Arbitration Regional Overview: Europe | International Arbitration Newsletter June 2018

BELGIUM

Belgian Court unfreezes Kazakhstan sovereign wealth fund

The Brussels Court of First Instance recently rejected an application by Kazakhstan to lift an attachment order obtained by Moldovan businessmen Anatolie and Gabriel Stati in an enforcement of a Stockholm Chamber of Commerce award obtained by the latter.

The Statis obtained their award in 2013 after an SCC tribunal held Kazakhstan liable under the Energy Charter Treaty for the seizure of their local oil and gas operations. The claimants obtained attachment orders from the Dutch and Belgian courts, BNY Mellon taking the view that it was legally required to freeze the entirety of the US$22.6 billion in assets it holds on behalf of the National Bank of Kazakhstan. The judgment limits the size of the attachment to US$530 million, representing the value of a Stockholm Chamber of Commerce award.

England

High Court orders fraud allegations to proceed to trial

In a highly unusual move the High Court in London has recently issued a judgment ruling that allegations that a US$520 million Stockholm Chamber of Commerce award against Kazakhstan was obtained through fraud must proceed to trial despite the claimants’ decision to abandon enforcement proceedings in England and Wales. The High Court judge said that he would exercise his discretion to set aside a notice of discontinuance submitted so that the fraud allegations against them can be tried on the merits. While it was the Statis who had brought the English enforcement action, the judge said Kazakhstan still had a “legitimate interest” in knowing whether the English courts would enforce the award.

Commercial Court confirms London seat in LCIA Pakistani dispute

The Commercial Court in London recently issued an anti-injunction against Pakistan’s National Transmission and Despatch Company (NTDC) to prevent the Pakistani state-owned electrical company from challenging a partial award in an LCIA arbitration confirming the seat of arbitration is London. Despite attempts by NTDC to halt the proceedings in Lahore, the LCIA arbitration filed by nine Pakistan-registered independent power companies that entered power purchase agreements with NTDC proceeded in London. A partial final award found that the power companies had validly exercised their right to select London as seat and NTDC was ordered to pay US$130 million to the power companies.  The Court held that the seat of arbitration was London, in line with the rulings of both the LCIA Court and the arbitrator and that only the English courts could therefore supervise the case.

FRANCE

French court rejects Mareva freezing order after investment treaty award against Panama

The Paris Court of Appeal has recently confirmed the first instance judgment preventing French-Tunisian entrepreneur Laurent Parienti from enforcing an investment treaty award against Panama. Despite winning an award of around €32 million against Panama and its transport authority in 2005, after bringing a claim under the 1985 France-Panama BIT, in a dispute concerning a concession to build a bus terminal in the Panamanian port city of Colon, the court held that the creditor may not freeze funds located abroad by serving an attachment on a foreign bank’s French office.

GREECE

Lebanese treaty award hitting Greece comes to light

Greece recently reported, while pursuing a set-aside action at the Athens Court of Appeal, an UNCITRAL award worth around €11 million issued in December 2015 in an ad hoc proceeding under the 1997 Greece-Lebanon bilateral investment treaty, an award issued in favour of two Lebanese and Palestinian companies from the Consolidated Contractors Company (CCC) Group, along with five members of the Khoury and Sabbagh families who are the group’s ultimate beneficiaries.  The treaty dispute arose in 2014 after the Greek tax authorities imposed a special property tax on the two companies along with penalties and additional taxes – amounting to almost €11.2 million in total – for the fiscal years from 2003 until 2011, calculated based on the objective value of the property at the time.

POLAND

Poland relieved by treaty claim withdrawal

Dutch aerospace heavyweight Airbus has recently withdrawn an intra-EU investment treaty claim against Poland over a cancelled US$3.5 billion helicopter deal. According to a statement by the General Counsel of the Republic of Poland, the request for arbitration filed by Airbus under the 1992 Netherlands-Poland bilateral investment treaty has been withdrawn, reportedly citing the recent ruling of the European Court of Justice in Achmea v Slovakia. However, Airbus has not waived any of its claims in the underlying dispute and would allegedly be seeking compensation in the Polish courts.

PORTUGAL

Portugal meets domestic law requirements to bring into force of the PCA’s Host Country Agreement

By a Ministry of Foreign Affairs Notice issued on 8 May 2018, the Portuguese government made public that on 26 March 2018 the Secretary-General of the Permanent Court of Arbitration (PCA) was informed by the Portuguese Republic that the requirements necessary for the entry into force of the PCA’s Host Country Agreement concluded on 16 June 2017 were met. Pursuant to Article 16 (1) thereof, the PCA’s Host Country Agreement shall enter into force 30 days after receipt by the Secretary-General of the said information, that is, on 25 April 2018.

Through this Agreement, an ad hoc office is created in Portugal with the aim to facilitate and approximate the conduct of PCA proceedings within the country (either through the choice of seat or by holding meetings relating to proceedings seated elsewhere), especially for the Portuguese-speaking countries, for the resolution of international conflicts between States or of commercial and investment disputes between States and private parties.

RUSSIA

UNCITRAL tribunal holds Russia liable for real estate seizures in Crimea

Russia has recently been hit by an award issued by an UNCITRAL tribunal allowing a US$159 million claim over expropriated real estate in Crimea for the seizure of assets following its annexation of the territory in 2014.The claimants filed their treaty claim in June 2015, contending that Russia had assumed obligations under the 1998 Ukraine-Russia bilateral investment treaty with respect to Ukrainian investments in Crimea through its occupation and de facto control of the territory.

Gazprom settles billion gas-pricing dispute with Turkish Botas

Turkish state entity Botaş has reportedly settled an arbitration proceeding heard in Stockholm after receiving a US$1 billion payment from the Russian giant Gazprom to settle a gas-pricing dispute. According to statements of Turkish President Erdogan, Botaş and Gazprom Export had reached an agreement for a 10.25% discount on Russian natural gas purchased in 2015 and 2016 following the Botaş filing of a claim against Gazprom Export in October 2015. The settlement would coincide with the signing of documents allowing construction to begin on an US$8.6 billion TurkStream gas pipeline project that will run from Russia to Turkey under the Black Sea.

SPAIN

Spain suffers first intra-EU Energy Charter Treaty arbitration loss post-Achmea

A recent award orders Spain to pay €64.5 million following another defeat in an Energy Charter Treaty arbitration arising from reforms to its renewable power sector, with the tribunal also ruling that the recent judgment in Achmea does not apply to multilateral treaties like the ECT.

Swedish tribunal suspends the enforcement of an award against Spain

The Swedish court of appeals has ordered the indefinite suspension of an award that ordered Spain to pay the company NovEnergia the amount of €53 million as a result of the reforms to its renewable power sector in the years 2010 and 2013. The award had been issued on February 2018 in an arbitration followed under the auspices of the Stockholm Chamber of Commerce. The suspension follows the appeal brought by Spain and comes after the decision of the Court of Justice of the European Union in the Achmea case.

TURKEY

Turkey hit with ICSID claim

UK company Ipek Investments Limited (IIL) has recently filed an ICSID claim against Turkey under the UK-Turkey bilateral investment treaty over measures targeting a mining and media conglomerate accused of financing terrorism. IIL’s sole director is Turkish businessman Hamdi Akin Ipek, the chair of the Koza media and mining conglomerate. The group had its assets seized and a number of its companies placed under the control of trustees by the Turkish courts in 2015 amid allegations that it was involved in financing terrorism.

Ipek has been accused of supporting Fethullah Gülen, an Islamic cleric whom Turkey alleges was behind a failed attempt to overthrow the government in July 2016. Turkey accuses Gülen, who now lives in exile in Pennsylvania, and his supporters of terrorism. Ipek, who is facing a request by Turkey for his extradition from the UK, denies the terrorism allegations, which he says are politically motivated.