## Facts

- Two U.S. corporations, Global Trading Resource Corp. and Globex International, Inc., exported meat and poultry products.
- In 2008, the claimants entered contracts to sell poultry products destined for Ukrainian public reserves.
- The claimants alleged a Ukrainian state body (the State Reserve) was responsible for negotiating purchases and nominated a private Ukrainian company (Alan Trade) to sign the contracts as counterparty.
- The claimants shipped poultry to the contract-designated port, but alleged the counterparty failed to pay and/or Ukraine failed to take delivery and pay.
- The claimants asserted Ukraine was internationally responsible for the conduct of the State Reserve and Alan Trade and sought approximately USD 35 million under the U.S.–Ukraine BIT.
- Ukraine raised a preliminary objection under ICSID Arbitration Rule 41(5), arguing the claims were manifestly without legal merit because the transactions were ordinary sales contracts and not an “investment” under Article 25(1) of the ICSID Convention or the BIT.
- The tribunal addressed the Rule 41(5) objection first as a threshold jurisdictional question.

## Issues

1. Whether rights arising from ordinary sales and purchase contracts for goods can qualify as an “investment” under Article 25(1) of the ICSID Convention.
2. Whether a broadly worded BIT definition of “investment” can, by party consent, expand ICSID jurisdiction beyond the objective limits of Article 25(1).
3. Whether ICSID Arbitration Rule 41(5) permits summary dismissal where the defect is a manifest lack of jurisdiction (rather than only lack of substantive legal merit).

## Decision

- The tribunal upheld Ukraine’s Rule 41(5) objection and dismissed all claims.
- The tribunal held the poultry purchase-and-sale contracts were pure commercial transactions and did not constitute an Article 25(1) ICSID “investment.”
- The tribunal concluded it lacked jurisdiction ratione materiae and therefore did not reach the merits of alleged treaty breaches.
- The tribunal held Rule 41(5) is available for claims that are manifestly outside the tribunal’s jurisdiction, including where no qualifying investment exists.

## Legal Principles

- Article 25(1) of the ICSID Convention imposes an objective limit on the category of disputes that can be submitted to ICSID as “investment” disputes.
- In treaty-based ICSID arbitration, the existence of an investment is assessed through a two-part inquiry: (1) whether the asset fits the relevant treaty’s definition, and (2) whether the operation still qualifies as an “investment” within Article 25(1).
- Party consent expressed through a BIT cannot expand ICSID jurisdiction beyond Article 25(1).
- Ordinary cross-border sales contracts and resulting payment claims, without features typically associated with an investment (such as a sustained commitment in the host state and investment-type risk), do not constitute an ICSID “investment.”
- ICSID Arbitration Rule 41(5) allows early dismissal when a claim’s lack of legal merit is clear and obvious, including when the tribunal manifestly lacks jurisdiction.

## Conclusion

The tribunal summarily dismissed the claimants’ BIT claims under ICSID Rule 41(5) because the dispute arose from unpaid poultry sales contracts that, as a matter of law, did not qualify as an “investment” under the objective requirements of Article 25(1) of the ICSID Convention, leaving the tribunal without jurisdiction.


Glob. Trading Res. Corp. & Globex Int’l, Inc. v. Ukr., ICSID Case No. ARB/09/11, Award (Dec. 1, 2010)