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.
Energoinvest v. DR Congo (II)
DR Congo Fails in Appeal Against Enforcement of a Duo of ICC Awards in France
ICC Cases No. 11441/KGA & 11442/KGA
Institution: International Chamber of Commerce (ICC)
Tribunal: Renato Roncaglia (President), Marc Ronca (Appointed by the claimant), Mohamed Abu-Samra (Appointed by the institution)
Seat of arbitration: Zurich (ICC Case No. 11441/KGA), Paris (ICC Case No. 11442/KGA)
On 28 February, in two parallel rulings (22-16.151; 22-16.152), the French Court of Cassation dismissed the Democratic Republic of Congo’s (“DRC”) appeals against earlier decisions that confirmed the enforcement of a duo of ICC awards.
Background
In 2003, two identically constituted tribunals ordered the DRC to pay Energoinvest USD 11 million and USD 18 million after the State defaulted on its repayment obligations related to a project for the construction of a hydro-electric facility and electric transmission lines within the DRC.
Subsequently, in 2004, Energoinvest transferred the rights to these awards to FG Hemisphere Associates (“FG”), a US-based investment fund.
By 2009, FG had secured the exequatur of the awards in France. The DRC contested these exequatur orders and, in 2012, informed FG of its decision to exercise its right of withdrawal as per Article 1699 of the French Civil Code (which permits a debtor to repurchase its debt rather than a third party, under the terms agreed upon between the creditor and the third party). FG opposed the DRC’s invocation of the right of withdrawal.
In December 2021, the Paris Court of Appeal upheld the exequatur orders. The DRC appealed the decision to the French Court of Cassation (“Court”).
Court of Cassation Dismisses the DRC’s Challenge
Reiterating its arguments on appeal, the DRC alleged that the arbitral tribunal breached the adversarial principle. The State argued that the tribunal failed to inform it of the procedural calendar and to ensure that procedural documents were properly served to the State even though it ceased to participate in the proceedings. Furthermore, the State contended that the Paris Court of Appeal failed to verify that the DRC had indeed been informed of the different steps of the proceedings and properly served the necessary documents.
The Court of Cassation refuted the DRC’s claims, determining that the State sought to relitigate the Court of Appeal’s discretionary assessment of the factual and evidentiary basis presented to it. The Court elucidated that the Court of Appeal, having considered the evidence, found no breach of the adversarial principle and that the DRC had been adequately informed of the proceedings but had intentionally chosen to withdraw from the arbitration process.
Thus, the Court deemed the DRC’s argument as without merit.
However, on its own motion, the Court of Cassation found that the Court of Appeal erred in adjudicating the DRC’s right of withdrawal.
The Court underscored that the jurisdiction to decide on the right of withdrawal lies with the enforcement judge (juge de l’exécution), not with the set-aside judge adjudicating an appeal against an exequatur order.
Accordingly, the Court determined that the Court of Appeal should not have ruled on the right of withdrawal, leading to the annulment of that part of the judgment. Nevertheless, the Court opted not to remit the case to the Court of Appeal.
Related Documents
- Judgment of the Paris Court of Appeal 18/10217, 7 December 2021
- Judgment of the Paris Court of Appeal 11/20732, 12 April 2016
Worley v. Ecuador
US Investor Pays Costs Award to Ecuador
Institution: Permanent Court of Arbitration (PCA)
Tribunal: Andrés Rigo Sureda (President), Bernard R. Hanotiau (Appointed by the claimant), Brigitte Stern (Appointed by the State)
Seat of arbitration: Paris
On 26 February, the Attorney General’s Office of Ecuador announced that the State received a USD 6 million payment from US-based Worley International to satisfy a costs award.
In December 2023, a PCA tribunal dismissed Worley’s claims under the Ecuador – US BIT based on jurisdictional grounds. The tribunal cited issues of corruption, illegality, and bad faith as the basis for its dismissal. Consequently, Worley was ordered to cover both the arbitration costs and the legal expenses of the State, totalling around USD 6 million.
Worley, in a January press release, refuted allegations of corruption, asserting that it had not violated anti-bribery and corruption laws. The company emphasised its commitment to adhering strictly to such laws, stating, “Worley takes its responsibilities under such laws extremely seriously.“
Following the tribunal’s award, Ecuador promptly initiated enforcement proceedings in the United States. The State submitted its enforcement petition to the Southern District Court of Texas merely one week after the award’s issuance.
Related documents:
Osama Fathallah v. Libya
Libya Secures Set Aside of USD 200 Million Award in Tunis
Institution: Center for Arbitration and Reconciliation of the Arab Pole
Tribunal: Not disclosed
Seat of arbitration: Tunis
On 25 February, the Libyan Lawsuits Department disclosed its success in overturning a USD 200 million contract award in Tunis.
The department revealed that the Tunis Court of Appeal has set aside the international award rendered in 2021, which was administered by the Center for Arbitration and Reconciliation of the Arab Pole in Tunisia.
The award had been granted in favour of Osama Nouh Fathallah. However, the press release does not provide details regarding the nature of the dispute or the grounds of the claim.
Yukos Universal v. Russia
Hulley Enterprises v. Russia
Veteran Petroleum v. Russia
Yukos Shareholders Successful in Seizing Russian Property in London
PCA Cases No. 2005-03/AA226, 2005-04/AA227, 2005-05/AA228
Institution: PCA
Tribunal: L. Yves Fortier (President), Charles H. Poncet (Appointed by the Claimants), Stephen M. Schwebel (Appointed by the State)
Seat of arbitration: The Hague, Netherlands
On 1 February, the Yukos shareholders announced that they seized a vacant plot of land in London belonging to Russia to satisfy a UK costs order.
In November 2023, Justice Cockerill of the High Court of Justice of England and Wales rejected Russia’s arguments of sovereign immunity in an attempt to block the enforcement of the Yukos shareholder awards. Subsequently, Russia was ordered to compensate the investors for their legal expenses incurred during the proceedings, amounting to approximately GBP 960,000, within a 28-day window (see our previous digest here.)
Following the State’s failure to comply with the costs order, the shareholders were granted an Interim Charging Order in January 2024 on a vacant property located at 245 Warwick Road, Kensington. Russia will be able to challenge the seizure at a hearing in April.
According to the press release, this incident marks the first instance of a successful charge against Russian property in England.
Related Documents
- Judgment of the High Court of Justice of England and Wales [2023] EWHC 2704, 1 November 2023
- Ruling of the High Court of Justice of England and Wales [2023] EWHC 2888, 1 November 2023
ABOUT THE AUTHOR
Zeyad Abouellail is a Senior Legal Officer at Jus Mundi and a PhD candidate & teaching assistant at Paris-Saclay University. His doctoral research focuses on the post-award phase in investment arbitration, alongside his teaching responsibilities in civil and contract law. Zeyad regularly speaks on the intersection of Artificial Intelligence and law. He holds Master’s Degrees in International Business Law from both Paris-Saclay University and Paris 1 Panthéon-Sorbonne University. Before joining Jus Mundi, Zeyad interned at several law firms in international arbitration and corporate law in Cairo, Egypt.
