THE AUTHOR:
Zeyad Abouellail, Legal Content Officer at Jus Mundi
Introducing “Arbitration Aftermath” by Zeyad Abouellail: Your guide to the latest post-award developments in the evolving landscape of investor-State and commercial arbitration. Each week, Zeyad explores a range of post-award news involving sovereign States with a global perspective –– from post-award settlements, compliance with awards, to recognition and enforcement procedures, annulment, and more.
London Steamship v. Spain (I)
London Steamship v. Spain (II)
Spain fails to recognize Spanish judgment in the UK as High Court sees conflict with arbitration award
London Steamship v. Spain (I)
Institution: Ad hoc Arbitration
Tribunal: Alistair Graham Schaff (Sole arbitrator)
Seat of arbitration: London, United Kingdom
London Steamship v. Spain (II)
Institution: Ad hoc Arbitration
Tribunal: Peter Gross (Sole arbitrator)
Seat of arbitration: London, United Kingdom
On October 6th, the High Court of England and Wales rejected Spain’s request to recognize a Spanish judgment holding the London Steamship Insurance Association (“the Club”) liable for the M/T Prestige sinking in 2002. The UK High Court deemed the Spanish judgment as “irreconcilable” with prior English judgments that enforced a related arbitration award, despite a conflicting CJUE opinion.
Background: oil spillage and parallel procedures
The dispute stems from the 2002 sinking of the M/T Prestige, resulting in an oil spill along the Spanish and French coastlines. This led to criminal and civil proceedings in Spain against both the vessel’s owners and the Club, with Spain and France as claimants.
The Club subsequently initiated two separate arbitrations against Spain and France, in which the States did not fully participate in.
In February 2013, sole arbitrator Alistair Schaff upheld the Club’s claims against Spain, finding that the State was bound by the arbitration clause. He also ruled that the Club was not liable to Spain, and that in any event, liability would be limited to USD 1 billion according to the terms of the insurance contract.
The UK High Court enforced the award in October 2013 while simultaneously rejecting Spain’s challenge to the award. Spain’s appeal was later dismissed in April 2015.
In 2019, Spain obtained ex parte registration of a 2019 Spanish judgment which held the Club liable for EUR 855 million. The Club appealed the registration and initiated a second arbitration against Spain in the same year (which is still pending).
In the context of the Club’s appeal against the registration of the Spanish judgment, Justice Butcher made a preliminary reference to the Court of Justice of the European Union (“CJUE”).
The CJUE issued its opinion in June 2022, stating that a judgment entered in the terms of an arbitral award does not qualify as a judgment for the purpose of Regulation No 44/2001. Therefore, earlier recognition of the award violated EU law and as a result, the UK judgments enforcing the 2013 award could not prevent recognition of the Spanish judgment.
The challenge to the registration of the Spanish judgment upheld
In his ruling, Justice Butcher upheld the Club’s challenge to the registration of the Spanish judgment. Applying ECJ case law on a test of irreconcilability, he found that the Spanish judgment is irreconcilable with the English judgment that enforced the 2013 award.
Justice Butcher disagreed with the CJUE opinion, asserting that the English judgment qualifies as a “judgment” under Regulation No 44/2001. He clarified that an order under s. 66 of the 1996 Arbitration Act is not merely “essentially contractual,” as the court plays an active decision-making role and is not simply passive.
He ultimately concluded that recognizing the Spanish judgment would run counter to English public policy principles concerning res judicata, especially in light of the 2013 award.
Spain’s set-aside request denied
In parallel, Spain challenged the two awards issued by sole arbitrator Peter Gross in the second proceeding initiated by the Club.
In the first award, Gross affirmed jurisdiction over Spain, determining that the Club’s pursuit of relief in arbitration did not constitute an abuse of process. He also noted that the CJUE’s jurisdiction did not bind him.
In a subsequent award, Gross found Spain in breach of its obligation to resolve claims exclusively through arbitration. He specified that compensation should be equivalent to what Spain would eventually recover by enforcing the Spanish judgment.
Justice Butcher rejected Spain’s request to set aside the awards, holding that the CJUE Opinion had no bearing on the arbitrator’s jurisdiction. He also affirmed the arbitrator’s authority under English law to grant equitable compensation.
Yet, Justice Butcher determined that the arbitrator lacked the authority to issue an injunction against the State. The Club contended that the prohibition of injunctions against States in the 1978 State Immunity Act lacked a foundation in customary international law. Justice Butcher deferred a decision on this matter pending the appeal in UK P&I Club N.V. v. Venezuela (The Resolute), where a similar argument arose.
London Steamship v. France (II)
UK High Court rejects France’s request to set-aside second set of Prestige awards
London Steamship v. France (II)
Institution: Ad hoc Arbitration
Tribunal: Elizabeth Gloster (Sole arbitrator)
Seat of arbitration: London, United Kingdom
On October 6th, in a separate judgment, Justice Butcher considered France’s application to set-aside two awards issued by sole arbitrator Elizabeth Gloster in the second arbitration initiated by the London Steamship Insurance Association against the State in 2019.
Background: the second arbitration launched by the Club
In a first partial award in February 2023, Gloster upheld jurisdiction over France and found that the State was in breach of its obligations in equity not to pursue claims outside of arbitration. She also found that she had the power to award equitable compensation. Finally, she granted an injunction restraining France from enforcing the 2019 Spanish judgment that held the Club liable (discussed above).
In a second award in May 2023, Gloster granted the Club equitable compensation. Similar to Peter Gross in the arbitration against Spain, she ruled that compensation should be equivalent to what France would eventually recover by enforcing the Spanish judgment.
High Court ruling on France’s set-aside request
France lodged appeals for both awards within 28 days of the second award’s issuance, missing the one-month deadline to contest the first award. The State sought an extension, arguing that the first partial award wasn’t challengeable under section 69 of the Arbitration Act.
Justice Butcher ruled that the first partial award qualifies as an “award” under s. 69. He noted that it meets the formal requirements of the Arbitration Act and addressed “substantive rights and liabilities of the parties”, settling certain matters without fully resolving the dispute. Despite this, Justice Butcher granted the time extension, deeming it in the “interests of justice” for France to appeal on points of “general public importance” where the arbitrator’s conclusion is at least seriously questionable.
Regarding the arbitrator’s decision to grant an interim injunction, Justice Butcher reiterated his stance on the Spain case. He clarified that, under English law, the arbitrator lacks the authority to issue such an injunction against the State. He also deferred a final decision on this matter pending the appeal in UK P&I Club v. Venezuela.
However, France’s appeal of the arbitrators’ rulings on equitable compensation was unsuccessful. Affirming his stance in the Spain case, Justice Butcher affirmed that equitable compensation is a viable remedy under English law. He also upheld Gloster’s decision to award compensation in the amount of a foreign judgment.
Ultimately, Justice Butcher dismissed France’s bid to set-aside both awards and deferred a final decision on France’s appeal of the arbitrator’s injunction.
Related documents:
- The London Steamship Owners’ Mutual Insurance Association Limited v. The French Republic (M/T Prestige) (I), Judgment of the High Court of Justice of England and Wales [2013] EWHC 3188, 22 October 2013
- The London Steamship Owners’ Mutual Insurance Association Limited v. The French Republic (M/T Prestige) (I), Judgment of the Court of Appeal of England and Wales [2015] EWCA 333, 1 April 2015
Santullo Sericom v. Gabon
Saab v. Cyprus
Gabon and Cyprus fail to discontinue set-aside proceedings pending before French Court of Cassation
Groupement Santullo Sericom v. Gabon, ICC Case No. 21403/MCP/DDA
Institution: ICC (International Chamber of Commerce)
Tribunal: Sébastien Besson (President), Charles Jarrosson (Appointed by the claimant), Barton Legum (Appointed by the State)
Seat of arbitration: Paris, France
On October 5th, the French Court of Cassation dismissed Gabon’s request to discontinue the appeal proceedings launched by Groupement Santullo Sericom against a Paris Court of Appeal ruling that annulled a EUR 140 million ICC award.
Background
The dispute arose from multiple construction contracts between Santullo and Gabon. Following unpaid invoices, Santullo initiated arbitration in 2015. The tribunal upheld jurisdiction in 2018, and in a final award issued in 2019, found the State liable for approximately EUR 140 million (CFA Franc 93 billion).
In April 2022, the Paris Court of Appeal set-aside the 2019 award, finding that the underlying contracts were obtained through corruption. The Court ordered Santullo to pay Gabon EUR 80,000 in costs under article 700 of the French Code of Civil Procedure (“CCP”). Santullo subsequently appealed this decision to the Court of Cassation.
Dismissal of the request for discontinuance
Despite appealing the Court of Appeal’s decision, Santullo did not pay the costs ordered by the latter. In turn, Gabon moved to discontinue the appeal due to non-payment.
The Court of Cassation clarified that only “exceptional circumstances” could justify discontinuing the appeal under Article 700 of the CCP. It determined that the size of the fees in question did not qualify as exceptional circumstances, even in light of Santullo’s financial capacity. As a result, Gabon’s request for discontinuance was dismissed.
Ayoub-Farid Saab and Fadi Saab v. Cyprus, ICC Case No. 20588/ZF/AYZ
Institution: ICC (International Chamber of Commerce)
Tribunal: Pierre D. Tercier (President), Ibrahim Fadlallah (Appointed by the claimants), V.V. Veeder (Appointed by the State)
Seat of arbitration: Paris, France
In a separate order but in similar fashion, the French Court of Cassation dismissed Cyprus’ request to discontinue the appeal launched by Lebanese investors against a prior ruling that upheld an ICC award, which found the State not liable under the 2001 Cyprus-Lebanon BIT.
Background
After the US Department of the Treasury designated the Federal Bank of the Middle East (FBME) as an “institution of primary money-laundering concern”, Cyprus took control of FBME. This led Ayoub-Farid Saab and Fadi Saab, FBME’s owners, to initiate arbitration in 2014 under the Cyprus-Lebanon BIT.
The tribunal upheld jurisdiction in 2015 and, in 2019, ruled that Cyprus had not violated the BIT.
The investors sought to set-aside the award, but the Paris Court of Appeal dismissed the request in March 2022. The Court ordered the investors to pay Cyprus EUR 80,000 in costs under Article 700 of the French CCP.
Dismissal of the request for discontinuance
Much like Santullo, the investors pursued an appeal without satisfying the cost order. Subsequently, Cyprus requested the appeal’s discontinuance.
The Court of Cassation, in nearly identical wording to its order in the Santullo case, rejected Cyprus’s discontinuance plea. It ruled that the size of the fees in question did not qualify as exceptional circumstances, even considering the investors’ financial capacity.
Projet Pilote Garoubé v. Cameroon
Paris Court of Appeal refuses to set-aside ICC award due to perceived arbitrator bias
ICC Case No. 15262/EC/ND/MCP
Institution: ICC (International Chamber of Commerce)
Tribunal: Horacio A. Grigera Naón (President), Filiga Michel Sawadogo (Appointed by the ICC), Xavier Favre-Bulle (Appointed by the ICC)
Seat of arbitration: Paris, France
On October 3rd, the Paris Court of Appeal dismissed Cameroon’s request to set-aside an ICC award that held it liable for EUR 17.8 million, rejecting the State’s contention that the tribunal was irregularly constituted.
Background
In 2001, Projet Pilote Garoubé (“PPG”) entered a contract with Cameroon, granting PPG the rights to exploit protected areas in northern Cameroon for wild fauna, livestock, and agriculture. After Cameroon terminated the concession in 2006, PPG initiated arbitration in November 2007.
An initial tribunal issued a partial award on jurisdiction in February 2010, which was later set-aside by the Paris Court of Appeal due to the irregular constitution of the tribunal. The ICC then replaced the entire tribunal in 2013.
The new tribunal upheld jurisdiction in 2014. In a subsequent partial award in 2016, it held Cameroon liable for the concession’s cancellation. The Paris Court of Appeal rejected Cameroon’s request to set-aside both awards in 2018.
In a September 2021 final award, the tribunal found Cameroon liable for EUR 17.8 million, plus interests and costs.
Dismissal of Cameroon’s set-aside request
Cameroon alleged a lack of independence and impartiality on the part of the tribunal’s president. It argued that this was evidenced by his reluctance to disclose his appointments in all arbitrations where he was selected by a private party against a State. Cameroon contended that the president displayed a discernible “pro-investor” bias, given his frequent appointments by investors in ISDS cases.
Cameroon further contented that the president exhibited a “hostile” stance throughout the proceedings. For instance, by refusing to grant the same period of time to respond to the statement of claim, to which he had granted an additional period of four months, or by refusing to hold a hearing over Cameroon’s allegations of violation of Article 20(6) of the 1998 ICC Rules.
The Paris Court of Appeal rejected Cameroon’s non-disclosure argument. It found that as the State did not raise this issue before the arbitral tribunal, it is deemed to have waived this argument. The Court clarified that challenging the tribunal with the arbitral institution differs from raising the irregularity before the tribunal itself. The Court also noted that these appointments were publicly known and that the State did not prove that they caused bias.
As to the president’s alleged hostility, the Court found that the tribunal rebalanced the delays by according the State an extension to file its reply. The Court emphasized that the president’s assessment in an email that Cameroon was “dragging its feet” pertains solely to the party’s handling of procedural matters and does not imply bias regarding the substantive merits of the dispute. Therefore, this observation is insufficient to cast doubts on their impartiality, and the Court found no violation of international public policy.
Cameroon further argued that the tribunal exceeded its mandate by compensating PPG for loss of opportunity when it had excluded such compensation in its partial award. The Court ruled that this was not the case, explaining that the tribunal had found in its partial award that PPG could rightly claim compensation for its losses over the contractual period up to 2036, which included loss of opportunity. The Court thus found no contradiction between both awards and no violation of international public policy.
In response to Cameroon’s claims, PPG argued that the State’s set-aside request amounted to an abuse of process, asserting that Cameroon had a “systematic” approach to challenging awards and not executing them. The Court rejected the contention, emphasizing that each party has the right to file a set-aside request and that PPG did not prove it suffered prejudice beyond its legal costs.
Related documents:
Redes Andinas de Comunicaciones v. Pronatel and MTC (I)
Redes Andinas de Comunicaciones v. Pronatel and MTC (II)
In Canada, Peru faces enforcement of ICC awards rendered against Ministry of Transport
ICC Cases No. 24471/JPA & 24472/JPA
Institution: ICC (International Chamber of Commerce)
Tribunal: José Antonio Cainzos Fernández (President), Guido Santiago Tawil (Appointed by the claimant), Eddy Rodriguez (Appointed by the respondents)
Seat of arbitration: Lima, Peru
On September 25th, the Superior Court of Justice of Ontario ruled that a pair of ICC awards rendered against the Peruvian Ministry of Transport (MTC) and its entity Programa Nacional de Telecomunicaciones (PRONATEL) are enforceable against the State, finding that MTC and PRONATEL are part of the government of Peru with no separate legal identity.
The dispute arose from two project financing agreements between Redes and PRONATEL for the installation of broadband networks in the Cajamarca region. PRONATEL terminated the agreements in 2019, leading to Redes initiating two ICC arbitrations against MTC and PRONATEL.
The two cases were heard by identically constituted tribunals. In two awards issued in August 2022, the tribunal held the respondents liable for the termination of the agreement. The awards are now worth USD 107.8 million (ICC Case No. 24471/JPA) and USD 81 million (ICC Case No. 24472/JPA) accounting for damages, interests, and costs.
Redes applied for enforcement of the awards in Ontario against Peru, MTC and PRONATEL.
In its ruling, the Court ruled that the awards are enforceable under the New York Convention.
The Court determined that the awards are enforceable against Peru, given that MTC and PRONATEL lack separate legal identities from the State. It explained that MTC is a “prima facie an organ of the Peruvian state which cannot be regarded as a legally separate from Peru.” It found the same for PRONATEL, which operates “within the scope of the MTC and under the charge of the Vice Ministry of Communications”.
On Peru’s sovereign immunity, the Court noted that MTC and PRONATEL, and by extension Peru, had waived immunity under the State Immunity Act. It also found that the commercial activity exception was satisfied.
Redes applied for enforcement of the awards in the US in December 2022. A Status Report filed by Redes in June 2023 indicates that service on Peru under the Inter-American Convention on Letters Rogatory is still underway.
The Status Report also states that the Superior Court of Justice in Lima rejected MTC and PRONATEL’s request for annulment of award No. 24471/JPA and confirmed it, while the annulment proceeding of the second award is still pending.
ABOUT THE AUTHOR
Zeyad Abouellail is a Legal Content Officer at Jus Mundi and a PhD candidate & teaching assistant at Paris-Saclay University. His research focuses on the post-award phase in investment arbitration, and he also lectures on civil and contract law. He holds two Master’s Degrees in International Business Law from Paris-Saclay University and Paris 1 Panthéon-Sorbonne University. Prior to joining Jus Mundi, Zeyad interned at several law firms in international arbitration and corporate law in Cairo, Egypt.
