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\nMason Capital v. South Korea<\/strong><\/a>\u00a0<\/strong><\/a><\/h2>\n\n\n\n
South Korea Faces Enforcement of USD 32 Million Award in the US<\/strong>\u00a0<\/strong><\/strong><\/h4>\n\n\n\n
<\/div>\n\n\n\nPCA Case No. 2018-55<\/strong>\u00a0
Institution: <\/strong>PCA (Permanent Court of Arbitration)<\/a>\u00a0
Tribunal: <\/strong>Klaus M. Sachs<\/a> (President), Elizabeth Gloster<\/a> (Appointed by the claimants), Pierre Mayer<\/a> (Appointed by the State)\u00a0
Seat of arbitration: <\/strong>Singapore\u00a0<\/p>\n\n\n\n
\n\n\n\n<\/div>\n\n\n\nOn 24 May, US hedge fund Mason Capital filed<\/a> for enforcement of a USD 32 million treaty award<\/a> against South Korea in the US District Court for the District of Columbia. <\/p>\n\n\n\n
The dispute arose out of government intervention in the merger between Samsung C&T (\u201cSC&T\u201d) and Cheil Industries. Mason Capital, a shareholder in SC&T, alleged that Korea had manipulated the shareholder vote and damaged its investment. It filed<\/a> for arbitration in 2018 under the Korea-USA FTA<\/a>. <\/p>\n\n\n\n
In 2020, the tribunal issued a decision<\/a> rejecting the state\u2019s preliminary objections to jurisdiction. <\/p>\n\n\n\n
In April 2024, the tribunal issued its final award<\/a>, ordering Korea to pay Mason USD 32 million in damages, EUR 630,000 in arbitration costs as well as USD 10 million in legal fees. <\/p>\n\n\n\n
Another US hedge fund and shareholder in SC&T, Elliott Associates, also filed for arbitration under the Korea-USA FTA concerning the same merger. The USD 48 million award<\/a> is currently being challenged by Korea in the UK (see our previous digest here<\/a>). <\/p>\n\n\n\n
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\n\n\n\nThe Lopez-Goyne Family Trust v. Nicaragua<\/strong><\/a>\u00a0<\/strong><\/a><\/h2>\n\n\n\n
Nicaragua Seeks to Enforce ICSID Costs Award in the US<\/strong>\u00a0<\/strong><\/h4>\n\n\n\n
<\/div>\n\n\n\nICSID Case No. ARB\/17\/44<\/strong>\u00a0
Institution: <\/strong>ICSID (International Centre for Settlement of Investment Disputes)<\/a>\u00a0
Tribunal: <\/strong>Luca G. Radicati di Brozolo<\/a> (President), Jos\u00e9 A. Mart\u00ednez de Hoz, Jr.<\/a> (Appointed by the claimants), Brigitte Stern<\/a> (Appointed by the State)<\/p>\n\n\n\n
\n\n\n\n<\/div>\n\n\n\nOn 22 May, Nicaragua filed a petition in the US District Court for the Northern District of California to enforce a USD 1.5 million costs award<\/a> against a group of US investors. <\/p>\n\n\n\n
The dispute arose out of Nicaragua\u2019s termination of a concession contract with Industria Oklahoma Nicaragua (ION) for oil exploration and exploitation in Nicaragua\u2019s onshore Pacific region. The group of investors, which is comprised of 24 individuals, corporations and trusts, held shares in ION. They filed for arbitration in 2017 under the CAFTA-DR-USA. <\/p>\n\n\n\n
The investors alleged that Nicaragua\u2019s termination of the concession constitutes an unlawful expropriation and a breach of the treaty’s fair and equitable treatment standard. They sought compensation of a minimum of USD 35 million and a maximum of USD 198 million. <\/p>\n\n\n\n
Nicaragua submitted a counterclaim alleging breaches of environmental obligations. <\/p>\n\n\n\n
In March 2023, the arbitral tribunal upheld<\/a> jurisdiction over the dispute but found that Nicaragua did not breach the treaty. It ordered the investors to pay the state USD 1.5 million in costs and expenses. The tribunal also ruled that it lacked jurisdiction over the counterclaim. <\/p>\n\n\n\n
The investors sought to annul the award, but the proceeding was discontinued<\/a> at their request in September 2023. <\/p>\n\n\n\n
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\n\n\n\n<\/a>Clorox v. Venezuela<\/strong><\/a>\u00a0<\/strong><\/strong><\/h2>\n\n\n\n
Venezuela Fails to Set Aside USD 104 Million Award in Switzerland<\/strong>\u00a0<\/strong><\/strong><\/h4>\n\n\n\n
<\/div>\n\n\n\nPCA Case No. 2015-30<\/strong>\u00a0
Institution: <\/strong>PCA (Permanent Court of Arbitration)<\/a>\u00a0
Tribunal:<\/strong> Yves Derains<\/a> (President), Bernard R. Hanotiau<\/a> (Appointed by the claimant), Ra\u00fal E. Vinuesa<\/a> (Appointed by the State)\u00a0
Seat of arbitration: <\/strong>Geneva, Switzerland\u00a0<\/p>\n\n\n\n
\n\n\n\n<\/div>\n\n\n\nOn 26 April, the Swiss Federal Tribunal upheld<\/a> a BIT award that ordered Venezuela to pay USD 104 million to Clorox S.L., a Spanish subsidiary of US multinational Clorox. <\/p>\n\n\n\n
Background<\/strong> <\/p>\n\n\n\n
The dispute arose out of price control measures enacted by Venezuela in 2011. Clorox claimed that the measures heavily affected the profit margin of its subsidiary Clorox Venezuela – the shares of which were transferred to Clorox Spain. <\/p>\n\n\n\n
In 2015, Clorox Spain filed for arbitration under the Spain \u2013 Venezuela BIT<\/a>. In 2019, the tribunal declined<\/a> jurisdiction, finding that Clorox Spain had not actively invested in Venezuela to be protected under the BIT. The award was set aside<\/a> by the Swiss Federal Tribunal in 2020, which considered that the tribunal had added supplementary jurisdictional conditions to the BIT. <\/p>\n\n\n\n
In a second award<\/a> in 2021, a majority of the tribunal upheld jurisdiction and dismissed Venezuela\u2019s abuse of process objection. The Swiss Federal Tribunal rejected<\/a> Venezuela\u2019s set aside bid and upheld the award in 2022. <\/p>\n\n\n\n
In a previously undisclosed August 2023 final award, the arbitral tribunal found that Venezuela indirectly expropriated the investor and ordered the state to pay USD 104 million in damages plus interest. <\/p>\n\n\n\n
Dismissal of Venezuela\u2019s Request to Set Aside the Final Award<\/strong> <\/p>\n\n\n\n
The Swiss Federal Tribunal (\u201cCourt\u201d) first emphasised that under the Swiss Federal Act on Private International Law, it may not review factual findings of the arbitral tribunal in the context of set aside proceedings and stressed that it does not act as an appellate court. <\/p>\n\n\n\n
The Court noted that Venezuela presented its own version of the facts without formally raising a challenge against the reasoning of the award. As such, the Court said it would not take into account the version of the facts presented by Venezuela. <\/p>\n\n\n\n
Venezuela\u2019s only ground was that the award violated public policy. The Court dismissed the state\u2019s claim that the tribunal\u2019s decision is unfounded, arbitrary, and contradicts the facts. The Court reiterated that it is not an appeal jurisdiction and that Venezuela did not establish how the award is contrary to material public policy. <\/p>\n\n\n\n
In conclusion, the Court rejected Venezuela\u2019s attempt to set aside the award. <\/p>\n\n\n\n
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\n\n\n\n<\/a>Marseille-Kliniken v. Equatorial Guinea (II)<\/strong><\/a>\u00a0<\/strong><\/strong><\/h2>\n\n\n\n
Swiss Company Enforces EUR 7.3 Million Award Against Equatorial Guinea in the Cayman Islands<\/strong>\u00a0<\/strong><\/strong><\/h4>\n\n\n\n
<\/div>\n\n\n\nSCAI Case No. 600413-2015<\/strong>\u00a0
Institution:<\/strong> SAC (Swiss Arbitration Centre formerly SCAI)<\/a>\u00a0
Tribunal: <\/strong>Andrea Meier<\/a> (President), Felix Fischer<\/a> (Appointed by the claimant), Melissa Magliana<\/a> (Appointed by the institution)\u00a0
Seat of arbitration:<\/strong> Zurich, Switzerland\u00a0<\/p>\n\n\n\n
\n\n\n\n<\/div>\n\n\n\nOn 8 March, the Grand Court of the Cayman Islands granted<\/a> Marseille-Kliniken leave to enforce a EUR 7.3 million SCAI award against Equatorial Guinea in ex parte<\/em> proceedings. The judgment was only recently published. <\/p>\n\n\n\n
Background<\/strong> <\/p>\n\n\n\n
The dispute arose out of a 2009 management contract between Swiss-based Marseille-Kliniken (\u201cMK\u201d) and Equatorial Guinea for the operation of a medical centre, staff training, and the development of hospital administration software. The dispute gave rise to a first arbitration that was settled<\/a> after a EUR 14 million award<\/a> in favour of MK. <\/p>\n\n\n\n
In the second arbitration, MK was awarded<\/a> EUR 7.3 million in damages plus interests and costs in December 2017. In November 2023, MK obtained confirmation<\/a> of the award in the US (see our previous digest here<\/a>). Guinea appealed<\/a> in December 2023. <\/p>\n\n\n\n
MK later launched enforcement proceedings in the Cayman Islands in December 2023. It sought an ex parte<\/em> order for leave to enforce the 2017 award. <\/p>\n\n\n\n
Ex Parte<\/em><\/strong> Enforcement of the Award in the Cayman Islands<\/strong> <\/p>\n\n\n\n
In the Judgment, Justice Kawaley found that MK\u2019s application fulfilled all the statutory requirements for ex parte<\/em> enforcement. He explained that the \u201capplication was almost a text book case for granting leave to enforce at the ex parte stage<\/em>\u201d and saw no reason to refuse enforcement of the award. <\/p>\n\n\n\n
Justice Kawaley discussed the time limit for challenging the ex parte<\/em> order. He noted it was clear from the US enforcement proceedings that the state has \u201cno apparent difficulty in instructing counsel<\/em>\u201d. He explained that a period of 21 days is justified over the standard period of 14 days since \u201cserving or giving notice to a party overseas will justify an extension to the standard response time applicable to parties within the jurisdiction<\/em>.\u201d <\/p>\n\n\n\n
Justice Kawaley concluded that \u201cthe fact that one attempt to resist enforcement had already been rejected by another court made it seem implausible that any seriously arguable grounds for setting aside the Ex Parte Order I had decided to grant would be advanced to this Court.<\/em>\u201d <\/p>\n\n\n\n
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