THE AUTHOR:<\/strong> Arbitration Aftermath with Zeyad Abouellail and Esen Ayd\u0131n: Your trusted source for the latest post-award developments in the dynamic world of investor-State and commercial arbitration. Back with a fresh perspective, Zeyad focuses on cases involving States, ministries, and public entities, while Esen handles disputes between private parties. From settlements and compliance with awards to recognition, enforcement procedures, annulment, and beyond. Each week, we bring you global insights and updates to navigate this ever-evolving landscape.<\/p>\n\n\n\n SCC Case No. V 2015\/092<\/strong> On 31 January, the Svea Court of Appeal upheld<\/a> an SCC Award<\/a> that dismissed a USD 6 billion Energy Charter Treaty<\/a> (1994) (“ECT<\/strong>“) claim brought by three Cypriot investors against Ukraine, albeit on different grounds from those reasoned by the arbitrators.<\/p>\n\n\n\n Background<\/strong> <\/p>\n\n\n\n In 2015, three Cypriot companies (“the investors”), ultimately controlled by Ukrainian oligarchs Igor Kolomoisky and Gennadly Bogolyubov, initiated arbitration against Ukraine<\/a>. The investors held a 40% stake in Ukrnafta, Ukraine’s largest oil and gas producer. They claimed that Ukraine had breached the ECT through a series of measures, including the regulation of gas sales prices to Naftogaz and attempts to dismantle Ukrnafta’s corporate structure. The investors sought compensation of around USD 6 billion.<\/p>\n\n\n\n In a Final Award<\/a> issued in February 2021, the tribunal declined jurisdiction over the investors’ claims, finding that:<\/p>\n\n\n\n The investors subsequently applied for the award to be set aside, while Ukraine sought modification of the tribunal’s award of costs. <\/p>\n\n\n\n Svea Court of Appeal Dismisses Investors\u2019 Request to Set Aside Jurisdictional Award<\/strong><\/p>\n\n\n\n In its judgment<\/a>, the Svea Court of Appeal concurred with the tribunal’s finding that the investors had not made a qualifying investment under the ECT. However, the Court diverged from the tribunal’s conclusions on certain points.<\/p>\n\n\n\n The Court observed that the tribunal had erroneously interpreted Ukraine’s denial of benefits objection under Article 17(1) of the ECT as a matter of jurisdiction, rather than admissibility. Consequently, the Court determined that it lacked the authority to assess the tribunal’s interpretation of Article 17(1)’s requirements under Section 36 of the Swedish Arbitration Act. <\/p>\n\n\n\n With regard to the tribunal’s dismissal of the case on grounds of illegality, the Court found that the ECT does not contain any implicit legality requirement. Furthermore, it considered that neither Swedish public policy nor Swedish case law prohibits the examination of a civil case even where the relevant assets had their origin in a crime. The Court further observed that international public policy does not mandate the dismissal of a claim related to corruption. Instead, it was more probable that such allegations would be addressed during the merits stage of the proceedings. The Court also noted that the clean hands principle, upon which the tribunal relied, lacked sufficient international support to justify a dismissal of the claim on this basis.<\/p>\n\n\n\n Nevertheless, the Court opined that the investment did not constitute a protected investment under the ECT. The Court explained that Article 1(6) of the ECT “must be interpreted as requiring, inter alia, that an investment must involve some form of contribution, that it must be of a certain duration, that it must provide an opportunity to make a profit and that it involves the assumption of risk<\/em>“.<\/p>\n\n\n\n On this basis, the court concluded that the investors had not paid consideration for their Ukrnafta shares. <\/p>\n\n\n\n Court Grants Ukraine\u2019s Request for Modification of the Tribunal\u2019s Costs Determination<\/strong><\/p>\n\n\n\n On Ukraine’s request for modification of the tribunal’s costs order (that each party shall bear its own costs), the Court observed that the SCC Arbitration Rules 2010<\/a> provide for the costs-follow-the-event principle and accordingly rejected the investors’ argument that in investor-state arbitration, the parties should bear their own costs. The Court considered that, under Swedish law and the SCC Rules, the starting point is that the prevailing party shall receive compensation for its legal costs.<\/p>\n\n\n\n The Court assessed the procedural history of the arbitration and concluded that no circumstances justified departing from the costs-follow-the-event principle. It determined that Ukraine should be awarded the costs of the arbitration, with the exception of USD 100,000 in compensation to the investors due to Ukraine’s delays in document production. Consequently, the Court granted Ukraine USD 18.9 million in arbitration costs out of a total of USD 23 million.<\/p>\n\n\n\n Furthermore, the investors were ordered to pay Ukraine’s legal costs in the domestic proceedings.<\/p>\n\n\n\n In a press release<\/a>, Ukraine’s Deputy Prime Minister for European and Euro-Atlantic Integration, Olga Stefanishyna, stated, “As a result of considering the plaintiffs’ claims, the arbitration tribunal agreed with Ukraine’s position regarding the tribunal’s lack of jurisdiction to consider this dispute, which was confirmed by the Svea Court of Appeal<\/em>“.<\/p>\n\n\n\n SCC Case No. V 2019\/126<\/strong> In a recently published judgment<\/a> of 23 December 2024, the Svea Court of Appeal set aside an intra-EU USD 33 million ECT <\/a>award, deeming it to be incompatible with Swedish public policy.<\/p>\n\n\n\n Background<\/strong><\/p>\n\n\n\n The dispute arose from a financial penalty imposed by the Polish Material Reserves Agency on Mercuria’s subsidiary, J&S Energy S.A. (JSE), in 2008. Although the penalty was overturned in 2009 by Polish administrative courts, the government failed to fully reimburse Mercuria. This led to the initiation of a first arbitration<\/a> under the ECT at the SCC in 2008, which was dismissed<\/a> on its merits in 2011.<\/p>\n\n\n\n Following unsuccessful attempts to obtain redress through Polish courts, Mercuria initiated a second ECT arbitration in 2019, seeking recovery of the outstanding penalty and accrued interest. In December 2022, the tribunal ruled<\/a> in Mercuria’s favour, awarding approximately USD 33 million in damages plus interest and legal costs.<\/p>\n\n\n\n The tribunal rejected Poland’s argument that intra-EU disputes should not be arbitrated and that Mercuria had committed an abuse of process. The tribunal also dismissed Poland’s fork-in-the-road objection that Mercuria was pursuing identical claims in both arbitration and Polish courts. On the merits, the tribunal found Poland<\/a> in breach of both the effective means and the fair and equitable treatment standards of the ECT, citing undue delays in proceedings, the ineffectiveness of local enforcement remedies, and the administrative authorities’ failure to maintain transparency and respect for procedural property (See<\/em> our previous digest here<\/a>).<\/p>\n\n\n\n While Poland sought to set aside the award at the seat in Stockholm, Mercuria initiated enforcement<\/a> proceedings in the United States.<\/p>\n\n\n\n Svea Court of Appeal Finds Award Incompatible with Swedish and EU Law<\/strong><\/p>\n\n\n\n In its judgment<\/a>, the Svea Court of Appeal relied on the jurisprudence of the CJEU as established in the cases of Achmea<\/em><\/a>, <\/em>Komstroy<\/em><\/a> and PL Holdings<\/em><\/a>. It explained that the Swedish Supreme Court had previously confirmed this approach in the context of setting aside proceedings concerning intra-EU awards. The Court further clarified that intra-EU arbitration clauses are “incompatible with the fundamental rules and principles governing the legal order of the EU, and consequently, of Sweden<\/em>“.<\/p>\n\n\n\n The Court thus found that upholding the award would be “manifestly incompatible with the public policy<\/em>” of Sweden and set it aside pursuant to Section 33(1)(2) of the Swedish Arbitration Act.<\/p>\n\n\n\n Set Aside of the Award Not Contrary to the European Convention on Human Rights (ECHR)<\/strong><\/p>\n\n\n\n Mercuria contended that the Svea Court should not adopt the CJEU’s interpretation of Article 26 of the ECT, as the annulment of the award would amount to a violation of its right to property under Article 1 of the First Additional Protocol<\/a> to the ECHR<\/a>, “both independently and in conjunction with the right to an effective remedy under Article 13 of the ECHR<\/em>“.<\/p>\n\n\n\n The Court acknowledged that it may only diverge from the CJEU’s interpretation if its application “would constitute a serious and unequivocal violation of an individual’s right<\/em>” under the ECHR.<\/p>\n\n\n\n However, the Court noted that the Swedish Supreme Court had previously observed that the annulment of an intra-EU award “does not in itself deprive the parties of the right to a judicial review or a fair trial<\/em>“.<\/p>\n\n\n\n The Svea Court found no reason to depart from this reasoning.<\/p>\n\n\n\n Mercuria was ordered to pay Poland’s costs in the domestic proceeding.<\/p>\n\n\n\n Enforcement of the Award in the United States<\/strong><\/p>\n\n\n\n Mercuria filed for the enforcement of the award in the United States in November 2023. On 2 January 2025, the US District Court for the District of Columbia stayed<\/a> the case pending the conclusion of the set-aside proceeding.<\/p>\n\n\n\n Subsequently, the parties submitted a joint motion<\/a> to resume the proceedings following the Svea Court’s judgment, which was granted by the court in a Minute Order<\/a> dated 31 January 2025.<\/p>\n\n\n\n PCA Case No. 2013-09<\/strong> On 31 January, the Federal Court of Australia ruled<\/a> on India<\/a>‘s appeal against a judgment<\/a> that upheld jurisdiction over the state and dismissed its sovereign immunity arguments under the New York Convention (1958)<\/a> (“NYC<\/strong>“) and the 1985 Australian Foreign States Immunities Act (“FSIA<\/strong>“) in the context of enforcement proceedings of a USD 111 million BIT award<\/a>.<\/p>\n\n\n\n Background<\/strong><\/p>\n\n\n\n In a prior judgment<\/a> in October 2023, Justice Jackman determined that India is not immune from jurisdiction, concluding that there was a clear and unmistakable submission by agreement as defined under section 10(2) of the FSIA. The judge reasoned that India\u2019s signing of the NYC by India constituted a waiver of its immunity from jurisdiction.<\/p>\n\n\n\n India contended that it had signed the NYC with a reservation, namely that its application was limited to “differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the Law of India<\/em>“, as opposed to disputes concerning the conduct of the state acting in its governmental capacity. However, this argument was rejected by the Jackman J.<\/p>\n\n\n\n In November 2023, India was granted leave to appeal<\/a> the judgment (See<\/em> our previous digests here<\/a> and here<\/a>).<\/p>\n\n\n\n Federal Court Finds that India Did Not Waive Its Immunity<\/strong><\/p>\n\n\n\n In its judgment<\/a>, a three-judge bench considered whether India’s submission to the jurisdiction of the court was limited by its reservation to the application of the NYC.<\/p>\n\n\n\n The Court drew upon the provisions of the Vienna Convention on the Law of Treaties<\/a> and the ILC’s Guide to Practice on Reservations to Treaties<\/a>. It established that “the reservation modifies the provision of the treaty to the extent of the reservation for each party reciprocally<\/em>” and that a valid reservation has the inherent capacity to exclude or modify “the legal effect of certain provisions of the treaty in their application to that State<\/em>“.<\/p>\n\n\n\n The Court thus concluded that India has no obligation to Australia to enforce the NYC other than in respect of differences arising out of legal relationships which are considered as commercial, “and, critically, vice versa<\/em>“. The Court considered that even if India’s ratification of the NYC can be considered as a waiver, such a waiver would only apply to awards outside the scope of the reservation.<\/p>\n\n\n\n The Court then proceeded to examine whether the award was commercial in nature. It was noted that, in the proceedings before the primary judge, the investors had “expressly disavowed<\/em>” that the BIT<\/a> and the Devas\/Antrix Agreement constituted commercial transactions. The Court further observed that the investors were not party to the BIT, that “India’s relationship with the BIT was in the realm of public international law that gave international law rights to private investors in India<\/em>“, and that the annulment of the Devas\/Antrix agreement was for reasons of public policy.The Court held that the award did not arise from a commercial relationship.<\/p>\n\n\n\n In conclusion, the Court set aside the judgment of the primary judge and ordered the investors to pay the costs of the appeal.<\/p>\n\n\n\n <\/p>\n\n\n\n An Update on Pending Enforcement Actions Against Spain in US Courts<\/strong><\/p>\n\n\n\n 9REN Holding v. Spain<\/a><\/em><\/strong> NextEra v. Spain<\/a><\/em><\/strong> Infrastructure Services (Antin) v. Spain<\/a><\/em><\/strong> Cube Infrastructure v. Spain<\/a><\/em><\/strong> AES Solar and others (PV Investors) v. Spain<\/a><\/em><\/strong> InfraRed v. Spain<\/a><\/em><\/strong> Hydro v. Spain<\/a><\/em><\/strong>
Zeyad Abouellail, <\/strong>Senior Legal Officer at Jus Mundi<\/strong><\/a><\/strong><\/p>\n\n\n\n
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\n\n\n\n<\/a>Littop v. Ukraine<\/strong><\/a><\/em><\/strong><\/strong><\/h2>\n\n\n\n
Svea Court of Appeal Upholds Award Rejecting Jurisdiction Over USD 6 Billion Claim Against Ukraine<\/strong><\/h4>\n\n\n\n
Institution: <\/strong>SCC<\/a> (SCC Arbitration Institute)
Tribunal: <\/strong>Julian D. M. Lew<\/a> (President), L. Yves Fortier<\/a> (Appointed by the claimants), Rodrigo Oreamuno<\/a> (Appointed by the State)
Seat of arbitration:<\/strong> Stockholm, Sweden<\/p>\n\n\n\n
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\n\n\n\nMercuria Energy v. Poland (II) <\/em><\/strong><\/a><\/h2>\n\n\n\n
Poland Successful in Setting Aside Intra-EU ECT Award in Sweden<\/strong><\/h4>\n\n\n\n
Institution: <\/strong>SCC<\/a> (SCC Arbitration Institute)
Tribunal: <\/strong>Klaus M. Sachs<\/a> (President), Juliet Blanch<\/a> (Appointed by the claimant), Laurence Boisson de Chazournes<\/a> (Appointed by the State)
Seat of arbitration:<\/strong> Stockholm, Sweden<\/p>\n\n\n\n
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\n\n\n\nCC\/Devas v. India (I)<\/strong><\/a><\/em><\/h2>\n\n\n\n
Federal Court of Australia Finds that India Did Not Waive Immunity by Ratifying the New York Convention<\/strong><\/h4>\n\n\n\n
Institution: <\/strong>PCA<\/a> (Permanent Court of Arbitration)
Tribunal: <\/strong>Marc Lalonde<\/a> (President), David R. Haigh<\/a> (Appointed by the claimants), Anil Dev Singh<\/a> (Appointed by the State)
Seat of arbitration:<\/strong> The Hague, Netherlands<\/p>\n\n\n\n
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\n\n\n\n<\/em><\/strong><\/a>9REN Holding v. Spain<\/strong><\/a>; <\/strong>NextEra v. Spain<\/strong><\/a>; <\/strong>Infrastructure Services (Antin) v. Spain<\/strong><\/a>; <\/strong>Cube Infrastructure v. Spain<\/strong><\/a>; <\/strong>AES Solar and others (PV Investors) v. Spain<\/strong><\/a>; <\/strong>InfraRed v. Spain<\/strong><\/a>; <\/strong>Hydro v. Spain <\/strong><\/a>; <\/strong>BayWa v. Spain<\/strong><\/a><\/em><\/strong><\/em><\/h2>\n\n\n\n
ICSID Case No. ARB\/15\/15<\/strong>
Institution: <\/strong>ICSID<\/a> (International Centre for Settlement of Investment Disputes)
Tribunal: <\/strong>William Ian Corneil Binnie<\/a> (President), David R. Haigh<\/a> (Appointed by the claimant), V.V. Veeder<\/a> (Appointed by the State)<\/p>\n\n\n\n
ICSID Case No. ARB\/14\/11<\/strong>
Institution: <\/strong>ICSID<\/a> (International Centre for Settlement of Investment Disputes)
Tribunal:<\/strong> Donald M. McRae<\/a> (President), L. Yves Fortier<\/a> (Appointed by the claimants), Laurence Boisson de Chazournes<\/a> (Appointed by the State)<\/p>\n\n\n\n
ICSID Case No. ARB\/13\/31<\/strong>
Institution: <\/strong>ICSID<\/a> (International Centre for Settlement of Investment Disputes)
Tribunal:<\/strong> Eduardo Zuleta Jaramillo<\/a> (President), Francisco Orrego Vicu\u00f1a<\/a> (Appointed by the claimants), J. Christopher Thomas<\/a> (Appointed by the State)<\/p>\n\n\n\n
ICSID Case No. ARB\/15\/20<\/strong>
Institution: <\/strong>ICSID<\/a> (International Centre for Settlement of Investment Disputes)
Tribunal:<\/strong> Vaughan Lowe<\/a> (President), James J. Spigelman<\/a> (Appointed by the claimants), Christian Tomuschat<\/a> (Appointed by the State)<\/p>\n\n\n\n
PCA Case No. 2012-14<\/strong>
Institution: <\/strong>PCA<\/a> (Permanent Court of Arbitration)
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
ICSID Case No. ARB\/14\/12<\/strong>
Institution: <\/strong>ICSID<\/a> (International Centre for Settlement of Investment Disputes)
Tribunal: <\/strong>Stephen L. Drymer<\/a> (President), William W. Park<\/a> (Appointed by the claimants), Pierre-Marie Dupuy<\/a> (Appointed by the State)<\/p>\n\n\n\n
ICSID Case No. ARB\/15\/42<\/strong>
Institution: <\/strong>ICSID<\/a> (International Centre for Settlement of Investment Disputes)
Tribunal: <\/strong>Lawrence A. Collins<\/a> (President), Peter J. Rees<\/a> (Appointed by the claimants), Rolf Knieper<\/a> (Appointed by the State)<\/p>\n\n\n\n