International Arbitration Newsletter - April 2019 | Regional Overview: Europe

Armenia

US Gold mining company announces Treaty claims against Armenia

US-based gold developer Lydian International has announced that two of its subsidiaries have submitted notices of dispute under Armenia’s bilateral investment treaties with the UK and Canada against Armenia over an “illegal blockade” of its local mining operation. 

The notice triggers the commencement of the respective cooling-off periods before formal ICSID/UNCITRAL arbitration.

The dispute relates to the Amulsar gold project located in south-central Armenia, which is reported to have the country’s second-largest gold deposits. Lydian says that its access to the project has been restricted by “illegal blockades” that began in the aftermath of Armenia’s peaceful revolution.

Belgium

Brussels Appeal Court seeks preliminary ruling regarding Micula brothers’ attempt to enforce ICSID award

The Brussels Court of Appeal has stayed the Micula brothers’ attempt to enforce their €178 million ICSID award against Romania, while agreeing to seek a preliminary ruling from the European Court of Justice (ECJ) on the relationship between EU law and member states’ enforcement obligations under the ICSID Convention.

The court stayed the brothers’ appeal regarding the enforcement of the ICSID award until the EU courts make a final ruling on whether Romania’s payment of the award would contravene EU law on state aid. The court said it would also seek a ruling from the ECJ on three preliminary questions, including whether a 2015 decision by the European Commission on the state aid issue precludes the award’s enforcement in the courts of a member state other than Romania.

The long-running dispute relates to Romania’s withdrawal of economic incentives ahead of its accession to the EU in 2007. The Miculas, who are Swedish nationals of Romanian origin, own food distribution businesses that had benefited from the incentives. In 2013, an ICSID tribunal found that the state had breached the 2003 Sweden-Romania bilateral investment treaty through the manner in which it withdrew the incentives and ordered it to pay €178 million in compensation. The award was upheld by an ICSID annulment committee three years later.

England

English court updholds freezing and search orders against Essar Steel

The English Commercial Court has upheld a worldwide freezing order against Mauritian entity Essar Steel along with search and discovery orders against certain of its affiliates, executives and former employees, that allowed steelmaker ArcelorMittal to search the London offices of an affiliate of India’s Essar Group in support of a bid to enforce a US$1.3 billion ICC award.

The court found that there was solid evidence that the group had engaged in asset dissipation “on a massive scale”. ArcelorMittal, which is based in Luxembourg and headed by Indian businessman Lakshmi Mittal, obtained the orders in January 2019 in support of its bid to enforce an ICC award against Essar Steel.

The dispute relates to a 2012 agreement whereby Essar Steel subsidiary ESML agreed to supply iron ore pellets from a mine it was developing in Nashwauk, Minnesota, for ArcelorMittal’s US subsidiary to use in its North American steel production operations over a 10-year period. After ESML encountered financial problems and work at the mine ceased, ArcelorMittal terminated the agreement and commenced ICC arbitration in 2016 against Essar Steel.

France

Italian businessman files ICC claim against French partner in eyewear merger dispute

Luxembourg-registered Delfin, a holding company for Italian billionaire Leonardo Del Vecchio filed a request for arbitration against French national Hubert Sagnières and EssilorLuxottica, following a €50 billion merger that created the latter as the world’s largest eyewear maker.

The dispute relates to the 2017 merger of Del Vecchio’s Italian business Luxottica – known for its eyewear frames business and Ray-Ban and Oakley sunglasses brands – with French publicly listed company Essilor, the world’s top manufacturer of lenses, which Sagnières chaired. Disagreements emerged after the 83-year old Del Vecchio told Italian media last year he intended to put his confidant Francesco Milleri forward as EssilorLuxottica’s CEO – an appointment Sagnières has opposed, suggesting it is part of an attempted power grab by Del Vecchio.

Poland

Paris Court dismisses US investor attempt to reopen treaty claim against Poland

The Paris Court of Appeal has rejected an application by US citizen Vincent Ryan and his companies Schooner Capital and Atlantic Investment Partners to set aside an ICSID additional facility award in Poland’s favour in a $125 million investment treaty claim over actions by state authorities that allegedly drove their vegetable oil business into bankruptcy.

The dispute relates to Ryan´s investment by means of an acquisition of a majority interest in an edible fats producer called Kama. The business was declared bankrupt in 2003, which the investors blamed on the Polish tax authorities’ imposition of a tax bill following a change to regulations on transfer pricing.

The claimants brought their ICSID additional facility claim in 2011, demanding $125 million plus interest for breaches of the 1990 US-Poland bilateral investment treaty. They argued that through the conduct of the tax and bankruptcy proceedings, Poland had illegally expropriated their investment in Kama and breached its obligations to provide fair and equitable treatment (FET) and full protection and security and allow free transfer of funds.

The arbitral tribunal concluded that the dispute concerned matters of taxation and fell out of the BIT. The tribunal also rejected the surviving claims on the merits.

Spain

Duro Felguera defeats Samsung subsidiary in SIAC arbitration on Australian mining project

A tribunal seated in Singapore has issued a partial award in an UNCITRAL arbitration between Samsung C&T and the Australian subsidiary of Spanish construction company Duro Felguera ordering Samsung to pay US$94 million in a dispute over work on a multibillion-dollar mining project in Australia. 

The dispute relates to a joint venture with Australia’s Forge Group that entered into a subcontract with Samsung to provide work in relation to Roy Hill, a US$7 billion iron ore mining, rail and port project in the Pilbara region of Western Australia. The work included the supply of processing equipment and the design of a bulk-handling system.