The most relevant European updates from the global International Arbitration and ADR practice group at Garrigues.
Ongoing EU talks to establish multilateral court for investor-state arbitration
Following the Achmea ruling issued by the European Court of Justice invalidating bilateral investment treaties between EU member states (see April 2018 Newsletter), the Council of the European Union has given the green light for negotiations to establish a multilateral court to replace traditional investor-state arbitration. The Council said the multilateral investment court is intended as a permanent body to adjudicate disputes under future and existing investment treaties, with the aim of the court being to move away from the “traditional arbitration framework” for investor-state dispute settlement. The Council mandate authorises the EU Commission to start negotiations with its trading partners under the auspices of UNCITRAL, where a working group is considering the multilateral court proposal.
New EU-Singapore invest protection agreement
The European Union and Singapore have finalised their first investment protection agreement, replacing 12 bilateral investment treaties and providing for a permanent two-tier tribunal to hear investor-state disputes. On 18 April 2018, the European Commission presented the final text of its agreement with Singapore to the Council of the European Union, as well as a new free trade agreement. The agreements come 11 years after the EU and Singapore first began negotiations in 2007.
The council must now adopt and sign the agreements before receiving the European Parliament’s consent. The commission says its aim is that the free trade agreement will enter into force in 2019, while the investment protection agreement will take effect following ratification by each EU member state.
It is the first time that a bilateral deal between the EU and a member of the Association of Southeast Asian Nations has reached the council for approval. A free trade agreement between the EU and another ASEAN member, Vietnam, was unveiled in 2016, but the text remains under review and has yet to be presented to the council.
New ICSID claim filed against Belarus
A Ukrainian-owned shareholder in a bank that collapsed after its licence was withdrawn has brought an ICSID claim against Belarus. Dutch entity Delta Belarus Holding is bringing the claim against Belarus under the 1995 Belarus-Netherlands bilateral investment treaty.
Commercial Court upholds award challenge
The English Commercial Court has partly upheld a challenge by India’s Reliance Industries and its partner BG Group to an UNCITRAL award issued in favour of the Indian government in a US$1 billion dispute over oil and gas fields, ruling that the tribunal’s failure to consider an issue relating to cost recovery had given rise to a “substantial injustice.”
Court of Appeal upholds CIETAC award despite forgery
In a judgment featuring detailed discussion of the public policy exception to enforcement in the 1996 Arbitration Act, the English Court of Appeal has declined to set aside a CIETAC award on illegality grounds where a party presented forged bills of lading for a shipment of steel from China to Mexico. In the ruling dated 23 April 2018, Lord Justices Lewison, Hamblen and Irwin upheld a judgment of the Commercial Court in February 2017 enforcing the award in favour of Chinese steel trading company Sinocore International, after finding that public policy was not violated.
Court dismisses challenge to LCIA award against Ukrainian oligarch
The English Commercial Court has dismissed a challenge to a US$820 million LCIA award against a company owned by Ukrainian oligarch Rinat Akhmetov – rejecting suggestions that the tribunal’s failure to await the outcome of court proceedings in Ukraine before issuing it constituted a serious irregularity. In a judgment dated 3 May 2018, Mr Justice Males rejected the application brought by Akhmetov’s SCM Group under section 68 of the 1996 English Arbitration Act. He ruled that the arbitrators had a wide discretion as to how to proceed and their decision not to wait for the Ukrainian courts did not violate the general duty of the tribunal under English law.
Paris Appeal Court annuls ICC award for doubts on arbitrator’s impartiality
An ICC award which dismissed claims worth US$150 million brought against Audi Volkswagen by a Qatari vehicle distributor was recently annulled by the Paris Court of Appeal.
According to the Paris Appeal court judgment, the award was issued by three German arbitrators, one of whom had failed to disclose work that was carried out by his law firm for the Volkswagen Group during the course of the arbitration, hence creating reasonable doubt as to his independence and impartiality.
Court of Cassation reinstates ECT award against Moldova
France’s Court of Cassation has reinstated a US$49 million Energy Charter Treaty award against Moldova that was set aside on jurisdictional grounds two years ago. In a judgment dated 28 March 2018, the Court of Cassation reinstated the UNCITRAL award in favour of Ukrainian company Komstroy (as successor-in-interest to Energoalians), quashing a ruling by the Paris Court of Appeal in 2016 that set the award aside. The Court of Cassation said the lower court had violated the text of the Energy Charter Treaty by imposing a jurisdictional requirement not contained in the treaty – namely that the acquisition of a debt originating from an electricity supply contract could not constitute an “investment” under the treaty in the absence of an economic contribution.
US renewable energy company files claim against Poland
Invenergy, a US renewable energy group, has brought a US$480 million investment treaty claim against Poland under the 1990 US-Poland bilateral investment treaty, saying the state’s actions have caused its wind energy projects to suffer significant losses. From 2005, Invenergy affiliates entered into a series of long-term contracts for the development of 11 wind farms. The contracts were signed with the trading arms of two partly state-owned Polish energy companies, Tauron and Energa. The company says it spent around US$630 million, in the development of the wind farms.
Serbia faces ICSID claim brought by a canadian family and their cypriot companies
The claim against Serbia has been launched by Canadians William, Kathleen, Allison and Robert Rand and their Cyprus-registered companies Rand Investments and Sembi Investment. William Rand is the President and Director of Rand Investments and sits on the board of Sembi Investment. He is also the President and Director of Rand Edgar Investment, based in Vancouver. Details of the case are again scarce but it is believed to relate to an agricultural enterprise. The claim is brought under the 2005 Serbia-Cyprus BIT and the 2014 Canada-Serbia BIT.