Albania's first jurisdictional objection was that Pantechniki's operations in Albania did not constitute an "investment" for the purposes of Article 25 of the ICSID Convention. Under the so-called "Salini test" (named after the award in Salini Construtorri S.p.A. and Italstrade S.p.A v. Morocco, ICSID Case No. ARB/00/4), some tribunals have found that an asset can qualify as an "investment" only if it features five specified elements, including "contribution to the host state's development."

Arbitrator Paulsson rejected that argument. He first found that the Salini test was not in fact a "test," but, rather, a list of "characteristics of investments." In his view, to elevate those factors to an explicit jurisdictional requirement, without more explicit authority in the text of the ICSID Convention, would improperly "transform arbitrators into policy-makers" and "increase unpredictability about the availability of ICSID to settle given disputes." While he agreed that a general consensus regarding the meaning of the term "investment" would be desirable, he determined that he was not empowered to provide such a universal definition. In any event, he held that Pantechniki,s commitment of resources to the performance of the construction contracts qualified as an investment for purposes of both the BIT and the ICSID Convention.

Albania raised a separate jurisdictional objection based on Pantechniki,s simultaneous participation in litigation before the Albanian courts. Specifically, Albania pointed to a so-called "fork-in-the-road" clause in the BIT, which provided that an investor could submit a dispute under the BIT either to a host-state domestic court or to international arbitration. According to Albania, because Pantechniki had filed a claim before the Albanian courts demanding compensation for losses arising from the riots, it had made a binding choice of forum for purposes of the BIT, and could not subsequently initiate parallel proceedings before an ICSID tribunal.

Similarly, Albania noted that Pantechniki had filed its appeal to the Albanian Supreme Court after it had filed its arbitration claim. Albania argued that such conduct was inconsistent with Article 26 of the ICSID Convention, which provides that the parties' consent to ICSID arbitration is "to the exclusion of any other remedy."

Pantechniki's response was essentially twofold. First, Pantechniki argued that its resort to the domestic courts could not trigger the fork-in-the-road clause because it was induced by the misleading representations of an Albanian official (the Minister of Finance). Arbitrator Paulsson rejected this argument, finding that Pantechniki had received no such binding promise that recourse to domestic litigation would be successful.

Second, Pantechniki argued that the claim it submitted to the Albanian courts and the claim it submitted to ICSID were distinct, and should not be conflated for purposes of the BIT or the ICSID Convention. In particular, Pantechniki stated that before the domestic courts, it had pursued a claim for violation of the construction contract, which expressly placed the risk of loss through civil unrest on an Albanian government agency. By contrast, Pantechniki argued, its claim before the ICSID tribunal was based on violations of the BIT. Pantechniki pointed to a number of prior investment treaty decisions that had distinguished between contract claims and treaty claims for purposes of applying similar fork-in-the-road or choice-of-forum clauses in treaties and contracts.

Arbitrator Paulsson acknowledged that, in principle, "[t]he same facts can give rise to different legal claims," and that "[t]he similarity of prayers for relief does not necessarily bespeak an identity of causes of action." However, he found that in Pantechniki's case, the contract claims and certain of the treaty claims had "the same normative source," and were in effect interchangeable for purposes of the BIT. To arbitrator Paulsson, Pantechniki was arguing both in the Albanian courts and in the ICSID proceedings that the Albanian government's refusal to pay the compensation amount estimated by the General Road Directorate's special commission was wrongful. In arbitrator Paulsson's opinion, the treaty claim submitted to ICSID arbitration did not have an "autonomous existence outside the contract."” Accordingly, he held that the fork-in-the-road provision had been triggered by Pantechniki's resort to the Albanian courts, and that pursuit of what was essentially the same claim through ICSID arbitration was prohibited.

Arbitrator Paulsson did not dismiss Pantechniki's claims in their entirety. Rather, he found that the company’s claims for denial of full protection and security and for "denial of justice" by the Albanian courts were distinct from the contract claim litigated in those courts, and thus that such claims could proceed to the merits. As to the full protection and security claim, arbitrator Paulsson determined that Albania had not acted negligently in failing to prevent the damage that Pantechniki suffered, and that the authorities were "powerless" given the scope of the unrest in the country. Thus, he dismissed this claim on the merits. Interestingly, arbitrator Paulsson indicated that the degree of "due diligence" required under the full protection and security standard might vary depending on the host state’s level of development, and on socioeconomic or political conditions prevailing at the time of the investment.

As to Pantechniki's denial of justice claim, arbitrator Paulsson held that it could not be properly asserted until "a reasonable opportunity to correct aberrant judicial conduct has been given to the system as a whole" – in this case, by allowing the Albanian Supreme Court to hear the case and render a decision. While arbitrator Paulsson accepted that domestic remedies need not be pursued "beyond a point of reasonableness," he found unconvincing Pantechniki's assertion that further appeals necessarily would have been futile, and concluded that "[o]ne cannot fault Albania before having taken the matter to the top." Accordingly, he dismissed this claim on the merits.

As to Pantechniki's fair and equitable treatment claim and pacta sunt servanda claims, arbitrator Paulsson found that Pantechniki was in essence repeating its contract-based claims in another guise. For the same reasons discussed above with respect to the fork-in-the-road provision, arbitrator Paulsson dismissed these claims as well.

Pantechniki is particularly notable for its holdings regarding the BIT’s fork-in-the-road provision and the full protection and security standard. As to the former, the award distinguishes itself from a line of cases, often cited as beginning with the 2002 annulment committee decision in Compañía de Aguas del Aconquija S.A. and Vivendi Universal v. Argentine Republic, ICSID Case No. ARB/97/3, that have separated contract-based claims from treaty-based claims, allowing litigation and arbitration proceedings to proceed in parallel with respect to each type of claim. The implication of Pantechniki is that in some circumstances, the two types of claims could be viewed as inseparable.

Further, Pantechniki's holding that full protection and security obligations must be viewed in light of the host state’s development status may have important implications for future full protection and security claims against states that are less developed or that lack substantial resources to conduct security or law enforcement operations. Such states might cite Pantechniki to contend that they should not be judged under the same standards that might be appropriate for wealthier or better-equipped governments.