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.
Libyan Investment Authority succeeds in lifting attachments against its assets in France
Al-Kharafi v. Libya
Institution: Ad hoc Arbitration
Tribunal: Abdel Hamid El-Ahdab (President), Ibrahim Fawzi (Appointed by the investor), Mohamed El-Kamoudi El-Hafi (Appointed by the State)
Seat of Arbitration: Cairo, Egypt
Siba Plast v. Libya
Institution: Ad hoc Arbitration
Tribunal: Not disclosed
Seat of Arbitration: Tunis, Tunisia
The Libyan Investment Authority (“LIA”) announced this week that it has been successful in lifting attachments on its assets in France. According to the LIA, this marks the first time since 2013 that its assets in France have been free from judicial seizures.
The LIA referenced two judgments from the Paris Court of Appeal, both delivered this month.
On November 23rd, the Paris Court of Appeal overturned an attachment secured in 2013 by the construction company Al-Kharafi. The Kuwaiti company aimed to enforce a USD 936 million award issued in early 2013 by an ad hoc tribunal seated in Cairo. As part of this effort, various attachments and seizures were carried out in France, notably the attachment of LIA’s funds to the French bank Société Générale in August 2013.
Although the LIA challenged the attachment in 2021, the enforcement judge (“juge de l’exécution”) dismissed the challenge as untimely. The judge’s rationale was based on the notification of the attachment to the Libyan State, considering the LIA as an extension of the State and therefore considered notified. Subsequently, the LIA appealed this decision.
In its judgment last week, the Paris Court of Appeal ruled in favour of the LIA, finding that it was never officially notified of the attachment. The Court emphasized the lack of evidence showing that the Libyan Ministry of Foreign Affairs had notified the LIA of the decision. Consequently, the time limit for contesting the attachment had not commenced. Additionally, the Court highlighted the possibility of a “double notification” to both the State and its extensions.
On the merits of the attachment, the Court declared it null and void, reasoning that Al-Kharafi failed to obtain the necessary authorization from the French Treasury to attach LIA’s frozen assets. The Court emphasized that under EU Regulation 2016/44, authorization from the competent authority is mandatory before the attachment, not merely at the payment stage.
Furthermore, the Court dismissed Al-Kharafi’s argument that lifting the attachment would infringe upon its property rights and fundamental creditor rights. It stated that the infringement on the creditor’s property rights does not appear disproportionate in light of the “imperatives of peace, stability and security in Libya, and the success of its pursued political transition policy”.
On November 16th, the Paris Court of Appeal upheld the prior lifting of attachments on LIA’s funds held by Société Générale. These attachments, initially secured by Tunisian Siba Plast in 2021, aimed to enforce a USD 280 million award obtained in an ad hoc arbitration seated in Tunis in 2014.
The enforcement judge lifted the attachments in 2022 finding that Siba Plast did not obtain the necessary prior authorization from the French Treasury to attach frozen assets. Siba Plast appealed this decision.
The Paris Court of Appeal confirmed the enforcement judge’s decision, finding that the attachments were irregular. It stressed that the administrative authorisation must necessarily precede the judicial seizure.
Subsidiaries of ExxonMobil seek enforcement of ICSID award against Venezuela in the US
ICSID Case No. ARB/07/27
Institution: ICSID (International Centre for Settlement of Investment Disputes)
Original Tribunal: Gilbert Guillaume (President), Gabrielle Kaufmann-Kohler (Appointed by the investors), Ahmed Sadek El-Kosheri (Appointed by the State)
Ad hoc committee: Franklin Berman (President), Rolf Knieper, Cecil W.M. Abraham (Members)
Resubmission Tribunal: Nicolas Angelet (President), Stephen L. Drymer (Appointed by the investors), Andrea Giardina (Appointed by the State)
On November 22nd, three subsidiaries of ExxonMobil (“Mobil companies”) initiated enforcement proceedings against Venezuela in the US District Court for the District of Columbia.
The Mobil companies seek to enforce a USD 985 million ICSID award resulting from a dispute spanning over 16 years.
Initially, in 2014, an award was issued holding Venezuela liable for USD 1.4 billion concerning the expropriation of the claimants’ investments in the Cerro Negro project, alongside USD 179 million for the La Ceiba project. Subsequently, in 2017, an ICSID ad hoc committee partially annulled the damages awarded concerning the USD 1.4 billion related to the Cerro Negro project. This action prompted the Mobil companies to initiate resubmission proceedings in 2018.
The resubmission tribunal awarded the investors USD 984 million in damages, subject to the Mobil companies reimbursing PDVSA the compensation granted in a parallel ICC arbitration (Mobil v. PDVSA, ICC Case No. 15416/JRF/CA).
ExxonMobil has already sought to join the auction of PDVSA’s assets in Citgo Petroleum in Delaware (led by Crystallex) and joins an ever-growing list of arbitral creditors of Venezuela in the US (see our previous digest here on attachment of PDVSA’s assets by other creditors in Delaware earlier this month).
ICSID Case No. ARB/07/27
- Award (Resubmission Proceeding), 10 July 2023
- Decision Dismissing Respondent’s Proposal for Disqualification of Arbitrator Stephen L. Drymer, 10 November 2021
- Decision on the Respondent’s Representation in this Proceeding, 1 March 2021
- Decision on Annulment, 9 March 2017
- Decision on Stay of Enforcement of the Award, 17 September 2015
- Decision on Revision, 12 June 2015
- Award of the Tribunal, 9 October 2014
- Decision on Jurisdiction, 10 June 2010
Mobil Cerro Negro, Ltd. v. 1. Petróleos de Venezuela, S.A., 2. PDVSA Cerro Negro, S.A., ICC Case No. 15416/JRF/CA
Paris Court confirms lifting of attachment on Malaysian buildings
On November 9th, Malaysia announced that the Paris enforcement judge quashed a prior ex parte order authorising attachment of three diplomatic buildings it owns in Paris, in enforcement proceedings of a USD 15 billion award.
The enforcement judge quashed the order on November 6th, after the Paris Court of Appeal overturned ex parte exequatur of the jurisdictional award earlier this year. Malaysia said it challenged the measures on the ground of immunity of its diplomatic premises as recognised under the Vienna Convention on Diplomatic Relations.
The dispute originates from an 1878 agreement that governed exploitation rights in the former sultanate of Sulu. The agreement included an arbitration clause, stipulating that a third party, the British Consul-General for Borneo, would act as the adjudicator in case of a dispute.
On June 6th, the Paris Court of Appeal found that the clause had become invalid due to the extinction of the Consul-General’s role in Borneo and that the arbitration agreement was null and void. The Court of Appeal set aside the jurisdictional award, finding that the arbitrator lacked jurisdiction to hear the dispute.
Malaysia also applied to set aside the final award; the proceedings are still pending. In the press release, it said that it “is confident that the ultimate annulment of the purported final award by the Paris Court of Appeal is only a matter of time”.
Earlier this year, the claimants were unsuccessful in their attempts to enforce the final award in the Netherlands. On June 27th, the Hague Court of Appeal refused to enforce the award, finding the arbitration agreement is 1878 not valid and that arbitrator Stampa had no jurisdiction to hear the dispute as the Madrid Court that appointed him had later annulled his appointment.
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.