THE AUTHOR:
Zeyad Abouellail, Legal Content Officer at Jus Mundi
Introducing “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 –– from post-award settlements, compliance with awards, to recognition and enforcement procedures, annulment, and more.
Eurus Energy v. Spain and Sevilla Beheer v. Spain
Spain files for annulment of renewables awards
Sevilla Beheer v. Spain, ICSID Case No. ARB/16/27
Institution: ICSID (International Centre for Settlement of Investment Disputes)
Tribunal: Raëd Fathallah (President), Peter D. Cameron (Appointed by the claimants), Attila Massimiliano Tanzi (Appointed by the State)
Ad hoc Committee: Not yet constituted
Eurus Energy v. Spain, ICSID Case No. ARB/16/4
Institution: ICSID (International Centre for Settlement of Investment Disputes)
Tribunal: Anne K. Hoffmann (President, appointed following passing away of James R. Crawford), Oscar M. Garibaldi (Appointed by the claimant), Andrea Giardina (Appointed by the State)
Ad hoc Committee: Not yet constituted
Spain has filed requests for annulment of two awards that held it liable for damages under the Energy Charter Treaty (“ECT”).
Sevilla Beheer v. Spain
On the 22nd of September, ICSID registered Spain’s request against the May 2022 award, which ordered the State to pay EUR 6.7 million in damages.
The arbitration was commenced in 2016 by two Dutch companies, Sevilla Beheer and Cordoba Beheer, and concerns Spain’s modification of the Feed-in Tariff scheme aimed to encourage investment in the renewable energy market. The investors alleged that Spanish regulatory measures enacted between 2010 and 2014 violated Article 10(1) of the ECT.
In a February 2022 Decision on Jurisdiction, Liability and Principles of Quantum, the tribunal rejected Spain’s intra-EU objection to jurisdiction and found that the retroactive application of the regulatory regime to remuneration already received by claimants’ photovoltaic plants violated the fair and equitable treatment standard of the ECT.
Later in the proceeding, the tribunal twice rejected Spain’s requests to reconsider the decision on jurisdiction, in August 2022 and January 2023.
The tribunal awarded EUR 6.7 million in damages out of the EUR 38 million initially claimed, plus interests, and ordered each party to bear its own costs.
Eurus Energy v. Spain
On the 19th of September, Spain’s request for annulment of the November 2022 award that ordered it to pay Japanese investor Eurus Energy EUR 106 million in damages was registered by ICSID.
This arbitration was also commenced in 2016 and concerned the claimant’s investment in wind farms following Spain’s differential tariffs regime for renewable energy producers. The case was first filed by both Eurus Energy and its Dutch wholly owned subsidiary Eurus Energy B.V, but the latter withdrew from the proceeding in 2018.
In a March 2021 Decision on Jurisdiction and Liability, the tribunal rejected the investor’s expropriation claim but found that the clawback effects of Spain’s 2013 and 2014 regulatory regime violated the ECT’s fair and equitable treatment standard.
The tribunal awarded the investor all the EUR 106.2 million claimed plus interest and USD 4.3 million in arbitration costs and legal fees.
A Decision on the Rectification of the Award was rendered in May 2023 following the claimant’s request for rectification, but remains unpublished.
Cube Infrastructure v. Spain
In Luxembourg, the European Commission files a petition for intervention in support of Spain’s request for an injunction against the enforcement of intra-EU award
ICSID Case No. ARB/15/20
Institution: ICSID (International Centre for Settlement of Investment Disputes)
Tribunal: Vaughan Lowe (President), James J. Spigelman (Appointed by the claimants), Christian Tomuschat (Appointed by the State)
Ad hoc Committee: Jacomijn J. van Haersolte-van Hof (President), Álvaro Rodrigo Castellanos Howell (Member), Timothy J. Feighery (Member)
Documents recently filed in US enforcement proceedings reveal that the European Commission (“EC”) requested a joinder in the anti-enforcement injunction action filed by Spain against the Luxembourg and French-based investors in the Luxembourg District Court.
Background: US Enforcement Action
The US proceedings were commenced in June 2020 when the investors sought to enforce the 2019 award, which ordered Spain to pay EUR 33 million in damages plus interests and costs in the District of Columbia.
The US District Court stayed the case in 2021 pending the outcome of the ICSID annulment proceedings, which concluded in 2022 with the ad hoc committee rejecting Spain’s annulment request.
In March 2023, US Magistrate Judge Moxila Upadhyaya rejected Spain’s intra-EU objection to enforcement and recommended that the Court enforce the award.
A month later, the District Court denied the investors’ motion for an anti-suit injunction enjoining Spain from seeking any relief in the Luxembourg proceeding.
Luxembourg Proceeding
In September 2022, Spain initiated the proceeding, asserting that the investors engaged in an “abuse of rights” and were in breach of EU law by seeking to enforce the award in the US.
Spain petitioned the Court for an injunction to compel the investors to suspend any execution of the award. Alternatively, Spain sought a declaration from the Luxembourg District Court affirming that enforcement measures would be deemed “a disturbance to public order,” contradicting both Luxembourg and EU law.
On the 2nd of August 2023, the EC filed a Petition for Permissive Joinder in support of Spain’s motion. It contended that the direct applicability of Article 108(3) of the TFEU “in the national courts of the [EU] Member States and to its [Luxembourg Court] duty of fair cooperation with Spain”, the Luxembourg Court must ensure that the investors’ “cannot force Spain to be in breach of its obligations under the article [108(3)]”.
The EC also argued that Articles 26, 53, 54, and 55 of the ICSID Convention do not prevent the Luxembourg Court from taking such measures.
In a Joint Status Report filed in the US District of Columbia on the 21st of September 2023, both parties provide their respective positioning on the status quo in light of the Luxembourg action.
* In the US proceedings, English translations were attached to the French original documents filed in the Luxembourg District Court.
Yemen v. Nexen, Consolidated Contractors and Occidental (I) & (II)
Yemen settles enforcement of ICC awards with set-off agreement
ICC Case No. 19869/MCP/DDA
Institution: ICC (International Chamber of Commerce)
Tribunal: Bernard R. Hanotiau (President), William Laurence Craig (Appointed by the State), Michael C. Pryles (Appointed by the respondents)
Seat of arbitration: Paris, France
ICC Case No. 23119/DDA/ELU
Institution: ICC (International Chamber of Commerce)
Tribunal: Andrew White (President), Francesco Mastrandrea (Co-Arbitrator), Doug S. Jones (Co-Arbitrator)
Yemen and an international consortium composed of Canadian Nexen Petroleum, Lebanese Consolidated Contractors (“CCC”), and US-based Occidental Peninsula (“Oxy”) have agreed to set-off to settle the enforcement of a pair of ICC awards.
The disputes concerned an Agreement for petroleum exploration and production entered in 1986 between the Yemen Ministry of Energy, Canadianoxy Offshore, and CCC for exploitation of the Masila oil field located in the eastern region of Yemen.
The tribunal in the first arbitration held the consortium liable for USD 9 million in damages plus interest and costs, while the second tribunal awarded the consortium USD 6.4 million in damages plus interests and costs (the award in the second arbitration has been filed under seal and is not public).
Yemen filed for enforcement of the award rendered in the first arbitration against Oxy in the US District Court for the District of Delaware earlier this year. However, with the conclusion of the second arbitration resulting in Yemen being owed about USD 300.000 on a net basis, both parties settled.
The Delaware court issued the Consent Judgment on September 20, 2023, formalizing the parties’ set-off and mutual agreement to recognize both awards as final, enforceable, and binding on them.
Related documents (ICC Case No. 19869/MCP/DDA):
- Partial Award on Respondents’ Threshold Legal Defences and Partial Dissenting Opinion of W. Laurence Craig, 6 February 2017
- Addendum and Decision, 5 July 2017
- Final Award and Partial Dissenting Opinion of W. Laurence Craig, 4 February 2020
- Addendum and Decision to the Final Award, and Dissent of W. Laurence Craig, 26 August 2020
Olin v. Libya
US court allows attachment of Libyan property to enforce ICC award
ICC Case No. 20355/MCP
Institution: ICC (International Chamber of Commerce)
Tribunal: Nayla Comair-Obeid (President), Roland Ziadé (Appointed by the claimant), Ibrahim Fadlallah (Appointed by the State)
Seat of arbitration: Paris, France
On the 18th of September, the US District Court for the Southern District of New York issued an Order authorizing Cyprus-based Olin Holdings to attach Libya’s property to enforce an ICC award that held Libya liable for EUR 18 million in damages in 2018 pursuant to the Cyprus – Libya BIT.
This comes following a May 2022 decision that confirmed the award and ordered Libya to pay EUR 27.7 million (the value of the award and interest accrued). Earlier this year, following Libya’s appeal to the enforcement of the award, US Court of Appeals for the Second Circuit upheld the District Court’s decision.
In a September 18th Memorandum Opinion and Order, the US District Court for the Southern District of New York has ruled that a fifteenth month since entry of judgment constitutes a “reasonable period of time” within the meaning of the Foreign Sovereign Immunities Act, allowing for an order to seek attachment pursuant to 28 U.S.C. § 1610(c).
The Court rejected Libya’s arguments that enforcement should be delayed pending the outcome of pending French set-aside proceedings. It deemed the potential outcome of the French proceedings as “purely speculative” and explained that should the result be favorable to Libya, it should have to file a motion to vacate the judgment.
Additionally, the Court emphasized that an order pursuant to 28 U.S.C. § 1610(c) is not specific to a particular property, and Libya retains the right to raise objections regarding specific attachments.
Related documents:
- Opinion of the United States Court of Appeals for the Second Circuit, 12 July 2023
- Respondent’s Opposition to Motion for Relief Pursuant to 28 U.S.C. § 1610(C) and 28 U.S.C. § 1963, 30 May 2023
- Submission in Support of Petitioner’s Motion for Relief Pursuant to 28 U.S.C. § 1610(C) and 28 U.S.C. § 1963, 12 May 2023
- Memorandum Opinion and Order of the United States District Court for the Southern District of New York, 22 March 2022
- Decision and Order on Motion of the Supreme Court of the State of New York, 27 April 2021
Nachingwea and others v. Tanzania
UK investor says it will seek to dismiss Tanzania’s bid to annul ICSID award as being without legal merit
ICSID Case No. ARB/20/38
Institution: ICSID (International Centre for Settlement of Investment Disputes)
Tribunal: Cavinder Bull (President), Doak Bishop (Appointed by the claimants), Sanji Mmasenono Monageng (Appointed by the State)
Ad hoc committee (Annulment proceeding): Rolf Knieper (President), Bertha Cooper-Rousseau (Member), Githu Muigai (Member)
On the 18th of September, Australia-based Indiana Resources, the parent company of the claimants in the arbitration, announced in a press release that it would object to Tanzania’s annulment request as being manifestly without legal merit and that it has already started identifying assets held by the State.
The dispute concerned Tanzania’s expropriation of Indiana’s investment in the Ntkaka Hill Nickel Project for the exploration of nickel sulphide deposits in the Nachingwea property in southern Tanzania. After Tanzania began passing new regulations in 2017 and 2018, revoking all prior mining licenses, the investors filed for arbitration in 2020. The claim was funded by Litigation Capital Management.
In a July 2023 award, the tribunal found Tanzania’s actions in breach of the UK – Tanzania BIT and awarded the investors USD 109.5 million in damages and accrued interests plus costs. The State filed for an annulment later in the same month.
Indiana says it will seek to lift the provisional stay of enforcement of the award and is already in the process of identifying assets of interest. It expressed its readiness to engage in a settlement discussion, though no response has been received from the State thus far.
Indiana also revealed that Tanzania has not yet made the required advance payments to ICSID. If no payment is made by the 22nd of September, the proceedings may be suspended.
ABOUT THE AUTHOR
Zeyad Abouellail is a Legal Content Officer at Jus Mundi and a PhD candidate & teaching assistant at Paris-Saclay University. His research focuses on the post-award phase in investment arbitration, and he also lectures on civil and contract law. He holds two Master’s Degrees in International Business Law from Paris-Saclay University and Paris 1 Panthéon-Sorbonne University. Prior to joining Jus Mundi, Zeyad interned at several law firms in international arbitration and corporate law in Cairo, Egypt.
