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.
Deutsche Telekom v. India
Deutsche Telekom Obtains Enforcement of USD 93 Million Award Against India in the US
PCA Case No. 2014-10
Institution: PCA (Permanent Court of Arbitration)
Tribunal: Gabrielle Kaufmann-Kohler (President), Daniel M. Price (Appointed by the claimant), Brigitte Stern (Appointed by the State)
Seat of arbitration: Geneva, Switzerland
On March 27, the US District Court for the District of Columbia dismissed India’s attempt to oppose enforcement of a USD 93 million BIT award won by Deutsche Telekom and confirmed the award.
Background
The dispute, which has involved multiple arbitrations and court proceedings, stems from a contract signed in 2005 between Devas Multimedia Private (“Devas”) and Antrix Corporation (the commercial arm of the Indian Space Research Organisation) for the procurement of S-band satellites aimed at providing high-speed internet services.
Following Antrix’s termination of the contract, Devas initiated an ICC arbitration against Antrix in 2011, and three Mauritius-based shareholders of Devas launched an arbitration under the Mauritius – India BIT in 2012 (CC/Devas v. India 1). A second treaty arbitration between the parties is currently pending at the PCA (CC/Devas v. India 2). (See our previous digests here; here; here).
Deutsche Telekom (“DT”), a minority indirect shareholder of Devas, launched an arbitration under the Germany – India BIT (“BIT”) in 2013.
In a December 2017 Interim Award, the tribunal upheld jurisdiction and found India liable for breaching the BIT’s fair and equitable treatment standard. The Swiss Federal Tribunal (“SFT”) dismissed India’s set-aside bid in December 2018.
In a May 2020 Final Award, the tribunal ordered India to pay DT USD 93.3 million in damages plus interest and a part of DT’s costs.
India applied to the Swiss Federal Tribunal to review both the interim and final awards, arguing fraudulent and unlawful investments and sought remittance of the case to the arbitral tribunal. However, in March 2023, the Swiss Federal Tribunal dismissed India’s request.
Enforcement of the award in the US
DT applied to enforce the award in the US in April 2021. The proceedings were stayed in July 2022, pending the conclusion of the Swiss revision proceedings. The stay was lifted in December 2023.
In its motion to dismiss the enforcement petition, India first argued that Article 9(2)(b)(v) of the BIT requires enforcement of awards against India to proceed under Indian law (and similarly for Germany, under German law). As such, enforcement should be denied under the doctrine of forum non conveniens.
In the March 27 Memorandum Opinion, Judge Richard J. Leon ruled that this argument can be “dispatched with alacrity”. He explained that the Circuit has “squarely held” ‘that the forum non conveniens is not available in proceedings to confirm a foreign arbitral award because only US courts can attach foreign commercial assets found within the United States’”.
Judge Leon then elaborated that this applies “even if the parties purported to agree to a different forum selection, which, at any rate, is an assumption fairly disputed by DT here”.
India also contended that the Court lacked subject-matter jurisdiction under the Foreign Sovereign Immunities Act (“FSIA”) because India did not waive its sovereign immunity and did not agree to arbitrate the dispute with DT.
Judge Leon emphasised that the issue of arbitrability of a dispute is not a jurisdictional question under the FSIA. He noted that DT met its burden of producing the jurisdictional facts for the application of the FSIA’s arbitration exception.
He concluded that India is not entitled to immunity under the FSIA.
Judge Leon then explained that India’s arbitrability arguments could be construed as a defense under the New York Convention. But even then, he highlighted that the Court “has no power to second guess” the tribunal’s findings on arbitrability.
He also noted that the BIT’s incorporation of the UNCITRAL Rules offers “clear and unmistakable evidence that the parties agreed to arbitrate arbitrability”.
Finally, Judge Leon rejected India’s request to reserve its merits defenses under the New York Convention for a later stage. He found that these arguments had already been raised before the arbitral tribunal, the Swiss Courts, and US courts and that India “cannot demand another bite at the apple.”
He concluded that “India is not entitled to another opportunity to develop its Article V defenses […] enough is enough!” and confirmed the award.
Other enforcement proceedings
In Switzerland, DT obtained an exequatur of the final award in Geneva in 2020.
In January 2023, the Berlin Higher Regional Court enforced the award, but only up to USD 10 million.
DT also successfully enforced the award in Singapore, with the Singapore Court of Appeal upholding its enforcement in December 2023 (see our previous digest here).
Yukos Universal v. Russia
Hulley Enterprises v. Russia
Veteran Petroleum v. Russia
Dutch Supreme Court Confirms Attachment of Russian Trademarks by Yukos Shareholders
PCA Cases No. 2005-03/AA226, 2005-04/AA227, 2005-05/AA228
Institution: PCA (Permanent Court of Arbitration)
Tribunal: L. Yves Fortier (President), Charles H. Poncet (Appointed by the claimants), Stephen M. Schwebel (Appointed by the State)
Seat of arbitration: The Hague, Netherlands
On March 22, the Dutch Supreme Court dismissed Russia’s appeal against the attachment of trademarks and copyrights of Russian vodka brands.
Background
In April 2016, the Hague District Court set aside the USD 50 billion awards, holding that the tribunal lacked jurisdiction to hear the dispute under the Energy Charter Treaty. However, the awards were reinstated by the Hague Court of Appeal in February 2020.
In November 2021, the Dutch Supreme Court dismissed Russia’s jurisdictional challenge to the award and most of its other objections.
Nevertheless, after finding that Russia could raise procedural fraud claims in the set-aside proceedings – not only in the context of revocation proceedings as the Hague Court of Appeal had ruled – the Supreme Court remanded the case to the Amsterdam Court of Appeal to address Russia’s procedural fraud arguments.
Last February, the Amsterdam Court of Appeal dismissed Russia’s final attempt to set aside the Yukos awards (see our previous digest here).
Attachment of Russia’s Assets in FKP
In April 2020, the District Court of The Hague granted leave to enforce the awards, and the investors targeted Russia’s assets in state-owned FKP Sojuzplodoimport (“FKP”). The investors were successful in attaching trademarks and copyrights used in the marketing of Russian vodka in the Benelux region.
In October 2020, the attachments were lifted by the Hague Court of Appeal.
The attachment was later partially confirmed in June 2022 against Russia but not “to the extent that it has been imposed at the expense of FKP” and to “the copyrights on the design of the products produced and sold under the Brands by or with the permission of FKP and/or the Russian Federation.”
Russia and FKP both appealed the confirmation of the attachment.
In September, Dutch Advocate-General Vlas recommended that the Supreme Court upholds the attachment (see our previous digest here).
Supreme Court Confirms Attachment of Russia’s FKP assets
Before the Supreme Court, Russia’s arguments related to the status of the awards were due to the set-aside proceedings. Russia contended that the 2021 Supreme Court decision had revived the Hague District Court judgment that set aside the awards. As a consequence, the awards were set aside, and enforcement was no longer possible.
In two separate judgments (here; here), the Supreme Court dismissed Russia and FKP’s appeals.
The Supreme Court noted that the Hague District Court judgments that set aside the awards have lost their supporting basis since the Supreme Court dismissed Russia’s arguments on the lack of a valid arbitration agreement in its 2021 decision.
The Court also rejected Russia’s other appeal grounds without motivating its decision.
In a press release, Tim Osborne, CEO of GML (parent company of the investors), says that “this ruling of the Supreme Court paves the way for the sale of the Russian Federation’s assets in satisfaction of the arbitral awards”. The trademarks will be sold at a public auction.
Omega Engineering and Rivera v. Panama
Panama files for enforcement of USD 4.8 million costs award against US investor
ICSID Case No. ARB/16/42
Institution: ICSID (International Centre for Settlement of Investment Disputes)
Tribunal: Laurence Shore (President), Horacio A. Grigera Naón (Appointed by the claimants), Zachary Douglas (Appointed by the State)
On March 21, Panama filed for enforcement of an ICSID award that granted it USD 4.8 million in costs against US-based Omega Engineering and its owner, Oscar Rivera.
The dispute arose out of multiple contracts for the construction of medical hospitals, a higher education center, a municipal hall, and other facilities.
The investors initiated arbitration in 2016 under the Panama-USA BIT and TPA (“treaties”), alleging improper termination of multiple contracts as well as failure to pay invoices and issue permits. The investors also alleged that Panama wrongfully initiated a criminal investigation of Mr. Rivera. According to the investors, Panama’s actions violated the treaties’ provisions on fair and equitable treatment, full protection and security, creeping expropriation, and umbrella clause.
In October 2022, the arbitral tribunal rejected the investors’ claims on the merits and granted Panama a portion of its costs for USD 4.8 million.
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.
