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\nMicula v. Romania (I)<\/strong><\/a>\u00a0<\/strong><\/a><\/h2>\n\n\n\n
Romania Fails in Bid to Overturn Enforcement of the Micula Award in the US <\/strong> <\/strong><\/strong><\/h4>\n\n\n\n
<\/div>\n\n\n\nICSID Case No. ARB\/05\/20<\/strong>
Institution:<\/strong> ICSID<\/a> (International Centre for Settlement of Investment Disputes)
Tribunal:<\/strong> Laurent L\u00e9vy<\/a> (President), Stanimir A. Alexandrov<\/a> (Appointed by the claimants), Georges Abi-Saab<\/a> (Appointed by the State)
Ad hoc<\/em> committee:<\/strong> Claus von Wobeser<\/a> (President), Bernardo M. Cremades Sanz-Pastor<\/a>, Abdulqawi Ahmed Yusuf<\/a> <\/p>\n\n\n\n
\n\n\n\n<\/div>\n\n\n\nOn 14 May, the US Court of Appeals for the District of Columbia Circuit rejected<\/a> Romania\u2019s request for relief from three judgments that enforced the Micula award in the US. <\/p>\n\n\n\n
<\/div>\n\n\n\nBackground <\/strong> <\/h4>\n\n\n\n
In December 2013, an ICSID tribunal found<\/a> that Romania had violated the Romania-Sweden BIT by withdrawing the tax incentives that had been granted to Swedish investors Viorel and Ioan Micula and their companies (“the investors”). The tribunal ordered Romania to pay the investors more than RON 376 million plus interest. An ad hoc committee of ICSID rejected Romania’s application for annulment in 2016. <\/p>\n\n\n\n
While Romania partially complied, the European Commission (\u201cEC\u201d) directed the state to halt the award\u2019s implementation, deeming it unlawful state aid. In 2015, the EC adopted its decision<\/a>, which provided that such payment constitutes state aid within the meaning of Article 107(1) of the TFEU.\u00a0<\/p>\n\n\n\n
The investors appealed and, in June 2019, the General Court of the EU annulled<\/a> the EC\u2019s decision. The EC then appealed to the CJEU, which in January 2022 set aside<\/a> the judgment annulling the EC\u2019s 2015 decision. In September 2022, the CJUE ruled<\/a> (upon a request from the Brussels Court of Appeal) that the award is incompatible with EU law and that it cannot be enforced in the EU. <\/p>\n\n\n\n
In the US, the District Court of Columbia (\u201cDC Court\u201d) confirmed<\/a> the award in September 2019 (\u201c2019 judgment\u201d). The DC Court rejected Romania\u2019s EU law objection to the subject matter jurisdiction of the court. It found that EU law is inapplicable because the dispute predates Romania\u2019s accession to the EU and that the award did not \u201crelate to the interpretation or application of EU law<\/em>.\u201d The US Court of Appeals for the District of Columbia Circuit (\u201cDC Appeals Court\u201d) affirmed<\/a> the DC Court\u2019s confirmation of the award in 2020. <\/p>\n\n\n\n
These proceedings also led to judgments for discovery sanctions and accrued sanctions against Romania, which were upheld<\/a> by the DC Appeals Court in June 2022. <\/p>\n\n\n\n
Subsequently, Romania sought relief<\/a> from the 2019 judgment and ensuing sanctions in March 2022. It relied on the two 2022 decisions of the CJUE. The DC Court rejected<\/a> Romania\u2019s request in December 2022. The state appealed<\/a>. <\/p>\n\n\n\n
<\/div>\n\n\n\nDC Appeals Court Rejects Romania\u2019s Request for Relief <\/strong> <\/h4>\n\n\n\n
The DC Appeals Court first noted that Romania does not distinguish between the three DC Court judgments and reasons that if the 2019 judgment is set aside, the sanction should also be set aside. Thus, the court only addressed whether the DC Court erred in denying relief from the 2019 judgment. <\/p>\n\n\n\n
First, the court rejected Romania\u2019s argument that the DC Court\u2019s jurisdictional analysis was premised on an erroneous interpretation and application of EU law. <\/p>\n\n\n\n
The court was unconvinced that the 2022 CJEU decisions support the interpretation that the state\u2019s accession to the EU retroactively renders the BIT \u201cvoid ab initio<\/em>\u201d. It explained that the January 2022 decision \u201cdoes not implicitly, much less \u2018indisputably\u201d rule on the retroactive validity of an agreement to arbitrate pre-dating Romania\u2019s accession<\/em>\u201d and that the September 2022 decision \u201csimilarly states that Romania\u2019s consent to arbitrate became void \u2018from Romania\u2019s accession to the European Union\u2019<\/em>\u201d. <\/p>\n\n\n\n
The court highlighted that under the FSIA exception, \u201cthe relevant jurisdictional question is the existence of a valid agreement to arbitrate<\/em>\u201d. <\/p>\n\n\n\n
Second, the court rejected Romania\u2019s contention that the DC Court\u2019s subject matter jurisdiction depended on the 2019 judgment of the General Court of the EU. It explained that the DC Court based its conclusion on a \u201cclose inspection<\/em>\u201d of the award and the BIT. <\/p>\n\n\n\n
Romania contended, for the first time on appeal, that the 2022 CJEU decision invalidated the award itself. The court was unconvinced, noting that under the ICSID Convention, the only possibility to set aside an ICSID award is through ICSID annulment proceedings. <\/p>\n\n\n\n
Finally, Romania repeated its arguments that the 2022 CJEU decisions established that there has never been a valid agreement to arbitrate and invoked the principle of international comity. <\/p>\n\n\n\n
The court assessed whether the asserted comity concerns \u201crise to the level of an extraordinary circumstance<\/em>\u201d. It found that the DC Court \u201ccarefully examined<\/em>\u201d the CJEU decisions before concluding that they did not affect jurisdiction under the FSIA. It highlighted the United States\u2019 treaty obligations under the ICSID Convention, requiring US courts to give \u201cfull faith and credit<\/em>\u201d to ICSID awards. <\/p>\n\n\n\n
The investors are also pursuing enforcement of the award in other jurisdictions. In March 2024, the CJEU ruled<\/a> that the UK Supreme Court infringed EU law by enforcing the award. <\/p>\n\n\n\n
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\n\n\n\n<\/strong><\/a>GPGC v. Ghana<\/strong><\/a> <\/strong><\/h2>\n\n\n\n
Ghana Declared in Default in US Enforcement Proceedings of USD 134 Million Award<\/strong> <\/strong><\/h4>\n\n\n\n
<\/div>\n\n\n\nPCA Case No. 2019-05<\/strong>
Institution:<\/strong> PCA<\/a> (Permanent Court of Arbitration)
Tribunal:<\/strong> John Beechey <\/a>(President), J. William F. Rowley<\/a> (Appointed by the claimant), Albert K. Fiadjoe<\/a> (Appointed by the respondent)
Seat of Arbitration:<\/strong> London, United Kingdom <\/p>\n\n\n\n
\n\n\n\n<\/div>\n\n\n\nOn 24 April, the United States Bankruptcy Courts for the District of Columbia declared<\/a> Ghana in default in the context of enforcement proceedings of a contractual PCA award. <\/p>\n\n\n\n
The dispute arose from Ghana\u2019s termination of an agreement entered with GPGC, a Ghanaian majority-owned subsidiary of Singaporean Trafigura Group for the installation and operation of two gas turbine power plants. In January 2021, the arbitral tribunal declared<\/a> Ghana\u2019s termination of the contract unlawful and awarded GPGC USD 134 million in damages plus interest, along with legal and arbitration costs.\u00a0<\/p>\n\n\n\n
In its petition to enforce<\/a> the award, GPGC said that Ghana has already made partial payments but that the remaining amount due with interest is USD 134 million (as of January 19, 2024).\u00a0<\/p>\n\n\n\n
GPGC is also seeking enforcement of the award in the UK. In October 2023, the High Court of Justice of England and Wales rejected<\/a> Ghana\u2019s attempt to set aside an order allowing alternative service of interim charging orders against five London properties where the state held either freehold or leasehold interests (see our prior digest here<\/a>). <\/p>\n\n\n\n
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\n\n\n\n<\/a>Lao Holdings v. Laos (I)<\/strong><\/a> <\/strong><\/strong><\/h2>\n\n\n\n
Laos Successful in Obtaining Enforcement of ICSID Costs Awards in Singapore<\/strong> <\/strong><\/strong><\/h4>\n\n\n\n
<\/div>\n\n\n\nICSID Case No. ARB(AF)\/12\/6<\/strong>
Institution: <\/strong>ICSID <\/a>(International Centre for Settlement of Investment Disputes)
Tribunal: <\/strong>William Ian Corneil Binnie<\/a> (President), Bernard R. Hanotiau<\/a> (Appointed by the claimant), Brigitte Stern<\/a> (Appointed by the State)
Seat of Arbitration:<\/strong> Singapore, Singapore <\/p>\n\n\n\n
\n\n\n\n<\/div>\n\n\n\nOn 18 April, the Singapore International Commercial Court (SICC) refused<\/a> to set aside an order that permitted Laos to enforce a USD 2 million ICSID costs award. <\/p>\n\n\n\n
<\/div>\n\n\n\nBackground <\/strong> <\/h4>\n\n\n\n
The dispute arose out of Lao Holdings\u2019 (\u201cLH\u201d) investment to develop a casino in Laos and involved numerous arbitrations between LH and its affiliates against Laos. <\/p>\n\n\n\n
In the ICSID Additional Facility arbitration initiated by LH against Laos under the Laos\u2014Netherlands BIT, the tribunal\u00a0denied<\/a>\u00a0LH the benefit of treaty protection after finding bad faith in the initiation of some investments and bad faith in the performance of other investment agreements. The tribunal ordered the investor to pay Laos USD 481,622 in arbitration costs and USD 1.4 million for the state\u2019s legal costs.\u00a0\u00a0\u00a0<\/p>\n\n\n\n
LH sought to set aside the award at the seat in Singapore. The SICC dismissed<\/a> LH\u2019s set aside request in 2021. The judgment was later upheld<\/a> by the Singapore Court of Appeal in 2022. <\/p>\n\n\n\n
In May 2023, Laos obtained enforcement of the award in Singapore. LH applied to set aside the enforcement order. <\/p>\n\n\n\n
<\/div>\n\n\n\nSICC Upholds Enforcement Order <\/strong> <\/h4>\n\n\n\n
LH contended that the enforcement order should be set aside, and enforcement refused, since
(i) the award is contrary to public policy,
(ii) the costs order was a decision on a matter beyond the scope of the submission to arbitration,
(iii) the costs order was not in accordance with the agreed arbitral procedure. <\/p>\n\n\n\nLH said that around March 2020, it learned about a fee cap agreement between Laos and its legal counsel. LH contended that it sought to recover additional expenses above that fee cap. The investor argued that the ICSID tribunal was misled into granting an excessive costs order due to Laos\u2019 intentional non-disclosure of the agreement. <\/p>\n\n\n\n
Laos argued that LH was precluded from bringing its application because it was aware of these facts during its set-aside bid and should have raised the grounds of challenge at that time. <\/p>\n\n\n\n
<\/div>\n\n\n\nAbuse of Process<\/strong> <\/h5>\n\n\n\n
LH contended that it could not have raised these issues in the set aside proceeding as it was time-barred and precluded from introducing those grounds since the fee cap arrangement came to light after the expiry of the three-month limit set by Article 34(3) of the UNCITRAL Model Law<\/a>. <\/p>\n\n\n\n
In reply, Laos argued that the three-month limit only applies to the filing of the originating summons and not the affidavit in support. <\/p>\n\n\n\n
The SICC agreed with Laos. It found that LH \u201ccould and should have<\/em>\u201d brought the grounds relating to the fee agreement in the context of the set aside proceeding and that \u201cto raise them now would be to misuse or abuse the process of the court<\/em>\u201d. <\/p>\n\n\n\n
<\/div>\n\n\n\nMerits of the Claim<\/strong> <\/h5>\n\n\n\n
In any event, the SICC ruled that LH\u2019s grounds against enforcement have no merit. <\/p>\n\n\n\n
The court found that the agreement had a fee cap “but also a conditional element for GOL to pay its counsel any amount above the US$1.5 million fee cap which was awarded as costs and expenses by the BIT I Tribunals and recovered<\/em>.” <\/p>\n\n\n\n
Further, the court ruled that Laos was not under an obligation to disclose the agreement to the ICSID tribunal \u201cas it could not have been material to the award of costs<\/em>\u201d. The court agreed with the state that \u201ca party does not have to disclose the fee agreement with its lawyers if it is claiming an amount that is equal to or lower than the amount payable by the client<\/em>\u201d, which it found to be the case. <\/p>\n\n\n\n
The Court was not persuaded by LH’s arguments that disclosure of a similar fee agreement in a parallel SIAC arbitration had impacted the tribunal\u2019s costs order (Laos v. Lao Holdings and Sanum, SIAC Case No. ARB 143\/14\/MV<\/a>). <\/p>\n\n\n\n
The court highlighted that even if it had concluded that the fee agreement should have been disclosed, \u201cthe non-disclosure could not possibly have reached the high threshold required for a finding that enforcement of the ICSID Award would be contrary to public policy in Singapore<\/em>.\u201d <\/p>\n\n\n\n
Accordingly, the SICC dismissed LH\u2019s application and allowed Laos to enforce the award. <\/p>\n\n\n\n
<\/div>\n\n\n\nLaos Granted Alternative Means of Service in Enforcement Proceedings in the US<\/strong> <\/h4>\n\n\n\n
On 24 April, the United States District Court for the Northern Mariana Islands granted<\/a> Laos\u2019 motion for alternative means of service. <\/p>\n\n\n\n
The US proceedings concern enforcement of the award rendered in the\u00a0ICSID AF proceeding with LH<\/a>\u00a0and the award rendered in the parallel BIT proceeding between\u00a0LH\u2019s\u00a0affiliate\u00a0Sanum Investments and Laos (PCA Case No. 2013-13)<\/a>, which concluded with a USD 1.7 million costs award in favour of the state.\u00a0\u00a0\u00a0<\/p>\n\n\n\n
The US court granted Laos\u2019 motion to serve Shawn A. Scott and Sanum Investments Ltd. by alternative means pursuant to Fed. R. Civ. P. 4(f)(3). <\/p>\n\n\n\n
The US proceeding has been launched against John K. Baldwin, Shawn A. Scott and Bridge Capital, LLC, the alleged alter egos of LH and Sanum. <\/p>\n\n\n\n
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\n\n\n\n<\/a>EDF v. Spain<\/strong><\/a> <\/strong><\/strong><\/h2>\n\n\n\n
Swiss Federal Tribunal Upholds Intra-EU ECT Award, Dismissing Spain\u2019s EU Law Arguments<\/strong> <\/strong><\/strong><\/h4>\n\n\n\n
<\/div>\n\n\n\nPCA Case No. AA613<\/strong>
Institution: <\/strong>PCA<\/a> (Permanent Court of Arbitration)
Tribunal:<\/strong> Alejandro A. Escobar<\/a> (President), Stanimir A. Alexandrov (Appointed by the claimant), Ra\u00fal E. Vinuesa (Appointed by the State)
Seat of arbitration: <\/strong>Geneva, Switzerland <\/p>\n\n\n\n
\n\n\n\n<\/div>\n\n\n\nOn 3 April, in a landmark ruling<\/a>, the Swiss Federal Tribunal dismissed Spain\u2019s bid to set aside an intra-EU Energy Charter Treaty<\/a> (ECT) award that had ordered it to pay French EDF Energies Nouvelles EUR 29.6 million in damages. The judgment was published earlier this month. <\/p>\n\n\n\n
<\/div>\n\n\n\nBackground <\/strong> <\/h4>\n\n\n\n
This arbitration is one of many that arose from Spain\u2019s reforms of incentives offered to investors in the renewable energy sector. <\/p>\n\n\n\n
EDF initiated the arbitration in 2016 on the basis of the ECT<\/a>. In 2023, the tribunal majority dismissed Spain\u2019s EU law objections to jurisdiction and found that Spain breached Article 10(1) of the ECT. The tribunal ordered Spain to pay EUR 29.6 million in damages. Raul E. Vinuesa, the state\u2019s appointee, dissented. <\/p>\n\n\n\n
Spain sought to set aside the award at the seat in Geneva. <\/p>\n\n\n\n
<\/div>\n\n\n\nSwiss Federal Tribunal Rejects CJEU\u2019s Interpretation in Komstroy, Upholds intra-EU ECT award <\/strong> <\/h4>\n\n\n\n
First, Spain contended that the tribunal had failed to properly discuss during its deliberation the effect of the award in Green Power v. Spain, which is the first known award to accept the intra-EU objection to jurisdiction. The state also relied on the dissenting opinion of Raul E. Vinuesa, which raised this point. <\/p>\n\n\n\n
In this regard, Spain argued that, according to article 190 of the Federal Act on Private International Law (PILA), the arbitral tribunal had been improperly constituted, its right to be heard had been violated, and procedural public policy had been infringed. <\/p>\n\n\n\n
The Swiss Federal Tribunal was unconvinced. The court explained that a reading of the award clearly shows that the tribunal had indeed taken into consideration the Green Power award in its deliberation and decision. The court reasoned that the dissenting opinion is without effect as \u201ca dissenting opinion remains an independent opinion, unrelated to the award, which does not affect either the reasons or the operative part of the award<\/em>.\u201d <\/p>\n\n\n\n
Second, Spain then challenged the impartiality of the tribunal’s president, Alejandro A. Escobar. It said the reasoning behind the award is highly similar to that in Triodos v. Spain, whose tribunal was also presided over by Escobar.\u00a0<\/p>\n\n\n\n
The Swiss court was also unconvinced by this argument. The court found Spain\u2019s challenge belated as it never raised this during the arbitration. It highlighted that it is \u201chardly surprising that the answer to an identical problem should be the same in two awards handed down six months apart by arbitral tribunals presided over by the same person<\/em>.\u201d <\/p>\n\n\n\n
Third, Spain advanced that the tribunal erred in upholding jurisdiction over the dispute. The state argued that Article 26 of the ECT is incompatible with EU law. It said that in the event of such a conflict of norms, EU law should take precedence over the ECT. <\/p>\n\n\n\n
The court clarified that it freely examines the jurisdiction of the arbitral tribunal. It explained that this may entail assessing questions of foreign law. In doing so, the court has full discretion, but in principle accepts the majority opinion, or in the event of disagreement between doctrine and case law, the opinion of the Supreme Court of that state. <\/p>\n\n\n\n
In the context of international investment treaties, the court specified that it would itself determine the meaning to be given to certain terms, taking into account, where appropriate, the doctrine and drawing inspiration, if necessary, from the solutions reached by arbitral tribunals in the matter. The court emphasised however, that awards are not binding on other arbitral tribunals or the court, and that \u201carbitral jurisprudence cannot be considered a source of arbitration law as such<\/em>\u201d. <\/p>\n\n\n\n
The court explained that it would interpret the ECT in light of the Vienna Convention on the Law of Treaties<\/a>. <\/p>\n\n\n\n
The court highlighted that \u201cthe present dispute is part of a wider issue concerning the legitimacy of recourse to investment arbitration within the EU to settle disputes of an intra-European nature<\/em>\u201d and that \u201cfor several years now, EU bodies have been waging a crusade<\/em>\u201d against intra-EU investment arbitration disputes. <\/p>\n\n\n\n
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