Zeyad Abouellail, <\/strong>Legal Content Officer at Jus Mundi<\/strong><\/a><\/strong><\/p>\n\n\n\n
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\nIntroducing “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 \u2013\u2013 from post-award settlements, compliance with awards, to recognition and enforcement procedures, annulment, and more.<\/p>\n\n\n\n
\nDiscover more digests<\/a><\/div>\n<\/div>\n<\/blockquote>\n\n\n\n<\/div>\n\n\n\n
\n\n\n\nNatland v. Czech Republic<\/strong><\/a><\/h2>\n\n\n\n
Czech Republic initiates set aside proceedings against USD 15 million UNCITRAL award<\/strong><\/strong><\/h4>\n\n\n\n
<\/div>\n\n\n\nPCA Case No. 2013-35<\/strong>
Institution:<\/strong> PCA (Permanent Court of Arbitration)<\/a>
Tribunal<\/strong>: Alfredo Bullard Gonz\u00e1lez<\/a> (President), John Beechey<\/a> (Appointed by the claimants), J. Christopher Thomas<\/a> (Appointed by the State)
Seat of Arbitration:<\/strong> Geneva, Switzerland<\/p>\n\n\n\n
\n\n\n\n<\/div>\n\n\n\nOn 30 January, the Czech Republic announced in a press release<\/a> that it has filed to set aside an award that ordered it to pay CZK 350 million (around USD 15 million) to a group of EU investors at the seat of arbitration in Geneva.<\/p>\n\n\n\n
The announcement detailed that on 15 December 2023, the tribunal rendered its Final Award<\/a> in an arbitration that has spawned over a decade, finding that the Czech Republic breached the Energy Charter Treaty<\/a> along with the Czech \u2013 Cyprus BIT<\/a> and the Czech \u2013 Netherlands BIT<\/a>. Nevertheless, the state highlighted that the award amounts to only 15.8% of the original claim (CZK 2.21 billion).<\/p>\n\n\n\n
The dispute concerned the claimants\u2019 investment in the Czech solar power sector. The arbitration was initiated in 2013 after the Czech Republic reformed the legal and regulatory regime for renewable energy sources.<\/p>\n\n\n\n
In 2017, the original tribunal – which was subsequently reconstituted following the resignations of several arbitrators – upheld<\/a> a part of the investors’ claims and found that the state breached the ECT as well as the applicable BITs. The Czech Republic\u2019s request to set aside the award was dismissed<\/a> by the Swiss Federal Tribunal in 2020.<\/p>\n\n\n\n
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\n\n\n\nOperaFund and Schwab Holding v. Spain<\/strong><\/a><\/h2>\n\n\n\n
UK High Court upholds registration of ICSID award against Spain pending Court of Appeals ruling on intra-EU objection<\/strong><\/h4>\n\n\n\n
<\/div>\n\n\n\nICSID Case No. ARB\/15\/36<\/strong>
Institution:<\/strong> ICSID (International Centre for Settlement of Investment Disputes)<\/a>
Tribunal:<\/strong> Karl-Heinz B\u00f6ckstiegel<\/a> (President), August Reinisch<\/a> (Appointed by the claimants), Philippe J. Sands<\/a> (Appointed by the State)
Ad hoc Committee:<\/strong> Timothy J. Feighery<\/a> (President), Fausto De Quadros<\/a>, Milton Estuardo Argueta Pinto<\/a> (Members)<\/p>\n\n\n\n
\n\n\n\n<\/div>\n\n\n\nOn 25 January, Justice Fraser of the High Court of Justice of England and Wales adjourned<\/a> Spain\u2019s challenge to the registration of a EUR 30 million award pending a decision of the Court of Appeals on the intra-EU objection in Infrastructures Services (Antin) v. Spain<\/a>.<\/p>\n\n\n\n
Fraser J opined that this is an \u201cunhappy case<\/em>\u201d, emphasising that \u201cthe whole purpose of the [ICSID] Convention, and of arbitration under it, was to avoid the risk of lengthy enforcement proceedings against states by parties that had succeeded in establishing awards in their favour<\/em>\u201d.<\/p>\n\n\n\n
Background<\/strong><\/p>\n\n\n\n
The dispute arose out of Spain\u2019s reforms of incentives offered for investments in the renewable energy sector. In 2015, Swiss Schwab Holdings and OperaFund Eco-Invest, domiciled in Malta, initiated arbitration under the Energy Charter Treaty<\/a> (ECT).<\/p>\n\n\n\n
In September 2019, the tribunal ruled<\/a> that Spain breached its obligation under the ECT to provide fair and equitable treatment to the investors and ordered the state to pay USD 29.3 million plus interest and costs. Later, Spain’s subsequent request to annul the award was dismissed<\/a> in March 2023.<\/p>\n\n\n\n
The award today is worth more than EUR 33 million.<\/p>\n\n\n\n
The investors sought to enforce the award in the UK and in September 2021, Cockerill J made an ex parte <\/em>order registering the award (\u201cregistration order\u201d).<\/p>\n\n\n\n
Spain sought to set aside the registration order arguing that it is immune from the court\u2019s jurisdiction, relying on the intra-EU objection under which the ICSID tribunal lacked jurisdiction to hear the dispute.<\/p>\n\n\n\n
Spain also alleged non-disclosure by the investors of a \u201csignificant amount of information<\/em>\u201d pertaining to post-Achmea EU law developments in the registration application.<\/p>\n\n\n\n
Adjournment of Spain\u2019s Challenge to the Registration Order<\/strong><\/p>\n\n\n\n
Sovereign Immunity and the Intra-Eu Objection<\/em><\/p>\n\n\n\n
Fraser J started by recalling that the arguments presented by Spain pertaining to its immunity are \u201calmost identical<\/em>\u201d to the arguments advanced in Infrastructure Services Luxembourg [2023] EWHC 1226<\/a> (\u201cISL decision\u201d). In the latter, Justice Fraser had dismissed Spain’s request to set aside an order registering an intra-EU ICSID award. Spain later obtained leave to appeal the ISL decision (\u201cISL appeal\u201d).<\/p>\n\n\n\n
The ISL appeal’s implications necessitated a nuanced approach from the Commercial Court, which opted for a case management hearing to expedite certain aspects of the proceedings while deferring others until the resolution of the ISL appeal. Absent the appeal, the immunity argument, according to Fraser J, would have been \u201cdismissed for the same reasons<\/em>\u201d.<\/p>\n\n\n\n
Thus, the jurisdictional challenge relating to the intra-EU objection was adjourned pending the ISL appeal.<\/p>\n\n\n\n
The discussion further ventured into the implications of Schwab Holdings’ non-EU domiciliation. Schwab argued that it could proceed individually to enforce the award and applied to the Court for to lift the enforcement restrictions pending the disposal of Spain\u2019s appeal to the registration order.<\/p>\n\n\n\n
Fraser J underscored that the award ordered damages to both investors conjointly and that there wasn\u2019t \u201cany differentiation or division performed in respect of dealing with each of the claimants separately so far as the money sum was concerned<\/em>\u201d. He warned of the risks of Schwab benefiting from putting itself in a \u201cbetter pecuniary position than OperaFund<\/em>\u201d.<\/p>\n\n\n\n
He highlighted the successful appeal in the ISL case could have broad ramifications, particularly if it were determined Spain enjoyed immunity due to the tribunal’s lack of jurisdiction.<\/p>\n\n\n\n
Yet, he explained that for now, the issue is \u201cwholly academic<\/em>\u201d and \u201cof no practical use or utility to any of the parties<\/em> [\u2026]. It would be an entirely hypothetical exercise<\/em>\u201d.<\/p>\n\n\n\n
Ultimately, the court denied Schwab’s request to lift enforcement restrictions and adjourned the deliberation on Spain’s claim of immunity, pending the outcome of the ISL appeal.<\/p>\n\n\n\n
Full and Frank Disclosure<\/em><\/p>\n\n\n\n
Spain argued that by not disclosing the relevant information relating to EU law developments, including the CJEU\u2019s decision in Komstroy<\/a>, the investors breached their duty of full and frank disclosure.<\/p>\n\n\n\n
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