International Arbitration Newsletter October - 2018 | Regional Overview: Europe

EUROPE

ICSID tribunal rejects Germany´s lack of jurisdiction objection based on Achmea

An ICSID tribunal has rejected Germany´s objection that it lacks jurisdiction in light of the ECJ´s ruling in Achmea in an Energy Charter Treaty (ECT) claim brought by Swedish nuclear investor Vattenfall against Germany following it’s decision to hasten its phase-out of nuclear energy following the Fukushima disaster,.

The tribunal held there was no basis to interpret the ECT as excluding intra-EU investment arbitration. While the ECT provides that an investor-state tribunal shall decide issues in dispute in accordance with the ECT and applicable rules and principles of international law, the tribunal said this provision only concerned the merits of a dispute and did not mean that EU law applied to jurisdictional questions. The tribunal further held that Germany had identified no principle of public international law, or even of EU law, which would permit it to interpret the words of the ECT so as to give priority to external EU treaties and a court judgment interpreting those treaties.

European Court of Human Rights upholds validity of CAS jurisdiction

In a judgment dated 2 October 2018, the European Court of Human Rights has rejected claims by German speed skater Claudia Pechstein and Romanian footballer Adrian Mutu that proceedings before the Court of Arbitration for Sport (CAS) were insufficiently independent to be considered a fair trial.The Court seated in Strasbourg ruled that claimants had not been denied their right to a fair trial under Article 6 of the European Convention of Human Rights, despite finding that CAS arbitration proceedings were required to offer all the safeguards of fair hearings.The court did rule, however, that the lack of a public hearing in Pechstein’s case had been a violation of Article 6, as questions concerning the merits of a ban imposed on her for doping required a hearing subject to public scrutiny.

FRANCE

France threatened with Energy Charter Treaty claim by Canadian Vermilion Energy

Canadian oil and gas company Vermilion Energy has threatened France with a potential Energy Charter Treaty (ECT) claim over draft legislation banning domestic oil and gas production before a softened version of the bill was enacted.

The alleged claim under the ECT against France’s Council of State relates to a draft bill on hydrocarbons law (called “la loi Hulot”) that sought to fulfil France’s commitment to the Paris Agreement on climate change, but which, according to Vermilion Energy, could contrevene the ECT´s fair and equitable treatment obligations to foreign investors.

GERMANY

Thyssenkrupp wins ICC dispute on Turkish plant shut-down

Thyssenkrupp Industrial Solutions (TKIS) has recently reported a favourable ICC award obtained in a dispute with an Istanbul-based fertiliser manufacturer over outstanding payments for the construction of an ammonium nitrate fertiliser plant in Turkey.

The tribunal found thatTKIS had handed over the plant to Turkish Bandirma Gubre Fabrikalari AS (Bagfaş) at the start of 2016 as contractually agreed and ordered Bagfaş to pay all outstanding amounts (€24.5 million) to the German construction giant.

PORTUGAL

Energais de Portugal brings first-known Treaty claim against Portugal on energy subsidy scheme

Portugal´s biggest energy producer Energais de Portugal (EDP) has confirmed on 30 September it will bring an investment treaty claim against Portugal (the first-ever known Treaty claim against this state) after the utility was hit with a demand to repay €285 million it received under a subsidy scheme.The decision came in response to a dispatch from Portugal’s Secretary of State for Energy, which quantified at €285 million the amount that EDP had allegedly been overcompensated under a government subsidy scheme known as CMEC.

RUSSIA

Russian state bank threatens Ukranian creditors with a Treaty claim before the SCC

Russian state-owned bank Vnesheconombank (VEBan) has submitted a notice of dispute against Ukraine under the 1998 Russia-Ukraine BIT after its local assets were frozen at the behest of a group of Ukrainian creditors seeking to enforce a BIT award.

The asset freeze order came following an UNCITRAL award obtained in favour of Everest Estate and 18 other Ukrainian investors, including some linked to Ukrainian billionaire Igor Kolomoisky, holding Russia liable for the illegal expropriation of various real estate holdings in Crimea following its annexation of the peninsula in 2014.

The BIT provides for a six-month cooling-off period. If the dispute is not resolved amicably, the bank says it will submit a claim before the Arbitration Institute of the Stockholm Chamber of Commerce.

SPAIN

Spain’s attempts to disqualify arbitrator fail

Spain has seen its recent attempts to disqualify Colombian arbitrator Eduardo Zuleta as president in ICSID arbitration proceedings under the Energy Charter Treaty (ECT)  rejected.Spain sought to disqualify Mr. Zuleta as president of an arbitration tribunal in the case brought against it in 2015 by the German investor STEAG GmbH under the ECT (STEAG Gmbh v Spain (ICSID Case No. ARB/15/4)), following an award issued against Spain in another arbitration proceeding under the ECT (Antin Infrastructure) in which Zuleta was also president of the arbitration tribunal.

The challenge was declined by Zuleta’s co-arbitrators, who ruled that his chairing of another tribunal which ruled against the state does not mean he prejudged issues.

Real Madrid files ICC arbitration against Mubadala Investment Company on home stadium sponsorship agreement

Spanish football club Real Madrid is bringing an ICC claim against a United Arab Emirates sovereign wealth fund Mubadala Investment Company for the alleged cancellation of a €400 million sponsorship agreement to finance the redevelopment of the club’s home stadium in Madrid, Santiago Bernabéu. Details are scarce, but it is understood that the club filed the claim in April 2018, arguing a wrongful cancellation of a sponsorship agreement. 

Dutch Akzonobel files ICC claim against Spanish Iberpotash

Dutch multinational AkzoNobel has filed an ICC claim against Spanish subsidiary of Israel Chemicals named Iberpotash following the termination of a contract to use waste produced at a potash mine near Barcelona to make high-quality salt.

The claim relates to Iberpotash´s termination of the 30-year joint venture agreement signed with Akzonobel after years of environmental concerns about the waste produced from its facilities. Under the agreement, Iberpotash and AkzoNobel were to use the 1.5 million tons of waste generated annually to produce vacuum salt and white potash, which could be used for food, for AkzoNobel’s paints and chemicals businesses and to be sold to other buyers.

Energy company files solar award enforcement against Spain before US Court

UAE-owned and Dutch-incorporated energy company Masdar Solar & Wind Cooperatief has filed a petition for enforcement of the ICSID award before the US District Court for the District of Columbia to enforce its €64.5 million Energy Charter Treaty (ECT) award against Spain over reforms to its renewable energy sector – arising from the first intra-EU arbitration to be decided in the wake of the Achmea judgment.

The award is the fourth against Spain in favour of a solar investor under the ECT and the third to be the subject of enforcement proceedings in the US, including awards won by energy companies Eiser and Novenergia.