of	the	law
is	still	not	interpreted	unanimously	and	there	is	a	great	probability	that	the	joint	activity
agreement	signed	by	the	Municipality	will	be	contested	in	court	as	contradicting	the
above	mentioned	provision	of	law.	It	also	could	be	impeded	by	the	fact	that	the	multi-
storey	parking	lots	will	be	private	property,	not	the	Municipality's.	Considering	this	factor
we	suggest,	in	the	short	run,	considering	the	possibility	of	amending	the	agreement
signed	on	30	December	1999	rejecting	the	Consortium's	obligation	to	construct	multi-
storey	parking	lots	foreseen	by	the	agreement	and	respectively	the	Municipality's
obligation	to	ensure	the	method	of	land	use	for	the	Consortium,	organisation	of
permissions	and	co-ordination	according	to	the	provisions	of	the	joint	activity
agreement.	According	to	the	amended	agreement	of	30	December	1999,	as	suggested
the	Consortium	would	preserve	the	right	and	obligations	connected	with	providing
parking	services	and	charging	local	fees	on	overground	parking	lots,	also,	considering
the	decreased	volumes	of	investments	into	development	of	parking	infrastructure,
correcting	the	expiry	date	of	the	Agreement	and	revenue	allocation	between	the
Consortium	and	the	Municipality.
161.		Thus,	on	29	July	2002,	Mayor	Zuokas	established	a	Working	Group	for	reconsideration	of	the
Agreement	of	30	December	1999	(CE	127).
162.		On	5	September	2002,	BP	proposed	the	conversion	of	the	Joint	Activity	Agreement	into	a
Cooperation	Agreement	as	the	Municipality	had	done	with	the	Company	Pinus	Proprius	(see	¶¶
167–171)	(CE	133).
163.		On	9	September	2002,	the	Working	Group	decided	to	(CE	134)	“conclude	partnership
agreements	instead	of	joint	activity	agreements	on	the	construction	of	multi-storied	car	parks
[…].
164.		On	24	February	2003,	the	Vilnius	District	Court	decided	to	(CE	155)	“nullify	[…]	annex	8	[the
form	of	JAA]	of	the	Agreement	made	between	Vilnius	City	Municipality	and	UAB	“Baltijos
parkingas”	and	UAB	“Egapris”,	which	Agreement	was	approved	by	Decision	No.	482	[…]”.
165.		On	6	May	2003,	the	Director	of	the	Administration	of	the	Municipality	of	Vilnius,	Raivydas
Rukštele	wrote	to	the	Government	Representative	that	(CE	169)
[d]uring	the	meeting	of	the	representatives	of	the	Parties	held	on	9	September	2002,	on
proposal	of	the	Municipality	it	was	decided	to	sign	cooperation	agreements	instead	of
joint	activity	agreement.	However,	changing	only	the	title	of	the	contract	and	of	the
designation	of	the	Parties'	obligations	might	be	insufficient	for	eliminating	the
inconsistencies.	Therefore,	it	would	be	very	important	to	the	Municipality	to	know	the
opinion	of	the	Government	Representative,	as	of	the	authority	supervising	the
legitimacy	of	the	legal	acts	passed	by	the	Municipality	[…].
166.		On	22	May	2003	(CE	168),	the	Lithuanian	Court	of	Appeals	decided	to	“uphold	the	Decision
passed	by	Vilnius	District	Court	on	24	February	2003,	and	reject	the	Appeal”.
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4.4.3		The	Pinus	Proprius	Project
167.		In	April	2001,	the	City	discussed	the	possibility	of	building	a	Parking	under	Gedimino	Avenue
and	southern	part	of	Municipality	Square	with	the	company	Pinus	Proprius	UAB.	Pinus	Proprius	was
proposing	the	development	of	property	it	owned	partly	while	the	City	owned	the	rest.	Pinus	Proprius
owns	a	building	on	Gedimino	Avenue	and	was	planning	the	renovation	of	the	building	into	a	hotel
(RE	56).
168.		On	24	October	2001,	the	Municipality	approved,	by	Decision	No.	417,	the	signing	of	a	Joint
Activity	Agreement	with	Pinus	Proprius	(CE	95).	However,	on	18	January	2002,	the	Representative
of	the	Government,	Gintautas	Jakimavicius,	requested	the	Vilnius	District	Administrative	Court	to
revoke	the	Decision	No.	417	on	the	approval	of	the	JAA:
a	conclusion	should	be	made	that	the	Law	does	not	provide	for	the	right	for
municipalities	to	conclude	joint	venture	agreement	with	private	persons	and	that	Vilnius
City	Municipality	Council	having	passed	the	decision	No.417	of	24	October	2001	and	by
Clause	1	thereof	approved	the	draft	joint	venture	agreement	with	Pinus	Proprius	UAB
exceeded	the	scope	of	competence	of	public	authorities	[(CE	104)].
169.		The	Vilnius	District	Administrative	Court	sent	the	case	to	the	Vilnius	District	Court,	which	was
within	its	jurisdiction.
170.		On	27	March	2002,	the	Vilnius	City	Council	decided	(Decision	No.	530)	to	approve	a
Cooperation	Agreement	between	the	Municipality	on	Vilnius	and	Pinus	Proprius.	On	19	April	2002,
the	Government	Representative,	Gintautas	Jakimavicius,	wrote	the	Vilnius	District	Court	(CE	117):
The	Vilnius	city	Council	on	March	27,	2002,	issued	decision	No.	530	“On	the	Approval	of
the	Cooperation	Agreement”	whereby	item	1	approved	the	Cooperation	Agreement
between	the	Municipality	of	the	City	of	Vilnius	and	Joint	Stock	Company	“Pinus	Proprius.”
By	this	decision	the	Vilnius	City	Council	actually	changed	decision	No.	417	of	10/24/01
“On	Approval	of	the	Partnership	Agreement,”	i.e.	it	became	out	of	force.	Since	the
decision	became	out	of	force,	the	legal	issue	also	disappeared.	Consequently,	the	case
was	dismissed.
Considering	the	presented	circumstances	[…]	I	withdraw	the	claim	and	therefore	ask	the
Court:	To	dismiss	the	case	[…].
171.		Thus,	on	20	August	2002,	the	City	of	Vilnius	concluded	a	Cooperation	Agreement	with	Pinus
Proprius	(CE	128).
4.4.4		The	modification	of	the	Agreement	of	30	December	1999
172.		The	Agreement	of	1999	provided	that	the	multi-storey	parking	lots	will	be	constructed	on	the
basis	of	a	Joint	Activity	Agreement.	However,	the	Municipality	considered	that,	by	virtue	of	the	12
October	2000	amendment	of	the	Law	on	Self-Government,	it	had	became	impossible	to	conclude
such	kind	of	contracts	with	private	companies,	namely	with	persons	other	than	State	institutions	or
municipalities	(see	¶	168).	Thus,	with	the	avowed	purpose	of	ensuring	the	lawfulness	of	the
Agreement,	the	Municipality	decided	to	establish	a	working	group	in	order	to	bring	the	Agreement	in
conformity	with	the	revised	Law	on	Self-Government.
173.		During	the	meeting	of	9	September	2002,	the	representatives	of	the	City	of	Vilnius	and	the
representatives	of	BP	agreed	(CE	134):
1.		To	exclude	the	provisions	of	the	Agreement	on	the	rights	and	obligations	of	the
Consortium	to	collect	parking	fees	and	fines	for	violation	of	parking	rules.	To	appeal	to	the
Government	of	the	Republic	of	Lithuania	with	the	request	to	issue	a	consent	granting	the
right	to	Vilnius	city	Municipality	to	carry	out	public	procurement	from	the	single	source.
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[…]
3.		To	conclude	partnership	agreements	instead	of	joint	activity	agreements	on	the
construction	of	multi-storied	car	parks.	[…]
174.		However,	on	2	October	2002,	Mayor	Zuokas	and	Bjorn	Avnes,	a	representative	of
Parkerings,	discussed	also	the	opportunity	to	cancel	the	Agreement.	Following	this	discussion,
Bjorn	Avnes	addressed	a	letter	dated	11	October	2002	to	Mayor	Zuokas	summarizing	the	remarks
made	during	the	meeting	of	2	October	2002	(CE	137):
The	unexpected	obstacles,	that	have	been	met	during	the	implementation	of	the
Agreement,	might	prove	that	the	step	was	a	bit	too	brave.	We	have	suffered	serious
economical	losses	and	setbacks	in	the	development	of	the	project.	I	am	therefore
prepared	to	meet	with	your	request	to	renegotiate	the	Agreement,	in	order	to	arrive	at	a
mutually	acceptable	solution.
As	we	discussed,	there	are	two	main	options	available	to	us:
(a)		The	Municipality	cancels	the	Agreement.
(b)		the	Agreement	is	renegotiated	on	all	terms,	basically	so	that	the	Municipality
takes	back	the	right	to	the	land	for	construction	of	car	parks	as	requested	in	your
letter	dated	5 	July	2002	[CE	126],	and	our	company	becomes	the	subcontractor	to
the	City	solely	for	street	parking	and	parking	house	management.
Alternative	(a)	is	regulated	under	the	Agreement	and	would	imply	that	we	are
reimbursed	for	our	expenses	(investments	and	losses)	plus	ten	percent,	and	the
Municipality	retains	all	rights	and	obligations,	but	also	including	the	parking	house	close
to	the	market	place,	parking	plan	and	operational	systems.
According	to	my	knowledge,	the	amount	would	be	in	the	order	of	15	millions	LITAS,
including	the	ten	percent.
Alternative	(b)	is	more	elaborate.	As	we	would	be	giving	up	the	real-estate	opportunities
present	in	the	Agreement	at	this	time,	this	will	need	to	be	economically	compensated.
[…]
Making	a	reasonable	assumption	on	the	outcome	of	a	renegotiation	as	outlined	above,
the	total	cost	to	the	Municipality	to	regain	major	parts	of	the	Agreement	would	be	in	the
order	of	11	million	LITAS.	[…]
175.		On	8	November	2002,	Mayor	Arturas	Zuokas	replied	to	Bjorn	Avnes:
[…]	This	Agreement	is	very	important	to	Vilnius	Municipality.	I	entirely	agree	with	you
that	both	partners	must	cooperate	in	seeking	the	way	out	of	the	difficult	situation	we	are
in	now.	[…]
Therefore,	I	would	like	to	stress	the	main	points	determining	Municipality's	decision	on
the	issue,	once	again:
—		The	object	of	the	competition	that	took	place	in	1997	and	was	followed	by
competitive	negotiations	and	by	signing	the	Agreement	with	Consortium	in	1999,
was	the	construction	of	parking	lots	—	not	any	other	real	estate	development
projects	which	could	be	profitable	even	if	separate	from	the	whole	parking	system.
This	meant	to	us	and	to	both	competitors	that	a	part	of	the	parking	fees	collected
in	public	places	should	cover	the	expenses	of	construction	of	parking	lots.	[…]
th
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[…]	I	may	only	express	serious	doubts	about	the	amounts	of	funds,	indicated	in	you
letter	as	desired	compensations	for	the	member	of	Consortium	in	case	of	changing	or
terminating	the	Agreement.
Implementation,	renegotiation	or	termination	of	the	Agreement	is	a	complex	problem.
Possible	ways	of	solving	it	should	be	pointed	out	by	the	specialists	representing	both
partners.	Therefore	I	suggest	you	to	preent	your	proposals,	considering	the	change	and
termination	of	the	Agreement,	for	the	negotiations	which	are	being	carried	out	by
specially	appointed	representatives.	[…]	[(CE	140)]
176.		Regardless	of	the	correspondence	between	Bjorn	Avnes	and	Mayor	Arturas	Zuokas,	the
Working	group	continued	the	negotiation.	On	27	November	2002,	during	a	meeting	of	the	Working
Group,	BP	asked	the	representatives	of	the	Municipality	why	(CE	142):
[…]	despite	an	agreement	reached	between	the	Parties,	Vilnius	City	Municipality	does
not	implement	the	decision	adopted	by	the	working	groups	to	apply	to	the	Government
with	regard	to	the	permission	granting	the	right	to	carry	service	procurement	from	the
single	source.	[…]	In	the	opinion	of	BP	representatives,	the	decision	of	the	working
groups	was	not	influenced	by	any	other	additional	circumstances	and	its	implementation
lies	exclusively	within	the	competence	of	the	Mayor	of	the	Municipality.	BP
representatives	outlined	that	inactivity	of	responsible	authorities	of	the	Municipality
poses	a	threat	to	the	continuity	of	the	Agreement	of	30	December	1999	and	raises
doubts	about	the	effectiveness	of	initiated	negotiations.
177.		The	representatives	of	the	Municipality	responded	(CE	142)	that	there	were	[…]	“two
reasons	due	to	which	no	application	was	submitted	to	the	Government:	[…]	the	Consortium
hasn't	yet	implemented	an	obligation	set	forth	in	point	5.1.15	of	the	Agreement	regarding	the
payment	of	the	sum	of	LTL	626,187	for	the	year	2001	to	the	Municipality	and	hasn't	yet	provided
information	indicated	in	points	3.2	and	3.3	of	the	Agenda”	[…].	Thus,	a	dispute	was	arising	over
BP's	performance	of	the	Agreement	especially	over	its	payment.
178.		In	its	letter	dated	28	November	2002,	Skips	AS	Tudor	(Parkerings'	parent	corporation)
underlined	the	failure	by	Vilnius	Municipality	to	address	the	Lithuanian	Government	for	permission
to	carry	out	public	procurement	of	the	Consortium's	parking	service.	Skips	AS	Tudor	also	argued
that	the	Agreement	[of	December	1999]	allowed	commercial	development	on	the	top	of	the	multi-
storey	car	parks	(CE	143).	Moreover,	concerning	the	payment	of	the	amount	set	forth	in	point
5.1.15	of	the	same	Agreement,	Skips	AS	Tudor	emphasized	that	(CE	143):
As	you	may	know,	the	key	source	of	the	consortium's	income	are	originating	from	the
two	contractual	rights	—	the	right	to	collect	parking	fees	and	the	right	to	collect	re-
clamping	penalties	—	which	rights	have	been	temporarily	assigned	to	us	by	Vilnius
Municipality	by	virtue	of	the	Agreement,	made	in	1999.	As	a	consequence	of	force
majeure	situation,	resulting	from	the	actions	of	the	Government	and	the	Parliament,	one
of	those	rights	and	related	income	streams	was	vanished,	and	the	other	one	was
significantly	reduced.	Accordingly,	the	total	income	of	the	consortium	was	adversely
affected	and	we	have	suffered	a	serious	financial	loss.	The	Agreement	defines	the
revenue	sharing	scheme	that	is	based	on	the	income,	not	on	profit.	Therefore,	once	force
majeure	had	a	direct	impact	on	the	income,	it	had	a	direct	impact	on	overall	revenue
sharing.	We	cannot	understand	how	Vilnius	Municipality,	having	lost	the	right	that	was
temporarily	assigned	to	the	consortium,	still	requests	the	same	amount	of	the	revenue
originating	from	such	right.
179.		On	3	February	2003,	during	a	meeting	with	the	Working	Group,	both	parties	maintained	the
same	position.	BP	representatives	proposed	to	submit	the	dispute	concerning	the	payment	of	the
sum	under	point	5.1.15	of	the	Agreement	to	a	court	or	to	any	other	impartial	authority.	However,	the
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parties	agreed	to	continue	the	negotiation	(CE	150).
During	the	next	meeting	of	the	Working	Group	on	13	February	2003,	the	Municipality
representatives	informed	BP	that	(CE	153)	“the	Municipality	is	preparing	to	appeal	to	the
court	regarding	the	fulfillment	of	the	obligation	provided	for	in	point	5.1.15.”
180.		On	24	February	2003,	the	Vilnius	District	Court	ruled	in	favou	of	a	challenge	to	the	hybrid	fee
structure	brought	by	the	Government	Representative	under	the	New	Law	on	Fees	and	Charges
(see	¶	124	and	CE	155).	As	a	result,	the	parking	fee	provision	of	the	Agreement	of	December	1999
was	cancelled.	This	decision	was	confirmed	on	22	May	2003	by	the	Lithuanian	Court	of	Appeals
(CE	168).
181.		By	letter	dated	25	March	2003,	the	Mayor	of	the	City	of	Vilnius	proposed	to	the	Consortium
various	actions,	especially	the	termination	of	the	Agreement	that	had	became	incompatible	with
applicable	law	and	the	conclusion	of	a	new	contract	for	fee	collection	service	(CE	156).
182.		On	16	May	2003,	BP	made	a	counter	proposal,	consisting	in	a	direct	agreement	with	VPK,
namely	the	Operator,	that	is	the	management	company	for	the	BP-Egapris	Consortium	for	the
collection	of	local	fees	and	charges,	and	a	second	and	separate	agreement	with	BP	for	the
construction	of	the	Multi-storied	Parking	(CE	166).
183.		On	24	October	2003,	VPK	submitted	its	proposal	for	a	renegotiated	agreement	for	collection
of	parking	fees	(CE	180):
1.1		VPK	shall	provide	the	following	service	to	the	Municipality:
a)		operate	and	develop	the	car	parking	system	of	the	Municipality	[…];
c)		collect	parking	charges	[…];
2.1		The	contract	shall	be	valid	for	20	years,	and	VPK	shall	have	the	right	of	option	to
extend	it	by	10	years.
3.1		The	Municipality	shall	pay	to	VPK	the	consideration	for	services	[…]	on	a	monthly
basis.	The	amount	of	payment	shall	be	calculated	as	a	percentage	from	collected	income.
[…]
184.		On	17	November	2003,	a	provisional	agreement	was	concluded	between	the	Municipality
and	VPK	(CE	186),	to	ensure	the	continued	collection	of	parking	charges	pending	negotiation.
185.		On	9	December	2003,	the	Municipality	responded	to	the	VPK	proposal	of	24	October	2003
with	a	counter-proposal	for	an	agreement	with	a	duration	of	four	years,	at	the	end	of	which	all
shares	of	VPK	would	be	transferred	to	the	Municipality	free	of	charge	(CE	190).
186.		On	18	December	2003,	VPK	responded	to	the	Municipality	counter-proposal	of	9	December
2003.	In	substance,	VPK	proposed	either	a	15-year	agreement	without	the	construction	of	the	multi-
storey	parking	or	a	10-year	agreement	with	VPK's	rights	and	obligations	to	construct	multi-storey
parking	(CE	192).
187.		The	Municipality	responded	on	15	January	2004	(CE	204):
Due	to	the	amended	legal	acts,	further	implementation	of	the	Agreement	concluded	[…]
on	December	1999	is	no	longer	possible	and	there	are	no	legal	preconditions	for	revising
this	Agreement.
The	conditions	specified	in	the	written	proposal	submitted	by	VPK	on	18	December	2003
regarding	the	establishment	of	new	legal	relations	with	Vilnius	City	Municipality	are	not
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acceptable	to	Vilnius	City	Municipality.	We	remind	you	that	a	proposal	from	Vilnius	City
Municipality	of	9	December	2003	regarding	the	conclusion	of	the	Agreement	with	VPK
and	the	fulfillment	of	the	obligations	set	in	the	Agreement	of	30	December	1999	has
already	been	submitted	to	you.
[…]	[W]e	also	would	like	to	remind	you	that	the	deadline	set	by	Vilnius	City	Municipality
Council	for	negotiations	expires	on	27	January	2004.	Upon	the	expiry	of	this	term	and	in
case	of	failure	to	conclude	a	new	Agreement,	VPK	will	be	deprived	of	its	right	to	collect
local	charges	for	parking	in	Vilnius	City.
4.4.5		The	termination	of	the	Agreement	by	the	Municipality
188.		By	decision	N°	I-221	dated	21	January	2004,	the	Municipality	of	Vilnius	decided	to	terminate
the	Agreement	between	the	Municipality	of	the	City	of	Vilnius	and	the	Consortium	Formed	by	UAB
Baltijos	Parkingas	and	UAB	Egapris	dated	30	December	1999	with	effect	from	1	March	2004	(CE
206).
189.		By	another	decision	N°	I-222	date	21	January	2004,	the	Municipality	of	Vilnius	decided	to
annul	the	local	regulations	that	allowed	VPK	to	collect	the	parking	fee	(CE	207).
190.		The	notice	of	termination	of	the	Agreement	was	sent	to	the	parties	on	27	January	2004.	In
substance,	the	reasons	for	termination	were	the	followings	(CE	210):
The	Agreement	dated	30	December	1999	is	terminated	[…]	by	reason	of	material	breach
on	the	part	of	the	Consortium	formed	by	UAB	Baltijos	Parkingas	and	UAB	Egapris	of	the
following	provisions	of	the	Agreement:
1)		Omission	to	draw	up,	coordinate	and	submit	for	approval	by	the	Vilnius	City
Council	of	the	Parking	Plan	introducing	the	public	parking	system	in	the	Vilnius
City	within	the	time-limits	defined	in	the	Agreement	[…];
2)		Failure	to	ensure	to	the	Municipality	[…]	the	availability	of,	and	direct	and	real
time	access	to,	all	information	specified	[…];
3)		Failure	to	make	investments	defined	in	the	Agreement,	including	failure	to	build
and	equip	multi-storey	car	parks	within	the	time-limits	defined	in	the	Agreement
[…];
4)		Failure	to	pay	to	the	Municipality	of	the	City	of	Vilnius	the	amounts	due	under
the	Agreement	[…];
191.		Moreover,	the	Municipality	requested	the	immediate	and	gratuitous	transfer	of	100	percent	of
the	shares	of	VPK.
192.		Following	the	Agreement's	repudiation,	the	Municipality	sued	BP	and	VPK	in	recovery	of	the
Clause	5.1.15	amount	(see	¶¶	179).	On	29	June	2005,	the	Vilnius	Regional	Court	decided	that	(CE
234):
The	consortium	was	deprived	of	the	right	to	collect	from	the	owners	of	cars	a	fee	for
unblocking	road	wheels	and	thus	lost	one	of	contractual	sources	of	income.	Plaintiff	[the
Municipality]	indicates	that	the	increase	of	the	fixed	fee	under	Clause	5.1.15	of	the
Agreement	is	unconditional	and	not	subject	to	any	circumstances.	However,	such
argument	of	Plaintiff	is	not	recognized	as	grounded.	Defendants	[BP]	substantially	show
that	if	such	argument	of	Plaintiff	is	accepted,	it	should	be	recognized	that	LTL	1,000,000
must	be	paid	even	if	the	consortium's	right	to	collect	local	charge	is	annulled	by	a
certain	legal	regulation.	The	court	decides	that	such	interpretation	of	the	Agreement
would	obviously	conflict	with	the	principles	of	good	faith	and	common	sense	in	general
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and	would	mean	breach	of	such	principles	while	interpreting	this	particular	Agreement.
193.		The	decision	of	the	Vilnius	Regional	Court	was	confirmed	on	appeal	on	20	October	2005	(CE
235).
5.		Position	of	the	Parties
5.1		The	Claimant
5.1.1		On	jurisdiction
194.		As	set	out	in	fuller	summary	in	Section	7.2.1	below,	Claimant	argues	that	the	Tribunal	has
jurisdiction.
5.1.2		On	the	merits
195.		Parkerings	contends	that	it	is	an	investor	subject	to	the	protection	of	the	Agreement	between
the	Government	of	the	Republic	of	Lithuania	and	the	Government	of	the	Kingdom	of	Norway	on	the
Promotion	and	Mutual	Protection	of	Investments	dated	16	June	1992	(hereinafter	the	“Treaty”	or
“BIT”).
196.		The	Claimant	alleges	that	through	the	acts	and	omissions	of	its	municipal	and	national
authorities,	Lithuania	has	violated	Parkerings'	investors	rights	under	the	Treaty	and	must	be	held
responsible.
197.		Parkerings	has	thus	based	its	claim	on	a	three-pronged	argumentation:
(i)		Lithuania	has	violated	its	duty	to	grant	the	investment	equitable	and	reasonable	treatment
and	protection	under	Article	III	of	the	Treaty	;
(ii)		Lithuania	has	violated	its	duty	under	Article	IV	of	the	Treaty	to	afford	the	investment
protection	no	less	favourable	than	that	afforded	to	investors	from	a	third	State;
(iii)		Lithuania	has	violated	its	duty	not	to	indirectly	expropriate	without	compensation	under
Article	VI	of	the	Treaty	.
5.1.2.1		Breach	of	the	duty	to	grant	equitable	and	reasonable	treatment
198.		According	to	the	Claimant,	the	Treaty	obligation	to	grant	“equitable	and	reasonable
treatment”	holds	Lithuania	to	a	stricter	standard	of	conduct	than	the	“fair	and	equitable	treatment”
standard	more	commonly	found	in	other	bilateral	investment	treaties.	A	showing	of	breach	of	Article
III	of	the	Treaty	therefore	requires	less	than	a	showing	of	breach	of	the	standard	of	“fair	and
equitable	treatment”	(see	¶	272	below).
199.		The	Claimant	submits	that	Lithuania's	conduct	falls	within	the	concept	of	unfair,	inequitable	or
unreasonable	treatment	prohibited	by	the	Treaty.	Through	the	acts	and	omissions	of	its	central	and
municipal	authorities,	Lithuania	did:
(i)		Engage	in	grossly	unfair	and	discriminatory	conduct	(see	Section	8.1.2.1	below);
(ii)		Engage	in	arbitrary	and	opaque	conduct	(see	Section	8.1.3.1	below);
(iii)		Frustrate	Parkerings'	legitimate	expectations	(see	Section	8.1.4.1	below);
200.		In	light	of	the	above,	the	Claimant	submits	that	Lithuania	breached	Article	III	of	the	Treaty
beyond	any	possible	doubt.
5.1.2.2		Breach	of	the	obligation	of	protection
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201.		The	Claimant	alleges	that	the	Respondent	failed	to	protect	its	investment	in	violation	of	Article
III	of	the	BIT	(see	full	summary	in	Section	8.2.1	below).
5.1.2.3		Breach	of	the	duty	to	afford	no	less	favourable	treatment
202.		The	Claimant	argues	that	the	core	of	Lithuania's	obligation	under	Article	IV	of	the	Treaty	is	to
provide	Norwegian	nationals	engaging	in	commercial	activities	the	same	standard	of	treatment	as
nationals	from	any	other	State	(see	Section	8.3.1	below).
203.		According	to	the	Claimant,	Lithuania	has	treated	Pinus	Proprius,	an	investment	of	Litprop
Holding	BV,	a	Dutch	investor,	more	favourably	than	BP.	The	Claimant	submits	that	Lithuania
breached	Article	IV	of	the	Treaty.
5.1.2.4		Breach	of	the	duty	not	to	expropriate	without	compensation
204.		The	Claimant	alleges	that	Lithuania	destroyed	BP's	value	by	undermining	and	then
terminating	the	Agreement.	The	Claimant	argues	that	Lithuania	indirectly	expropriated	Parkerings'
ownership	interest	in	BP.	By	failing	to	provide	compensation,	Lithuania	breached	its	obligations
under	Article	VI	of	the	Treaty	(see	full	summary	in	Section	8.4.1	below).
5.1.2.5		Damages
205.		The	Claimant	argues	that	Parkerings	is	entitled	to	full	compensation	for	all	injuries	arising	out
of	Lithuania's	violations	of	the	Treaty.	The	purpose	is	to	eliminate	all	consequences	of	the	violations
and	reinstate	the	situation	which	would	have	likely	existed	in	the	absence	of	any	violation.
206.		Pursuant	to	Article	VI	(2)	of	the	Treaty,	the	appropriate	measure	of	compensation	in	cases	of
lawful	expropriation	is	the	market	value	of	the	investment	immediately	before	the	date	of
expropriation.	While	this	provision	requires	the	expropriation	to	be	lawful,	Parkerings	contends	that
it	also	provides	the	relevant	standard	for	determining	the	appropriate	measure	of	compensation	for
Lithuania's	violations	of	the	Treaty,	which	entailed	the	destruction	of	BP.
207.		The	definition	of	fair	market	value	has	been	established	under	international	law	as	being	the
price	a	buyer	would	be	willing	to	pay	the	seller	under	circumstances	in	which	each	party	had
reliable	information	in	order	to	maximize	its	financial	gain	and	neither	party	was	under	duress	or
threat.	Fair	market	value	should	be	measured	at	the	time	the	investor	suffered	the	injury	that	gave
rise	to	a	right	to	compensation,	that	is	21	January	2004	in	the	present	case,	i.e.	the	date	on	which
the	Municipality	decided	to	terminate	the	Agreement	in	breach	of	the	Treaty.
208.		According	to	the	Claimant,	the	fair	market	value	compensation	must	take	into	account	the
future	profitability	of	BP,	given	that	continued	demand	for	its	services	was	guaranteed	in	the
relevant	market.	In	other	words,	the	fair	market	value	of	BP	in	January	2004	would	reflect	the	strong
demand	for	its	service	and	the	predictability	of	revenue	streams	guaranteed	by	the	Agreement.
Accordingly,	BP's	value	should	be	determined	by	reference	to	the	company's	reasonably
anticipated	profitability	using	the	discounted	cash	flow	(DCF)	method.
209.		Tribunals	have	long	accepted	that	forecasting	future	cash	flows	will	necessarily	implicate
some	degree	of	uncertainty	but	that	the	mere	existence	of	such	uncertainty	does	not	warrant
preclusion	of	compensation	for	future	profitability.	The	use	of	a	DCF	valuation	in	the	present	case	is
particularly	appropriate	for	two	reasons:
(i)		first,	the	parking	business	stands	out	for	its	stability,	low	risk,	ad	predictability,	which
reduces	the	margin	of	uncertainty	to	a	minimum.	In	BP's	case,	predictability	was	enhanced	by
the	nature	of	its	contractual	rights	under	the	Agreement,	in	that	it	was	to	be	the	sole	partner
of	the	Municipality	in	the	design,	development	and	operation	of	the	integrated	parking
system;
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Universite de Geneve; date: 25 January 2015
(ii)		second,	several	buyers	(e.g.	NCC	and	Skanska)	made	arms-length	offers	for	a	stake	in	BP
in	2000	and	2001	using	the	DCF	method	to	establish	their	offer	price,	which	is	consistent	with
general	valuation	practice	in	the	parking	industry.
210.		The	Claimant	further	argues	that	any	diminution	of	value	attributable	to	or	associated	with
Lithuania's	conduct	should	be	discarded.	The	purpose	of	this	rule	is	to	preclude	the	host	State	from
using	its	executive,	legislative	or	judicial	branches	to	progressively	reduce	the	value	of	an	asset
and	then	expropriate	it.	This	is	of	particular	importance	in	the	present	case	where	Lithuania
gradually	eroded	the	value	of	BP,	first	by	litigating	and	legislating	away	the	legal	framework	of	the
investment,	then	by	refusing	to	either	perform	or	renegotiate	the	Agreement	in	good	faith,	and
finally	by	unlawfully	terminating	the	Agreement.	Thus,	full	compensation	of	the	fair	market	value	of
BP	on	21	January	2004	requires	the	Tribunal	to	disregard	any	diminution	in	the	value	of	BP	that
might	have	been	caused	by	each	of	these	various	steps	leading	up	to	the	destruction	of	BP.
211.		In	light	of	the	above,	the	Claimant	contends	that	its	expert,	Mr.	Lapuerta,	has	correctly
valued	BP	as	of	January	2004	in	the	amount	of	EUR	38.5	million	taking	into	account	the	following
assumptions:
(i)		BP	would	build	the	five	MSCPs	assigned	to	Egapris	under	the	ABP,	given	that	BP	and
Egapris	were	jointly	and	severally	liable	and	that	the	latter	had	no	prospect	of	carrying	out
the	work	itself	pursuant	to	its	insolvency;
…(ii)		Egapris	was	not	able	to	enforce	its	call	option	under	the	ABP	for	50%	of	the	shares	in
VPK.
212.		After	deduction	of	the	projected	investment	in	the	construction	of	10	MSCPs	that	BP	was
unable	to	make	due	to	Lithuania's	breach,	as	well	as	of	the	returns	BP	could	have	made	using	these
funds	elsewhere,	Mr.	Lapuerta	reaches	the	amount	of	EUR	20.4	million	(NOK	176.4	million	at	the
exchange	rate	on	21	January	2004)	as	compensation	owed	to	Parkerings	for	the	destruction	of	BP,
in	addition	to	the	interest	computed	thereupon.
5.1.3		Prayers	for	relief
213.		Based	upon	all	the	above	submissions,	Parkerings	requests	the	following	relief:
Parkerings	respectfully	requests	that	the	Tribunal:
(a)		Declare	that	Lithuania	has	breached	its	obligations	under	the	Treaty	and
international	law;
(b)		Award	Parkerings	damages	in	the	amount	of	NOK	176.4	million	as	the	fair
market	value	of	BP	as	of	January	21,	2004;
(c)		Award	Parkerings	interest	at	the	NIBOR	rate,	compounded	monthly	for	the
period	January	22,	2004	through	the	day	of	payment;
(d)		Direct	Lithuania	to	pay	all	of	Parkerings'	costs	and	expenses,	including	legal
fees,	incurred	in	connection	with	this	arbitration;	and
(e)		Order	any	such	further	relief	as	may	be	available	and	appropriate	in	the
circumstances.
5.2		The	Respondent
5.2.1		On	jurisdiction
214.		As	set	out	in	fuller	summary	in	Section	7.2.2	below,	the	Respondent	argues	that	most	of
Parkerings'	claims	are	groundless	and	fall	outside	the	scope	of	the	Tribunal's	jurisdiction	under	the
2
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Universite de Geneve; date: 25 January 2015
Treaty.	Therefore,	Lithuania	submits	that	the	claims	should	be	dismissed	for	lack	of	jurisdiction.
5.2.2		On	the	merits
215.		According	to	the	Respondent,	all	of	the	Claimant's	claims	must	fail	on	the	following	grounds.
5.2.2.1		Lithuania	has	not	frustrated	Claimant's	legitimate	expectations
216.		The	Respondent	argues	that	the	Claimant's	attempt	to	lower	the	standard	for	a	violation	of
the	duty	to	treat	the	investment	fairly	and	equitably	is	meritless	(see	¶¶	282	et	seq.).
217.		The	Respondent	argues	that	a	claim	based	upon	the	frustration	of	legitimate	expectations
due	to	governmental	action	requires	the	investor	to	show	that	such	action	frustrated	expectations
that	the	host	State	created	or	reinforced	through	its	own	conduct.	In	the	present	case,	Lithuania
cannot	be	held	responsible	for	Parkerings'	failure	to	conduct	the	required	due	diligence	prior	to
signing	the	Agreement	nor	its	failure	to	obtain	other	guarantees	that	investors	typically	demand	in
agreements	with	States	or	their	agencies	(see	Section	8.1.4.1	below).
218.		Concerning	Claimant's	allegation	of	arbitrary	conduct,	the	Respondent	alleges	that	it	clearly
explained	during	the	negotiations	that	the	Agreement	was	untested	and	was	subject	to	legal
challenges.	Moreover,	the	Respondent	argues	that	the	claims	set	out	by	the	Claimant	are	only
allegations	of	contract	breach	(see	Section	8.1.3.1	below)
5.2.2.2		There	has	been	no	expropriation	by	Lithuania
219.		The	Respondent	submits	that	Parkerings	cannot	bring	a	claim	for	expropriation	on	the	basis
of	the	alleged	wrongful	termination	of	the	Agreement.
220.		The	Respondent	also	argues	that	Parkerings	has	not	been	substantially	deprived	of	its
ownership	of	BP.
221.		Furthermore,	a	claim	of	contract	breach	cannot	form	the	basis	of	an	expropriation	claim
where,	as	here,	the	Claimant,	pursuant	to	the	Agreement,	could	seek	redress	before	the	Lithuanian
courts	(see	Section	8.4.1	below).
5.2.2.3		Lithuania	has	not	violated	its	duty	to	grant	Claimant	protection
222.		According	to	the	Respondent,	protection	within	the	meaning	of	the	Treaty	is	not	intended	to
generate	an	all-encompassing	duty	for	the	host	State.	The	Respondent	alleges	that	the	guarantee
of	protection	is	characterized	by	the	standard	of	due	diligence.
223.		As	to	Parkerings'	specific	argument	that	the	Government	should	have	backed	up	BP	in	its
contractual	dispute	with	the	Municipality	and	challenge	the	termination	of	the	Agreement,	the
Respondent	argues	that	it	is	inconsistent	with	the	purpose	of	the	Treaty	(see	Section	8.2.1	below).
224.		Therefore,	the	Respondent	argues	that	it	has	not	violated	its	duty	to	protect	the	Claimant.
5.2.2.4		The	Claimant	was	not	subject	to	any	discrimination
225.		The	Respondent	alleges	that	in	order	to	make	out	a	claim	for	discrimination,	that	is	to	say	a
violation	of	the	Treaty's	Equitable	and	Reasonable	Treatment	provision	and/or	a	violation	of	the
Treaty's	Most	Favored	Nation's	provision	(MFN),	the	Claimant	must	show	that	two	separate	investors
were	similarly	situated	and	that	the	two	investors	were	treated	differently.
226.		The	Respondent	contends	that	the	Claimant	did	not	show	that	a	third	investor	was	similarly
situated	and	treated	differently	(see	full	summary	in	Section	8.1.2.1	and	8.3.1	below).
5.2.2.5		The	Claimant	is	not	entitled	to	compensation
227.		The	Respondent	has	shown	that	Parkerings'	claims	are	meritless.	Accordingly,	no
From: Oxford Public International Law (http://opil.ouplaw.com). (c) Oxford University Press, 2013. All Rights Reserved. Subscriber:
Universite de Geneve; date: 25 January 2015
compensation	can	be	claimed.
228.		Further,	Parkerings'	claim	for	damages	is	entirely	speculative	and	flawed	on	several	grounds,
namely:
(i)		The	Claimant	has	not	established	any	causation	between	the	alleged	Treaty	violations
and	the	damages	it	seeks.	The	Claimant	is	only	entitled	to	damages	with	respect	to	harm	that
was	the	direct	result	of	the	State's	unlawful	acts.	The	specific	provision	on	expropriation	of
which	the	Claimant	avails	itself	cannot	provide	any	guidance	on	the	measure	of
compensation	for	other	Treaty	violations;
(ii)		The	Claimant's	claim	for	damages	based	upon	an	estimation	of	BP's	future	profits	had	it
built	all	10	MSCPs	and	operated	them	until	2012	is	equivalent	to	a	claim	for	lost	profits.	No
tribunal	has	awarded	lost	profits	where	as	here,	the	claiming	party	has	not	made	the
investment	which	would	give	rise	to	the	cash	flow	claimed.	On	the	contrary,	tribunals	have
adopted	a	cautious	approach	to	the	use	of	the	DCF	method.
229.		It	is	undisputed	that	the	Claimant's	integrated	parking	system	never	became	operational.
Parkerings	never	made	any	investment	in	any	of	the	MSCPs	nor	did	it	begin	construction	of	a	single
one.	As	a	result,	the	parking	project	never	existed	as	required	in	the	DCF	model.
230.		According	to	the	Respondent,	damages	should	be	limited	to	proven	net	out-of-pocket
expenditures.	However,	the	Claimant	has	made	no	submissions	in	this	respect	and	has	not	met	the
onus	of	proving	its	damages	accordingly.	The	Respondent	submits	that	Parkerings	actually	never
made	any	significant	investment	expenditures.	At	any	rate,	any	investment	costs	that	the	Claimant
incurred	must	be	reduced	by	the	benefit	that	it	received	from	BP.
231.		Furthermore,	the	claim	for	lost	profits	per	se	is	erroneous	for	the	following	reasons:
•		the	valuation	date	is	not	21	January	2004,	as	it	overlooks	the	preceding	four	years	during
which	many	intervening	factors	could	have	altered	BP's	value.	The	only	reliable	date	for
calculation	is	the	year	2000,	which	is	closer	to	the	alleged	detrimental	State	actions	and	thus
minimizes	any	speculation	about	the	ensuing	period;
•		BP	and	VPK	are	not	devoid	of	any	value.	On	the	contrary,	BP's	assets	are	worth	at	least
LTL	188'590	and	BP	further	owns	all	shares	of	VPK,	a	fully	operational	company;
•		Mr.	Lapuerta's	analysis	is	overstated,	as	it	should	not	have	(1)	included	a	corruption-risk
related	discount,	(2)	excluded	expenditures	or	revenues	for	2000	and	2001,	(3)	disregarded
Egapris'	call	option	upon	VPK's	shares,	or	(4)	included	an	eleventh	MSCP	(i.e.	the	Turgaus
MSCP)	in	the	calculation.	As	a	matter	of	fact,	the	net	present	value	(NPV)	of	Claimant's
investment	was	near	zero,	whether	valued	in	2000	or	2004:	it	was	negative	in	2000	and
below	EUR	0.95	million	as	of	2004;
•		the	two	arms-length	offers	the	Claimant	refers	to	do	not	provide	any	indication	as	to	the
fair	market	value	of	its	investment.	In	any	event,	such	offers	made	in	2000	and	2001	are	only
useful	insofar	as	a	DCF	analysis	is	carried	out	for	2000	as	opposed	to	2004.	Further,	the
Respondent	points	out	that	NCC	and	Skanska's	offers	were	contingent	upon	certain	events
and	conditions	that	were	contrary	to	the	assumptions	made	in	Mr.	Lapuerta's	report	(e.g.	the
right	to	develop	additional	MSCPs,	the	premium	for	project	legality	or	the	premium	for	the
extinction	of	Egapris'	call	option).
5.2.3		Prayers	for	relief
232.		Based	upon	all	the	above	submissions,	Lithuania	requests	the	following	relief:
For	the	foregoing	reasons,	the	Respondent	respectfully	requests	that	the	Tribunal:
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(a)		DISMISS	all	of	the	Claimants'	claims	in	their	entirety;	and
(b)		ORDER	the	Claimant	to	pay	all	of	the	costs	and	expenses	of	this	arbitration,
including	the	fees	and	expenses	of	the	Republic's	expert,	Mr.	Tim	Giles,	the	fees
and	expenses	of	any	experts	to	be	appointed	by	the	Tribunal,	the	fees	and
expenses	of	the	Republic's	legal	representation	in	respect	of	this	arbitration,	and
any	other	costs	of	this	arbitration.
6.		Issues	to	be	Determined	by	the	Tribunal
233.		In	light	of	the	facts	and	submissions	of	the	parties	set	forth	above,	the	questions	arising	for
the	Tribunal's	determination	are	the	following:
(i)		Does	the	Tribunal	have	jurisdiction	over	Parkerings'	claims?	(see	Section	7	below);
(ii)		What	is	the	applicable	standard	for	the	duty	of	“equitable	and	reasonable	treatment”
within	the	meaning	of	Article	III	of	the	Treaty	?	(see	Section	8.1	below)	Has	Lithuania	violated
Article	III	of	the	Treaty?	In	particular,	did	Lithuania	engage	in	unfair	and	discriminatory	or
arbitrary	and	opaque	conduct	with	respect	to	Parkerings'	investment?	(see	Section	8.1.2	and
8.1.3	below)	Did	Lithuania	frustrate	Parkerings'	legitimate	expectations?	(see	Section	8.1.4	et
seq.	below);
(iii)		Has	Lithuania	violated	its	obligation	of	protection	pursuant	to	Article	III	of	the	Treaty?	(see
Section	8.2	below);
(iv)		Has	Lithuania	violated	its	duty	to	afford	no	less	favourable	treatment	under	Article	IV	of
the	Treaty	?	(see	Section	8.3	below);
(v)		What	is	the	applicable	standard	in	terms	of	expropriation	within	the	meaning	of	Article	VI
of	the	Treaty	?	(se	Section	8.4	below)	Has	Lithuania	breached	its	duty	not	to	expropriate
Parkerings'	investment?	(see	Section	8.4.2	below);
(vi)		Is	Parkerings	entitled	to	any	compensation	and	if	so,	what	is	the	measure	thereof?	This
question	may	be	moot	depending	on	the	decision	in	the	foregoing	issues;
(vii)		What	are	the	costs	of	this	case	and	how	should	they	be	apportioned	between	the
Parties?
7.		Jurisdiction
7.1		Issues	for	determination
234.		The	Tribunal's	jurisdiction	over	the	claims	of	the	Claimant	will	be	examined	in	light	of	the
requirement	of	the	ICSID	Convention	and	the	BIT.
235.		Article	25(1)	of	the	ICSID	Convention	provides	as	follows:
The	jurisdiction	of	the	Centre	shall	extend	to	any	legal	dispute	arising	directly	out	of	an
investment	between	a	Contracting	State	(or	any	constituent	subdivision	or	agency	of	a
Contracting	State	designated	to	the	Centre	by	that	State)	and	a	national	of	another
Contracting	State,	which	the	parties	to	the	dispute	consent	in	writing	to	submit	to	the
Centre.	When	the	parties	have	given	their	consent,	no	party	may	withdraw	its	consent
unilaterally.
236.		Article	IX	of	the	BIT	contains	the	following	dispute	settlement	clause:
1.		Any	dispute	which	may	arise	between	an	investor	of	one	contracting	party	and	the
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other	contracting	party	in	connection	with	an	investment	on	the	territory	of	that	other
contracting	party	shall	be	subject	to	negotiations	between	the	parties	in	dispute.
2.		If	any	dispute	between	an	investor	of	one	contracting	party	and	the	other	contracting
party	continues	to	exist	after	a	period	of	three	months,	the	investor	shall	be	entitled	to
submit	the	case:
A.		Either	to	the	International	Centre	of	Settlement	of	Investment	Disputes	having	regard
to	the	applicable	provisions	of	the	Convention	on	the	Settlement	of	investment	disputes
between	States	and	Nationals	of	other	States	opened	for	signature	at	Washington	D.C.
on	18	March	1965,
B.		or	in	case	both	contracting	parties	have	not	become	parties	to	this	Convention,	to	an
arbitrator	of	International	ad	hoc	Arbitral	Tribunal	established	under	the	Arbitration	Rules
of	the	United	Nations	Commission	on	the	International	Trade	Law.	The	parties	to	the
dispute	may	agree	in	writing	to	modify	these	rules.	The	Arbitral	Award	shall	be	final	and
binding	on	both	parties	to	the	dispute.
7.2		The	parties'	position
7.2.1		Parkerings
237.		Parkerings	contends	that	the	Tribunal	has	jurisdiction.
238.		The	Claimant	argues	that	it	is	a	company	incorporated	under	the	laws	of	Norway	and	is	an
investor	subject	to	the	protection	of	the	Treaty.	The	Claimant	specifies	that	it	owns	100	percent	of
the	shares	of	the	Lithuanian	company	BP,	which	constitutes	an	investment	in	Lithuania.
239.		The	Claimant	contends	that	through	the	acts	and	omissions	of	its	municipal	and	national
authorities,	Lithuania	has	violated	the	Treaty.
240.		The	Claimant	argues	that	Article	IX	of	the	Treaty,	which	governs	the	dispute	between	a
contracting	party	and	an	investor,	”grants	the	Tribunal	jurisdiction	over	any	and	all	disputes	'in
connection	with'	an	investment,	including	disputes	arising	out	of	breaches	of	contract	or
violation	of	domestic	law” .
241.		The	Claimant	underlines	that	it	pleaded	breaches	of	Lithuania's	obligations	under	the	Treaty
and	not	breaches	of	the	Agreement.	The	Claimant	alleges	that	the	Respondent	cannot	deny	its
Treaty	claims	arguing	that	some	facts	do	not	rise	to	the	level	of	a	Treaty	breach.
242.		Finally,	the	Claimant	is	opposed	to	the	Respondent's	opinion	that	the	Lithuanian	Courts	were
able	to	remedy	to	the	present	problems.
7.2.2		The	Republic	of	Lithuania
243.		The	Respondent	argues	that	Parkerings'	claims	fall	outside	the	scope	of	the	Tribunal's
jurisdiction	under	the	Treaty.	Specifically,	more	than	half	of	the	claims	concern	alleged	breaches	of
the	Agreement;	these	commercial	disputes	cannot	be	the	basis	of	a	claim	under	the	BIT.
Furthermore,	the	Respondent	argues	that	the	Tribunal	has	no	jurisdiction	under	the	BIT	on	several
grounds:
(i)		Parkerings	is	not	a	party	to	the	Agreement	and	has	no	rights	thereunder;	
(ii)		Lithuania	as	host	State	is	not	responsible	on	an	international	level	for	acts	of	its	agencies.
The	conduct	of	State	organs	including	municipalities	is	not	attributable	to	the	State,	unless
such	conduct	had	legal	effects	on	an	international	level'	
(iii)		BP	and	the	Municipality	agreed	to	submit	all	disputes	arising	under	the	Agreement	to	the
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Lithuanian	Courts.	In	order	to	observe	this	contractual	choice,	ICSID	tribunals	do	not	have
jurisdiction	over	purely	contractual	claims	which	do	not	amount	to	claims	for	Treaty
violations.	Claims	arising	out	of	contracts	between	investors	or	their	subsidiaries	and	the
Government	or	its	agencies	do	not	constitute	claims	cognizable	under	bilateral	investment
treaties.	Further,	the	Treaty	does	not,	in	the	present	case,	contain	an	umbrella	clause.
However,	the	Respondent	admits	that	where	the	foreign	investor	is	denied	a	remedy	for	a
contractual	breach	in	a	domestic	forum,	such	breach	of	contract	may	constitute	an
international	wrong.	This	is	not	the	case	here,	given	that	the	Agreement	provided	for	dispute
resolution	before	the	Lithuanian	Courts.	The	Respondent	alleges	that	the	Lithuanian	Courts
were	perfectly	able	to	protect	Claimant's	rights.	
244.		Therefore,	Lithuania	submits	that	the	following	claims	should	be	dismissed	for	lack	of
jurisdiction:
(a)		Claimant's	allegation	of	breach	of	the	Equitable	and	Reasonable	Treatment	Clause	by
virtue	of	the	City's	supposed	failure	to	properly	recognize	an	event	of	force	majeure	under
Section	7.2.1	of	the	Agreement;
(b)		Claimant's	allegation	of	breach	of	the	Equitable	and	Reasonable	Treatment	Clause	by
virtue	of	the	City's	supposed	failure	to	disclose	material	information	during	contract
negotiations,	as	required	under	the	good	faith	duty	set	out	under	Lithuanian	law;
(c)		Claimant's	allegation	of	breach	of	the	Equitable	and	Reasonable	Treatment	Clause	by
virtue	of	the	City's	supposed	failure	to	issue	consistent	directions	to	BP	regarding	its
performance	under	the	Agreement,	as	required	under	Section	1.5.1	of	the	Agreement;
(d)		Claimant's	allegation	of	breach	of	the	Equitable	and	Reasonable	Treatment	Clause	by
virtue	of	the	City's	supposed	failure	to	defend	the	Agreement	against	measures	adopted
by	the	Government	as	required	under	Section	1.5.1	of	the	Agreement;
(e)		Claimant's	allegation	of	breach	of	the	Equitable	and	Reasonable	Treatment	Clause	by
virtue	of	the	City's	supposed	failure	to	renegotiate	in	good	faith	as	required	under	the	good
faith	duty	set	out	under	Lithuanian	law;
(f)		Claimant's	allegation	of	breach	of	the	Full	Security	and	Protection	Clause	by	virtue	of
the	City's	supposed	failure	to	renegotiate	in	good	faith	as	required	under	the	good	faith
duty	set	out	under	Lithuanian	law;	and
(g)		Claimant's	allegation	of	breach	of	the	Expropriation	Clause	by	virtue	of	the	City's
supposed	termination	of	the	Agreement	on	grounds	that	were	not	permitted	under	Article	7
of	the	Agreement.
7.3		Discussion	on	the	Tribunal's	jurisdiction
245.		There	is	no	doubt	that	the	conditions	rationae	personae	of	the	ICSID	Convention	are	met,	as
the	parties	are,	on	the	one	hand,	a	national	of	the	Kingdom	of	Norway,	Parkerings,	and	on	the	other
hand,	the	Republic	of	Lithuania.
246.		The	parties	gave	their	consent	to	arbitration:	the	Republic	of	Lithuania,	on	16	June	1992,	by
signing	the	BIT	and	Parkerings,	on	11	March	2005,	with	its	Request	for	Arbitration.
247.		The	Arbitral	Tribunal	notes	that	pursuant	to	Article	IX	of	the	BIT,	any	dispute	in	connection
with	an	investment	shall	be	subject	to	negotiations	between	the	parties.	If	the	dispute	continues	to
exist	after	a	period	of	three	months,	the	investor	is	entitled	to	submit	the	case	to	an	arbitral	tribunal.
In	the	absence	of	parties'	determination	on	that	matter,	the	Tribunal	considers	that	the	conditions	of
Article	IX	of	the	BIT	are	met.
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248.		Thus	the	first	question	for	the	Tribunal	to	resolve	here	is	whether	the	Claimant	is	an	investor
in	Lithuania.
7.3.1		The	Claimant's	Investment
249.		In	accordance	with	Article	25	of	the	ICSID	Convention,	an	arbitral	tribunal	established
pursuant	to	the	ICSID	Convention	has	jurisdiction	ratione	materiae	over	“any	legal	dispute	arising
directly	out	of	an	investment.”	No	definition	of	“investment”	is	to	be	found	in	the	ICSID
Convention.
250.		Article	I	of	the	BIT	gives	the	definition	of	the	term	“Investment”:
The	term	“Investment”	means	every	kind	of	asset	invested	in	the	territory	of	one
contracting	party	in	accordance	with	its	laws	and	regulations	by	an	investor	of	the	other
contracting	party	and	includes	in	particular,	though	not	exclusively:
(…)
(II)		Shares,	debentures	or	any	other	forms	of	participation	in	companies.
251.		UAB	Baltijos	Parkingas	(BP)	is	a	Lithuanian	company,	registered	with	the	Lithuanian	Company
Register.	Parkerings,	which	is	a	company	registered	in	Norway,	is	“the	owner	of	sixty	five
thousand	(65,000)	ordinary	shares	of	the	Company	[BP]	for	the	value	of	one	hundred	(100)	Litas
each,	comprising	100%	of	the	authorized	capital	of	the	Company.”
252.		In	the	Vivendi	case,	the	ICSID	ad	hoc	Committee	held	that	“[…]	the	foreign	shareholding	is
by	definition	an	investment	and	its	holder	an	investor	[…]” .
253.		In	this	case	the	Tribunal	accepts	the	Claimant's	contention	that	“Parkerings'	direct	100
percent	ownership	interest	in	BP	constitutes	an	investment	in	Lithuania	within	the	meaning	of
the	Treaty.”
254.		The	Arbitral	Tribunal	is	therefore	of	the	opinion	that	Parkerings	is	an	investor	in	Lithuania	for
the	purpose	of	the	ICSID	Convention	and	within	the	meaning	of	the	BIT,	since	it	owns	the	entirety	of
the	shares	of	a	Lithuanian	company	which	is	BP.
255.		The	issue	is	thus	to	determine	whether	the	dispute	arises	in	connection	with	such	investment
in	Lithuania.
7.3.2		Did	the	claims	fall	under	the	Treaty?
256.		The	Claimant	asserts	that	its	claims	arise	from	action	that	the	Republic	of	Lithuania	undertook
in	violation	of	the	BIT.	The	Claimant	does	not	base	its	request	on	breaches	of	the	Agreement.
257.		The	Respondent,	however,	rightly	distinguishes	between	disputes	arising	out	of	contract
breaches	and	disputes	under	the	BIT.	In	particular,	the	Respondent	states	that	investor-state
arbitration	is	only	available	to	adjudicate	rights	contained	in	the	Treaty.
258.		However,	the	issue	lies	elsewhere.	It	is	uncontroversial	that	this	dispute	is	between
Parkerings	and	the	Republic	of	Lithuania	whilst	the	Agreement	was	entered	into	by	two	different
entities,	namely	BP	and	the	City	of	Vilnius,	both	of	which	are	not	parties	to	this	arbitration.	It	is
undisputed	that	States	are	responsible	on	an	international	level	for	acts	of	municipalities	(and	other
State	constituent	subdivisions)	 	that	are	contrary	to	international	law	and	that	States	are	not
liable	internationally	for	acts	of	their	agencies	that	are	wrongful	under	domestic	law.	For	instance,
the	ad	hoc	Committee	in	Vivendi	held:
[…]	in	the	case	of	a	claim	based	on	a	treaty,	international	law	rules	of	attribution	apply,
with	the	result	that	the	state	of	Argentina	is	internationally	responsible	for	the	acts	of	its
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provincial	authorities.	By	contrast,	the	state	of	Argentina	is	not	liable	for	the
performance	of	contracts	entered	into	by	Tucumán,	which	possesses	separate	legal
personality	under	its	own	law	and	is	responsible	for	the	performance	of	its	own
contracts.
259.		In	the	present	case,	the	Claimant	alleges	that	the	Republic	of	Lithuania	itself,	and	not	the	City
of	Vilnius,	violated	its	obligations	under	the	BIT	by	virtue	of	the	attribution	to	the	State	of	the	acts	of
the	Municipality.	As	a	result,	the	proper	parties	to	the	dispute	are	Parkerings	and	the	Republic	of
Lithuania.	That	the	Claimant	was	not	a	party	to	the	Agreement	is	irrelevant	as	the	Arbitral	Tribunal	is
not	ruling	on	breaches	of	the	Agreement	but	on	violation	of	the	BIT.	Put	differently,	the	Claimant	is
alleging	treaty	violation	and	there	is	nothing	convincing	in	the	record	that	may	lead	to	the	suspicion
of	the	Claimant	having	disguised	contract	claims	with	Treaty	claims	for	the	benefit	of	jurisdiction.
Whether	the	Respondent	did	in	fact	violate	the	Treaty	(or	the	international	law)	is	a	matter	of
substance	and	merit	rather	than	of	jurisdiction.
260.		Furthermore,	the	Claimant	is	rightfully	alleging	that	its	claim	is	based	on	its	investment	that
went	sour.	This	is	an	adequate	response	to	Respondent's	argument	that	the	Lithuanian	Courts	do
have	jurisdiction	over	claims	based	on	the	Agreement.	As	a	matter	of	rights,	the	Arbitral	Tribunal
has	no	jurisdiction	over	the	claims	based	on	the	Agreement.
261.		The	phrase	“any	dispute	[…]	in	connection	with	the	investment”	as	provided	by	Article	IX
(1)	of	the	BIT	is	a	general	provision	that	provides	the	basis	for	an	international	Arbitral	Tribunal's
competence	over	any	disputes	related	to	an	investment.
262.		This	is	recognized	in	the	decisions	of	past	international	tribunals. 	For	instance,	in	the	case
SGS	v.	Republic	of	the	Philippines,	the	Arbitral	Tribunal	held	that:
[t]he	term	“dispute	with	respect	to	investments”	is	not	limited	by	reference	to	the	legal
classification	of	the	claim	that	is	made.	A	dispute	about	an	alleged	expropriation
contrary	to	Article	VI	of	the	BIT	would	be	a	“dispute	with	respect	to	investments”. .
263.		In	Vivendi,	the	ad	hoc	Committee	stated	that:
it	is	not	open	to	an	ICSID	tribunal	having	jurisdiction	under	a	BIT	in	respect	of	a	claim
based	upon	a	substantive	provision	of	that	BIT,	to	dismiss	the	claim	on	the	ground	that	it
could	or	should	have	been	dealt	with	by	a	national	court.	In	such	a	case,	the	inquiry
which	the	ICSID	tribunal	is	required	to	undertake	is	one	governed	by	the	ICSID
convention,	by	the	BIT	and	by	applicable	international	law.
[…]
It	is	not	the	Committee's	function	to	form	even	a	provisional	view	as	to	whether	or	not
the	Tucumán	conduct	involved	a	breach	of	the	BIT,	and	it	is	important	to	state	clearly
that	the	Committee	has	not	done	so.	But	it	is	nonetheless	the	case	that	the	conduct
alleged	by	Claimants,	if	established	could	have	breached	the	BIT.	The	claim	was	not
simply	reducible	to	so	many	civil	or	administrative	law	claims	concerning	so	many
individual	acts	alleged	to	violate	the	Concession	Contract	of	the	Administrative	law	of
Argentina.	It	was	open	to	Claimants	to	claim,	and	they	did	claim,	that	these	acts	taken
together,	or	some	of	them,	amounted	to	a	breach	of	[…]	the	BIT.
264.		The	Arbitral	Tribunal	notes	that	the	Claimant	alleged	exclusively	violations	of	the	BIT	and
particularly	failure	to	afford	its	investment	equitable	and	reasonable	treatment	and	protection,	to
accord	its	investment	treatment	no	less	favorable	than	the	treatment	accorded	to	investment	by
investors	from	a	third	State,	and	last,	a	breach	of	its	obligation	not	to	expropriate	without
compensation.
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265.		Prima	facie,	the	conduct	of	the	Republic	of	Lithuania	through	its	subdivision	constituent	(the
Municipality	of	the	City	of	Vilnius)	had	an	impact	on	the	investment	of	the	Claimant.	The	claims	are
therefore	in	connection	with	the	investment	and	fall	under	the	Treaty.	The	Arbitral	Tribunal
emphasizes	that	the	substantive	justification	of	the	Claimant's	claims	is	not	a	matter	of	jurisdiction
but	of	merit.	This	question	will	be	developed	below.
266.		As	the	claims	fall	under	the	Treaty,	whether	the	Claimant	should	have	submitted	the	dispute
before	the	Lithuanian	courts	is	not	relevant	at	the	stage	of	examination	of	the	jurisdiction.	The
Arbitral	Tribunal	concludes	that	it	has	jurisdiction	under	Article	IX	of	the	Treaty.
8.		Merits
267.		The	Claimant's	substantive	claim	under	the	BIT	is,	as	stated	in	paragraph	197	above	under
three	main	headings:
i		Lithuania	has	violated	its	duty	to	grant	the	Claimant's	investment	in	Lithuania	“equitable
and	reasonable	treatment	and	protection”	as	required	under	Article	III	of	the	Treaty;
ii		Lithuania	has	violated	its	duty	to	accord	the	Claimant's	investment	in	Lithuania
“treatment	no	less	favourable	than	that	accorded	to	investments	made	by	investors	of	any
third	state	as	required	under	Article	IV	of	the	Treaty;
iii		Lithuania	has	violated	its	duty	not	to	indirectly	expropriate	the	Claimant's	investment
without	compensation	as	required	under	Article	VI	of	the	Treaty.
8.1		Claims	for	violation	of	the	duty	of	equitable	and	reasonable	treatment	(Article	III
of	the	Treaty)
268.		Article	III	of	the	Agreement	between	the	Government	of	the	Republic	of	Lithuania	and	the
Government	of	the	Kingdom	of	Norway	on	the	Promotion	and	Mutual	Protection	of	Investments
provides	that:
Each	contracting	party	shall	promote	and	encourage	in	its	territory	investments	of
investors	of	the	other	contracting	party	and	accept	such	investments	in	accordance	with
its	laws	and	regulations	and	accord	them	equitable	and	reasonable	treatment	and
protection.	Such	investments	shall	be	subject	to	the	laws	and	regulations	of	the
contracting	party	in	the	territory	of	which	the	investments	are	made.
269.		The	Claimant	alleges	that	Lithuania	breached	its	obligation	to	accord	Parkerings's	investment
equitable	and	reasonable	treatment.	The	Claimant	alleges:
•	“the	Treaty	accord	equitable	and	reasonable	treatment	holds	Lithuania	to	a	stricter
standard	of	conduct	than	the	fair	and	equitable	treatment	standard	more	commonly	found	in
other	investment	treaties”	 	(see	below	8.1.1);
•	“Lithuania	subjected	BP	to	grossly	unfair	and	discriminatory	treatment	“	 	(see	below
8.1.2);
•	“Lithuania's	conduct	was	grossly	arbitrary	and	opaque”	 	(see	below	8.1.3);
•		and	finally,	that:	”Lithuania	frustrated	Parkerings's	legitimate	expectations”	 	(see
below	8.1.4).
270.		The	Arbitral	Tribunal	will	examine	each	of	these	arguments	separately.
8.1.1		The	distinction	between	the	notions	of	fair	and	reasonable
271.		Unlike	other	BITs,	the	Treaty	refers	to	“equitable	and	reasonable”	in	its	Article	III.	This	led	to
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a	discussion	on	the	content	of	such	standard	and	to	whether	it	has	the	same	meaning	as	“fair	and
equitable”	standard.
272.		Regarding	the	applicable	standard,	the	Claimant	alleges	that	“the	Treaty	obligation	to
accord	equitable	and	reasonable	treatment	holds	Lithuania	to	a	stricter	standard	of	conduct	than
the	fair	and	equitable	treatment	standard	more	commonly	found	in	other	investment	treaties”.
273.		To	support	its	opinion,	Claimant	relies	on	the	French	text	of	Olivier	Corten	that	discusses	the
notion	of	“équitable”	and	“raisonnable”:	what	is	“reasonable”	could	not	be	inequitable	but	an
equitable	solution	might	be	unreasonable	if	it	is	insufficiently	rational .
274.		The	Respondent	alleges	that	“Claimant's	analysis	does	not	comport	with	the	dictates	of	the
Vienna	Convention	on	the	Law	of	Treaties	(the	Vienna	Convention)	which	governs	the	Treaty's
interpretation.”	The	Respondent	underlines	that	“a	Treaty	should	be	interpreted	“in	good	faith	in
accordance	with	the	ordinary	meaning	to	be	given	to	the	terms	of	the	treaty	in	their	context	and
in	light	of	its	object	and	purpose.” 	Moreover,	the	Respondent	contends	that	the	terms
“reasonable”	and	“fair”	are	“virtually	synonymous.” 	The	Respondent	finally	argues	that	“the
set	of	bilateral	investment	treaties	signed	by	Norway,	where	the	formulae	“fair	and	equitable	“
and	“equitable	and	reasonable”	seem	to	have	been	used	indistinctively	within	the	standard
clause	generally	devoted	to	the	promotion	and	protection	of	investments”	confirms	that	the	two
phrases	are	synonymous.”
275.		The	Arbitral	Tribunal	considers	that	the	interpretation	of	the	Treaty	is	effectively	governed	by
the	Vienna	Convention	which	provides	that	a	Treaty	should	be	interpreted,	pursuant	to	Article	31,
“in	good	faith	in	accordance	with	the	ordinary	meaning	to	be	given	to	the	terms	of	the	treaty	in
their	context	and	in	light	of	its	object	and	purpose.”
276.		The	interpretation	given	by	the	Claimant,	based	on	Corten's	interpretation	of	the	terms
equitable	and	reasonable,	is	not	convincing.	If	the	two	phrases	are	given	their	plain	meaning,	it	is
far	from	apparent	that	they	should	differ	in	any	way.	Thus,	under	this	approach,	treatment	is	fair
when	it	is	“free	from	bias,	fraud	or	injustice;	equitable,	legitimate	[…]”;	and,	by	the	same	token,
equitable	treatment	is	that	which	“is	characterized	by	equity	or	fairness,	[…]	fair	,	just	,
reasonable.”
277.		The	standard	of	“fair	and	equitable	treatment”	has	been	interpreted	broadly	by	Tribunals
and,	as	a	result,	a	difference	of	interpretation	between	the	terms	“fair”	and	“reasonable”	is
insignificant.	The	Claimant	did	not	show	any	evidence	which	could	demonstrate	that,	when	signing
the	BIT,	the	Republic	of	Lithuania	and	the	Kingdom	of	Norway	intended	to	give	a	different	protection
to	their	investors	than	the	protection	granted	by	the	“fair	and	equitable”	standard.
278.		Thus	the	Arbitral	Tribunal	intends	to	identically	interpret	the	notion	“equitable	and
reasonable”	and	the	standard	“fair	and	equitable.”
279.		The	Claimant	raises	three	issues	that	shall	now	be	examined:
—		Did	Lithuania	engage	in	unfair	and	discriminatory	treatment?
—		Did	Lithuania	engage	in	arbitrary	conduct?
—		Did	Lithuania	frustrate	Parkerings'	legitimate	expectations?
8.1.2		Was	the	Treatment	“unfair	and	discriminatory”?
8.1.2.1		The	position	of	the	parties
280.		The	Claimant	alleges	that	Lithuania	subjected	BP	to	grossly	unfair	and	discriminatory
treatment.	The	principle	of	fair	and	equitable	treatment	is	violated	where	a	host	State's	conduct	is
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grossly	unfair	or	discriminatory.	Discrimination	is	a	significant	element	in	determining	whether	the
standard	of	fair	and	equitable	treatment	has	been	breached.
281.		In	the	present	case,	the	Claimant	contends	Lithuania	subjected	BP	to	the	following	unfair	and
discriminatory	measures:
1.		the	Municipality	instructed	BP	to	relinquish	the	Gedimino	MSCP	on	the	grounds	of	cultural
heritage	concerns	and	public	opposition	in	April	2001,	at	a	time	BP	had	already	carried	out
important	planning	and	design	works.	Further,	in	breach	of	the	Agreement	whereby	BP	was	to
be	the	sole	partner	of	the	Municipality,	the	Mayor	handed	over	the	project	to	another
contractor,	Pinus,	six	months	later;	
2.		the	Mayor	chose	to	sign	the	JAA	relevant	to	the	Pergales	site	with	the	Municipality's	newly
selected	contractor	to	the	detriment	of	BP	and	advocated	the	validity	of	his	decision	in	the
local	court	litigation	with	the	Government	Representative;	
3.		after	VPK	lost	the	clamping	and	part	of	the	parking	income,	the	Municipality	claimed	that
BP	should	have	foreseen	the	clamping	prohibition,	without,	however,	considering	it	as	a	force
majeure	event	which	should	have	released	BP	of	its	obligations	under	Clause	5.1.15	of	the
Agreement,	as	confirmed	by	the	Lithuanian	Courts.	Further,	when	clamping	resumed,	the
Municipality	was	receiving	40%	of	the	fees	whilst	VPK	was	receiving	nothing;	
4.		the	City	of	Vilnius	refused	to	renegotiate	the	Agreement	unless	BP	provided	the	payment
of	the	amount	of	Clause	5.1.15	of	the	Agreement.	
282.		The	Respondent	is	of	the	opinion	that	“[i]n	international	law,	the	principle	of
nondiscrimination	encompasses	both	“most	favored	nation	treatment”	(between	aliens)	and
“national	treatment”	(between	aliens	and	nationals).”
283.		The	Respondent	argues	that	any	discrimination	claim	must	establish	that	similar	situations
were	treated	differently	by	the	host	State.	In	other	words,	the	Claimant	has	not	established	a
different	treatment	of	Parkerings	and	Pinus	under	like	circumstances..
284.		The	facts	relating	to	the	MSCP	built	by	Pinus	and	those	relating	to	Parkerings	are	distinct.	In
particular,	the	MSCP	projected	by	BP	in	Gedimino	was	significantly	bigger	than	the	MSCP	built	by
Pinus	Proprius	and	encroached	into	the	City	Old	Town.	The	location	of	the	MSCP	built	by	Pinus
Proprius	outside	of	the	Old	Town	entailed	a	different	treatment	of	the	two	projects	by	the	Cultural
Heritage	Commission.
285.		The	MSCP	built	by	Pinus	Proprius	had	to	be	sold	to	the	City	after	construction	was	completed.
The	MSCP	built	by	BP	did	not	have	to	be	sold	to	the	City.
286.		As	to	the	Cooperation	Agreement	entered	into	between	the	Municipality	and	Pinus	Proprius,	it
did	not	involve	any	transfer	of	land	belonging	to	the	City	as	opposed	to	any	potential	cooperation
agreement	with	BP	which	would	have	required	the	lease	or	the	sale	of	land	through	a	public	auction
pursuant	to	the	applicable	law	on	land.
8.1.2.2		Discussion
287.		Various	tribunals	have	held	that	a	discriminatory	conduct	is	a	violation	of	the	standard	of	the
fair	and	equitable	treatment.	In	CMS	Gas	Transmission	Company	v.	The	Argentine	Republic,	the
Tribunal	considered	that:
any	measure	that	might	involve	arbitrariness	or	discrimination	is	in	itself	contrary	to	fair
and	equitable	treatment.	The	standard	is	next	related	to	impairment:	the	management,
operation,	maintenance,	use,	enjoyment,	acquisition,	expansion,	or	disposal	of	the
investment	must	be	impaired	by	the	measures	adopted.
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288.		In	order	to	determine	if	there	is	discrimination	in	violation	of	the	standard	of	the	fair	and
equitable	treatment,	one	has	to	make	a	comparison	with	another	investor	in	a	similar	position	(like
circumstances).	For	instance,	in	the	case	Antoine	Goetz	et	consorts	c.	République	du	Burundi
(Award	of	10	February	1999),	the	Tribunal	stated	that:
[u]ne	discrimination	suppose	un	traitement	différencié	appliqué	à	des	personnes	se
trouvant	dans	des	situations	semblables.
289.		The	Tribunal	considers	that	the	conduct	of	the	City	of	Vilnius	could	possibly	amount	to	a
contractual	breach	of	the	Agreement.	It	should	be	noted,	however,	at	the	outset	of	the	present
dispute,	that	a	possible	breach	of	an	agreement	does	not	necessarily	amount	to	a	violation	of	a	BIT.
290.		As	to	arguments	(3)	and	(4)	(see	above	¶	280),	even	if	a	contractual	breach	had	occurred,
the	evidence	in	the	record	does	not	show	any	comparison	made	by	the	Claimant	with	another
investor	which	could	bring	under	the	BIT	the	actions	mentioned	in	those	arguments.	The	Tribunal	is
not	in	a	position	to	determine	if	there	had	been	a	discriminatory	measure	against	the	Claimant	as	no
comparison	is	possible	with	another	investor.	As	a	result,	the	arguments	(3)	and	(4)	are	not
evidence	of	discrimination	within	the	meaning	of	Article	III	of	the	Treaty.
291.		Concerning	the	arguments	(1)	and	(2)	(see	above	¶	280)	the	violations	alleged	by	the
Claimant	and	the	position	of	the	Respondent	are	substantially	the	same	as	those	discussed	under
Most-favoured-Nation	Treatment	(MFN)	(see	below	section	8.3)	In	certain	situations	where	an	MFN
clause	has	been	incorporated	within	a	BIT,	establishing	a	discrimination	under	the	standard	of	fair
and	equitable/reasonable	treatment	is	not	necessary	(see	below	¶¶	366	et	seq).	Consequently,
the	Arbitral	Tribunal	refers	to	the	discussion	of	the	Most-Favoured-Nation	Treatment	under	section
8.3	below.
292.		However,	the	Tribunal	shall	review	the	question	whether	the	conduct	of	the	Respondent	was
arbitrary.
8.1.3		Was	the	conduct	or	the	Respondent	“arbitrary”?
8.1.3.1		Position	of	the	parties
293.		The	Claimant	alleges	that	the	conduct	of	the	Republic	of	Lithuania	was	grossly	arbitrary	and
opaque	in	violation	of	Article	III	of	the	Treaty.	According	to	the	Claimant,	it	is	well	established	that
fair	and	equitable	treatment	inherently	precludes	arbitrary	and	capricious	actions	against	investors.
Inconsistency	of	State	action	and	complete	lack	of	transparency	are	a	clear	showing	of
arbitrariness.	A	foreign	investor	may	expect	the	host	State	to	act	consistently,	i.e.	without	arbitrarily
revoking	any	pre-existing	decisions	or	permits	issued	by	the	State,	which	were	relied	upon	by	the
investor	to	assume	its	commitments,	as	well	as	to	plan	and	launch	its	commercial	and	business
activities.
294.		The	obligation	to	afford	investments	fair	and	equitable	treatment	also	places	the	State	under
an	affirmative	obligation	not	to	approve	investments	on	terms	that	are	inconsistent	with
Government	policies	or	laws.	A	State	cannot	escape	its	international	responsibility	by	requiring	the
investor	to	be	more	knowledgeable	about	its	laws	and	regulations	than	its	own	authorities.
295.		The	Claimant	submits	that	Lithuania	subjected	BP	to	arbitrariness	and	lack	of	transparency:
	Lithuania	failed	to	disclose	to	Parkerings	information	pertaining	to	the	viability	of	the	hybrid
parking	fee	concept	prior	to	the	execution	of	the	Agreement.	Although	the	Municipality	of	Vilnius
was	in	possession	of	a	legal	opinion	(“the	Sorainen	Memo”)	questioning	the	conformity	of	the
parking	fee	with	the	Lithuanian	law,	it	did	not	inform	BP	before	the	signing	of	the	Agreement.	The
Municipality	of	the	City	of	Vilnius	failed	to	warn	BP	about	the	imminent	changes	to	the	applicable
law.
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296.		Examples	of	arbitrariness	on	the	part	of	the	Republic	of	Lithuania	include:
•		The	Municipality	of	the	City	of	Vilnius	arbitrarily	refused	to	acknowledge	the	existence	of	a
force	majeure	event	and	insisted	on	full	payment	of	Article	5.1.15	of	the	Agreement.	
•		The	Municipality	and	various	public	entities	adopted	a	“blatantly	contradictory	and
ambiguous	position	in	connection	with	the	Parking	Plan.”	
•		The	Municipality	changed	its	opinion	several	times	concerning	the	first	MSCP	site.
•		The	Municipality	arbitrarily	refused	to	issue	the	necessary	design	conditions	and	to	enter
into	the	necessary	land-use	agreement.
•		The	Municipality	accused	BP	of	failure	to	perform	its	construction	obligation,	refused	to
negotiate	in	good	faith	and	then	terminated	unlawfully	the	Agreement.	
297.		The	Respondent	states	that	the	Sorainen	Memo	was	disclosed	to	BP	before	the	signing	of	the
Agreement.	The	Respondent	alleges	that	it	made	it	clear	that	the	measures	set	out	in	the
Agreement	were	untested	and	could	be	subject	to	legal	challenges. 	For	the	Respondent,	the
State	is	not	responsible	for	the	consequence	of	“unwise	business	decisions	or	for	the	lack	of
diligence	of	the	investor.”
298.		The	Respondent	underlines	that	BP	was	granted	a	force	majeure	claim	by	the	Lithuanian
Courts.
299.		The	Respondent	is	of	the	opinion	that	the	conduct	alleged	by	the	Claimant	does	not	give	rise
to	a	claim	under	the	Treaty	and	that	the	conduct	alleged	is	“nothing	more	than	allegation	of
contract	breach.”
8.1.3.2		Discussion
a)		The	Sorainen	Memo
300.		It	is	not	disputed	by	the	parties	that	arbitrariness	is	incompatible	with	the	standard	of	fair	and
equitable	treatment.
301.		Based	on	the	facts	as	discussed	by	the	Parties,	the	Tribunal	finds	that	a	memo	(“the
Sorainen	Memo”)	concerning	the	Law	on	Fees	and	Charges	was	effectively	in	possession	of	the
City	of	Vilnius	prior	to	the	execution	of	the	Agreement	on	30	December	1999. 	Indeed,	the
memorandum	is	dated	28	December	1999	and	the	Respondent	does	not	allege	that	it	received	the
document	after	30	December	1999.	Mr.	Robertas	Staskevicius	confirmed	that	“[…]	it	was	before
City	Council.	It	was	on	28 	of	December.	When	we've	got	this	—	[Sorainen	memo]	it	was
immediate	discussion	of	that	because	it	was	quite	serious	issue.”
302.		The	record	does	not	convincingly	show	that	any	information	contained	in	the	Sorainen	Memo
and,	a	fortiori,	a	copy	of	the	memorandum,	was	given	to	the	Claimant	by	the	City	of	Vilnius	before
the	conclusion	of	the	Agreement.	Accordingly,	the	Tribunal	assumes	that	Mr.	Tamulis	did	not
receive	a	copy	of	this	memorandum	and	that	the	Claimant	was	unaware	of	its	existence	(up	to	April
2000).
303.		In	substance,	the	Sorainen	Memo	contains	a	brief	(5	pages)	legal	opinion	regarding	the	draft
of	the	Agreement	between	the	Municipality	of	Vilnius	and	the	Consortium.	In	its	most	relevant	part,
the	Memorandum	reads	as	follows:
we	would	take	the	views	that	the	legal	acts	of	the	Republic	of	Lithuania	and	contractual
deeds	and	obligations,	indicated	in	the	Agreements	of	the	Municipality	and	the
Consortium,	do	not	create	sufficient	and	clear	legal	ground	for	the	Consortium	to	have
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right	to	collect	a	portion	of	the	fee	for	vehicle	parking	time	for	on-street	parking	places
designated	by	the	Municipality	Council,	which	is	derived	from	the	entire	fee,	established
in	Article	5.1.3,	less	local	charges	approved	by	the	Municipality	Council.
304.		The	information	contained	in	the	Sorainen	Memo	is	characterized	as	the	opinion	of	a	law	firm
regarding	the	Agreement.	The	document	does	not	provide	any	information	which	was	not,	at	the
time	of	its	drafting,	accessible	to	the	public	or	at	least	to	any	other	qualified	law	firm.	The	Claimant
could	have	also	obtained	an	opinion	from	another	law	firm.
305.		It	is	not	disputed	that	the	Claimant	did,	in	fact,	receive	a	legal	opinion	dated	29	December
1999	from	another	law	firm,	namely	the	Lawin	Firm.	The	opinion	concluded	that:
“Following	your	request,	we	would	like	to	comment	the	legal	situation	relating	to
collection	of	payment	for	car	parking	in	places	designated	by	the	Municipality	(streets
and	squares).	The	Agreement	between	Vilnius	City	Municipality	and	the	Consortium
establishes	that	such	payment	will	consist	of	local	charges	and	the	portion	of	payment
falling	on	the	Consortium.
The	portion	of	payment	falling	on	the	Consortium	is	to	be	legally	qualified	as	payment
for	services,	which	will	be	rendered	by	the	Consortium	to	car	drivers.	The	scope	of	this
service	is	the	development	of	parking	system	in	the	city	and	its	administering.	Car
parking	in	pay	place	is	to	be	qualified	as	a	behaviour	of	a	driver	expressing	his/her	will
to	use	the	service	rendered	by	the	Consortium	and	to	pay	for	it	according	the	rate	set	by
the	Consortium.”
306.		Mr.	Tamulis	testified	convincingly	that	such	opinion	was	only	a	“small	piece	of	an	exhibit
from	the	legal	opinion	which	we	had	from	Lawin	regarding	the	whole	thing	around	the	hybrid
parking	fee.”	 	In	the	view	of	the	Arbitral	Tribunal,	the	Claimant,	when	it	requested	such	opinion,
was	without	doubt	aware	that	the	business	environment,	and	especially	various	provisions	of	the
Agreement,	were	not	certain.	In	fact,	it	would	have	been	foolish	for	a	foreign	investor	in	Lithuania	to
believe,	at	that	time,	that	it	would	be	proceeding	on	stable	legal	ground,	as	considerable	changes
in	the	Lithuanian	political	regime	and	economy	were	undergoing.
307.		Another	matter	is	whether,	in	itself,	failing	to	disclose	a	legal	opinion	(such	as	the	Sorainen
Memo)	to	the	counter-party	before	entering	into	an	Agreement	has	international	consequences	for
a	State	party.	Such	a	conduct	is	often	considered	as	a	breach	of	good	faith	or	a	“culpa	in
contrahendo”.	However,	such	a	conduct,	while	objectionable,	does	not,	in	itself,	amount	to	a
breach	of	international	law.	It	would	take	unusual	circumstances	to	decide	otherwise;	in	particular,
the	Claimant	has	been	unable	to	show	that	the	Sorainen	Firm	(or	the	Municipality	of	Vilnius)	was	in
possession	of	information	unavailable	to	the	public,	especially	to	other	legal	experts.
308.		In	MTD	v.	Republic	of	Chile,	the	Tribunal	noted	that:
[the	State	is	not]	responsible	for	the	consequences	of	unwise	business	decisions	or	for
the	lack	of	diligence	of	the	investor.	Its	responsibility	is	limited	to	the	consequences	of
its	own	action	to	the	extent	they	breached	the	obligation	to	treat	the	Claimants	fairly
and	equitably.
309.		The	Tribunal	concludes	that	the	City	of	Vilnius	did	not	act	arbitrarily	when	it	failed	to	disclose
the	Sorainen	Memo	and	its	content	to	BP.	Whatever	the	effect	of	the	nonproduction	of	the	Sorainen
Memo	on	the	Claimant's	contractual	rights	is	not	a	matter	for	this	Tribunal.
b)		The	Force	majeure
310.		As	already	stated,	breaching	the	Agreement	will	not	automatically	result	in	a	violation	of	the
Respondent's	international	law	obligations	under	the	BIT.	In	the	present	instance,	the	Tribunal
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concludes	that	the	force	majeure	(see	¶	295)	claim	and	any	breaches	of	the	Agreement	do	not
reach	the	status	of	a	BIT	breach.
311.		In	fact	this	issue	has	been	reviewed	by	the	Lithuanian	Courts.	On	29	June	2005,	a	Lithuanian
court	ruled	on	the	problem	of	force	majeure:
“[h]aving	evaluated	the	arguments	presented	by	the	parties,	the	court	decides	that	the
grounds	do	exist	to	recognize	that	non-performance	of	the	Defendant's	contractual
obligations	as	a	consequence	of	lost	income	from	unblocking	road	wheels	was
conditioned	by	Force	majeure	events,	i.e.	Government	Resolution	no	1056,	therefore
there	are	ground	to	release	Defendants	[BP]	from	fulfilment	of	obligations	related	to	such
part	of	income”.
312.		The	Lithuanian	Court	of	Appeals	confirmed	this	decision	and	held	that:
“[…]	upon	adoption	of	Government	Resolution	No	1056,	Defendants	[BP]	could	not
perform	the	obligation	under	Clause	5.1.1	of	the	Agreement.	[…]	Thus	Defendants	did	not
fulfil	part	of	the	monetary	obligation	under	the	Agreement	for	objective	reasons	and	the
court	of	first	instance	had	sufficient	grounds	to	release	them	from	the	part	of	the
obligation	the	performance	of	which	was	directly	related	with	the	collection	of	the
unclamping	fee	and	its	transfer	to	Plaintiff.”
313.		Two	layers	of	Lithuanian	Courts	confirmed	that	the	City	of	Vilnius	acted	wrongfully	when	it
refused	to	recognise	the	existence	of	a	force	majeure	situation.	On	that	point,	the	Courts	ruled	in
favour	of	BP.	The	fact	that	the	Lithuanian	Courts	denied	some	of	BP's	claims	is	not	relevant	in	the
present	proceedings;	indeed	subject	to	denial	of	justice,	which	is	not	at	issue	here,	an	erroneous
judgment	(if	there	should	be	one)	shall	not	in	itself	run	against	international	law,	including	the
Treaty.	On	that	matter,	the	Respondent	did	not	act	arbitrarily	in	contradiction	with	the	provisions	of
the	Treaty.
c)		The	termination	of	the	Agreement
314.		The	Claimant	alleges	that	the	City	of	Vilnius	(see	¶	295)	did	not	act	in	good	faith	during	the
contractual	relationship,	refused	to	renegotiate	the	Agreement	in	good	faith,	and	finally,	decided
unilaterally	to	terminate	the	Agreement.
315.		Fair	and	equitable	treatment	is	denied	when	the	investor	is	treated	in	such	an	unjust	or
arbitrary	manner	that	the	treatment	is	unacceptable	from	an	international	law	point	of	view.	
Indeed,	many	tribunals	have	stated	that	not	every	breach	of	an	agreement	or	of	domestic	law
amounts	to	a	violation	of	a	treaty.	For	instance,	in	the	Saluka	v.	Poland	case,	the	Tribunal	stated:
The	Treaty	cannot	be	interpreted	so	as	to	penalise	each	and	every	breach	by	the
Government	of	the	rules	or	regulations	to	which	it	is	subject	and	for	which	the	investor
may	normally	seek	redress	before	the	courts	of	the	host	State.	[…]	something	more	than
simple	illegality	or	lack	of	authority	under	the	domestic	law	of	a	State	is	necessary	to
render	an	act	or	measure	inconsistent	with	the	customary	international	law
requirements.	(¶¶	442–443).
316.		Under	certain	limited	circumstances,	a	substantial	breach	of	a	contract	could	constitute	a
violation	of	a	treaty.	So	far,	case	law	has	offered	very	few	illustrations	of	such	a	situation.	In	most
cases,	a	preliminary	determination	by	a	competent	court	as	to	whether	the	contract	was	breached
under	municipal	law	is	necessary .	This	preliminary	determination	is	even	more	necessary	if	the
parties	to	the	contract	have	agreed	on	a	specific	forum	for	all	disputes	arising	out	of	the	contract.
For	the	avoidance	of	doubt,	the	requirement	is	not	dependent	upon	the	parties	to	the	contract
being	the	same	as	the	parties	to	the	arbitration.
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317.		However,	if	the	contracting-party	is	denied	access	to	domestic	courts,	and	thus	denied
opportunity	to	obtain	redress	of	the	injury	and	to	complain	about	those	contractual	breaches,	then
an	arbitral	tribunal	is	in	position,	on	the	basis	of	the	BIT,	to	decide	whether	this	lack	of	remedies	had
consequences	on	the	investment	and	thus	whether	a	violation	of	international	law	occurred.	In
other	words,	as	a	general	rule,	a	tribunal	whose	jurisdiction	is	based	solely	on	a	BIT	will	decide	over
the	“treatment”	that	the	alleged	breach	of	contract	has	received	in	the	domestic	context,	rather
than	over	the	existence	of	a	breach	as	such.
318.		In	the	case	at	hand,	there	is	no	doubt	that	BP	had	access	to	the	Lithuanian	Courts.	In	fact,
neither	BP	nor	the	Claimant	has	challenged	the	alleged	violation	of	the	Agreement,	with	the
exception	of	force	majeure	case,	before	the	Lithuanian	Courts	as	provided	by	the
Agreement (see	above	¶	310).	T	he	experts	confirmed	that	the	Lithuanian	Courts	are
independent 	and	that	levels	of	corruption	had	declined	substantially. .
319.		Mr.	Bjorn	Havnes	declared	that	“[t]o	be	honest	with	you,	I	don't	think	it	would	stand	a
chance	in	the	Lithuanian	courts.” 	However,	again,	this	testimony	seems	to	show	the	emotion	of
the	witness	rather	than	reflect	the	actual	reliability	of	the	Lithuanian	judiciary.	The	failure	to
complain	of	the	violation	of	the	Agreement	before	the	Lithuanian	Court	leads	to	two	consequences.
First,	the	Claimant	failed	to	show	that	the	Municipality	of	Vilnius	terminated	the	Agreement
wrongfully	and	therefore	breached	the	Agreement.	Second,	even	supposing	that	the	Agreement
has	been	wrongfully	terminated,	the	Claimant	failed	to	show	that	the	right	of	BP	to	complain	of	the
breach	of	the	Agreement	has	been	denied	by	the	Republic	of	Lithuania	and	thus	that	its	own
investment	was	actually	not	accorded,	by	the	Respondent,	an	equitable	and	reasonable	treatment
in	such	circumstances.
320.		Given	the	above	circumstances,	the	Arbitral	Tribunal	cannot	reach	the	conclusion	that
Article	III	of	the	BIT	was	breached.
8.1.4		Legitimate	expectations
8.1.4.1		Position	of	the	parties
The	Claimant	contends	that	the	Republic	of	Lithuania	has	violated	its	obligation	to	accord	a	fair	and
equitable	treatment	by	frustrating	its	legitimate	expectations.	The	standard	of	fair	and	equitable
treatment	requires	the	host	State	to	treat	international	investments	in	a	way	that	does	not	affect	the
basic	expectations	that	were	taken	into	account	by	the	foreign	investor	in	making	its	investment.
Parkerings	was	therefore	entitled	to	expect	that	Lithuania	maintain	a	stable	and	predictable	legal
and	business	framework,	as	well	as	act	transparently	in	a	consistent	manner	free	from	any
ambiguity.
321.		The	Claimant	principally	alleges	that:
a)	“Lithuania	frustrated	Parkerings's	legitimate	expectation	that	it	would	respect	and
protect	the	legal	integrity	of	the	Agreement
The	Municipality	of	Vilnius	did	not	inform	the	Claimant	of	the	existence	of	the	“Sorainen
memo”	that	questioned	the	consistency	of	a	hybrid	parking	fee	with	the	Lithuanian	Laws	 	;
Moreover,	modification	of	law	had	the	effect	to	invalidate	several	decisive	provisions	of	the
Agreement.	The	Municipality	did	not	object	to	the	new	law	“even	though	it	had	contractually
undertaken	to	use	its	best	efforts	to	ensure	that	the	Government's	laws	and	decrees
furthered	the	successful	development	of	the	parking	system”;
Claimant	emphasizes	that	it	“had	a	legitimate	expectation	that	Lithuania	would	not	employ
its	municipal	and	national	instrumentalities	to	first	induce	investment	by	Parkerings	on	the
false	promise	of	a	contractual	armor	for	its	investment,	and	then	deliberately	to	perforate
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that	legal	armor	to	expose	Parkerings	to	the	arbitrariness	of	the	Municipal	authorities	 	;
b)	“Lithuania	frustrated	Parkerings's	legitimate	expectation	that	it	would	respect	and
protect	the	economic	integrity	of	the	Agreement”:
Notwithstanding	the	modification	of	law,	the	Municipality	continued	to	require	the	full
performance	of	the	Agreement	by	BP	and	notably	the	payment	of	the	Clause	5.1.15;
The	Municipality	failed	to	deliver	to	BP	the	design	conditions	of	MSCP	and	changed	several
times	the	site	of	the	construction,	but	pretended	that	BP	had	breached	the	Agreement;
The	Municipality	refused	to	renegotiate	in	good	faith	the	Agreement;
The	Municipality	repudiated	unlawfully	the	Agreement.	
322.		The	Claimant	alleges	that	it	was	“entitled	to	expect	that	Lithuania	maintain	a	stable	and
predictable	legal	and	business	framework,” 	and	that	“Lithuania	was	required	to	act	in	a
consistent	manner,	free	from	ambiguity	and	totally	transparently	in	its	relation	with
Parkerings.” 	The	Claimant	asserts	that	by	frustrating	its	legitimate	expectations,	the	Respondent
violated	Article	III	of	the	BIT.
323.		The	Respondent	alleges	that	not	every	regulatory	action	that	creates	a	business	problem
amounts	to	a	treaty	violation. 	For	the	Respondent,	the	Claimant	should	prove	that	“the
Government's	conduct	frustrated	the	investor's	investment-backed	expectations	that	the	State
created	or	reinforced	through	its	own	acts.” 	The	Respondent	alleges	that	neither	the	City	nor	the
Government	of	Lithuania	induced	Parkerings	to	invest	by	making	representations	as	to	the	stability
of	the	legal	regime	applicable	to	the	Agreement. 	On	the	contrary,	Parkerings	was	aware	that	the
arrangements	set	out	in	the	Agreement	were	untested	and	could	be	subject	to	legal	challenge.
Parkerings	should	have	known	the	potential	modification	of	law	and	the	legal	challenges	of	certain
provisions	of	the	Agreement.
324.		The	Respondent	noted	that	the	Agreement	does	not	contain	a	provision	stabilizing	the	legal
regime	applicable	to	the	Agreement,	but	contains	a	provision	exempting	the	City	from	responsibility
for	actions	taken	by	the	Lithuanian	Government.
325.		Finally,	the	Respondent	argues	that	the	claims	consist	only	of	possible	breaches	of	the
Agreement	and	therefore	that	the	Claimant	should	have	acted	before	the	Lithuanian	Courts.
8.1.4.2		Discussion
326.		The	Tribunal	notes	that	in	this	case	a	difference	has	to	be	made	between:	a)	the	obligations
of	the	Republic	of	Lithuania	not	to	modify	the	law,	and	b)	the	obligations	of	the	Municipality	of
Vilnius	to	inform	and	protect	the	Claimant	against	the	potential	economic	impact	of	such
modification	on	the	Agreement.
a)		Did	Lithuania	frustrate	Parkerings'	legitimate	expectation	that	it	would	respect	and	protect	the
legal	integrity	of	the	Agreement?
327.		In	2000,	subsequent	to	the	signing	of	the	Agreement	of	29	December	1999,	the	Lithuanian
Parliament	amended	several	laws	which	affected	the	Agreement.	The	Law	on	Local	Fees	and
Charges	was	modified	on	13	June	2000, 	the	Decree	on	Clamping	was	amended	on	5	September
2000 	and	finally,	the	Law	on	Self-Government	was	modified	on	12	October	2000.
328.		The	Agreement	provided	that	the	Consortium	was	granted	the	right	to	collect	the	parking	fees
and	the	clamping	fees.	The	parties	agree	that	the	modification	of	the	Law	on	Local	Fees	and
Charges	and	the	amendment	of	the	Decree	on	Clamping	prevented	the	Consortium	from	receiving
an	important	part	of	its	income.
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329.		The	questions	to	be	resolved	are	whether	Parkerings	had	any	legitimate	expectation	in	the
stability	of	the	legal	system	and	whether	its	expectation	has	been	frustrated.
330.		In	order	to	determine	whether	an	investor	was	deprived	of	its	legitimate	expectations,	an
arbitral	tribunal	should	examine	“[…]	the	basic	expectation	that	were	taken	into	account	by	the
foreign	investor	to	make	investment	[…]” .	In	other	words,	the	Fair	and	Equitable	Treatment
standard	is	violated	when	the	investor	is	deprived	of	its	legitimate	expectation	that	the	conditions
existing	at	the	time	of	the	Agreement	would	remain	unchanged.
331.		The	expectation	is	legitimate	if	the	investor	received	an	explicit	promise	or	guaranty	from	the
host-State,	or	if	implicitly,	the	host-State	made	assurances	or	representation	that	the	investor	took
into	account	in	making	the	investment.	Finally,	in	the	situation	where	the	host-State	made	no
assurance	or	representation,	the	circumstances	surrounding	the	conclusion	of	the	agreement	are
decisive	to	determine	if	the	expectation	of	the	investor	was	legitimate. 	In	order	to	determine	the
legitimate	expectation	of	an	investor,	it	is	also	necessary	to	analyse	the	conduct	of	the	State	at	the
time	of	the	investment.
332.		It	is	each	State's	undeniable	right	and	privilege	to	exercise	its	sovereign	legislative	power.	A
State	has	the	right	to	enact,	modify	or	cancel	a	law	at	its	own	discretion.	Save	for	the	existence	of
an	agreement,	in	the	form	of	a	stabilisation	clause	or	otherwise,	there	is	nothing	objectionable
about	the	amendment	brought	to	the	regulatory	framework	existing	at	the	time	an	investor	made	its
investment.	As	a	matter	of	fact,	any	businessman	or	investor	knows	that	laws	will	evolve	over	time.
What	is	prohibited	however	is	for	a	State	to	act	unfairly,	unreasonably	or	inequitably	in	the	exercise
of	its	legislative	power.
333.		In	principle,	an	investor	has	a	right	to	a	certain	stability	and	predictability	of	the	legal
environment	of	the	investment	The	investor	will	have	a	right	of	protection	of	its	legitimate
expectations	provided	it	exercised	due	diligence	and	that	its	legitimate	expectations	were
reasonable	in	light	of	the	circumstances.	Consequently,	an	investor	must	anticipate	that	the
circumstances	could	change,	and	thus	structure	its	investment	in	order	to	adapt	it	to	the	potential
changes	of	legal	environment.
334.		In	the	present	case,	various	modifications	of	laws	occurred	in	Lithuania.	It	is	not	contested
that	these	amendments	had	an	impact	on	the	investment	expectations	of	the	Claimant,	as	it	was
deprived	of	its	right	to	receive	part	of	its	expected	income. 	Neither	is	it	contested	that	the
Republic	of	Lithuania	gave	no	specific	assurance	or	guarantee	to	Parkerings	that	no	modification	of
law,	with	possible	incidence	on	the	investment,	would	occur.	The	legitimate	expectations	of	the
Claimant	that	the	legal	regime	would	remain	unchanged	are	not	based	on	or	reinforced	by	a
particular	behaviour	of	the	Respondent.	In	other	words,	the	Republic	of	Lithuania	did	not	give	any
explicit	or	implicit	promise	that	the	legal	framework	of	the	Agreement	would	remain	unchanged.
335.		In	1998,	at	the	time	of	the	Agreement,	the	political	environment	in	Lithuania	was
characteristic	of	a	country	in	transition	from	its	past	being	part	of	the	Soviet	Union	to	candidate	for
the	European	Union	membership.	Thus,	legislative	changes,	far	from	being	unpredictable,	were	in
fact	to	be	regarded	as	likely.	As	any	businessman	would,	the	Claimant	was	aware	of	the	risk	that
changes	of	laws	would	probably	occur	after	the	conclusion	of	the	Agreement.	The	circumstances
surrounding	the	decision	to	invest	in	Lithuania	were	certainly	not	an	indication	of	stability	of	the
legal	environment.	Therefore,	in	such	a	situation,	no	expectation	that	the	laws	would	remain
unchanged	was	legitimate.
336.		By	deciding	to	invest	notwithstanding	this	possible	instability,	the	Claimant	took	the	business
risk	to	be	faced	with	changes	of	laws	possibly	or	even	likely	to	be	detrimental	to	its	investment.	The
Claimant	could	(and	with	hindsight	should)	have	sought	to	protect	its	legitimate	expectations	by
introducing	into	the	investment	agreement	a	stabilisation	clause	or	some	other	provision	protecting
it	against	unexpected	and	unwelcome	changes.
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337.		The	record	does	not	show	that	the	State	acted	unfairly,	unreasonably	or	inequitably	in	the
exercise	of	its	legislative	power.	The	Claimant	has	failed	to	demonstrate	that	the	modifications	of
laws	were	made	specifically	to	prejudice	its	investment.
338.		Consequently,	in	the	case	at	hand,	the	Tribunal	is	not	persuaded	that	the	Claimant	had	any
legitimate	expectation	that	the	Government	of	the	Republic	of	Lithuania	would	not	pass	legislation
and	regulatory	measures	which	could	harm	its	investment.	In	that	respect,	the	Tribunal	considers
that	the	Respondent	did	not	violate	Article	III	of	the	BIT.
b)		Did	Lithuania,	by	the	action	and	omission	of	the	Municipality,	frustrate	Parkerings'	legitimate
expectation	that	it	would	respect	and	protect	the	economic	and	legal	integrity	of	the	Agreement?
339.		The	Claimant	contends	that	the	City	of	Vilnius	was	aware	of	the	existence	of	the	proposals	to
amend	the	Law	on	Fees	and	Charges,	the	Decree	on	Clamping	and	the	Law	of	Self-Government,
but	never	informed	the	Claimant	during	the	negotiation	and	prior	to	the	signing	of	the	Agreement
340.		Concerning	the	amendment	of	the	Decree	on	Clamping	and	the	modification	of	the	Law	on
Self-Government,	the	record	confirms	that	Mayor	Zuokas	was	a	member	of	the	Board	of	the
Association	of	Local	Authorities	in	Lithuania. 	On	22	October	1999,	the	Board	of	the	Association	of
Local	Authorities	in	Lithuania	had	to	“submit	comments	and	proposals	to	the	Seimas,	Government
and	any	other	state	authorities	on	the	improvement	of	the	legal	base	of	local	self-government
and	other	laws	related	to	the	operation	of	the	local	authorities.”
341.		Consequently,	the	City	of	Vilnius	was	in	possession	of	information,	prior	to	the	conclusion	of
the	Agreement,	concerning	possible	modifications	of	the	Law	on	Self-Government	and	omitted	to
advise	the	Claimant.	It	is	evident	that	the	Respondent,	as	mentioned	above	(see	¶	335),	had	the
contractual	obligation	to	act	and	negotiate	in	good	faith	prior	to	the	conclusion	of	the	Agreement.
By	failing	to	do	so,	it	may	have	breached	the	Agreement	but	that	is	not	a	matter	for	this	Tribunal.
342.		However,	first,	the	record	does	not	show	that	the	Respondent	deliberately	neglected	to
advise	the	Claimant	of	the	possible	amendment	of	the	law.	Second,	as	described	above	(see	¶
335),	the	political	environment	was	changing	at	the	time	of	the	negotiation	of	the	Agreement	and
the	Claimant	should	have	known	that	the	legal	framework	was	unpredictable	and	could	evolve.
Third,	the	fact	that	the	City	of	Vilnius	knew	the	intention	of	the	legislator	to	modify	certain	laws,	does
not	mean	that	the	City	of	Vilnius	knew	the	substance	of	the	modification.	Indeed,	the	record	does
not	show	that	the	City	of	Vilnius	was	in	possession	of	any	specific	information	which	indicated	that
the	Agreement	would	be	affected	by	a	modification	of	the	law.	Fourth,	the	Claimant	failed	to
demonstrate	that	any	investor	or	at	least	a	qualified	law	firm	was	unable	to	get	the	information
about	the	amendment	process.	Therefore,	the	Tribunal	sees	no	reason	why,	in	the	circumstances,
the	alleged	contractual	obligation	of	the	Municipality	to	inform	BP	of	the	future	modification	of	the
law	is	constitutive	of	a	legitimate	expectation	for	the	Claimant.
343.		The	Claimant	alleges	a	violation	by	the	Municipality	of	Vilnius	of	its	obligation	to	use	its	best
efforts	to	ensure	that	the	Government's	laws	and	decrees	furthered	the	successful	development	of
the	parking	system.	The	Claimant	alleges	that	following	the	different	modifications	of	laws,	it	was
deprived	of	various	sources	of	income	in	violation	of	the	Agreement.	Moreover,	the	Claimant
accuses	the	Representative	of	the	Municipality	and	notably	the	Mayor	of	failing	to	act	in	good	faith
to	protect	and	respect	the	Agreement	and	especially	the	economic	interest	of	the	Claimant	in	the
performance	of	the	Agreement.
344.		It	is	evident	that	not	every	hope	amounts	to	an	expectation	under	international	law.	The
expectation	a	party	to	an	agreement	may	have	of	the	regular	fulfilment	of	the	obligation	by	the
other	party	is	not	necessarily	an	expectation	protected	by	international	law.	In	other	words,
contracts	involve	intrinsic	expectations	from	each	party	that	do	not	amount	to	expectations	as
understood	in	international	law.	Indeed,	the	party	whose	contractual	expectations	are	frustrated
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should,	under	specific	conditions,	seek	redress	before	a	national	tribunal.	As	stated	by	the	Tribunal
in	Saluka,	“[t]he	Treaty	cannot	be	interpreted	so	as	to	penalise	each	and	every	breach	by	the
Government	of	the	Rules	or	regulations	to	which	it	is	subject	and	for	which	the	investor	may
normally	seek	redress	before	the	courts	of	the	host	State.”
345.		In	the	case	at	hand,	the	Claimant	alleges	that	the	Municipality	of	Vilnius	frustrated	its
legitimate	expectation	in	violation	of	Article	III	of	the	Treaty	(see	¶¶	321	et	seq.).	However,	the
Tribunal	considers	that	the	Claimant's	expectations	are,	in	substance,	of	a	contractual	nature.	The
acts	and	omissions	of	the	Municipality	of	Vilnius,	in	particular	any	failure	to	advise	or	warn	the
claimant	of	likely	or	possible	changes	to	Lithuanian	law,	may	be	breaches	of	the	Agreement	but
that	does	not	mean	they	are	inconsistent	with	the	Treaty.
346.		In	conclusion,	the	Arbitral	Tribunal	finds	that	the	Claimant	has	not	been	deprived	of	any
legitimate	expectation	in	violation	of	Article	III	of	the	Treaty.
8.2		Claims	for	Violation	of	the	Obligation	of	Protection	(Article	III	of	the	Treaty)
347.		Pursuant	to	Article	III	of	the	BIT	the	contracting	States	also	agreed	to	accord	protection	to	the
investor.
8.2.1		Position	of	the	parties
348.		The	Claimant	alleges	that	the	Respondent	failed	to	protect	its	investment.
(a)		When	parking	meters	owned	by	VPK	were	destroyed,	the	Police	did	not	identify	any
suspects,	did	not	find	any	evidence.
(b)		Claimant	sought	the	protection	of	the	Prime	Minister	against	the	action	and	omission	of
the	Municipality	but	no	such	protection	was	given.	Claimant	alleged	that	“the	Government
Representative	failed	to	disclose	that	the	Municipality	was	treating	BP	unfairly	and
engaging	in	discrimination	by	refusing	to	enter	into	a	Cooperation	Agreement”.
(c)		Claimant	reproaches	the	Government	Representative	for	its	passiveness	when	the
Municipality	refused	to	sign	a	Cooperation	Agreement	with	BP	and	then	repudiated	the
Agreement.
349.		The	Claimant	argues	that	the	Republic	of	Lithuania,	in	order	to	comply	with	its	obligation,
“must	show	that	it	took	all	measure	of	precaution	to	protect	Parkerings'	investment	and	met	the
standard	of	due	diligence.	[…]	Lithuania's	duty	of	protection	extends	to	guarding	against	the
action	of	both	non-state	actors	and	organs	of	government.	[…]	a	state	has	a	duty	to	protect
aliens	and	their	investment	against	unlawful	acts	committed	by	some	of	its	citizens.	If	such	acts
are	committed	with	the	active	assistance	of	state-organs	a	breach	of	International	Law	occurs.
[…]	If	the	wrong	has	been	committed	by	a	private	individual	or	a	state	organ,	Lithuania	is	under
an	obligation	to	punish	the	wrongdoer.”
350.		The	Claimant	alleges	that,	by	its	failure	to	protect	the	investment,	the	Respondent	has
breached	its	obligation	under	Article	III	of	the	Treaty.
351.		The	Respondent	contends	that	it	granted	the	Claimant	the	full	protection	and	security	as
provided	by	the	Treaty.	Under	International	Law,	the	guarantee	of	protection	is	characterized	by
the	standard	of	due	diligence.	This	standard	requires	“the	state	to	take	reasonable	steps	to
prevent	hostile	acts	toward	investors	that	it	knew	or	should	have	known	were	about	to	take
place.”
352.		In	the	Respondent's	view,	“the	guarantee	of	protection	and	security	is	not	absolute	and
does	not	impose	strict	liability	on	the	State	that	grants	it.” 	“The	simple	fact	that	Claimant	is
not	pleased	with	the	result	of	a	state	action	does	not	constitute	a	basis	for	a	claim	under	the
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protection	clause,	provided	the	state	exercised	due	diligence.”
353.		The	Respondent	alleges	that	Lithuania	reacted	reasonably	within	the	parameter	of	due
diligence	of	a	democratic	state	to	the	various	complaints	lodged	by	Claimant	and	BP. 	For	the
Respondent,	the	non-intervention	of	the	Government's	Representative	concerning	the	termination
of	the	Agreement	and	the	refusal	of	the	City	of	Vilnius	to	sign	a	Cooperation	Agreement	do	not
amount	to	a	violation	of	the	Treaty.	Indeed,	the	termination	was	not	wrongful	and,	therefore,	did	not
merit	any	legal	challenge;	Lithuania	had	no	obligation	to	challenge	an	alleged	breach	of	the
Agreement	if	the	contracting	party	had	the	right	and	the	opportunity	to	challenge	the	breach
itself.
8.2.2		Discussion
354.		Article	III	of	the	Treaty	only	mentions	the	term	protection.	In	a	number	of	decisions,	Tribunals
make	reference	to	the	standard	of	“full	protection	and	security.”	It	is	generally	accepted	that	the
variation	of	language	between	the	formulation	“protection”	and	“full	protection	and	security”	does
not	make	a	significant	difference	in	the	level	of	protection	a	host	State	is	to	provide. 	Moreover,	in
casu,	the	Parties	make	systematically	reference	to	the	standard	of	“full	protection	and	security.”
Therefore,	the	Arbitral	Tribunal	intends	to	apply	the	standard	of	“full	protection	and	security.”
355.		A	violation	of	the	standard	of	full	protection	and	security	could	arise	in	case	of	failure	of	the
State	to	prevent	the	damage,	to	restore	the	previous	situation	or	to	punish	the	author	of	the
injury. 	The	injury	could	be	committed	either	by	the	host	State,	or	by	its	agencies	or	by	an
individual.
356.		The	Claimant	alleges	damages	to	its	materials	due	to	vandalism.	However,	the	Claimant	does
not	show	that	such	vandalism	would	have	been	prevented	if	the	authorities	had	acted	differently.
The	Claimant	only	contends	that	the	police	did	not	find	the	authors	of	this	offence.	Both	parties
agree	that	Lithuanian	authorities	started	an	investigation	to	find	the	authors	of	the	vandalism.
357.		The	Arbitral	Tribunal	finds	that	the	record	does	not	show	in	which	way	the	process	of
investigation	amounted	to	a	violation	of	the	Treaty.	In	Tecmed,	the	Tribunal	underlined	that	“the
guarantee	of	full	protection	and	security	is	not	absolute	and	does	not	impose	strict	liability	upon
the	State	that	grants	it.”
358.		The	Claimant	criticized	the	alleged	failure	of	the	Prime	Minister	to	protect	its	investment
against	the	action	and	omission	of	the	municipality.	However,	the	record	does	not	show	that	the
Prime	Minister	did	not	act	in	any	manner	that	should	be	incompatible	with	his	function	and	duties.
The	Claimant	failed	also	to	demonstrate	a	negligence	of	the	Prime	Minister	that	could	amount	to	a
breach	of	the	BIT.
359.		The	Claimant	also	criticized	the	Respondent	for	its	passivity	when	the	City	of	Vilnius
breached	the	Agreement.	However,	the	Arbitral	Tribunal	considers	that	the	investment	Treaty
created	no	duty	of	due	diligence	on	the	part	of	the	Respondent	to	intervene	in	the	dispute	between
the	Claimant	and	the	City	of	Vilnius	over	the	nature	of	their	legal	relationships.
360.		The	Respondent's	duty	under	the	Treaty	was,	first,	to	keep	its	judicial	system	available	for
the	Claimant	to	bring	its	contractual	claims	and,	second,	that	the	claims	would	be	properly
examined	in	accordance	with	domestic	and	international	law	by	an	impartial	and	fair	court.	There	is
no	evidence	—	not	even	an	allegation	—	that	the	Respondent	has	violated	this	obligation.
361.		The	Claimant	had	the	opportunity	to	raise	the	violation	of	the	Agreement	and	to	ask	for
reparation	before	the	Lithuanian	Courts.	The	Claimant	failed	to	show	that	it	was	prevented	to	do	so.
As	a	result,	the	Arbitral	Tribunal	considers	that	the	Respondent	did	not	violate	its	obligation	of
protection	and	security	under	the	Article	III	of	the	BIT.
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8.3		Claims	for	violation	of	the	obligation	to	accord	treatment	no	less	favorable	than
the	Treatment	accorded	to	investments	by	investors	of	a	third	State	(Article	IV	of	the
Treaty)
362.		Article	IV	of	the	Treaty	provides	that
1.	[i]nvestments	made	by	investors	of	one	contracting	party	in	the	territory	of	the	other
contracting	party,	as	also	the	returns	therefrom,	shall	be	accorded	treatment	no	less
favourable	than	that	accorded	to	investments	made	by	investors	of	any	third	state.
8.3.1		Position	of	the	parties
363.		In	substance,	the	Claimant	alleges	that	the	Respondent	violated	Article	IV	of	the	Treaty	as
follows:
(a)		the	City	of	Vilnius	rejected	the	project	of	MSCP	proposed	by	BP	on	the	Gedimino	site	for
cultural	heritage	concerns,	because	the	project	was	situated	in	the	Old	Town	of	the	City	of
Vilnius.	However,	the	Municipality	authorized	another	company	(Pinus	Proprius)	to	build	a
MSCP	on	the	same	site;
(b)		the	City	of	Vilnius	refused	to	sign	a	Joint	Activity	Agreement	(JAA)	with	BP	for	the
Gedimino	MSCP	and	for	the	Pergales	MSCP	for	legal	reason,	but	signed	a	JAA	with	the
Company	Pinus	Proprius;
(c)		Once	the	JAA	signed	with	the	Company	Pinus	Proprius	has	been	declared	unlawful,	the
City	of	Vilnius	transformed	it	into	a	Cooperation	Agreement.	However,	the	City	of	Vilnius
refused	to	conclude	a	similar	Cooperation	Agreement	with	BP	as	a	substitute	of	the	JAA.
364.		In	the	Claimant's	view,	the	Companies	Pinus	Proprius	and	BP	were	facing	similar
circumstances.	The	refusal	of	the	City	of	Vilnius	to	sign	a	JAA	or	a	Cooperation	Agreement
prevented	BP	from	the	construction	of	any	MSCP	in	Vilnius	and	thus	deprived	it	of	the	opportunity	to
carry	out	its	investment	as	it	was	entitled	to	do	under	the	Agreement.
365.		The	Respondent	alleges	that	the	situation	of	the	MSCP	built	by	Pinus	Proprius	on	the	Gedimino
site	was	clearly	different	from	the	project	proposed	by	the	Claimant	on	the	Gedimino	site	and	the
Pergales	site.
(a)		The	MSCP	built	by	Pinus	Proprius	on	the	Gedimino	site	was	smaller	than	the	MSCP	project
proposed	by	the	Claimant.	The	proposed	MSCP	designed	by	the	Claimant	extended	to	the
Odiminiu	Square,	which	is	part	of	the	Old	Town	area	as	defined	by	the	Annex	No.	5	of	the
Agreement,	but	the	one	constructed	by	Pinus	Proprius	was	not.	The	Respondent	underlines
that	a	construction	in	the	Old	Town	needed	the	approval	of	the	Government's	Cultural
heritage	Commission.
(b)		The	Joint	Activity	Agreement	could	not	be	signed	with	BP	since	the	modification	of	the
Article	9(2)	of	the	Law	on	Self-Government	which	prohibited	the	conclusion	of	such
agreement	with	private	entities.	The	Respondent	alleges	that	the	Cooperation	Agreement
signed	with	Pinus	Proprius	was	not	a	JAA.	However,	the	conclusion	of	a	similar	Cooperation
Agreement	with	BP	was	not	possible	for	various	reasons:
•		A	transfer	of	land	was	necessary	for	the	MSCP	proposed	by	BP	and	not	for	the	MSCP
built	by	Pinus	Proprius,	as	the	latter	was	already	the	owner	of	part	of	the	land	where	the
MSCP	was	built.	Consequently,	a	Public	Auction	was	necessary	for	the	transfer	of	state-
owned	land	to	BP	 	;
•		Pinus	Proprius	had	the	contractual	obligation	to	transfer	its	own	land	to	the	State
when	the	building	would	be	achieved.	Pinus	Proprius	also	agreed	to	sell	the	MSCP	to
the	City.	On	the	contrary,	BP	could	remain	the	owner	of	the	MSCP	built	on	the	Gedimino
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site	and	on	Pergales	site	and	would	have	the	possibility	to	lease	the	state-owned	land
or	to	buy	it	 	.
•		The	MSCP	built	by	Pinus	Proprius	was	under	state-owned	land	that	was	not
delineated	by	a	land	plot	and,	therefore,	could	never	be	owned	or	leased	by	Pinus
Proprius.	On	the	contrary,	the	project	of	MSCP	on	Pergales	site	proposed	by	BP	was
situated	on	a	state-owned	land	delineated	as	a	land	plot	and	therefore	required	a
Public	Auction.	
366.		Article	IV	of	the	Treaty	is	known	as	the	standard	of	the	“Most-favoured-nation	Treatment”.
Most-favoured-nation	(MFN)	clauses	are	by	essence	very	similar	to	“National	Treatment”
clauses.	They	have	similar	conditions	of	application	and	basically	afford	indirect	advantages	to
their	beneficiaries,	namely	a	treatment	no	less	favourable	than	the	one	granted	to	third	parties.
Tribunals'	analyses	of	the	National	Treatment	standard	will	therefore	also	be	useful	to	discuss	the
alleged	violation	of	the	MFN	standard.
367.		National	treatment	and	Most-Favoured-Nation	treatment	are	treaty	clauses	that	have	the
same	substantive	effect	as	the	international	treatment	standard:	foreigners	should	be	afforded
treatment	no	less	favourable	than	the	one	granted	to	local	citizens.	The	international	law
requirement	in	fact	acts	as	a	minimum	requirement	as	it	would	be	useless	for	the	States	party	to	a
treaty	to	grant	benefits	less	sweeping	than	customary	law.	In	other	words,	all	the	requirements,	be
they	national	treatment,	most	favourednation-treatment	or	non-discrimination	at	large,	will	in	effect
bar	discrimination	against	foreign	national	investing	in	the	country	concerned.	All	investors
benefiting	from	a	treaty	will	benefit	of	a	treatment	identical	or	better	than	nationals	or	third	countries
persons.	There	is,	thus,	no	reason	discretely	to	address	the	issue	of	nondiscrimination:	the	two
aspects,	under	most-favoured-nation	requirements	(Article	IV	of	the	Treaty)	on	the	one	hand	and
under	international	customary	law	on	the	other.
368.		Discrimination	is	to	be	ascertained	by	looking	at	the	circumstances	of	the	individual	cases.
Discrimination	involves	either	issues	of	law,	such	as	legislation	affording	different	treatments	in
function	of	citizenship,	or	issues	of	fact	where	a	State	unduly	treats	differently	investors	who	are	in
similar	circumstances.	Whether	discrimination	is	objectionable	does	not	in	the	opinion	of	this
Tribunal	depend	on	subjective	requirements	such	as	the	bad	faith	or	the	malicious	intent	of	the
State:	at	least,	Article	IV	of	the	Treaty	does	not	include	such	requirements.	However,	to	violate
international	law,	discrimination	must	be	unreasonable	or	lacking	proportionality,	for	instance,	it
must	be	inapposite	or	excessive	to	achieve	an	otherwise	legitimate	objective	of	the	State.	An
objective	justification	may	justify	differentiated	treatments	of	similar	cases.	It	would	be	necessary,
in	each	case,	to	evaluate	the	exact	circumstances	and	the	context.
369.		The	essential	condition	of	the	violation	of	a	MFN	clause	is	the	existence	of	a	different
treatment	accorded	to	another	foreign	investor	in	a	similar	situation. 	Therefore,	a	comparison	is
necessary	with	an	investor	in	like	circumstances.	The	notion	of	like	circumstances	has	been
broadly	analyzed	by	Tribunals .
370.		For	example,	in	Pope	and	Talbot	Inc.	v.	Government	of	Canada,	the	Tribunal	held	that:
[i]n	evaluating	the	implication	of	the	legal	context,	the	Tribunal	believes	that,	as	a	first
step,	the	treatment	accorded	a	foreign	owned	investment	protected	[…]	should	be
compared	with	that	accorded	domestic	investment	in	the	same	business	or	economic
sector. 	[…]
Once	it	is	established	that	a	foreign	and	domestic	investor	are	in	the	same	business	or
economic	sector,	“[d]ifference	in	treatment	will	presumptively	violate	[the	principle]
unless	they	have	a	reasonable	nexus	to	rational	government	policies	that	(1)	do	not
distinguish,	on	their	face	or	de	facto,	between	foreign-owned	and	domestic	companies,
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and	(2)	do	not	otherwise	unduly	undermine	the	investment	liberalizing	of	NAFTA.	[…]	A
formulation	focusing	on	the	like	circumstances	[…]	will	require	addressing	any	difference
in	treatment,	demanding	that	it	be	justified	by	showing	that	it	bears	a	reasonable
relationship	to	rational	policies	not	motivated	by	preference	of	domestic	over	foreign-
owned	investment.
371.		In	order	to	determine	whether	Parkerings	was	in	like	circumstances	with	Pinus	Proprius,	and
thus	whether	the	MFN	standard	has	been	violated,	the	Arbitral	Tribunal	considers	that	three
conditions	should	be	met:
(i)		Pinus	Proprius	must	be	a	foreign	investor;
(ii)		Pinus	Proprius	and	Parkerings	must	be	in	the	same	economic	or	business	sector;
(iii)		The	two	investors	must	be	treated	differently.	The	difference	of	treatment	must	be	due	to
a	measure	taken	by	the	State.	No	policy	or	purpose	behind	the	said	measure	must	apply	to
the	investment	that	justifies	the	different	treatments	accorded.	A	contrario,	a	less	favourable
treatment	is	acceptable	if	a	State's	legitimate	objective	justifies	such	different	treatment	in
relation	to	the	specificity	of	the	investment.
372.		With	regard	to	the	first	condition	(i):	The	parties	are	not	disputing	the	fact	that	the	company
Pinus	Proprius	is	an	investor	in	Lithuania.	As	Pinus	Proprius	is	owned	by	the	Dutch	company	Litprop
Holding	BV,	it	is	a	foreign	investor	within	the	meaning	of	the	BIT.
373.		With	regard	to	the	second	condition	(ii):	BP	and	Pinus	Proprius	are	engaged	in	similar
activities.	Both	Pinus	Proprius	and	BP	are	companies	acting	in	the	construction	and	management	of
parking	garages.	Both	are	competitors	for	the	same	MSCP	project	in	Gedimino.	Thus,	the	Arbitral
Tribunal	finds	that	Pinus	Proprius	and	BP	are	in	a	similar	economic	and	business	sector.
374.		With	regard	to	the	last	condition	(iii):	The	Claimant	alleges	that	Pinus	Proprius	has	been
treated	differently	than	BP,	because,	first,	Pinus	Proprius	has	been	authorised	to	construct	its	MSCP
in	Gedimino,	but	BP's	project	also	situated	in	Gedimino	has	been	refused.	Second,	the	Municipality
of	Vilnius	refused	to	conclude	a	JAA	or	a	Cooperation	agreement	with	BP	but	accepted	such	a
conclusion	with	Pinus	Proprius.
375.		However,	the	situation	of	the	two	investors	will	not	be	in	like	circumstances	if	a	justification	of
the	different	treatment	is	established.
376.		The	Arbitral	Tribunal	will	discuss	separately	the	two	alleged	discriminatory	measures,	namely
whether	the	Municipality	wrongfully	granted	Pinus	and	denied	BP	an	authorisation	to	build	a	MSCP
under	Gedimino	Avenue	(see	below	the	situation	of	the	Gedimino	MSCP,	section	8.3.2.1);	and
whether	the	Municipality	wrongfully	refused	to	enter	into	a	Cooperation	Agreement	with	BP,	whilst	it
had	concluded	such	a	Cooperation	Agreement	with	Pinus	(see	below	The	Situation	of	the	Pergales
MSCP,	section	8.3.2.2).
8.3.1.1		The	situation	of	the	Gedimino	MSCP
377.		In	order	to	determine	if	the	two	investors	were	in	like	circumstances,	or	if	the	measure	taken
by	the	Municipality	was	justified,	the	Arbitral	Tribunal	analyses	below	the	situation	of	the	two
investors.
378.		In	substance,	the	Respondent	argues	that	BP's	MSCP	project	in	Gedimino	was	fundamentally
different	from	the	MSCP	built	by	Pinus	Proprius.	First,	the	MSCP	project	proposed	by	the	Claimant
was	clearly	bigger	than	the	MSCP	built	by	Pinus	Proprius.	Second,	the	proposed	MSCP	designed	by
the	Claimant	extended	to	the	Odiminiu	Square,	which	is	part	of	the	Old	Town	area	as	defined	by
Annex	No.	5	of	the	Agreement,	but	the	one	constructed	by	Pinus	Proprius	did	not.	Finally,	BP's
project	reached	the	Vilnius'	historic	Cathedral	Square.	The	Respondent	underlines	that	a
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construction	in	the	Old	Town	needed	the	approval	of	the	Government's	Cultural	Heritage
Commission.
379.		The	record	confirms	that	Claimant's	proposed	project	on	the	Gedimino	site	and	the	MSCP	built
by	Pinus	Proprius	were	almost	identically	located	in	the	sense	that	they	are	both	situated	in	the	Old
Town.	Indeed,	the	maps	produced	by	the	Respondent 	show	that	the	Pinus	Proprius	MSCP	is
partly	superimposed	with	the	MSCP	project	of	BP.
380.		However,	the	Claimant's	project	is	considerably	bigger	than	the	MSCP	constructed	by	Pinus
Proprius .	All	the	maps	clearly	show	that	BP's	MSCP	extended	under	Gedimino	Street	as	far	as	the
Cathedral	Square. 	The	Claimant's	project	involved	the	construction	of	a	garage	comprising	over
500	parking	slots	by	comparison;	the	MSCP	constructed	by	Pinus	Proprius	consists	of	only	233
parking	slots.
381.		However,	notwithstanding	the	difference	of	size,	both	Pinus	Proprius	MSCP	and	BP's	MSCP
project	in	Gedimino	show	obvious	similarities.	They	are	located	in	the	Old	Town	district	of	the	City	of
Vilnius	as	defined	by	the	Administrative	borders. 	The	Old	Town	as	defined	by	the	Administrative
borders	is	protected	territory	as	defined	by	the	applicable	laws	and	regulations. 	The	Old	Town	of
Vilnius	as	defined	by	its	administrative	borders	is	considered	to	be	practically	the	same	as	the	area
defined	by	UNESCO.
382.		The	territory	of	the	Old	Town	as	defined	by	UNESCO	is	a	protected	area	which	requires	the
approval	of	various	administrative	Commissions	in	order,	notably,	to	make	any	construction. 	Mr
Robertas	Staskevicius	agreed	that	“[t]he	Department	of	Cultural	Heritage	Protection,	their
concern	was	over	the	administrative	region	in	Vilnius	designated	by	UNESCO	as	being	the
protected	administrative	region.” 	And	that	“they	[the	Department	of	Cultural	Heritage
Protection]	would	be	concerned	about	an	activity	that	took	place	within	that	zone	[the
administrative	region	in	Vilnius	designated	by	UNESCO].”
383.		The	Tribunal	understands	that	inside	the	Old	Town	as	defined	by	UNESCO	is	located	the	Old
Town	as	defined	by	Annex	5	of	the	Agreement. 	Annex	5	of	the	Agreement	supplies	the
contractual	definition	of	the	Old	Town.	Mr.	Robertas	Staskevicius	confirmed	that	“the	reason	why
that	zone	was	identified	in	the	contract	with	the	consortium	was	to	make	sure	that	the
consortium	focused	on	solving	the	traffic	and	parking	problems	in	that	specific	zone.” 	Mr.
Robertas	Staskevicius	confirmed	also	that	“as	far	as	this	department	[the	Department	of	Cultural
Heritage	Protection]	within	the	Ministry	of	Culture	of	the	Lithuanian	Government	was	concerned,	it
didn't	matter	how	the	parties	had	defined	a	part	of	the	Old	Town	in	annex	5	of	the	Contract.” 	It
is	not	immediately	apparent	why	Annex	5,	clearly	a	contractual	document	binding	the	Municipality
of	Vilnius	and	BP,	should	be	relevant,	as	argued	by	the	Respondent,	in	assessing	whether	Pinus
Proprius	was	in	like	circumstances	with	Parkerings.
384.		Nevertheless,	ex	abundanti	cautela,	it	appears	that	after	analysis	of	the	maps	furnished	by
the	Respondent, 	neither	the	MSCP	built	by	Pinus	Proprius	nor	the	MSCP	proposed	by	BP	are
situated	in	the	Old	Town	District,	as	defined	by	Annex	5	of	the	Agreement. 	The	most	recent
maps	furnished	by	the	Respondent	established	that	BP's	project	did	not	extend	into	the	Annex	5
area .	Consequently,	this	argument	is	not	useful	for	the	Tribunal's	determination.
385.		Another	feature	does	however	call	the	Tribunal	attention:	the	MSCP	planned	by	BP	extends
significantly	in	the	Old	Town	as	defined	by	UNESCO	and	especially	near	the	historical	site	of	the
Cathedral.	The	record	shows	that	various	administrative	Departments	and	Commissions	in	Lithuania
were	opposed	to	the	MSCP	as	planned	by	BP.	On	20	October	2000,	the	State	Monument	Protection
Commission	of	the	Republic	of	Lithuania	objected	to	the	parking	plan	for	the	following	reason:
Projects	of	such	type	and	scale	like	the	project	of	the	construction	of	planned
underground	garages	in	the	Old	Town	of	Vilnius	should	be	developed	concurrently	taking
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into	consideration	the	possible	direct	and	indirect	environmental	impact	of	planned
works	and	also	the	impact	on	cultural	properties.	In	the	opinion	of	the	State	Monumental
Protection	Commission,	the	planned	garages	[…]	would	change	the	character	of	the	Old
Town	of	global	value;	destroy	large	areas	of	unexplored	cultural	layer.	Also,	the	intensity
of	traffic	and	air	pollution	in	the	Old	Town	is	likely	to	increase.	The	Old	Town	might
become	less	attractive	in	terms	of	tourism	and	to	the	residents	and	visitor,	and	this
would	be	a	great	loss.	[The	State	Monumental	Protection	Commission]	resolves:	to
object	the	project	of	construction	of	the	underground	garages	in	the	Old	Town	of	Vilnius
[…]	 .
386.		On	4	December	2000,	the	Urban	Development	Department	of	the	Vilnius	Municipality	stated
its	objection	to	BP's	MSCP	project	under	Gedimino:
The	city's	humanitarian	community	would	psychologically	not	accept	this	proposal.	The
final	conclusions	concerning	the	feasibility	of	construction	of	this	garage	would	have	to
be	supplied	by	detailed	exploratory	archaeological	works,	because	this	square	[Odminiu]
is	a	supposed	site	of	the	defensive	installations	of	Vilnius	Castle.	In	terms	of	the
townscape,	the	site	of	the	square	is	very	important	in	the	formation	of	the	area	of
Cathedral	Square.	Clearance	of	the	trees	and	extension	and	distortion	of	the	Cathedral
area	is	not	architecturally	acceptable.	This	site	also	remains	the	subject	of	the	debate	on
the	feasibility	of	construction	—	for	the	purpose	of	better	formation	of	the	area	of
Cathedral	Square	and	creation	of	a	site	of	particular	public	significance.	Therefore,	it
would	be	purposeful	to	design	the	garage	only	together	with	a	structure	that	would
occupy	the	square,	provided	that	construction	of	such	a	structure	would	be	permitted.
Currently,	such	construction	is	irrelevant .
387.		On	22	December	2000,	the	Vilnius	Territorial	Division	underlined:
the	solutions	presented	in	the	referred	documents	directly	affect	a	cultural	monument
old	city	of	Vilnius	[…] .
388.		Finally,	on	12	March	2001,	the	State	Monument	Protection	Commission	of	the	Republic	of
Lithuania	stated,	concerning	the	MSCP	project	filed	by	BP:
In	case	construction	of	underground	garages	in	the	old	city	of	Vilnius	embarked	now,	it
can	be	stated	that	Lithuania	failed	to	perform	obligation	undertaken	upon	signing	in
November	1999	of	the	Convention	for	the	Protection	of	the	Architectural	heritage	of
Europe	and	the	European	Convention	on	the	Protection	of	the	Archaeological	heritage.
All	legal	acts	concerning	regulation	of	territorial	planning,	land	relationship,	heritage
protection,	environment	protection	and	construction	would	be	infringed	[…].
Upon	installation	of	garages,	a	big	portion	of	archaeological	heritage	of	the	old	city	of
Vilnius	will	be	destroyed;	use	of	multiple	up-to-date	materials	and	technologies	will
damage	the	authenticity	of	the	old	city	of	Vilnius .
389.		In	a	letter	to	the	City	Development	Committee	dated	25	July	2001,	Mr.	Jonas	Tamulis,	member
of	the	board	of	BP,	wrote	that
[g]iven	the	suspension	of	solution	in	the	Old	Town	territories	(in	the	boundaries	within
which	it	is	inscribed	in	the	UNESCO	List	of	World	Heritage)	for	stage	two	we	do	not
propose	any	sites	in	this	territory.	The	second	step	should	involve	construction	of
parking	areas	in	such	sites	according	to	the	parking	plan	which	should	necessarily	be
independent	form	solution	regarding	the	Old	Town .
390.		The	Arbitral	Tribunal	considers,	as	described	above	(see	¶	383),	that	the	difference	based
on	the	alleged	encroachment	in	the	Old	Town	as	defined	by	the	Annex	5	of	the	Agreement	is	not
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relevant.
391.		The	difference	in	size	of	the	two	MSCPs	also	is,	in	and	by	itself,	not	decisive	either	to
establish	that	the	two	investors	were	not	in	like	circumstances	but	it	may	be	one	of	the	factors	to
take	into	consideration.
392.		On	the	other	hand,	the	fact	that	BP's	MSCP	project	in	Gedimino	extended	significantly	more
into	the	Old	Town	as	defined	by	the	UNESCO,	is	decisive.	Indeed,	the	record	shows	that	the
opposition	raised	against	the	BP	projected	MSCP	were	important	and	contributed	to	the	Municipality
decision	to	refuse	such	a	controversial	project.	The	historical	and	archaeological	preservation	and
environmental	protection	could	be	and	in	this	case	were	a	justification	for	the	refusal	of	the	project.
The	potential	negative	impact	of	the	BP	project	in	the	Old	Town	was	increased	by	its	considerable
size	and	its	proximity	with	the	culturally	sensitive	area	of	the	Cathedral.	Consequently,	BP's	MSCP	in
Gedimino	was	not	similar	with	the	MSCP	constructed	by	Pinus	Proprius.
393.		That	being	said	the	Claimant	failed	to	show	that	Pinus	Proprius	benefited	of	a	more	favourable
treatment	regarding	the	administrative	requirements,	i.e.	that	is	was	exempt	of	such	requirements
or	obtained	a	clearance	more	easily.	It	is	the	Claimant's	burden	of	proof	to	show	that	the	foreign
investor	has	been	treated	more	favourably.
394.		The	Tribunal	notes	that	the	Pinus	Proprius	project	was	also	situated	in	the	Old	Town	as
defined	by	the	UNESCO	and	should	have	likely	met	the	same	administrative	requirements	as	BP's.
Indeed,	the	project	had	to	be	approved	by,	among	others,	the	State	Monument	Protection
Commission	of	the	Republic	of	Lithuania,	the	Urban	Development	Department	of	the	Vilnius
Municipality	and	the	Vilnius	Territorial	Division.	However,	there	is	no	evidence	that	Pinus	Proprius
has	been	treated	differently	from	BP	in	the	discharge	of	the	administrative	requirements.	For
instance	there	is	no	evidence	that	Pinus	Proprius	failed	to	apply	or	did	not	receive	the	permission,
from	the	State	Monument	Protection	Commission	of	the	Republic	of	Lithuania	or	the	Urban
Development	Department	of	the	Vilnius	Municipality	or	the	Vilnius	Territorial	Division,	to	construct
its	MSCP	in	the	Old	Town.
395.		Moreover,	the	record	does	not	evidence	that	Pinus	Proprius	faced	the	same	objections	and
that	its	project	had	the	same	potential	impact	on	the	Old	Town.	On	the	contrary,	the	record	shows
that	the	Pinus	Project	did	not	extend	near	the	Cathedral	area	which	may	have	meant	it	was	less
controversial.
396.		Nonetheless,	despite	similarities	in	objective	and	venue,	the	Tribunal	has	concluded,	on
balance,	that	the	differences	of	size	of	Pinus	Proprius	and	BP's	projects,	as	well	as	the	significant
extension	of	the	latter	into	the	Old	Town	near	the	Cathedral	area,	are	important	enough	to
determine	that	the	two	investors	were	not	in	like	circumstances.	Furthermore,	the	Municipality	of
Vilnius	was	faced	with	numerous	and	solid	oppositions	from	various	bodies	that	relied	on
archaeological	and	environmental	concerns.	In	the	record,	nothing	convincing	would	show	that
such	concerns	were	not	determinant	or	were	built	up	to	reject	BP's	project.	Thus	the	City	of	Vilnius
did	have	legitimate	grounds	to	distinguish	between	the	two	projects.	Indeed,	the	refusal	by	the
Municipality	of	Vilnius	to	authorize	BP's	project	in	Gedimino	was	justified	by	various	concerns,
especially	in	terms	of	historical	and	archaeological	preservation	and	environmental	protection.
These	concerns	are	peculiar	to	the	extension	of	BP's	project	in	the	Old	Town	and	thus	could	justify
different	treatment	with	Pinus	Proprius.	In	the	absence	of	convincing	evidence	that	Pinus	Proprius
benefited	from	a	more	favourable	treatment	in	terms	of	administrative	requirement,	the	Arbitral
Tribunal	finds	that	the	Claimant	failed	to	demonstrate	a	discrimination	concerning	the	Gedimino	car
park.
397.		Finally,	the	Tribunal	notes	that,	in	April	2001,	the	Municipality	of	Vilnius	ordered	the
Consortium	to	abandon	the	Gedimino	project	and	to	study	the	MSCP	on	the	Pergales	site. 	BP
accepted	to	start	the	planning	for	the	site	of	Pergales	and	also	agreed	that	the	site	of	Gedimino	was
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uncertain	due	to	its	location	in	the	Old	Town	(see	above	¶	392) .	The	record	is	insufficient	to
show	that	the	Municipality	of	Vilnius	unduly	rejected	the	Gedimino	project	of	MSCP	proposed	by	BP.
On	the	contrary,	the	Gedimino	site	was	only	one	possibility	among	several	other	locations.	The
refusal	of	one	site	did	not	deprive	BP	of	the	possibility	to	propose	other	locations	and	finally	to
construct	its	ten	MSCPs	as	agreed.
8.3.1.2		The	situation	of	the	Pergales	MSCP
398.		As	set	out	above	(see	¶¶	363–364)	the	Claimant	alleges,	first,	that	the	Municipality	refused	to
sign	a	Joint	Activity	Agreement	(JAA)	with	BP	but	concluded	a	JAA	with	Pinus	Proprius,	and	second,
that	once	the	JAAs	had	been	declared	unlawful	under	the	Law	on	Self-Government,	the	Municipality
refused	to	transform	the	JAA	envisioned	by	BP	into	a	Cooperation	Agreement	as	it	did	with	Pinus
Proprius.
399.		JAAs	are	used	in	Lithuania	to	embody	private-public	partnerships	for	construction,	if	the
project	is	situated	on	state-owned	land	and	if	the	constructor	is	neither	the	owner	nor	the	lessee	of
the	land.
400.		In	his	statement,	Mr.	Sigitas	Burnickas	explained	that:
Under	Lithuanian	law,	much	of	the	land	available	for	infrastructure	development	within
the	city	of	Vilnius	was	formally	owned	by	the	national	government,	and	not	the
Municipality.	This	necessitated	a	two	step	process	for	each	car	park	—	first,	the
Municipality	had	to	obtain	the	land	from	the	State;	second,	the	Municipality	had	to
transfer	that	land	to	the	consortium	member	responsible	for	developing	that	particular
car	park.
In	accordance	with	applicable	construction	regulations	the	permits	for	the	construction	of
car	parks	could	be	issued	only	if	the	developer	had	possession	of	the	relevant	land	plot
by	proprietary	right,	by	lease	(or	sublease),	or	by	right	of	use.	Under	the	land	lease	law
of	1998,	however,	the	state-owned	land	plots	could	only	be	leased	to	the	consortium
through	an	auction	procedure.	[…]
In	the	consortium's	case,	the	joint	activity	agreement	would	work	as	follows.	First,	the
Municipality	would	obtain	the	state-owned	land	plots	by	right	of	trust	and	apply,	on	its
behalf	or	on	behalf	of	the	consortium	member,	for	the	construction	permit.	Second,	the
consortium	member	would	finance	and	carry	out	the	construction	works	on	the
stateowned	land.	Because	of	the	joint	activity	agreement,	there	was	no	requirement	for	a
lease	of	transfer	of	any	kind	during	construction.	Third,	upon	completion	of	construction,
each	of	the	parties	received	a	defined	share	in	the	joint	property.	The	division	of
property	was	agreed	to	in	the	model	joint	activity	agreement:	the	consortium	member
would	own	the	car	park	and	the	Municipality	would	receive	the	associated	public
infrastructure	that	the	consortium	member	had	constructed.	Under	the	provision	of	the
land	lease	law,	the	consortium	member	who	owned	the	car	park	on	the	state-owned	land
could	lease	that	land	without	having	to	go	through	an	auction .
401.		In	summary,	the	Tribunal	understands	that	a	JAA	or	Cooperation	Agreement	is	necessary	to
start	the	construction	and	permits	to	avoid	the	public	auction	as	defined	by	Article	7	section	1	of
the	Law	on	leasing	of	Land. 	Indeed,	pursuant	to	Article	7	section	1	of	the	Law	on	leasing	of
Land:
State-owned	land,	save	for	the	case	stipulated	in	paragraph	2	of	this	article,	in	the
procedure	set	by	the	Government	shall	be	leased	in	an	auction	for	the	person,	whose	bid
for	land	lease	fee	is	the	highest.	[…]
402.		However,	Article	7	section	2	of	the	same	law	provides	that	if	the	prospective	lessee	already
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owns	a	building	on	the	said	land,	no	public	auction	is	necessary:
In	case	state-owned	land	is	developed	with	buildings	owned	or	rented	by	natural	or	legal
persons,	it	shall	be	leased	without	an	auction	in	the	procedure	set	by	the	Government.
403.		In	the	case	at	hand,	it	is	not	disputed	that	Pinus	Proprius	was	the	owner	of	a	small	part	of	the
land	on	its	MSCP	building	site. 	BP	was	not	the	owner	of	the	land	on	the	MSCP	building	site	and,
consequently	it	needed	a	JAA	in	order	to	construct	its	MSCP.	This	was	also	the	case	for	Pinus
Proprius,	at	least	for	the	part	of	the	land	it	did	not	own.
404.		However,	on	12	October	2000,	the	Amendment	of	the	Law	on	Self-Government	precluded	the
public	authorities	from	concluding	JAA	with	a	private	entity.	In	substance,	Article	9	Section	2	of	the
Law	on	Self-Government	provides	that	“[f]or	general	purposes	a	municipality	may	conclude	joint
activity	contracts	or	public	procurement	contracts	with	State	institutions	and	(or)	other
municipalities.” 	It	is	common	ground	that	a	municipality	is	thus	authorized	to	enter	into	JAAs	but
exclusively	with	State	constituent	divisions	to	the	exclusion	of	private	entities.
405.		On	24	October	2001,	the	Vilnius	City	Council	decided	to	conclude	a	JAA	with	the	Company
Pinus	Proprius. 	However,	on	18	December	2001,	the	Representative	of	the	Government	for
Vilnius	Region,	Mr	Gintautas	Jakimavicius,	suspended	the	enforcement	of	the	decision	of	the	Vilnius
City	Council	pursuant	to	the	Law	on	Local	Self-Government, 	and	on	18	January	2002,	requested
the	Vilnius	District	Administrative	Court	to	revoke	the	decision	of	the	Vilnius	City	Council.	In
substance,	the	Representative	of	the	Government	for	Vilnius	Region	stated:
a	conclusion	should	be	made	that	the	Law	does	not	provide	for	the	right	for
municipalities	to	conclude	joint	venture	agreement	with	private	persons	and	that	Vilnius
City	Municipality	Council	having	passed	the	decision	No.417	of	24	October	2001	and	by
Clause	1	thereof	approved	the	draft	joint	venture	agreement	with	Pinus	Proprius	UAB
exceeded	the	scope	of	competence	of	public	authorities .
406.		On	27	March	2002,	the	Vilnius	City	Council	agreed	to	modify	the	controversial	JAA	into	a
Cooperation	Agreement. 	Thus,	the	Representative	of	the	Government	for	the	Vilnius	Region,	Mr.
Gintautas	Jakimavicius,	wrote	to	the	Vilnius	District	Administrative	Court:
[t]he	Vilnius	City	Council	on	March	27,	2002,	issued	decision	No.	530	“on	the	Approval	of
the	Cooperation	Agreement”	whereby	item	1	approved	the	Cooperation	Agreement
between	the	Municipality	of	the	City	of	Vilnius	and	the	Joint	Stock	Company	“Pinus
Proprius.”	By	this	decision	the	Vilnius	City	Council	actually	changed	decision	No.	417	of
10/24/01	“On	approval	of	the	Partnership	Agreement,”	i.e.	it	became	out	of	force.	Since
the	decision	became	out	of	force,	the	legal	issue	also	disappeared.	Consequently,	the
case	was	dismissed.
407.		Finally,	on	20	August	2002,	the	Vilnius	City	Municipality	concluded	a	Cooperation	Agreement
with	Pinus	Proprius. 	The	record	shows	that	the	Cooperation	Agreement	and	the	JAA	signed
between	Pinus	Proprius	and	the	City	of	Vilnius	are	in	every	respect	similar.
408.		BP's	situation	evolved	differently.	Indeed,	in	March	2002,	the	Mayor	of	the	Municipality	of
Vilnius,	Mr.	Zuokas,	sent	to	BP	a	draft	Joint	Activity	Agreement 	and,	in	April	2002,	BP	sent	a
revised	draft	of	the	JAA. 	However,	the	City	of	Vilnius	never	concluded	the	JAA	with	BP	for	the
Construction	of	the	MSCP	on	Pergales	site. 	It	is	not	contested	that	the	City	of	Vilnius	also	refused
to	conclude	a	Cooperation	Agreement	with	BP	similar	to	the	one	concluded	with	Pinus	Proprius.
409.		The	Claimant	alleges	that	BP	and	Pinus	Proprius	were	in	like	circumstances	and	that	by
refusing	to	conclude	a	JAA	or	a	Cooperation	Agreement	with	BP,	the	Municipality	of	Vilnius	gave	a
treatment	more	favourable	to	Pinus	Proprius.
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410.		However,	the	Tribunal	finds	that	in	order	to	determine	whether	the	claiming	investor	and
another	(most	favoured)	investor	used	as	benchmark	were	in	like	circumstances,	at	least	two
elements	were	significantly	different	between	the	BP	and	Pinus	Proprius	projects	and	therefore
different	treatment	could	be	justified.
411.		Before	addressing	such	two	differences,	the	Tribunal	wishes	to	comment	on	a	significant
difficulty	the	Claimant	is	facing.	Entering	into	agreements	is	subject	to	party	autonomy	and	no	one
may	be	forced	to	contract.	Under	conditions	changing	from	one	law	to	another,	parties	may
conclude	framework	agreements	and	define	conditions	under	which	they	will	have	to	enter	into
such	agreement.	Even	when	the	legislation	recognizes	the	enforceability	of	such	obligation	to
contract,	part	autonomy	will	still	play	its	part	in	the	negotiation	and	conclusion	of	the	agreements.
In	casu,	the	City	of	Vilnius	is	a	public	entity	and	thus	has	to	act	with	the	defence	of	public	interests
as	it	main	yardstick.	Public	interest	does,	of	course,	depend	on	the	policy	of	the	administration
running	the	public	entity	at	any	particular	time.	Thus,	it	is	a	difficult	endeavour	to	show
discrimination	in	a	public	entity	entering	into	an	agreement	with	a	certain	person	and	refusing	to
conclude	a	similar	agreement	with	another	party.	Apart	from	factors	applying	to	individuals	or
companies	(timing,	financing,	opportunities,…)	a	public	entity	may	have	legitimate	motivation	of	its
own	at	the	time	to	exercise	it	discretion	to	contract	or	not	to	contract.
412.		The	two	differences	which	the	Tribunal	considers	relevant	are	(i)	the	substantive	differences
to	the	content	of	the	agreements,	and	(ii)	the	existence	and	non-existence	of	a	signed	JAA	with
Pinus	Proprius	and	BP	respectively.	These	two	differences	are	reviewed	below.
413.		With	regard	to	the	first	difference	between	the	projects:	The	substance	of	the	Cooperation
Agreement	signed	with	Pinus	Proprius	was	different	from	the	proposed	JAA	with	BP.	Indeed,	pursuant
to	Article	7.2	of	the	Cooperation	Agreement	between	the	City	of	Vilnius	and	Pinus	Proprius,	the
parties
agree	on	the	following	principles	of	apportionment	in	kind	of	their	joint	property,	i.e.	the
Infrastructure	Unit:
(a)		title	to	the	Underground	Car	Park	A	(including	the	internal	service	lines
necessary	for	the	operation	of	the	car	park)	shall	be	vested	in	PINUS	PROPRIUS;
(b)		title	to	the	remaining	part	of	the	Infrastructure	(i.e.	the	service	lines,	transport
communication,	pavement,	minor	architectural	structures,	collectors	to	house
service	lines	of	the	city,	etc.)	save	the	part	indicated	in	paragraph	(a)	above,	shall
be	vested	in	the	Municipality.	
414.		This	part	of	the	Pinus	Proprius	Agreement	was	similar	to	the	one	contained	in	the	BP	draft	JAA.
415.		However,	pursuant	to	Article	10.4.3.	of	the	same	Cooperation	Agreement:
Should	the	Municipality	receive	the	Lithuanian	Government's	consent	for	purchase	from
the	sole	source	of	the	Underground	Car	Park	A	or	fulfil	other	requirements	prescribed	by
laws	as	applicable	in	the	event	of	purchase	to	this	particular	transaction,	the	parties
undertake	to	enter	into	a	leasing	contract	with	respect	to	the	Underground	Car	park	A
subject	to	the	requisite	conditions	set	forth	below:
(i)		transfer	by	PINUS	PROPRIUS	of	the	Underground	Car	Park	A	into	the
Municipality's	possession	and	use	on	the	stipulation	that	once	the	price	quoted	for
the	Underground	Car	Park	A	has	been	paid	the	Underground	Car	Park	A	will	become
the	ownership	of	the	Municipality;
(ii)		the	period	of	payment	for	the	Underground	Car	Park	A	being	10	years	as	the	of
the	date	of	signing	the	leasing	contract;
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(iii)		PINUS	PROPRIUS	giving	its	consent	to	transfer	by	the	Municipality	against
payment	of	the	Underground	Car	park	A	to	other	third	parties	to	be	used	for
business	needs;
(iv)		no	payment	for	use	of	the	Underground	Car	Park	A	being	effected	to	PINUS
PROPRIUS	 	.
416.		In	brief,	Pinus	Proprius	had	the	contractual	obligation	to	sell	the	MSCP	to	the	Municipality	of
Vilnius	upon	completion	of	the	construction.
417.		On	the	other	hand,	pursuant	to	the	form	of	JAA	annexed	to	the	Concession	Agreement
between	the	Municipality	of	Vilnius	and	BP:
3.2.1.		the	multi-storey	car	park	would	belong	by	the	right	of	ownership	to	the	consortium
or	the	consortium	Member	only;
3.2.2.		the	remaining	part	the	Object	if	Infrastructure	(engineering	services,	transport,
communications,	etc.),	except	those	specified	in	sub-item	3.2.1.	of	part	3	of	this	Article,
would	belong	by	the	right	of	ownership	to	the	Municipality	 	.
418.		Neither	the	draft	JAA	annexed	to	the	Concession	Agreement,	nor	the	draft	JAA	proposed	by
the	Mayor	Zuokas	on	9	April	2002	contained	a	provision	that	obliged	BP	to	sell	the	MSCP	to	the
Municipality.	Mr.	Rukstele	explained	that:
after	BP-Egapris	constructed	car	park,	according	to	the	condition	of	the	joint	activity
agreements	with	them,	particularly	which	is	different	from	agreement	of	cooperation	with
Pinus	Proprius.	They	[BP-Egapris]	had	the	right	to	register	even	the	beginnings	of	the
construction	to	separate	it	from—to	make	it	their	own	property	and	to	apply	for	lease	to
purchase	the	land	plot	on	which	that	construction	is	built.	And	this	is	not	the	case	with
Pinus	Proprius” .
[…]	there	was	an	obligation	on	behalf	of	Pinus	Proprius	to	sell	the	car	park	to	municipality.	It
was	not	intending	to	be	the	owner	of	that	car	park	to	municipality .
419.		The	Claimant	accepts	that	“[u]nlike	Pinus,	BP	would	lease	the	land	on	which	it	built	its
MSCPs.	That	was	possible	because	of	the	above	cited	provision	of	Article	7(2)	of	the	Land	Lease
Law	that	allows	a	private	company	to	acquire	a	lease	interest	in	publicly	owned	land	if	it	already
owns	building	on	the	land	—	clearly	BP's	case.”
420.		In	summary,	BP's	draft	JAA	provided	that	the	investor	will	be	the	owner	of	the	MSCP	and	will
lease	or	buy	the	publicly-owned	land	after	completion	of	works.	Unlike	BP's	JAA,	Pinus	Proprius'
Cooperation	Agreement	provided	that	the	investor	will	sell	its	MSCP	to	the	Municipality	(subject	to
the	Lithuanian	Government	authorizing	such	a	purchase)	and	therefore	will	not	lease	or	buy	the
publicly-owned	land.	This	dissimilarity	is	significant.	It	may	very	well	be	that	the	economic
difference	is	limited	or	even	nonexistent.	The	record	does	not	evidence	that	it	is	the	case.
Nevertheless,	the	legal	situation	is	different:	one	investor	remains	the	owner	of	the	investment	while
the	other	must	return	it	to	the	City.	Whatever	the	compensation	paid,	the	two	situations	are	not	the
same.
421.		Both	BP	and	Pinus	Proprius	needed	a	JAA	in	order	to	construct	the	car	parks.	Once	the
construction	would	be	completed,	both	investors	would	be	the	owners	of	the	MSCP.	On	that	matter,
they	are	similar.	However,	Pinus	Proprius	would	be	obliged,	subsequently,	to	sell	its	MSCP	to	the
Municipality,	if	the	latter	was	authorized	to	buy	it.	Therefore,	the	JAA	or	the	Cooperation	Agreement
signed	with	Pinus	Proprius	was	useful	for	the	construction	process	but	had	neither	the	purpose	nor
the	effect	of	avoiding	the	public	auction	(Article	7(1)	of	the	Land	Lease	Law).	BP	needed	a	JAA	or	a
Cooperation	Agreement	for	the	construction	process,	but	more	fundamentally,	to	avoid	the	public
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auction.	This	is	a	further	difference.
422.		In	substance,	a	public	auction	has	several	objectives,	and	especially	gives	the	assurance	to
the	State	that	the	highest	price	will	be	paid	for	the	lease	of	the	publiclyowned	land.	Moreover,	the
public	auction	guarantees	the	equality	of	treatment	as	all	entities	interested	have	the	opportunity	to
apply	for	the	lease.
423.		In	the	case	of	Pinus	Proprius,	the	public	auction	was	not	necessary	because	the	investor	was
not	to	keep	the	MSCP	and	would	not	need	to	enter	into	a	lease	of	the	land.	The	Municipality	would
be	the	owner	of	the	MSCP	and	the	publicly-owned	land	would	not	be	leased	by	another	private
entity.
424.		On	the	other	hand,	BP	had	a	right	to	own	the	MSCP	and	therefore	to	lease	the	publiclyowned
land.	Consequently,	the	public	auction	was	an	obligation,	unless	the	Municipality	and	BP	concluded
a	JAA.	In	the	context	of	the	legal	uncertainty	of	the	JAA	and	the	Cooperation	Agreement	with	regard
to	the	Law	on	Self-Government,	the	Municipality	of	Vilnius	could	refuse	the	conclusion	of	such
Agreement	with	BP	and	thus	dispense	with	the	obligation	to	organize	a	pubic	auction.
425.		In	addition,	the	Cooperation	Agreement	concluded	with	Pinus	Proprius	afforded	full	power	of
self-determination	to	the	Municipality	of	Vilnius	after	the	construction	of	the	MSCP.	Indeed,	the
Municipality	-	once	properly	authorized	by	superior	authorities	—	could	decide,	at	its	sole
discretion,	to	buy	the	MSCP	after	completion	of	works.	The	consequences	of	the	conclusion	of	JAA
or	Cooperation	Agreement	were,	therefore,	limited	to	the	time	of	the	construction	process.	The
Agreement	had	no	impact	in	this	regard	after	the	construction.
426.		It	was	not	the	case	with	BP,	which	was	contractually	entitled	to	remain	the	owner	of	the	MSCP
and	therefore	had	the	right	to	lease	the	land.	It	is	evident	that	the	consequences	of	the	conclusion
of	a	Cooperation	Agreement	with	Pinus	Proprius	were	limited	in	terms	of	time	and	importance,	while
the	conclusion	of	a	JAA	or	Cooperation	Agreement	with	BP	had	wider	ranging	effects.
427.		BP	and	Pinus	Proprius	situations	were	different	enough	to	justify	a	different	treatment.
Therefore,	the	Tribunal	on	balance	has	concluded	that	both	investors	were	not	in	like
circumstances.
428.		With	regard	to	the	second	difference	between	the	projects:	As	described	above	(see	¶¶
405–407)	in	October	2001,	the	City	of	Vilnius	concluded	a	JAA	with	Pinus	Proprius.	A	few	months
later,	the	Representative	of	the	Government	for	the	Vilnius	Region	challenged	the	validity	of	the
JAA.	Thus,	the	JAA	was	withdrawn	and	a	Cooperation	Agreement	was	concluded	in	its	place.	The
Cooperation	Agreement	concluded	in	March	2002	was	nothing	more	than	a	change	of	title	of	the
existing	JAA	in	order	to	avoid	the	decision	of	the	Vilnius	District	Administrative	Court	on	the	legality
of	the	JAA.	In	other	words,	the	Municipality	wanted	to	avoid	that	its	decision	to	conclude	a	JAA	be
declared	in	violation	of	the	Law	on	Self-Government.
429.		In	the	case	of	BP,	the	situation	was	clearly	different;	BP	never	concluded	any	JAA	with	the
Municipality	of	Vilnius.	The	conclusion	of	a	Cooperation	Agreement	with	BP	would	have	required	the
conclusion	of	a	new	agreement	and	not	the	modification	of	an	existing,	possibly	binding	and
enforceable	agreement.	It	is	therefore	at	least	credible	and	understandable	that	the	Municipality	of
Vilnius	refused	to	conclude	a	new	agreement	with	BP	due	to	the	uncertainty	of	the	legality	of	JAA	or
Cooperation	Agreements.
430.		Under	the	circumstances,	the	Arbitral	Tribunal	concludes	that	Pinus	Proprius'	situation
differed	from	BP's	situation.	As	a	result,	the	decision	of	the	Municipality	of	Vilnius	to	refuse	the
conclusion	of	a	JAA	or	a	Cooperation	Agreement	with	BP	could	be	justified	by	the	difference.
8.4		Expropriation
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431.		Article	VI	of	the	Treaty	provides	that:
Investments	made	by	investors	of	one	contracting	party	in	the	territory	of	the	other
contracting	party	cannot	be	expropriated,	nationalized	or	subjected	to	other	measures
having	a	similar	effect	(all	such	measure	hereinafter	referred	to	as	“expropriation”)
except	when	the	following	conditions	are	fulfilled:
(I)		The	expropriation	shall	be	done	for	public	interest	and	under	domestic	legal
procedures;
(II)		It	shall	not	be	discriminatory;
(III)		It	shall	be	done	only	against	compensation.	[…]
8.4.1		Position	of	the	parties
432.		The	Claimant	alleges	that	pursuant	to	Article	VI	of	the	Treaty,	the	investment	cannot	be
expropriated,	nationalized	or	subjected	to	measures	having	a	similar	effect	except	for	a	public
purpose,	in	a	non-discriminatory	manner,	upon	payment	of	compensation	and	in	accordance	with
domestic	laws.
433.		Claimant	argues	that	by	repudiating	the	Agreement,	the	Republic	of	Lithuania	destroyed	the
value	of	BP	and	VPK.	Moreover,	the	Claimant	contends	that	the	“Government's	litigious,
legislative,	and	administrative	interference	with	the	Agreement	deprived	BP	of	the	legal	security
afforded	by	the	Agreemen.t” 	By	preventing	the	execution	and	demanding	full	performance	of
the	Agreement	at	the	same	time,	and	then	repudiating	the	Agreement,	the	Municipality	of	Vilnius
destroyed	BP.	Thus,	by	taking	the	asset	that	was	the	sole	purpose	of	BP's	existence,	Lithuania
indirectly	expropriated	Parkering's	ownership	interest	in	BP. 	BP	became	a	“company	with	assets,
but	without	business.”	By	failing	to	provide	compensation	for	this	expropriation,	Lithuania
breached	its	obligation	under	Article	VI	of	the	Treaty.
434.		The	Claimant	contends	that	whether	Lithuania	benefited	or	not	from	the	expropriation	is
irrelevant.	On	the	contrary,	whether	the	investor	continues	to	enjoy	the	benefit	of	ownership	is
decisive.
435.		The	Respondent	alleges	that	the	termination	of	a	contract	only	amounts	to	an	expropriation
in	limited	cumulative	circumstances.	First,	the	termination	must	be	wrongful;	second,	there	must	be
no	remedy	under	the	contract	for	the	wrongful	termination;	and	third	the	termination	must	give	rise
to	a	substantial	deprivation	of	the	investor's	enjoyment	of	the	property	in	question.
436.		The	Respondent	contends	that	the	termination	was	lawful	under	the	terms	of	the
Agreement 	and	that,	in	any	case,	the	Claimant	never	brought	a	claim	before	the	contractually
agreed	forum,	i.e.	Lithuanian	Courts.	The	Respondent	underlines	that	the	Lithuanian	Courts	were	in
position	to	give	a	fair	and	impartial	hearing	of	the	Claimant's	case. 	Finally,	the	Respondent
alleges	that	the	Claimant	was	not	deprived	of	its	property	since	it	still	owns	and	controls	BP	and
because	BP	and	VPK	continue	to	develop	their	activities	in	Lithuania.
8.4.2		Discussion
437.		The	Treaty	expressly	contemplates	de	facto	expropriation	besides	the	formal	or	direct
expropriation.	De	facto	expropriation	(or	indirect	expropriation)	is	not	clearly	defined	in	treaties,	but
can	be	understood	as	the	negative	effect	of	government	measures	on	the	investor's	property
rights,	which	does	not	involve	a	transfer	of	property	but	a	deprivation	of	the	enjoyment	of	the
property.
438.		As	indicated	in	Metalclad	v.	Mexico,	the	Tribunal	stated	that
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expropriation	[…]	includes	not	only	open,	deliberate	and	acknowledged	takings	of
property,	such	as	outright	seizure	or	formal	or	obligatory	transfer	of	title	in	favour	of	the
host	State,	but	also	covert	or	incidental	interference	with	the	use	of	property	which	has
the	effect	of	depriving	the	owner,	in	whole	or	in	significant	part,	of	the	use	or
reasonablyto-be-expected	economic	benefit	of	property	even	if	not	necessarily	to	the
obvious	benefit	of	the	host	State.
439.		The	parties	are	not	challenging	the	fact	that	the	expropriation	can	be	direct	or	indirect	and
that,	in	the	case	at	hand,	the	expropriation	alleged	by	the	Claimant	is	indirect.	There	is	no	mention
of	any	direct	expropriation.
440.		In	the	present	case,	the	expropriation	results,	according	to	the	Claimant,	of	the	wrongful
termination	of	the	Agreement	between	the	City	of	Vilnius	and	BP.	Undoubtedly,	wrongful	termination
of	an	agreement	amounts	to	a	breach	thereof.	Whether	contract	rights	may	be	expropriated	is
widely	accepted	by	the	case	law	and	the	legal	authors.	However,	under	limited	circumstances,
three	cumulative	conditions	(which	will	be	addressed	below	¶¶	443–456)	should	be	met	to	elevate
a	breach	of	an	agreement	to	the	level	of	an	indirect	expropriation	within	the	meaning	of	the	Treaty.
441.		Having	said	that,	an	expropriation	does	not	necessarily	amount	to	a	violation	of	the	Treaty.
Indeed,	pursuant	to	Article	VI	of	the	Treaty,	the	expropriation	is	legitimate	if	done	for	public	interest
and	under	domestic	legal	procedures;	if	not	discriminatory;	and	if	done	against	compensation.
442.		Therefore,	the	Arbitral	Tribunal	will	first	determine	if	an	indirect	expropriation	occurred	(see
¶¶	443–456).	If	the	answer	is	positive,	it	will	analyse	if	the	expropriation	is	legitimate.
443.		First,	a	breach	of	an	agreement	will	amount	to	an	expropriation	only	if	the	State	acted	not
only	in	its	capacity	of	party	to	the	agreement,	but	also	in	its	capacity	of	sovereign	authority,	that	is
to	say	using	its	sovereign	power.	The	breach	should	be	the	result	of	this	action.	A	State	or	its
instrumentalities	which	simply	breach	an	agreement,	even	grossly,	acting	as	any	other	contracting
party	might	have	done,	possibly	wrongfully,	is	therefore	not	expropriating	the	other	party.
444.		The	Tribunal	agrees	with	the	tribunal	in	Azurix	Corp.	v.	the	Argentine	Republic	which	held
that:
contractual	breaches	by	State	party	or	one	of	its	instrumentalities	would	not	normally
constitute	expropriation.	Whether	one	or	series	of	such	breaches	can	be	considered	to
be	measures	tantamount	to	expropriation	will	depend	on	whether	the	State	or	its
instrumentality	has	breached	the	contract	in	the	exercise	of	its	sovereign	authority,	or
as	a	party	to	a	contract.	As	already	noted,	a	State	or	its	instrumentalities	may	perform	a
contract	badly,	but	this	will	not	result	in	a	breach	of	treaty	provisions	“unless	it	be
proved	that	the	state	or	its	emanation	has	gone	beyond	its	role	as	a	mere	party	to	the
contract,	and	has	exercised	the	specific	functions	of	a	sovereign.
445.		In	the	present	case,	on	27	January	2004,	Mr.	Artüras	Zuokas,	Mayor	of	the	City	of	Vilnius,
informed	the	Consortium	that	the	Agreement	dated	30	December	1999	was	terminated.	The	reason
invoked	was	a	“material	breach	on	the	part	of	the	Consortium	formed	by	UAB	Baltijos	Parkingas
and	UAB	Egapris	of	[…]	provisions	of	the	Agreement.” 	The	record	does	not	show	that	the	State,
i.e.	the	Municipality,	acted	differently	than	another	contracting	party	would	have	done.	In	other
words,	assuming	that	the	Municipality	of	the	City	of	Vilnius	breached	the	Agreement,	there	is	no
evidence	that	it	used	its	sovereign	power	in	that	respect.
446.		It	is	thus	unnecessary	and	irrelevant	to	ascertain	whether	the	termination	breached	the
Agreement.
447.		Therefore,	the	termination	of	the	Agreement	by	the	City	of	Vilnius	cannot	be	considered	as
an	expropriation	under	the	BIT	due	to	the	fact	that	the	City	of	Vilnius	did	not	act	as	a	sovereign
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authority	and	did	not	use	that	authority	to	expropriate	the	rights	of	BP.
448.		Second,	a	breach	of	contract,	if	there	should	be	one	is,	in	itself,	not	always	sufficient	to
amount	to	an	indirect	expropriation	within	the	meaning	of	the	BIT.	An	investor	faced	with	a	breach
of	an	agreement	by	the	State	counter-party	should,	as	a	general	rule,	sue	that	party	in	the
appropriate	forum	to	remedy	the	breach.	Therefore,	as	already	stated	(see	¶	316),	a	preliminary
determination	of	the	existence	of	a	contractual	breach	under	domestic	law	is,	in	most	cases,	a
prerequisite.
449.		If	the	investor	is	deprived,	legally	or	practically,	of	the	possibility	to	seek	a	remedy	before	the
appropriate	domestic	court,	then	the	Arbitral	Tribunal	might	decide	on	the	basis	of	the	BIT	if
international	rights	have	been	violated	(see	above	¶	317).	That	would	be	the	case,	for	instance,	if	a
party	is	denied	the	possibility	to	complain	about	the	wrongful	termination	of	the	agreement	before
the	forum	contractually	chosen.
450.		For	instance,	in	the	Waste	Management	case,	the	Tribunal	concluded	that:
it	is	one	thing	to	expropriate	a	right	under	a	contract	and	another	to	fail	to	comply	with
the	contract.	Non-compliance	by	a	government	with	contractual	obligations	is	not	the
same	thing	as,	or	equivalent	or	tantamount	to,	an	expropriation.	In	the	present	case,	the
Claimant	did	not	lose	its	contractual	rights,	which	it	was	free	to	pursue	before	the
contractually	chosen	forum.
451.		In	Azinian	and	others	v.	the	United	Mexican	States,	the	Tribunal	noted	that:
[t]he	problem	is	that	Claimants'	fundamental	complaint	is	that	they	are	the	victims	of	a
breach	of	the	Concession	Contract.	NAFTA	does	not,	however,	allow	investors	to	seek
international	arbitration	for	mere	contractual	breaches.	Indeed,	NAFTA	cannot	possibly
be	read	to	create	such	a	regime,	which	would	have	elevated	a	multitude	of	ordinary
transactions	with	public	authorities	into	potential	international	disputes.
The	Tribunal	added	that	“the	Claimants	have	raised	no	complaints	against	the	Mexican
courts;	they	do	not	allege	a	denial	of	justice.”
452.		In	Generation	Ukraine	v.	Ukraine,	the	Tribunal	held	that:
an	international	tribunal	may	deem	that	the	failure	to	seek	redress	from	national
authorities	disqualifies	the	international	claim,	not	because	there	is	a	requirement	of
exhaustion	of	local	remedies	but	because	the	very	reality	of	conduct	tantamount	to
expropriation	is	doubtful	in	the	absence	of	a	reasonable	—	not	necessarily	exhaustive	—
effort	by	the	investor	to	obtain	correction.
453.		In	the	case	at	hand,	BP	and	possibly	the	Claimant	had	the	opportunity	to	bring	the	case
before	the	forum	contractually	chosen,	i.e.	Lithuanian	Courts,	in	order	to	complain	of	the	breach	of
the	Agreement	(see	above	¶	316).	The	record	does	not	show	any	objective	reason	to	question	the
Lithuanian	Courts'	ability	to	dispose	of	the	case	fairly,	competently,	impartially	and	within	a
reasonable	period	of	time. 	Nevertheless,	neither	BP	nor	the	Claimant	challenged	the	termination
before	the	forum	contractually	chosen,	i.e.	the	Lithuanian	Courts.
454.		It	is	not	the	mission	of	the	present	Arbitral	Tribunal	to	decide	on	the	alleged	breach	of	the
Agreement,	entered	into	by	a	company	which	acted	as	vehicle	of	the	investment	of	the	Claimant.	In
the	absence	of	any	objective	reason	not	to	bring	the	case	before	national	tribunals,	it	cannot	be
concluded,	on	the	basis	of	the	facts	at	hand,	that	the	Claimant's	investment	has	been	indirectly
expropriated.
455.		Third,	the	breach	of	the	Agreement,	in	casu	the	termination	of	the	agreement,	must	give	rise
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to	a	substantial	decrease	of	the	value	of	the	investment.
456.		In	the	case	at	hand,	the	Arbitral	Tribunal	finds	that	it	is	not	worth	analysing	the	existence	of	a
decrease	of	the	value	of	the	Claimant's	investment	as	no	other	conditions	for	the	existence	of	an
expropriation	developed	above	are	met	(see	above	¶¶	443–454).	Thus	it	can	be	concluded	that
Parkerings	has	not	been	expropriated	within	the	meaning	of	Article	VI	of	the	Treaty.	Accordingly,
the	question	whether	the	expropriation	was	legitimate	is	not	relevant	and	does	not	need	to	be
discussed	here	either.
9.		The	Issue	of	Costs
457.		Both	parties	sought	the	costs	of	this	arbitration	in	the	event	that	they	were	successful.
458.		By	letter	dated	22	December	2006,	Parkerings	presented	the	Tribunal	with	a	statement	of
costs	and	expenses	of	€	2,655,584.75	which	included	the	sum	of	€	196,591.42	paid	to	ICSID	as
deposit	towards	the	fees	and	expenses	of	the	Arbitral	Tribunal.	By	letter	of	9	May	2007,	Parkerings
amended	its	statement	of	costs	and	expenses	to	€	2,655,584.75.
459.		On	the	same	date,	the	Republic	of	Lithuania	presented	the	Tribunal	with	a	submission	of
costs	and	expenses	of	€	1,340,716.10	which	included	the	sum	of	€	196,591.42	paid	to	ICSID	as
deposit	towards	the	fees	and	expenses	of	the	Arbitral	Tribunal.
460.		The	parties	filed	no	additional	comments	on	statements	of	costs.
461.		It	is	unambiguous	from	Article	61(2)	of	the	ICSID	Convention	and	Rule	28	of	the	ICSID
Arbitration	Rules	that	the	Arbitral	Tribunal	has	discretion	with	regard	to	costs.
462.		There	is	no	rule	in	international	arbitration	that	costs	must	follow	the	event.	Thus,	the
question	of	costs	is	within	the	discretion	of	the	Tribunal	with	regard,	on	the	one	hand,	to	the
outcome	of	the	proceedings	and,	on	the	other	hand,	to	other	relevant	factors.
463.		In	the	Tribunal's	view,	the	proceedings	were	expeditiously	and	efficiently	conducted	by	the
representatives	of	both	parties.
464.		Even	if	no	violation	of	the	BIT	or	international	law	occurred,	the	conduct	of	the	City	of	Vilnius
was	far	from	being	without	criticism.	In	such	circumstances,	the	Arbitral	Tribunal	concludes	that	an
equitable	result	would	be	that	each	party	bears	its	own	costs	and	expenses,	and	that	the	costs	and
expenses	of	the	Tribunal	be	paid	equally	by	both	parties.
10.		The	Award
465.		Having	heard	and	read	all	the	submissions	and	evidence	in	this	arbitration,	and	for	the
reasons	set	out	above,	the	Tribunal	unanimously	decides	that:
a)		the	Tribunal	has	jurisdiction	to	hear	and	consider	all	the	claims	made	by	the	Claimant	in
this	case;
b)		the	conduct	of	the	Republic	of	Lithuania,	which	is	the	subject	of	the	claims	in	this
arbitration,	did	not	involve	a	violation	of	the	duty	of	equitable	and	reasonable	Treatment	(
Article	III	of	the	Treaty	);
c)		the	conduct	of	the	Republic	of	Lithuania	as	claimed	in	this	arbitration	did	not	involve	a
violation	of	the	obligation	of	protection	(	Article	III	of	the	Treaty	);
d)		the	conduct	of	the	Republic	of	Lithuania	as	claimed	in	his	arbitration	did	not	involve	a
violation	of	the	obligation	to	accord	treatment	no	less	favorable	than	the	Treatment	accorded
to	investment	by	investor	of	a	third	State	(	Article	IV	of	the	Treaty	);
168
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e)		the	conduct	of	the	Republic	of	Lithuania	as	claimed	in	this	arbitration	did	not	involve	a
violation	of	the	prohibition	of	expropriation	(	Article	VI	of	the	Treaty	);
f)		Parkerings'	claims	are	accordingly	dismissed	in	their	entirety;
g)		Each	party	shall	bear	its	own	costs	and	half	of	the	costs	and	expenses	of	these
proceedings.
[signature]
Dr.	Julian	Lew
Arbitrator
Date:	August	13,	2007
[signature]
Dr.	Laurent	Lévy
President
Date:	August	14,	2007
[signature]
The	Hon.	Marc	Lalonde
Arbitrator
Date:	August	9,	2007
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Universite de Geneve; date: 25 January 2015
	
Footnotes:
1		The	Government	Representative	has	the	constitutional	authority	and	duty	to	supervise	the
legality	of	all	muicipal	acts.	Specifically,	the	Government	Representative	has	to	ensure	consistency
of	municipal	acts	with	Lithuanian	laws	and	decrees	and	protect	the	rights	of	individuals	and
organizations.
2		See	Claimant's	Memorial,	¶	272
3		Idem,	¶	342.
4		See	Claimant's	Memorial,	¶	190.
5		See	Claimant's	Post-hearing	Brief,	p.	4.
6		See	Claimant's	Post-hearing	Brief,	p.	6–7.
7		See	Respondent's	Counter-memorial,	¶	140.
8		See	Respondent's	Counter-memorial,	¶¶	148–151.
9		See	Respondent's	Counter-memorial,	¶¶	152–158	and	Respondent	Post-Hearing	Brief,	p.1.
10		See	Respondent's	Counter-Memorial,	pp.	56–57.
11		See	Exhibit	C	195.
12		Compañia	de	Aguas	del	Aconquija	S.A	and	Vivendi	Universal	v.	Argentine	Republic,	ICSID	Case
No.	ARB/97/3,	Decision	on	Annulment,	July	3,	2002,	reprinted	in	19	ICSID	Rev.—FILJ	89	(2004),	¶
50.
13		See	Claimant's	Memorial	p.	60;	Exhibit	CE	195.
14		See	Claimant's	Memorial,	p.	60	et	seq.
15		See	Respondent's	Counter-Memorial,	p.	48–49.
16		See	Generation	Ukraine	Inc.	v.	Ukraine,	ICSID	Case	No.	ARB/00/9,	Award,	September	16,	2003,
p.	39,	reprinted	in	44	ILM	404	(2005).	See,	e.g.,	Luigi	Condorelli,	L'imputation	à	l'état	d'un	fait
internationalement	illicite:	solutions	classiques	nouvelles	tendances,1984 	(«sont	attribués	à
l'Etat,	d'après	le	droit	international,	tous	les	comportements	de	tous	ceux	qui,	dans	l'ordre
interne	de	l'Etat	concerné,	exercent	effectivement	les	prérogatives	de	la	puissance	publique»).
Free	translation:	The	attribution	to	a	State	of	an	internationally	wrongful	fact:	classical	solution,
new	tendencies	(“According	to	international	law,	will	be	attributed	to	a	State,	all	the	conduct	of
those	who,	in	the	domestic	body	of	law	of	the	State,	will	actually	exercize	the	prerogatives	of
sovereignty”).
17		See	Compañia	de	Aguas	del	Aconquija	S.A	and	Vivendi	Universal	v.	Argentine	Republic,	ICSID
Case	No.	ARB/97/3,	Decision	on	Annulment,	July	3,	2002,	supra	note	12	¶	96.
18		The	Tribunal	is	of	the	opinion	that	it	must	pay	due	consideration	to	earlier	decisions	of
international	tribunals.
19		SGS	Société	Générale	de	Surveillance	S.A.	v.	Republic	of	the	Philippines,	ICSID	Case	No.
ARB/02/6,	Decision	of	the	Tribunal	on	Objections	to	Jurisdiction,	January	29,	2004,	reprinted	in	8
ICSID	Rep.	518	(2005),	¶	131.
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20		See	Compañia	de	Aguas	del	Aconquija	S.A	and	Vivendi	Universal	v.	Argentine	Republic,	ICSID
Case	No.	ARB/97/3,	Decision	on	Annulment,	July	3,	2002,	supra	note	12,	¶	102.
21		Idem,	¶	112.
22		See	Claimant's	Memorial	p.	60–77.
23		See	Claimant's	Memorial,	p.61
24		Idem,	p.	64.
25		Idem,	p.	66.
26		Idem,	p.	68.
27		See	Oliver	Corten,	L'utilisation	du	”raisonnable”	par	le	juge	international,	Editions	de
l'Université	de	Bruxelles,	1997 .
28		See	Respondent's	Counter-Memorial,	¶	167.
29		Idem,	¶	169.
30		Idem,	¶	171.
31		Stephen	Vascianne,	in	Bishop,	Crawford	and	Reisman,	Foreign	Investment	Dispute,	¶	7,	p.
1015.
32		See	Claimant's	Memorial,	¶	201.
33		Idem,	¶	202.
34		Idem,	¶	203.
35		Idem,	¶	205.
36		See	Respondent's	Counter-Memorial,	¶	238.
37		Idem,	¶	241.
38		Idem,	¶¶	247–250.
39		CMS	Gas	Transmission	Company	v.	Argentine	Republic,	ICSID	Case	No.	ARB/01/08,	Award,	May
12,	2005;	reprinted	in	44	ILM	1205	(2005),	¶	290;	See	also	Stephen	Vascianne,	The	Fair	and
Equitable	Treatment	Standard	in	International	Investment	Law	and	Practice,	Brit.	Y.B.	Int'l	L.	99,	133
(1999) .
40		See	Antoine	Goetz	and	others	v.	Republic	of	Burundi,	ICSID	Case	No.	ARB	95/3,	Award,
February	10,	1999,	reprinted	in	15	ICSID	Rev.—FILJ	457	(2000),¶	121.
41		See	Claimant's	Memorial,	p.	66	et	seq.	and	Claimant's	Post-Hearing	Brief,	p.	60	et	seq.
42		See	Claimant's	Post-Hearing	Brief,	p.	61
43		Idem,	p.	62.
44		See	Claimant's	Memorial,	¶	210.
45		See	Claimant's	Post-Hearing	Brief,	p.81.
46		See	Respondent	Counter-Memorial,	p.	68.
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47		Idem,	p.	72.
48		See	Respondent	Post-Hearing	Brief,	p.	17.
49		Idem,	p.	11	et	seq.
50		See	CE	11	;
51		See	Robertas	Staskevicius,	Tr.	1307:17–21.
52		See	Claimant's	Memorial,	¶	45.
53		See	Exhibit	R	40.
54		See	Jonas	Tamulis	Stmt,	Tr.	514–515.
55		MTD	Equity	Sdn.	Bhd.	and	MTD	Chile	S.A.	v.	Republic	of	Chile,	ICSID	Case	No.	ARB/01/7,	Award,
May	25,	2004,	available	at	http://www.asil.org/ilib/MTDvChile.pdf,	¶	167.
56		See	Exhibit	C	234.
57		See	Exhibit	C	235.
58		See	S.D.	Myers,	Inc.	v.	Government	of	Canada,	NAFTA	UNCITRAL	Arbitration,	First	Partial	Award,
November	13,	2000,	available	online	at	http://www.dfait-maeci.gc.ca/,	p.	65.
59		See	UNCITRAL	Arbitration,	Partial	Award,	March	17,	2006;	See	also	Azurix	Corp.	v.	Argentine
Republic,	ICSID	Case	No.	ARB/01/12,	Award,	July	14,	2006,	available	online	at
http://www.worldbank.org/icsid/cases/pdf/ARB0112_Azurix-Award-en.pdf
60		See	for	instance,	Generation	Ukraine	Inc.	v.	Ukraine,	ICSID	Case	No	ARB/00/9,	Award,
September	16,	2003,	supra	note16,	p.	91	and	Waste	Management,	Inc.	v.	United	Mexican	States,
ICSID	Case	No.	ARB(AF)/00/3,	Award,	April	30,	2004,	reprinted	in	43	ILM	967	(2004),	¶¶	114–115.
61		See	CE	13,	Article	7.3.	of	the	Agreement.
62		See	Gintautas	Barktkus,	Tr.	908.
63		See	Expert	Report	of	Carlos	Lapuerta,	p.	4.
64		See	Bjorn	Havnes,	Tr.	1072.
65		See	Claimant's	Memorial,	¶	215.
66		Idem,	¶	216.
67		Idem,	¶	217
68		Idem,	p.	68.
69		Idem,	¶	216.
70		See	Respondent	Counter-Memorial,	p.	65.
71		Ibidem.
72		See	Respondent	Post-Hearing	Brief,	p.	18.
73		See	Respondent	Counter-Memorial	,	p.	68.
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74		Ibidem.
75		Idem,	¶¶	189–200.
76		Idem,	¶¶	201–206.
77		See	Exhibit	CE	136.
78		See	Exhibit	CE	41.
79		See	Exhibit	CE	47.
80		See	Técnicas	Medioambientales	Tecmed,	S.A.	v.	United	Mexican	States,	ICSID	Case	No.
ARB(AF)/00/2,	Award,	May	29,	2003,	reprinted	in	19	ICSID	Rev.—FILJ	158	(2004),	¶	154.
81		See	Waste	Management,	Inc.	v.	United	Mexican	States,	ICSID	Case	No.	ARB(AF)/00/3,	Award,
April	30,	2004,	supra	note	60.	See	also,	Técnicas	Medioambientales	Tecmed,	S.A.	v.	United
Mexican	States,	ICSID	Case	No.	ARB(AF)/00/2,	Award,	May	29,	2003,	supra	note	80,	¶¶	152	et	seq.;
CMS	Gas	Transmission	Company	v.	Argentine	Republic,	ICSID	Case	No.	ARB/01/8,	Award,	May	12,
2005,	supra	note	39.
82		See	The	Republic	of	Lithuania	Counter-Memorial,	¶	81:	«	the	Lithuanian	Government	had
taken	actions	that,	with	respect	to	the	On-Street	parking	Concession,	prevented	(or	would
eventually	prevent)	the	concessionaire,	VPK,	from	collecting	the	fee	as	provided	under	the
Agreement	and	from	penalizing	drivers	who	failed	to	pay	the	fees	provided	under	the	Agreement
».
83		See	Exhibit	CE	256,	p.	3084.
84		Idem,	p.	3077.
85		See	Saluka	Investment	BV	(The	Netherlands)	v.	The	Czech	Republic,	UNICITRAL	Case,	¶	442.
86		See	Claimant's	Memorial,	p.	72	et	seq.	and	Claimant's	Post-Hearing	Brief,	p.	117.
87		See	Claimant's	Memorial,	¶	222.
88		See	Respondent	Counter-Memorial,	p.	86.
89		Idem,	¶	228.
90		See	Respondent	Counter-Memorial,	¶	230.
91		Idem,	¶	232.
92		Idem,	¶	235.
93		See	for	instance	Rubins	N.,	Kinsella	S.,	International	Investment,	Political	Risk	and	Dispute
Resolution,	New-York,	2005.
94		See	Wena	Hotels	Limited	v.	Arab	Republic	of	Egypt,	ICSID	Case	No.	ARB/98/4,	Award,
December	8,	2000,	reprinted	in	41	ILM	896	(2002),	¶¶	84–95.
95		See	Técnicas	Medioambientales	Tecmed,	S.A.	v.	United	Mexican	States,	ICSID	Case	No.
ARB(AF)/00/2,	Award,	May	29,	2003,	supra	note	80,	¶	177.
96		See	Claimant's	memorial,	p.	74	and	Claimant's	Post-Hearing	Brief,	p.	99.
97		See	Respondent	Counter-Memorial,	p.	90	and	Respondent	Post-Hearing	Brief,	p.	5
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98		See	Respondent	Counter-Memorial,	¶	248.
99		See	Respondent	Post-Hearing	Brief,	p.	6.
100		Idem,	pp.	5–6.
101		See	Goetz	and	others	v.	Burundi,	ICSID	Case	No.	ARB/95/3,	Award,	February	10,	1999,	supra
note	40,	¶	121.
102		See	for	instance:	Occidental	Exploration	and	Production	Company	v.	Republic	of	Ecuador,
UNICITRAL	Case	No.	UN	3467,	Final	Award,	July	1,	2004,	¶¶	173–176;	Marvin	Roy	Feldman	Karpa	v.
United	Mexican	States,	ICSID	Case	No.	AB(AF)/99/1,	Award,	December	16,	2002,	reprinted	in	18
ICSID	Rev.—FILJ	488	(2003),	¶¶	170	et	seq;	S.D.	Myers,	Inc	v.	The	Government	of	Canada,	NAFTA
UNICITRAL	Arbitration,	First	Partial	Award,	November	13,	2000,	¶¶	248–250.
103		See	Pope	&	Talbot	Inc.	v.	The	Government	of	Canada,	NAFTA	Case,	Award	on	the	merits	of
phase	2,	April	10,	2001,	¶	78.
104		Idem,	¶¶	78–79.
105		See	Exhibit	CE	249.
106		See	Exhibits	RE	97,	RE	102–103.
107		See	Respondent	Counter-Memorial,	p.	93;	Exhibits	RE	97	and	RE	102–103.
108		See	Exhibits	RE	97,	RE	102–103.
109		See	CE	39,	CE	40	and	CE	95.
110		See	Exhibits	RE	97,	RE	102,	RE	103;	See	also	Exhibit	CE	294.
111		See	Exhibit	CE	75	and	CE	294	;	See	Robert	Staskevicius,	TR	1350:19.
112		See	Robert	Staskevicius,	TR	1348:13.
113		See	for	instance	CE	81,	CE	60,	CE	69,	CE	84.
114		See	Robert	Staskevicius,	TR	1348:13
115		See	Robert	Staskevicius,	TR	1348:20.
116		See	Exhibits	CE	13,	RE	97,	RE	102,	RE	103.
117		See	Robert	Staskevicius,	TR	1352:12.
118		Idem,	TR	1350:9.
119		See	Exhibits	RE	97,	RE	102–103
120		See	Exhibits	RE	103	and	RE	104.
121		See	Exhibits	RE	97,	RE	99,	RE	100,	RE	102,	RE	103;
122		Exhibit	CE	49
123		Exhibit	CE	60.
124		Exhibit	CE	61.
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125		Exhibit	CE	81.
126		Exhibit	CE	89.
127		See	Exhibits	R	63	and	CE	89.
128		See	Exhibits	CE	89.
129		Ibidem
130		See	Lithuania	TR.	375:24–376:5.
131		See	Burnickas	Stmt.	¶	11.
132		See	Lithuania,	Tr.	375:24–376:5.
133		See	Exhibits	RE	11.
134		See	Letter	from	Counsel	for	Respondent	dated	9	November	2006;	Rukstele	1517:6–23.
135		Exhibit	CE	47.
136		Exhibit	CE	95.
137		Exhibit	CE	99.
138		Exhibit	CE	104.
139		See	Exhibit	CE	112	and	CE	128.
140		See	Exhibit	CE	117.
141		See	Exhibit	CE	128.
142		Exhibit	CE	95	and	CE	128.
143		See	Exhibit	CE	110.
144		See	Exhibit	CE	113.
145		See	for	instance	CE	116,	CE	126,
146		See	Exhibit	CE	128;	see	also	Rukstele	Tr.	1523:2–3.
147		Exhibit	CE	128.
148		See	Exhibit	CE	13	and	also	roject	of	Joint	Activity	Agreement,	Articles	3.3.2.1.	and	3.3.2.2.,	CE
113.
149		See	Rukstele	Tr.	1527:2–14.
150		Idem,	Tr.	1527:20–24.
151		Claimant's	Post-Hearing	Brief,	p.114.
152		See	Claimant's	Memorial	¶	237.
153		Idem,	¶	238
154		Idem	¶	239	and	Claimant's	Post-Hearing	Brief,	p.	123.
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155		Idem	¶	235.
156		See	Respondent	Counter-Memorial,	p.	81.
157		Idem,	¶¶	210–212.
158		Idem,	¶	214.
159		Idem,	¶	218	and	¶¶	220–224
160		See	Metalclad	Corporation	v.	United	Mexican	States,	ICSID	Case	No.	ARF	(AF)/97/1,	Award,
August	30,	2000,	reprinted	in	16	ICSID	Rev.—FILJ	168	(2001),¶	103.
161		See	Azurix	Corp.	v.	Argentine	Republic,	ICSID	Case	No.	ARB/01/12,	Award,	July	14,	2006,
supra	note	59,	¶	314.
162		Exhibit	CE	210.
163		See	Waste	Management,	Inc.	v.	United	Mexican	States,	ICSID	Case	No.	ARB	(AF)/00/3,	Award,
April	30,	2004,	supra	note60,	¶	175.
164		See	Robert	Azinian	and	others	v.	United	Mexican	States,	ICSID	Case	No.	ARB(AF)/97/2,	Award,
November	1,	1999,	reprinted	in	14	ICSID	Rev.—FILJ	538	(1999),¶	87	and	¶	100.
165		See	Generation	Ukraine	Inc.	v.	Ukraine,	ICSID	Case	No.	ARB/00/9,	Award,	September	16,
2003,	supra	note16,	p.	91.
166		See	Gintautas	Barktkus,	Tr.	908	and	Expert	Report	of	Carlos	Lapuerta,	p.	4.
167		See	Article	7.3	of	the	Agreement	between	the	Municipality	of	Vilnius	and	the	Consortium,	CE
13.
168		See	Técnicas	Medioambientales	Tecmed,	S.A.	v.	United	Mexican	States,	ICSID	Case	No.	ARB
(AF)/00/2,	Award,	May	29,	2003,	supra	note	80,	¶	115;	see	also	Telenor	Mobile	Communications	AS
v.	Republic	of	Hungary,	ICSID	Case	No.	ARB/04/15,	Award,	September	13,	2006,	available	online	at
http://www.worldbank.org/icsid,	¶¶	65	et	seq.