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.
Rusoro Mining v. Venezuela
Colombia’s Supreme Court of Justice Rejects Bid to Recognise USD 1 Billion Award Against Venezuela
ICSID Case No. ARB(AF)/12/5
Institution: ICSID (International Centre for Settlement of Investment Disputes)
Tribunal: Juan Fernández-Armesto (President), Francisco Orrego Vicuña (Appointed by the claimant), Bruno Simma (Appointed by the State)
Seat of arbitration: Paris, France
On 20 June, the Colombian Supreme Court of Justice rejected Rusoro Mining’s attempt to recognise a USD 1 billion ICSID Additional Facility award against Venezuela, citing sovereign immunity concerns.
Background
The dispute originates from Venezuela’s nationalisation of the gold mining industry in 2011. Rusoro Mining, a Canadian company, held controlling interests in 24 Venezuelan mining companies. Consequently, Rusoro initiated arbitration proceedings under the Canada-Venezuela BIT in 2012.
An ICSID Additional Facility tribunal issued an award in August 2016, finding that Venezuela had unlawfully expropriated Rusoro’s investment. The tribunal ordered Venezuela to pay Rusoro damages exceeding USD 960 million, in addition to interest and costs.
The award withstood extensive set-aside proceedings in France, ultimately being upheld by the Paris Court of Appeal in 2022.
Rusoro pursued enforcement of the award across multiple jurisdictions. In Canada, the Ontario Superior Court of Justice recognised the award in April 2017. Meanwhile, in the United States, Rusoro joined the list of creditors aiming to capitalize on the Delaware auction of PDVSA’s stake in US-based CITGO Petroleum.
In Colombia, Rusoro filed its request for recognition of the award in 2023.
Colombia’s Supreme Court Dismisses Request to Recognise the Award
The Colombian Supreme Court (Court) commenced by distinguishing between immunity from jurisdiction and immunity from execution. It noted that whilst jurisdictional immunity has become more flexible in international practice, immunity from execution remains considerably more stringent.
The Court determined that recognising the award would essentially be a step towards enabling coercive measures against Venezuela’s assets, thus implicating the doctrine of immunity from execution. It observed that even if a state waives its jurisdictional immunity by consenting to arbitration, this does not automatically constitute a waiver of its immunity from execution.
The Court analysed the framework of the ICSID Convention, an unusual process in this case, given that the arbitration was not governed by the ICSID Convention but conducted under the Additional Facility Rules.
The Court paid particular attention to Article 55 of the ICSID Convention. The Court reasoned that this provision preserves the application of domestic and customary international law on execution immunity.
The Court elucidated that “it is evident that the requested recognition of the award is intended to urge the adoption of coercive measures against the respondent State in the arbitration. Hence, it is necessary to examine this request mainly under the umbrella of the very restrictive immunity from execution.”
Ultimately, the Court found that granting recognition of the award would contravene Colombia’s concept of international public order and consequently dismissed the request to recognise the award.
Infinito Gold v. Costa Rica
Canadian Miner Withdraws Application for Partial Annulment of ICSID Award Against Costa Rica
ICSID Case No. ARB/14/5
Institution: ICSID (International Centre for Settlement of Investment Disputes)
Tribunal: Gabrielle Kaufmann-Kohler (President), Bernard R. Hanotiau (Appointed by the claimant), Brigitte Stern (Appointed by the State)
Ad hoc committee: D. Brian King (President), José Antonio Moreno Rodríguez, Deva Villanúa (Members)
Canada-based Infinito Gold has withdrawn its application for partial annulment of an ICSID award that found Costa Rica in breach of the Canada-Costa Rica BIT but awarded no damages to the investor.
On 20 June, Infinito Gold announced it had reached an agreement with Costa Rica to discontinue the annulment proceeding. It explained that it is “it is unable to continue” and that “costs incurred for the Arbitration […] are in the millions of dollars”.
Optimus Gold Corp, a Canadian mining company, had provided funding to Infinito for the annulment proceeding under a Joint Venture Earn-In Acquisition Agreement. Optimus Gold has declared that it “will not be proceeding with the current terms of the Agreement and is negotiating to rework the agreement in light of the discontinuance“. Additionally, Optimus is seeking recovery of its USD 300,000 security deposit.
Infinito filed its Application for Partial Annulment of the award in October 2021. The company argued that the tribunal had seriously departed from a fundamental rule of procedure and failed to state the reasons on which its decision not to award damages was based.
In the Award, the tribunal concluded that a legislative mining ban had breached the BIT’s fair and equitable treatment standard. However, the tribunal explained that it had difficulty in identifying a quantifiable harm caused by the breach.
Yukos Universal v. Russia
Hulley Enterprises v. Russia
Veteran Petroleum v. Russia
Yukos Shareholders Successfully Auction 18 Russian-owned Trademarks in the Netherlands
PCA Case No. 2005-04/AA227
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 17 June, GML, the parent company of the Yukos shareholders, announced the successful auction of 18 Russian-owned liquor trademarks in the Netherlands for EUR 1.6 million. The auction included trademarks for the iconic vodka brands Stolichnaya and Moskovskaya.
In the press release, GML stated that this auction marks the first successful enforcement of the USD 50 billion ECT award against Russia.
The Benelux trademarks were initially seized by the Yukos shareholders four years ago. Earlier in March this year, the Dutch Supreme Court dismissed Russia’s appeal against the attachment (see our previous digest here). The shareholders had previously rejected a bid at a December 2022 auction.
Tim Osborne, CEO of GML, commented on the outcome, stating that “this historic success emboldens us to take our enforcement fight for justice to every corner of the world where Putin is trying to hide his country’s state assets”.
Rockhopper v. Italy
UK Investor Announces Successful Monetisation of EUR 190 Million ECT Award Against Italy
ICSID Case No. ARB/17/14
Institution: ICSID (International Centre for Settlement of Investment Disputes)
Tribunal: Klaus Reichert (President), Charles H. Poncet (Appointed by the claimants), Pierre-Marie Dupuy (Appointed by the State)
Ad hoc committee: Michael D. Nolan (President), Eva Kalnina, Carita H. Wallgren-Lindholm (Members)
On 17 June, UK-based Rockhopper Exploration plc announced the successful conclusion of a funded participation agreement with a specialist fund for the monetisation of an award that ordered Italy to pay EUR 190 million in damages for breaching the Energy Charter Treaty.
Rockhopper said that all required precedent conditions have been satisfied and that the initial payment is due within five days of the announcement.
In a previous press release, Rockhopper had disclosed the details of the agreement. The company stated that it will retain legal and beneficial ownership of the award, whilst the fund will make cash payments to Rockhopper in up to three tranches:
- Tranche 1 – Rockhopper will retain approximately EUR 15 million from an upfront payment of EUR 45 million upon completion. Rockhopper had previously entered into a litigation funding agreement with another funder in 2017, under which all costs relating to the arbitration from commencement to the rendering of the award were paid on its behalf. Under that agreement, the original funder is entitled to a proportion of any proceeds from the award or any monetisation thereof.
- Tranche 2 – An additional contingent payment of EUR 65 million upon a successful annulment outcome.
- Tranche 3 – A potential payment of 20% on recovery of amounts exceeding 200% of the Specialist Fund’s total investment, including costs.
Rockhopper further stated that the funder will cover all costs related to the arbitration from the date of the announcement.
Italy filed for annulment of the award in 2022. The proceeding is still pending, with both parties having filed post-hearing briefs this month.
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.
