Lena Goldfields Arbitration

1925 a concession agreement was granted to Lena Goldfield, British company, by USSR. The concession granted rights of mining in Russia, the agreement referred to arbitration with two arbitrators and super arbitrator. The company said that the USSR have made impossible to carry out the concession. The place of arbitration could be chosen by the arbitral court, it was London and the award was made in German. The lex arbitri then, was English law. The concession had not express consideration of any applicable law, but the arbitral tribunal did not choose to apply national rules of a private party, [indeed it was done until Channel Tunnel 1993] The award perhaps was the first to apply the general principles of law recognised by civilised nations, namely compensation for unjust enrichment. [influencing the Anglo Persian Oil company concession 1933 and Texaco arbitration] The soviet arbitrator was instructed to withdraw when the Soviet government purported to dissolve the concession which was the subject matter of the dispute, but he withdrew only after the three man tribunal for which the concession provided had been established

The remaining two members met and decided that they were competent to render an award, and they subsequently did so. The case is cited as authority for the proposition that a truncated tribunal has the authority to render a final award. The mining concession granted to the English company although governed by the Russian law in respect of the most ordinary matters, is subject to the general principles of law in so far as the contractual provisions safeguarding the company’s position were concerned The concession agreement was considered still operative. To asses compensation ‘the present value, if paid in cash now, of future profits which the company would have made and which the [soviet] government now can make on the assumption of good commercial management and the best technical skill and up date development… the problem is, therefore, similar to that of asserting a fair purchase price for a going concern’