Almost three years have passed since the UAE-based Rasia FZE investment company and its CEO Joseph K. Borkowski sued Armenia at the International Center for the Settlement of Investment Disputes (ICSID), seeking US$160 million in damages over a railway and highway construction contract dispute.

The Office of the Prime Minister of the Republic of Armenia has already transferred $400,000 to the International Center to cover the procedural expenses of the Tribunal within the framework of this case.

The arbitration case deals with concession agreements signed by Armenia and Rasia FZE over the construction of the Southern Armenia Railway and Southern Expressway of Armenia projects.

The plaintiffs argue that Armenia breached the concession contracts granted to the claimants by turning to other companies for the implementation of the infrastructure projects.

It should be noted that according to the agreement signed between the RA Ministry of Transport and Communication and Rasia FZE, the company was to carry out the technical-economic feasibility study of the Southern Railway of Armenia and the Southern Expressway of Armenia and, if found economically feasible, to implement the financing, construction, and operation of the project.

Former Armenian President Serzh Sargsyan first announced construction of the Armenian-Iranian railway in 2008

The Southern Railway of Armenia was to pass through the country’s Syunik, Yeghegnadzor and Gegharkunik provinces. In 2014, the Ministry of Transport announced that the Southern Armenia Railway project, as a missing key link in the North-South international transport corridor, would be the shortest route from the Black Sea ports to the Persian Gulf ports.

According to the concession agreement signed by the then Minister of Transport and Communication Gagik Beglaryan and Rasia FZE Investment Company CEO Joseph Borkowski on July 28, 2012, after the construction was completed, the company would design and finance construct and operate the   Southern Railway exclusively at the expense of funds attracted by the company. The term of the contract was 30 years, with a twenty-year extension.

The length of the railway was to be about 316 km. It would consist of bridges, tunnels, complex structures, and would have 27 stations. The construction was expected to take six years.

In 2017, Armenia’s Ministry of Transport and Communications stated that the Armenian government could no longer tolerate continued Rasia FZE contract violations and would seek to build the railway independently of the company given the project’s strategic importance to Armenia.

This is when the company and Borkowski took Armenia to arbitration court.

According to ICSID administrative and financial regulations, the parties must make regular payments to the Center to cover procedural costs. These costs include arbitrators' fees and costs, as well as other procedural costs. According to the settlement, if the tribunal has not decided that the parties to the dispute have not agreed on the division of costs, each party pays half of the required advance payment.

The Office of the Representative of the Republic of Armenia to the ECHR told Hetq that Armenia's liability amounted to a total of $400,000.

"It should be noted that after the completion of the arbitration proceedings, a settlement document will be submitted on the costs incurred,” the ECHR’s Armenia Office said.