CME & Lauder vs. Czech Republic: The unbearable costs of the unpredictable arbitration system
photo by wuestenigel/ cc by 2.0

CME vs. Czech Republic

  • Amount demanded: US$495 million
  • Outcome: US$ 270 million
  • Treaty invoked: Czech Republic - Netherlands BIT
  • Sector: media
  • Issue: democracy

Lauder vs. Czech Republic

  • Amount demanded: Data not available
  • Outcome: Decided in favour of neither party (liability found but no damages awarded)
  • Treaty invoked: Czech Republic - United States of America BIT
  • Sector: media
  • Issue: democracy

by FOE Europe

In the early 1990s, Ronald Lauder invested in TV Nova – a private Czech TV broadcaster, through his German company, which was later succeeded by Dutch company Central European Media (CME). Both Lauder and CME sought to initiate arbitration against the Czech Republic to seek damages following the alleged interference of the Czech Media Council into business arrangements, which Lauder claimed contributed to profit losses. The CME and Lauder cases happened in parallel. Despite dealing with similar facts for both cases, the tribunals delivered two contradictory awards. Lauder’s claim was dismissed as not constituting a violation of treaty obligations, while the second case was found in favour of CME who was awarded damages of $269,814,000 with fees of $1,351,203 amounting to a total of $271,165,203 (€198,830,622).

The Ronald Lauder and CME cases effectively highlight the unpredictability and irregularities of the arbitration system. Despite the lack of consistency in decision making in international arbitration tribunals, the consequences of the awards are irreversible for states being sued and can translate into hundreds of millions of euro in compensation paid out of public budgets.

last update: April 2021

source: FOE Europe