No review of the merits and jurisdiction of ICSID awards
It is well established that, as held by the Second Circuit of the US Court of Appeals in Mobil Cerro Negro Ltd. v. Bolivarian Republic of Venezuela, 863 F3d 96, 102 not only the merits, but also the jurisdiction of the arbitral tribunal cannot be reviewed by State Courts.
Effects on the enforcement of such awards
Prima facie, it might seem that the effect of such awards is that they have just to be enforced, and consequently that the loser must pay the amounts awarded against it, without being able to raise any defence.
However, this exclusion of any defence does not seem to be absolute.
Subsequent facts which affect the right of the victorious party to collect may entitle the loser not to pay. Oppositions to enforcement of judgments and of awards are rich of examples of such defences to enforcement.
The special situation of intra EU BITs
Investment treaty awards rendered under intra EU BITs raise this issue as a consequence of oppositions to their recognition and enforcement as a consequence of the Achmea ruling by the Court of Justice of the European Union (Slovak Republic v. Achmea BV, March 2018, Case C-284-16, para 60) that intra EU investment arbitration is contrary to the Treaty on the Functioning of the European Union.
Such arbitration agreements are consequently not valid in the territory of the European Union, since European law prevails on any international treaty.
Such defence has been made in various Court proceedings, outside the European Union in which those awards had been the object of enforcement proceedings.
This defence has been generally rejected.
In some of such disputes the investment agreement had been entered into before the accession of the host State to the European Union, while in others it had been entered after it.
These two situations were distinguished.
It may be wondered whether they do not produce the same result, since in the former a valid arbitration agreement would have become invalid, as a consequence of said accession, while in the latter it was invalid since the beginning.
In all such situations, the basic question in this respect seems to be whether the enforcement Court, in spite of the finality of ICSID awards, may and has to consider the issue of the jurisdiction or in any event authority to enforce such awards.
The Act of State defence
The Achmea ruling being a decision of a supranational Court, which binds all the Member States of the European Union (i.e. all the signatories of the investment BIT under which the ICSID arbitration takes place) the enforcement Court faces an Act of State. As it has been held by the Supreme Court of the United States in Republic of Austria v. Altmann, 541 US 677 (2004), 327 F3d 1246
“the courts of one state will not question the validity of public acts (acta jure imperii) performed by other sovereigns within their own borders, even when such courts have jurisdiction over a controversy”.
The enforcement Court has then to decide whether such an Act of State deprives the victorious party in the ICSID proceedings of the right to collect under them.
The Foreign Compulsory Defence
The enforcement Court may have to also consider a further defence in the jurisdictions which, like the US under the Restatement (Third) of Foreign Relations Law, Section 441(1) (1987), provide that
“a state may not require a person to do an act in another state that is prohibited by the law of the state of which he is a national, or to refrain from doing an act in another state that is required by the law of that state or by the law of the state of which he is a national”.
The law of the European Union, as construed by its Courts, is – as to intra-EU States disputes – the law of both the parties to such proceedings, what may also have to be taken into account.
If the enforcement of ICSID awards is opposed, the enforcement Court may have to deal with such defences or – in the jurisdictions which should so provide – may deal with them even ex officio.
The DC District Court has not taken into account such issues in dealing with Romania’s opposition (Micula et al. v. Romania, Civ. No. 1:17 CVD2332, 21 June 2019), while in Mannington Mills Inc. v. Congolan Corp., the Third Circuit of the US Court of Appeals has held (595 F2d 1287 ) that Foreign Sovereign Compulsion
“shields from … liability the acts of parties carried on in obedience to the mandate of a foreign government”.