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Dan Cake (Portugal) S.A. v. Hungary (ICSID)

  • Catherina Valenzuela-Bock (a1)


In Dan Cake v. Hungary, an arbitral tribunal constituted under the auspices of the International Centre for Settlement of Investment Disputes (ICSID) issued a rare finding of denial of justice in its adjudication of the claims by Portuguese investor Dan Cake, alleging that the Hungarian court’s actions during the liquidation proceedings of its subsidiary were a violation of the fair and equitable treatment provision of the Hungary-Portugal Bilateral Investment Treaty (BIT). The decision adds an example of the factual circumstances that lead to a finding of denial of justice and reaffirms the stringent requirements that need to be satisfied in order to succeed on such a claim.



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* This text was reproduced and reformatted from the text available at the International Centre For Settlement of Investment Disputes website (visited May 17, 2016),

1 Dan Cake (Portugal) S.A. v. Hungary, ICSID Case No. ARB/12/9, Decision on Jurisdiction and Liability, ¶ 99 (Aug. 25, 2015) (quoting the April 22, 2008, order from the Budapest Metropolitan Court in full).

2 See Azinian v. Mexico, ICSID Case No. ARB(AF)/97/2, Award, ¶ 99 (Nov. 1, 1999) (“The possibility of holding a State internationally liable for judicial decisions does not, however, entitle a claimant to seek international review of the national court decisions as though the international jurisdiction seised has plenary appellate jurisdiction.”).

3 Jan Paulsson, Denial of Justice in International Law 89 (2005).

4 Mondev International Ltd. v. USA, ICSID Case No. ARB/01/7, Award, ¶ 127 (Oct. 11, 2002).

5 Elettronica Sicula S.p.A. (ELSI) (U.S. v. It.), Judgment, 1989 I.C.J. Rep. 15, ¶ 128 (July 20).

6 Azinian , ICSID Case No. ARB(AF)/97/2, ¶ 102.

7 Loewen v. United States, ICSID Case No. ARB(AF)/98/3, Award, ¶ 132 (June 26, 2003).

8 Azinian, supra note 2, ¶ 103.

9 Mondev, supra note 4, ¶ 127.

10 Paulsson, supra note 3, at 228.

11 Id.

12 Dan Cake (Portugal) S.A. v. Hungary, ICSID Case No. ARB/12/9, Decision on Jurisdiction and Liability, ¶ 103 (Aug. 25, 2015).

13 Id. ¶¶ 104-05.

14 Id. ¶ 92(b).

15 Id. ¶¶ 94, 98. See also cite to legal commentary at ¶ 96, noting that “[i]t is the duty of the court to schedule the settlement (composition) hearing within 60 days.”

16 Id. ¶¶ 109-18.

17 Id. ¶ 113.

18 Id. ¶ 117.

19 Id.

20 See id. ¶ 142.

21 Id.

22 Id.

23 Id. ¶ 145.

24 Id.

25 Id.

26 Id. ¶ 146.

27 Id. ¶ 154.

page 524 note 1 Amended Tr., Day 3, 46:5–11

page 524 note 2 Amended Tr., Day 3, 60:4–10

page 524 note 3 Amended Tr., Day 3, 124:19–23

page 524 note 4 International Law Commission, Draft Articles on Responsibility of States for Internationally Wrongful Acts (2001).

page 524 note 5Question : Have they [Dan Cake] told you that for them it was important that the assets weren’t sold?

Answer : Well, I do believe it was in the interest of any creditor supporting a composition agreement because Danesita would only then have been able to meet its undertakings vis-a`-vis the creditors, if the company continues its operation as a going concern.” (Amended Tr., Day 2, p. 148:10–17).

page 524 note 6Question : Would you have initiated the second tender if a composition hearing had been scheduled by the court? Answer : No.”

(Amended Tr., Day 2, p. 212:4–6).

page 524 note 7 Exh. RLA-055.

page 524 note 8 Exh. CLA-002 attached to the Reply. Claimant notes, at footnote 23 of the Reply, that “the English version is a summary of the [sic] Hungary’s original prepared by Mr. Csongór Palotaás.” The accuracy of this version has not been challenged by the Respondent.

page 524 note 9 Metropolitan Court of Budapest, Order, April 22, 2008, Exh. C-033.

page 524 note 10 Id.

page 524 note 11 Id.

page 524 note 12 Amended Tr., Day 2, 206:14–17.

page 524 note 13 Exh. CLA-002 attached to the Reply. See above, footnote 6, the Claimant’s comment on the translation into English.

page 524 note 14 [After checking the contents of MKB Bank’s letter of 20 March 2008 to Dr. Palotás, Exh. R-025 or C-020]: “On page 2, paragraphs 3 and 5 suggest, I believe, that until the signing of the tripartite agreement between Dan Cake, MKB and Danesita, we had to fine-tune the text. But the agreement could only enter into force once we receive the signed bank guarantee. I believe that this should have happened before the court approval of the competition (sic) agreement” (Amended Tr., Day 2, 140:12–18).

page 524 note 15 Dr. Ott’s cross-examination,: “Prior to the court’s approval we requested a surety in a notarised document and we requested a bank guarantee to be submitted to us, and in return we issued a conditional release of the mortgage in which we undertook responsibility and we stated that provided that the final approval of the composition agreement by the court and provided that all the bank guarantee and the surety documents are available, then MKB would have no other option but to issue the final release of the mortgage” (Amended Tr., Day 2, 122:12–21).

page 524 note 16 Amended Tr., Day 3, 81:13–15.

page 524 note 17 Robert Azinian et al. v. United States of Mexico , ICSID case n° ARB(AF)/97/2, Award of 1 November 1999 (para. 102); 5 ICSID Rep. 269, 290; CLA-022. October 2002 (para. 127); 6 ICSID Rep. 192, 226; CLA-025.

page 524 note 18 Mondev International Ltd v. United States of America, ICSID case ARB(AF)/99/2, Award of 11

page 524 note 19 The Loewen Group and Raymond L. Loewen v. United States of America , ICSID case n° ARB(AF)/98/3, Award of 26 June 2003 (para. 132); 7 ICSID Rep. 442, 467; RLA-021.

page 524 note 20 Elettronica Sicula S.p.A . (ELSI), United States of America v. Italy, 1989 ICJ 15 (para. 128); CLA-024.

page 524 note 21 Amended Tr., Day 1, 60:10–18.

page 524 note 22 Amended Tr., Day 1, 61:3–5. Respondent mistakenly referred to it as the “May 29th 2008 decision.”

page 524 note 23 Amended Tr., Day 1, 61:7–9.

page 524 note 24 Amended Tr., Day 3, 85:1 - 87:4.

* She earned her law degree at Heidelberg University and holds a J.D. from Boston College Law School.

Dan Cake (Portugal) S.A. v. Hungary (ICSID)

  • Catherina Valenzuela-Bock (a1)


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