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\n9REN Holding v. Spain <\/strong><\/a>
NextEra v. Spain<\/strong><\/a>
AES and others v. Spain<\/strong><\/a><\/h2>\n\n\n\nThe United States files an amicus brief in US appeal proceedings over the enforcement of intra-EU awards against Spain<\/strong><\/h4>\n\n\n\n
<\/div>\n\n\n\n9REN v. Spain, ICSID Case No. ARB\/15\/15<\/strong>
Institution: <\/strong>ICSID (International Centre for Settlement of Investment Disputes)<\/a>
Tribunal:<\/strong> William Ian Corneil Binnie<\/a> (President), David R. Haigh<\/a> (Appointed by the claimant), V.V. Veeder<\/a> (Appointed by the State)
Ad hoc Committee:<\/strong> D\u00e1rio Moura Vicente<\/a> (President), Nicolas Molfessis<\/a>, N. Fernando Pi\u00e9rola Castro<\/a> (Members)<\/p>\n\n\n\nNextEra v. Spain, ICSID Case No. ARB\/14\/11<\/strong>
Institution:<\/strong> ICSID (International Centre for Settlement of Investment Disputes)<\/a>
Tribunal: <\/strong>Donald M. McRae<\/a> (President), L. Yves Fortier<\/a> (Appointed by the claimants), Laurence Boisson de Chazournes<\/a> (Appointed by the State)
Ad hoc Committee: <\/strong>Joongi Kim<\/a> (President), Lawrence Boo Geok Seng<\/a>, Humberto S\u00e1enz Marinero<\/a> (Members)<\/p>\n\n\n\nAES and others v. Spain, PCA Case No. 2012-14<\/strong>
Institution:<\/strong> PCA (Permanent Court of Arbitration)<\/a>
Tribunal:<\/strong> Gabrielle Kaufmann-Kohler<\/a> (President), Charles N. Brower<\/a> (Appointed by the claimants), Bernardo Sep\u00falveda-Amor<\/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 February 2nd, the United States submitted an amicus brief<\/a> in US appeal proceedings over the enforcement of three intra-EU awards against Spain.<\/p>\n\n\n\n
In its brief, the State contends that a US district court is required to independently verify the existence of an arbitration agreement prior to asserting jurisdiction over a foreign state. It further argues that merely becoming a signatory to the New York<\/a> or ICSID Conventions<\/a> does not imply a waiver of sovereign immunity. Moreover, the submission points out that the anti-suit injunctions issued against Spain in the NextEra and 9Ren cases represent a \u201csignificant affront to a foreign state in contravention of principles of international comity<\/em>\u201d. The US explained that the manner in which foreign states are treated in US courts, alongside the interpretation and application of the Foreign Sovereign Immunities Act (\u201cFSIA\u201d), holds significant implications for diplomatic relations with foreign states and for how the US is treated in courts abroad.<\/p>\n\n\n\n
Background<\/strong><\/p>\n\n\n\n
The investors in the three cases, domiciled in the Netherlands or Luxembourg, sought to enforce their respective awards in the US District Court for the District of Columbia (\u201cDC Court\u201d) against Spain. Spain contested the enforcement on the grounds of the intra-EU defence and filed motions to dismiss the petitions. Concurrently, Spain initiated injunctive proceedings in the Netherlands<\/a> and Luxembourg<\/a> to prevent the investors from pursuing enforcement of the awards. In response, the investors sought anti-suit injunctions in the DC Court.<\/p>\n\n\n\n
In NextEra<\/a> and 9Ren<\/a>, Judge Tanya Chutkan found that the Court had jurisdiction over Spain and rejected its motion to dismiss. Judge Chutkan further granted preliminary injunctions, barring Spain from seeking any relief in Luxembourg or the Netherlands that could potentially hinder or obstruct the enforcement of the awards.<\/p>\n\n\n\n
Conversely, in AES<\/a>, Judge Richard Leon found that the Court lacked jurisdiction over Spain and consequently granted its motion to dismiss the petition for enforcement of the award. Judge Leon further denied the request for a preliminary injunction against Spain.<\/p>\n\n\n\n
The decisions in the three cases were later subject to appeals.<\/p>\n\n\n\n
Amicus Brief of the US<\/strong><\/p>\n\n\n\n
The US first argued that a district court must make its own determination of whether an agreement to arbitrate exists and \u201ccannot treat the arbitrator\u2019s decision on the question as dispositive<\/em>\u201d. The Court must engage in an \u201cindependent review<\/em>\u201d of a State\u2019s objection to the application of the FSIA\u2019s arbitration exception before exercising jurisdiction.<\/p>\n\n\n\n
It explained that this is a threshold requirement under the FSIA. This requirement applies to ICSID awards even if \u201csubstantive review of the award is only available through limited avenues within the ICSID system and not in United States courts<\/em>\u201d because \u201cdoing so does not constitute improper review of the merits of the arbitral award itself<\/em>\u201d.<\/p>\n\n\n\n
Furthermore, the US maintained that neither the ICSID nor the New York Conventions constitute an explicit or implied waiver of immunity from jurisdiction under the FSIA. In the view of the US, \u201cbecoming a party to either the New York Convention or the ICSID Convention, without more, does not provide the necessary \u2018strong evidence\u2019 that a foreign state intended to waive its sovereign immunity in United States courts<\/em>\u201d.<\/p>\n\n\n\n
It was underscored that applying the waiver exception based solely on being a party to the New York or ICSID Conventions \u201cmay have implications for the treatment of the United States in foreign courts and for [the United States\u2019] relations with foreign states<\/em>.\u201d<\/p>\n\n\n\n
In its staunch opposition to the DC court\u2019s injunctions against Spain in NextEra and 9Ren, the US argued that the injunction \u201cruns afoul of the basic principle of the perfect equality of nations,<\/em>\u201d explaining that \u201cenjoining a foreign sovereign from bringing suit in a foreign court is an extraordinary remedy that would rarely (and possibly never) be justified<\/em>\u201d and that \u201ccomity concerns are near their peak.<\/em>\u201d<\/p>\n\n\n\n
Moreover, the US expressed concern that such injunctive orders could adversely affect the United States when it becomes a litigant in foreign courts, especially as some states apply the principles of reciprocity in their treatment of other states.<\/p>\n\n\n\n
Related documents:<\/strong><\/p>\n\n\n\n
In the US appeals proceeding:<\/p>\n\n\n\n
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- Brief of Amicus Curiae MOL Hungarian Oil and Gas PLC in Support of Appellees NextEra Energy et al. and 9REN Holding, 10 August 2023<\/a><\/li>\n\n\n\n
- Brief Amicus Curiae of the Chamber of Commerce of the United States of America in Support of Appellees and Affirmance, 6 July 2023<\/a><\/li>\n\n\n\n
- Amicus Curiae Brief of International Scholars in Support of Appellee and Affirmance, 6 July 2023<\/a><\/li>\n\n\n\n
- Brief for the European Commission on Behalf of the EU as Amicus Curiae in Support of Spain and Reversal, 6 June 2023<\/a><\/li>\n<\/ul>\n\n\n\n
In the US District Court of Columbia<\/p>\n\n\n\n
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- NextEra v. Spain, ICSID Case No. ARB\/14\/11, Memorandum Opinion of the US District Court for the District of Columbia, 15 February 2023<\/a><\/li>\n\n\n\n
- 9REN v. Spain, ICSID Case No. ARB\/15\/15, Memorandum Opinion of the US District Court for the District of Columbia, 15 February 2023<\/a><\/li>\n\n\n\n
- AES and others (PV Investors) v. Spain, PCA Case No. 2012-14, Memorandum Opinion of the US District Court for the District of Columbia, 29 March 2023<\/a><\/li>\n<\/ul>\n\n\n\n
Other proceedings:<\/p>\n\n\n\n
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- AES and others (PV Investors) v. Spain, PCA Case No. 2012-14, Request for Determination of Docket Date for Issue of Third-Party Summons Under Section 118 of the Dutch CCP at the Request of the Kingdom of Spain, 10 March 2023<\/a><\/li>\n\n\n\n
- 9REN v. Spain, ICSID Case No. ARB\/15\/15, Summons Before the District Court of and in Luxembourg at the Request of the Kingdom of Spain, 22 December 2022<\/a><\/li>\n\n\n\n
- NextEra v. Spain, ICSID Case No. ARB\/14\/11, Writ of Summons at the Request of the Kingdom of Spain Pursuant to Art. 223 Dutch CCP, 22 December 2022<\/a><\/li>\n<\/ul>\n\n\n\n
<\/div>\n\n\n\n
\n\n\n\nInfrastructure Services (Antin) v. Spain <\/strong><\/a><\/h2>\n\n\n\n
UK Court of Appeal refuses to order Spain to pay EUR 120 million in security pending appeal over enforcement of intra-EU award<\/strong><\/h4>\n\n\n\n
<\/div>\n\n\n\nICSID Case No. ARB\/13\/31<\/strong>
Institution: <\/strong>ICSID (International Centre for Settlement of Investment Disputes)<\/a>
Tribunal: <\/strong>Eduardo Zuleta Jaramillo<\/a> (President), Francisco Orrego Vicu\u00f1a<\/a> (Appointed by the claimants), J. Christopher Thomas<\/a> (Appointed by the State)
Ad hoc Committee: <\/strong>Cavinder Bull<\/a> (President), Jos\u00e9 Antonio Moreno Rodr\u00edguez<\/a>, Nayla Comair-Obeid<\/a> (Members)<\/p>\n\n\n\n
\n\n\n\n<\/div>\n\n\n\nOn February 1st, the Court of Appeal of England and Wales rejected<\/a> the investors\u2019 request to order Spain to provide security of EUR 120 million as a condition for its appeal against the enforcement of an intra-EU ICSID award<\/a>.<\/p>\n\n\n\n
Background<\/strong><\/p>\n\n\n\n
Infrastructure Services Luxembourg and Energia Termosolar (\u201cthe investors\u201d) sought to enforce the EUR 112 million award<\/a> across multiple jurisdictions, including the US<\/a>, Australia<\/a>, and the UK.<\/p>\n\n\n\n
In the UK, the investors successfully registered the award in June 2021. Spain sought to set aside the registration order, invoking the intra-EU objection. In May 2023, Justice Fraser of the High Court dismissed<\/a> Spain\u2019s set aside request and upheld the registration order.<\/p>\n\n\n\n
Subsequently, Spain was granted permission to appeal the May 2023 decision. Afterwards, the investors submitted their request for security in the amount of EUR 120 million.<\/p>\n\n\n\n
Dismissal of the investors\u2019 request for security<\/strong><\/p>\n\n\n\n
On jurisdiction, the Court explained that it saw no issue with the investors seeking security after Spain obtained permission to appeal. The decision allowing the appeal did not decide whether a condition was to be imposed, thus leaving room for the investors to request the imposition of such a condition.<\/p>\n\n\n\n
On whether there was a compelling reason for the security to be imposed, the investors based their arguments on the UK\u2019s obligations under the ICSID Convention<\/a>, Spain’s conduct in the anti-suit proceedings in Luxembourg (which it initiated against the investors, similar to 9Ren, NextEra, and AES), and Spain’s efforts to obtain an adverse state aid<\/a> ruling from the European Commission.<\/p>\n\n\n\n
The Court noted that the investors did not claim that Spain, should it lose the appeal, \u201ceither does not have the means to pay or will not pay [the award].<\/em>\u201d It pointed out that the investors’ contention\u2014that Spain’s initiation of proceedings in Luxembourg constituted sufficient grounds for requiring Spain to provide security\u2014was deemed \u201cdeprived of practical content<\/em>\u201d as Spain offered an undertaking to stay the Luxembourg proceedings until a final determination of the UK appeal, which the Court accepted.<\/p>\n\n\n\n
Moreover, the Court dismissed the investors’ arguments related to state aid, explaining that \u201cstate aid issues are complex and will, in part, be before this court when Spain\u2019s appeal [\u2026] is heard<\/em>.\u201d<\/p>\n\n\n\n
Ultimately, the Court ruled that the investors are \u201ca long way away from showing a compelling reason why Spain, as a sovereign state and a member of the European Union, should be required to pay the Award into court here in England and Wales, as a condition of pursuing its appeal<\/em>\u201d and dismissed the request for security.<\/p>\n\n\n\n
Related documents:<\/strong><\/p>\n\n\n\n
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- Judgment of the High Court of Justice of England and Wales [2023] EWHC 1226, 24 May 2023<\/a><\/li>\n\n\n\n
- Approved Judgment on Costs of the High Court of Justice of England and Wales [2023] EWHC 235, 27 January 2023<\/a><\/li>\n\n\n\n
- Approved Judgment 1 of the High Court of Justice of England and Wales [2023] EWHC 234, 27 January 2023<\/a><\/li>\n\n\n\n
- Interim Third-Party Debt Order of the High Court of Justice of England and Wales, 26 July 2022<\/a><\/li>\n<\/ul>\n\n\n\n
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