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\nHeirs to the Sultanate of Sulu v. Malaysia<\/strong><\/a>\u00a0<\/strong><\/a><\/h2>\n\n\n\n
Malaysian State-Owned Petronas Files for \u00a71782 Discovery in View of Actions Relating to the Sulu v. Malaysia Arbitration<\/strong>\u00a0<\/strong><\/strong><\/h4>\n\n\n\n
<\/div>\n\n\n\nInstitution: <\/strong>Ad hoc Arbitration\u00a0\u00a0
Tribunal:<\/strong> Gonzalo Stampa<\/a> (Sole arbitrator)\u00a0
Seat of arbitration:<\/strong> Paris, France\u00a0<\/p>\n\n\n\n
\n\n\n\n<\/div>\n\n\n\nOn 28 May, Petronas, Malaysia’s national oil and gas company, filed<\/a> for discovery in the United States pursuant to 28 U.S.C. \u00a7 1782, in light of civil and criminal proceedings it intends to initiate in Spain and Luxembourg relating to the Sulu v. Malaysia arbitration. <\/p>\n\n\n\n
The application is filed by two Luxembourg-based subsidiaries of Petronas against Therium Capital (which provided funding for the arbitration), Evergreen (the parent entity of Therium), and several banking entities. Petronas asserts that, according to public sources, Therium has provided more than USD 20 million in funding to the Sulu claimants. <\/p>\n\n\n\n
The application pertains to the now-infamous USD 15 billion award<\/a> rendered in 2022 by Spanish arbitrator Gonzalo Stampa. During the arbitration, Mr. Stampa moved the seat from Madrid to Paris after a Madrid court had annulled his appointment. This notably led to his criminal conviction in Spain in December 2023. The appeal of the conviction was dismissed by the Madrid Court of Appeal last month. <\/p>\n\n\n\n
Petronas says that the Sulu claimant’s efforts to enforce the award have caused it “significant damages in seeking to set aside attachments that have been improperly levied over their bank accounts by the Sulu Claimants<\/em>“. Petronas contends the final award is “highly irregular<\/em>” and “bears no connection whatsoever to the value of the annual lease payments<\/em> [\u2026] a mere US $1,050<\/em>.” <\/p>\n\n\n\n
The application has been filed in view of four actions Petronas plans to launch: <\/p>\n\n\n\n
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- A civil claim in Spain against Mr. Stampa for damages arising as a result of the “rogue arbitration<\/em>“.\u00a0<\/li>\n<\/ul>\n\n\n\n
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- A civil claim in Spain against the Sulu claimants, their attorneys and the entities funding and\/or supporting the Sulu claimants in the arbitration and enforcement proceedings for “for acting with willful negligence by purposefully ignoring the revocation of Mr. Stampa’s authority as arbitrator by the Spanish Courts<\/em>“.\u00a0<\/li>\n<\/ul>\n\n\n\n
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- A private criminal prosecution against the Sulu claimants, their Spanish attorneys, and\/or the funders “for inducing Mr. Stampa to commit a criminal offence<\/em>“.\u00a0<\/li>\n<\/ul>\n\n\n\n
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- Civil claims in Luxembourg against the Sulu claimants and the funder to recover the losses arising out of the attachments.\u00a0\u00a0<\/li>\n<\/ul>\n\n\n\n
The applicants seek documents and bank records relating to any money transfers between entities within the Therium Group of companies and Mr. Stampa, or any person who may have conspired with Mr. Stampa, as well as documents relating to “the level of control and direction which entities within the Therium Group have over the Sulu Claimants’ legal strategy<\/em>“. <\/p>\n\n\n\n
In Luxembourg, the Sulu claimants attached assets belonging to the two Petronas entities in July 2022, but the attachment was set aside<\/a> in January 2023. Earlier this year, in February 2024, the Sulu claimants filed for another attachment. The proceeding is currently pending. <\/p>\n\n\n\n
The Sulu claimants have initiated enforcement proceedings in multiple jurisdictions. In November 2023, Malaysia overturned<\/a> an order authorising the attachment of three diplomatic buildings in Paris (see our previous digest here<\/a>). <\/p>\n\n\n\n
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\n\n\n\nCEF Energia v. Italy<\/strong><\/a>\u00a0<\/strong><\/a><\/h2>\n\n\n\n
Svea Court of Appeal Sets Aside Intra-EU ECT Award\u00a0<\/strong>\u00a0<\/strong><\/h4>\n\n\n\n
<\/div>\n\n\n\nSCC Case No. 2015\/158<\/strong>\u00a0
Institution: <\/strong>SCC (Stockholm Chamber of Commerce)<\/a>\u00a0
Tribunal:<\/strong> Klaus Reichert<\/a> (President), Klaus M. Sachs<\/a> (Appointed by the claimant), Giorgio Sacerdoti<\/a> (Appointed by the State)\u00a0
Seat of arbitration:<\/strong> Stockholm, Sweden\u00a0<\/p>\n\n\n\n
\n\n\n\n<\/div>\n\n\n\nOn 27 May, the Svea Court of Appeal set aside<\/a> an intra-EU ECT award<\/a> that ordered Italy to pay Dutch company CEF Energia EUR 9.6 million in damages plus interest and costs. <\/p>\n\n\n\n
Background <\/strong> <\/p>\n\n\n\n
Following incentive schemes implemented by Italy in the early 2000s to encourage investment in renewable energies, CEF Energia invested in photovoltaic plants between 2010 and 2012. However, Italy later enacted several reforms that reduced the value of the tariffs. <\/p>\n\n\n\n
In response, CEF initiated<\/a> arbitration in 2016 under the Energy Charter Treaty<\/a> (ECT). <\/p>\n\n\n\n
In a January 2019 award<\/a>, the arbitral tribunal dismissed Italy\u2019s intra-EU objection to jurisdiction but declined jurisdiction over certain measures due to the ECT taxation carve-out. On the merits, the tribunal found that a 2014 decree reduced the tariff cuts and breached the investor\u2019s legitimate expectations. Italy was ordered to pay the investor EUR 9.6 million in damages plus interest and a portion of the investor\u2019s legal and expert fees. <\/p>\n\n\n\n
Italy sought to set aside the award at the seat of arbitration in Stockholm. In April 2019, the Svea Court of Appeal stayed enforcement of the award pending the conclusion of the set aside proceeding. <\/p>\n\n\n\n
Concurrently, CEF filed<\/a> for enforcement of the award in the US in August 2019. The proceeding has been stayed<\/a> since July 2020 pending the conclusion of the Swedish proceeding. <\/p>\n\n\n\n
Svea Court of Appeal Finds Award Incompatible with Swedish Public Policy and EU Law <\/strong> <\/p>\n\n\n\n
In its judgment, the Svea Court of Appeal (\u201cSvea Court\u201d) recalled the CJEU judgments in Achmea<\/a>, Komstroy<\/a>, and PL Holdings<\/a>. It highlighted that in PL Holdings, the CJEU ruled that the arbitration clause contained in Article 26 of the ECT does not apply to disputes between an EU member state and an investor from another member state. The Svea Court explained that it follows from PL Holdings that arbitration clauses contained in investment treaties between member states are contrary to the principles of mutual trust, sincere cooperation, and the autonomy of EU law. <\/p>\n\n\n\n
The Svea Court elucidated that following the CJEU\u2019s ruling in PL Holdings, the Swedish Supreme Court set aside<\/a> the award, considering that it is \u201cincompatible with the fundamental rules and principles governing the legal system of the EU and thus also of Sweden<\/em>\u201d. <\/p>\n\n\n\n
As such, the Svea Court found that the award, which involved an investment dispute between a member state and an investor from another member state, is \u201cmanifestly incompatible<\/em>\u201d with Swedish public policy and must be set aside. It did not rule on Italy\u2019s remaining grounds. <\/p>\n\n\n\n
Last April, the Svea Court set aside<\/a> another intra-EU ECT award<\/a> in Triodos v. Spain on the same grounds (see our previous digest here<\/a>). <\/p>\n\n\n\n
Related Greentech Action <\/strong> <\/p>\n\n\n\n
In a Status Report<\/a> filed in the US enforcement proceeding of the Greentech award<\/a>, Italy stated that it expects the award to be set aside by the Svea Court of Appeal for the same reasons, \u201cas the Greentech arbitration was conducted pursuant to the same clause in the Energy Charter Treaty<\/em>\u201d and \u201cthe two cases concern similar facts and involve identical legal issues<\/em>\u201d. <\/p>\n\n\n\n
The Greentech investors were awarded<\/a> EUR 11.9 million in damages plus interest and costs. <\/p>\n\n\n\n
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\n\n\n\n<\/a>Oschadbank v. Russia<\/strong><\/a>\u00a0<\/strong><\/strong><\/h2>\n\n\n\n
Arbitral Tribunal Dismisses Russia\u2019s Request for Revision of USD 1.1 Billion Award <\/strong> <\/h4>\n\n\n\n
<\/div>\n\n\n\nPCA Case No. 2016-14<\/strong>\u00a0
Institution: <\/strong>PCA (Permanent Court of Arbitration)<\/a>\u00a0
Tribunal:<\/strong> David A.R. Williams<\/a> (President), Charles N. Brower<\/a> (Appointed by the claimant), Hugo Perezcano D\u00edaz<\/a> (Appointed by the Appointing Authority)\u00a0
Seat of arbitration:<\/strong> Paris, France\u00a0<\/p>\n\n\n\n
\n\n\n\n<\/div>\n\n\n\nOn 11 December 2023, an arbitral tribunal dismissed<\/a> Russia\u2019s request for revision of an award<\/a> that ordered it to pay Ukraine\u2019s Oschadbank USD 1.1 billion in damages. The decision has recently surfaced in US enforcement proceedings. <\/p>\n\n\n\n
Background <\/strong> <\/p>\n\n\n\n
In November 2018, a UNCITRAL<\/a> tribunal found<\/a> Russia liable under the Russia \u2013 Ukraine BIT<\/a> for expropriating Oschadbank\u2019s (\u201cthe investor\u201d) banking business in the Crimean Peninsula. It ordered the state to pay USD 1.1 billion in damages plus interest and costs. <\/p>\n\n\n\n
In February 2019, Russia sought<\/a> to set aside the award at the seat of arbitration in Paris. <\/p>\n\n\n\n
In August 2019, it also filed an application for revision of the award pursuant to Article 1502 of the French Code of Civil Procedure (CCP). It requested the tribunal to revoke its Final Award and issue a new award declaring that it had no jurisdiction over Oschadbank\u2019s claims. The original tribunal was reconvened, and the revision application was stayed pending the conclusion of the French set-aside proceedings. <\/p>\n\n\n\n
The Paris Court of Appeal (\u201cParis CA\u201d) first set aside<\/a> the award in March 2021, finding that Article 12 of the BIT is a temporal condition to the offer to arbitrate and that the tribunal lacked jurisdiction ratione temporis<\/em> as Oschadbank made its investments in Crimea before the 1st of January 1992. <\/p>\n\n\n\n
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