This article was featured in Jus Mundi‘s 2023 Arbitration Year in Review, in collaboration with VYAPs, a yearly collection of articles from jurisdictions all around the globe updating you on arbitration-related developments from the previous year.
THE AUTHORS:
Celia Cañete, Associate at Pérez-Llorca (Madrid)
Javier García Urbano, Associate at Pérez-Llorca (Madrid)
Investment Treaty Arbitration in Spain: Enforcement and Annulment Proceedings
2023, as in previous years, has been defined by investment arbitrations initiated by foreign investors against Spain. Notably, Spain has been actively seeking to set aside and impede the enforcement of the awards. Further decisions on the enforceability of intra-EU investor-State awards were issued, as the doctrine established by the Court of Justice of the European Union (“CJEU”) in Achmea v. Slovakia (I) (“Achmea”) and Energoalians v. Moldova (“Komstroy”), that arbitration clauses contained in intra-EU bilateral investment treaties and the Energy Charter Treaty (“ECT”) are incompatible with EU law continue to spark discussion:
- On 13 December 2022, the Svea Court of Appeal granted an application by Spain to set aside an intra-EU award for €56 million secured by Novenergia. The Court found that the arbitral tribunal lacked jurisdiction in light of the Achmea and Komstroy cases. On 10 July 2023, the Swedish Supreme Court upheld the award’s annulment when it refused to grant Novenergia leave to appeal the award.
- On 15 February 2023, the United States District Court for the District of Columbia granted two anti-suit injunctions in favour of the investors 9Ren and NextEra. The purpose of these injunctions was to stop Spain from preventing the enforcement of two Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965) (“ICSID Convention”) intra-EU awards with a combined value of €333 million. On 29 March 2023, a different judge of the same District Court found that the Court lacked subject-matter jurisdiction to enforce an intra-EU award obtained by AES Solar against Spain. The Court held that Spain lacked the capacity to extend an offer to arbitrate under EU law, and therefore, no valid agreement ever existed.
- On 2 March 2023, an ICSID ad hoc committee upheld a €31 million award in favour of a group of European investors against Spain under the ECT, disregarding the Achmea doctrine. On 8 May 2023, the same result was adopted by another ICSID committee, which refused Spain’s application to annul a €22 million ECT intra-EU award. In the latter case, the committee expressly departed from the decision of the arbitral tribunal in the Green Power and SCE v. Spain case, which, on 16 June 2022, ruled in favour of Spain and held that it did not have the competence to hear the case of an investor seeking €74 million.
- On 27 March 2023, the High Court of Justice of England and Wales
- (“HCJEW”) issued three interim payment orders against Spain for the enforcement of an award. The High Court ordered the precautionary seizure of certain assets and rights of the Spanish Instituto Cervantes and Agencia per a la Competitivitat de L’Empresa in London.
- On 12 April 2023, the High Court of Australia concluded that Spain could not invoke sovereign immunity to avoid the recognition and enforcement of an ICSID award obtained by Antin, a foreign investor. The High Court held that Spain waived its immunity by ratifying the ICSID Convention. Also, on 24 May 2023, the HCJEW established that Spain cannot invoke sovereign immunity to prevent the recognition and enforcement of a €120 million ICSID award under the ECT.
Apart from the above, Spain has experienced setbacks in investment arbitration cases brought by foreign investors. For instance, on 6 October and 30 October 2023, two ICSID tribunals ordered Spain to pay damages over reforms to the renewable energy subsidy regime.
New Developments in Commercial Arbitration Practice in Spain
Spain’s hot topics on commercial arbitration have also been of great interest to both international and domestic arbitration players:
- On the institutional front, the leading international court of arbitration in Spain, – the Madrid International Arbitration Center (“CIAM”) –, has released a new set of rules aimed at stepping up Madrid’s game in the international arbitration arena; and
- From the commercial practice perspective, Spain has observed how the London Steamship v. Spain (I) (“Prestige”) saga is far from being a closed case, as the HCJEW has rejected the enforcement of the Spanish judgment despite last year’s CJEU judgment.
Madrid Strengthens its Position as a Leading International Arbitration Hub
On 19 October 2023, the CIAM published its new Arbitration Rules (“2024 Rules” or the “Rules”), which will apply to any request for arbitration filed on or after 1 January 2024. The 2024 Rules respond to the demands for greater speed and efficiency in international arbitration and offer tools to enhance the flexibility of arbitral proceedings, as well as a wider range of options for parties and arbitrators to determine the particularities needed to conduct their cases.
The main innovation introduced by the 2024 Rules is the creation of a highly expedited procedure by which the parties can resolve certain disputes, provided that there is express agreement to do so regardless of the amount in dispute. Highly expedited procedures administered by the CIAM aim to provide parties the option of conducting the whole arbitration within four months. The procedure’s main characteristics are as follows:
- Disputes are resolved by a sole arbitrator;
- No first procedural order is issued;
- There is no hearing unless the sole arbitrator deems it necessary; and
- The deadline to render the award is three months from filing the statement of claim.
Arbitration practitioners are eagerly waiting to see whether the new features introduced by the CIAM (in particular, the new highly expedited procedure) will boost Madrid’s position as a leading international hub for commercial arbitration.
The Prestige Saga: an Unexpected Turn of Events After 20 Years
The Prestige saga was addressed in last year’s “Arbitration 2022 Year in Review – Spain”. As anticipated, in 2023 the HCJEW departed from the CJEU’s judgment on this matter last year, rejecting the enforcement of the €855 million Spanish decision issued in this case.
In 2003, Spain filed a claim before the Spanish courts (the “Spanish Proceedings”) against the insurer of the oil tanker, the Prestige (the “Insurer”), following the disaster that occurred on the Galician coast in 2002. In 2012, while the Spanish Proceedings were still ongoing, the Insurer commenced arbitration in the United Kingdom. A year later, the arbitral tribunal concluded that the claims brought in the Spanish Proceedings should have been referred to arbitration in London. The HCJEW rendered a judgment in the terms of the arbitration award (the “HCJEW Judgment”).
In 2018, in the context of the Spanish Proceedings, the Spanish Supreme Court issued its final judgment against the Insurer (the “Spanish Judgment”). When Spain requested its recognition before the HCJEW, the Insurer argued that the Spanish Judgment was irreconcilable with the HCJEW Judgment under Article 34(3) of Regulation 44/2001. The HCJEW raised the issue before the CJEU, which, in its judgment dated 20 June 2022, concluded that the HCJEW Judgment could not prevent recognition of the Spanish Judgment (the “CJEU Judgment”).
Even though it appeared that the CJEU Judgment had resolved the jurisdictional conflict arising from the Prestige saga, on 6 October 2023 the HCJEW issued a judgment refusing to enforce the Spanish Judgment. The HCJEW alleged that its enforcement would be irreconcilable with existing English arbitral decisions, and even contrary to the principles of English public policy relating to res judicata.
In relation to the CJEU Judgment, the HCJEW held that it was not bound by answers to questions not raised to the CJEU:
“209. I have also reached the conclusion (as did Sir Peter Gross at paragraph [122(3)] of the Gross First Award) that, if the CJEU purported to answer a question not or falling outside those referred to it, the national court would not be bound to follow any such pur- ported answer, though it would not lightly so hold. This appears to me to be the corollary of the limited jurisdiction established by Article 267 of the TFEU. […]
236. Further, while I am clearly entitled to have regard to the rea- soning of the CJEU in those paragraphs, if I am not bound by them I would not follow them. In my judgment they fail to give effect to the exclusion of arbitration from the Regulation, and they fail to have regard to the jurisprudence of the ECJ/CJEU which has recognised that the arbitration exception is effective to exclude arbitration in its entirety, including proceedings in national courts the subject matter of which is arbitration […]. “
ABOUT THE AUTHORS:
Celia Cañete is an associate in the Dispute Resolution practice area at Pérez-Llorca (Madrid) and co-coordinator of MAD VYAP.
Javier García Urbano is an associate in the Dispute Resolution practice area at Pérez-Llorca (Madrid) and co-coordinator of MAD VYAP.
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