Russia appoints former CJI D.Y. Chandrachud as arbitrator in Ukraine-Ukraine investment treaty dispute

Key Facts

• D.Y. Chandrachud, former Chief Justice of India, was appointed by Russia as its arbitrator in the investment treaty arbitration initiated by Ukraine's state-owned bank Oschadbank.
• The dispute concerns assets and operations that Oschadbank alleges to have lost in the Donetsk, Luhansk, Kherson, and Zaporizhzhia regions of Ukraine following Russia's 2022 full-scale invasion.
• The arbitration is conducted under the 1998 Agreement between the Government of the Russian Federation and the Cabinet of Ministers of Ukraine on Encouragement and Mutual Protection of Investments, a bilateral investment treaty (BIT).
• The arbitral tribunal consists of three members: D.Y. Chandrachud appointed by Russia, Stavros Brekoulakis (a Greek arbitrator and professor at the National University of Singapore) appointed by Oschadbank, and Dyalá Jiménez of Costa Rica serving as the president of the tribunal, jointly appointed by both sides.
• D.Y. Chandrachud retired from the Supreme Court of India on 10 November 2024 after serving since May 2016, including as Chief Justice of India.
• Oschadbank had previously secured an arbitration award of approximately US$1.1 billion for losses related to Russia's annexation of Crimea in 2014.
• Arbitrators in investment treaty disputes typically act independently and disclose any conflicts of interest; Chandrachud had declined earlier appointments by Russia in related disputes involving Wintershall Dea and Ukrenergo before accepting this role post-retirement.

Background & Context

Investment treaty arbitration is a mechanism for resolving disputes between investors or state-owned entities and host states under bilateral or multilateral investment agreements. Such agreements, including the 1998 Russia-Ukraine BIT, provide protections for investments and specify arbitration processes for dispute settlement.

Oschadbank, a Ukrainian state-owned bank, alleges expropriation and loss of assets in regions of Ukraine occupied after Russia's 2014 annexation of Crimea and especially following the full-scale invasion in 2022. This case represents a continuation and escalation of claims against Russia related to the Ukraine conflict.

The tribunal structure with three members — one appointed by each party and a presiding arbitrator chosen by agreement — is standard practice in international investment treaty arbitration. The tribunal's functioning sits at the nexus of international law, diplomacy, and sovereign rights.

Why This Matters for Exams / Exam Relevance

• This case exemplifies the practical application of bilateral investment treaties in resolving interstate conflicts involving state-owned enterprises.
• It illustrates the role of international arbitration in addressing geopolitical disputes and protecting foreign investments in conflict zones.
• Understanding the significance of the 1998 Russia-Ukraine bilateral investment treaty is essential for questions related to international investment law and treaty arbitration.
• The appointment of a former Indian Chief Justice as arbitrator demonstrates India's contribution to international legal processes and India's prominence in global judicial and arbitration forums.
• Exam questions on the structure and roles of arbitral tribunals, conflict of interest disclosure by arbitrators, and the binding nature of investment treaty awards can be contextualized through this case.

Points to Remember

• D.Y. Chandrachud is the first Indian former Chief Justice appointed as an arbitrator by Russia in this context.
• This arbitration concerns Oschadbank's claims for lost assets due to Russia's occupation of specific Ukrainian regions after the 2022 invasion.
• The tribunal is composed of three arbitrators: one appointed by each party and a mutually agreed presiding arbitrator.
• The underlying legal framework is the 1998 Russia-Ukraine bilateral investment treaty.
• Oschadbank successfully secured a $1.1 billion award for its losses in Crimea from a prior arbitration, underscoring the treaty's enforceability.
• Investment arbitration serves as a crucial peaceful dispute resolution mechanism in international economic relations affected by geopolitical conflicts.