It has been announced in Global Arbitration Review that Ukraine has been the first state to have an emergency arbitrator award enforced against it (albeit that enforcement is currently stayed pending appeal). The Pechersk District Court in Kiev upheld an application by London-listed JKX Oil & Gas and two subsidiaries to enforce a Stockholm Chamber of Commerce award issued in January under the SCC’s 2010 Rules emergency arbitrator procedure.
GAR reports that the emergency arbitrator issued the award within six days of his appointment and that the award ordered Ukraine to stop imposing royalties on one of JKX’s subsidiaries’ gas production over a specific percentage. Under the SCC’s emergency arbitrator procedure, the emergency arbitrator’s award is not binding on the main tribunal but remains in place until a decision of the main arbitral tribunal is reached on interim measures.
GAR reports that Ukraine did not take part in the emergency arbitrator procedure and sought to resist enforcement of the award in its courts. The state argued that it had not been properly notified of the emergency arbitrator’s appointment and had been denied an opportunity to present its case. Ukraine also raised other concerns regarding the cooling-off period required under the Energy Charter Treaty, its lack of consent to the emergency arbitrator procedure and public policy concerns.
The judge found that the Ukraine had had proper notice of the procedure and dismissed its other grounds. GAR indicates that a hearing on Ukraine’s appeal of the district court’s decision is scheduled for 7 July before the Kiev City Court of Appeal. In the meantime, enforcement is stayed.
The decision is interesting for being the first known enforcement of an emergency arbitrator award against a State. The fact that that enforcement has also been granted by the courts of that same State is also noteworthy. For investors bringing claims under the ECT or a BIT where there are a number of dispute resolution options, the ability to enforce an emergency arbitrator award available under the rules of an arbitral institution may be a factor in favour of adopting that method over ICSID arbitration. We shall await the result of the appeal with interest.