International Arbitration Newsletter - November 2018 | Regional Overview: Europe

EUROPE

Tribunal rules that Achmea decision does not apply to ICSID cases

An ICSID tribunal in an intra-EU bilateral investment treaty claim against Hungary has ruled that the recent Achmea judgment does not apply to ICSID arbitration..In its decision, the tribunal held that Achmea did not alter a decision it made two years ago that it had jurisdiction over all the claims raised against Hungary – and that it did not need to address awards of other tribunals taking into account Achmea.

The tribunal declined a request by the European Commission to intervene in an intra-EU case with arguments on the effect of Achmea, while other tribunals have allowed such applications.

England

London High Court upholds worldwide freezing order in aid of ICC Zurich arbitration

The London High Court has recently upheld a worldwide freezing order against British waste management group Environmental Power International (EPI) and one of its directors pending an arbitration with a Turkish joint venture partner that heard in Zurich under ICC rules.The judge accepted that there was solid evidence of a real risk of dissipation of assets that justified the continuation of the freezing order until the conclusion of the arbitration.

The underlying ICC arbitration concerns a contract for a joint venture that entitled Turkish partner Recydia to receive 25% of certain EPI revenues from the licensing and commercialisation of technology for a waste-to-energy plant.

HUNGARY

Hungary hit by ICSID award allowing indirect expropriation Treaty claim

French investors UP and CD Holding have recently obtained an ICSID award allowing a 23 million Euro Treaty claim against Hungary filed under the France-Hungary bilateral investment treaty.The dispute concerned changes to Hungarian legislation on fringe benefits provided to employees through vouchers and how these reforms introduced by Hungary in 2011 amounted to indirect expropriation of the investment by French cooperative UP and its wholly owned subsidiary CP Holding Internationale.

LITHUANIA

Latvian businessman files ICSID claim against Lithuania

On 16 October 2018, Latvian businessman Oļegs Roščins registered a claim against Lithuania before ICSID, which is brought under the 1996 Latvia-Lithuania bilateral investment treaty and concerns deposits in a bank that was declared insolvent five years ago.Roščins is allegedly seeking to recover €17.1 million in deposits held at Ūkio bankas, a Lithuanian commercial bank based in Kaunas. The bank ran into financial difficulties after the 2008 crash, and in 2013 it was placed in administration by the Lithuanian authorities.

RUSSIA

Gazprom applies to Swedish Court of Appeal to set aside partial award

Russian state-owned energy company, Gazprom, has recently filed its application with the Svea Court of Appeal to set aside the partial award rendered by an ad hoc tribunal finding that Polish state gas utility PGNiG was entitled to seek a gas price revision.

The dispute relates to an arbitration filed by PGNiG against Gazprom in 2011 on gas price adjustments, whereby Gazprom did not agree with the pricing formula that the Polish company had suggested.

In its challenge, Gazprom alleges that the tribunal acted ultra vires when it found that it had the authority to fill gaps in the parties’ agreement, even though the parties had not granted the panel this authority.

SPAIN

Spain seeks to oppose enforcement of solar award on the basis of Achmea

In a Memorandum filed on 16 October 2018 before the US District Court of the District of Columbia, Spain has sought to prevent the enforcement of a €53 million Energy Charter Treaty (ECT) award in favour of  Luxembourg fund, Novenergia, granted by a Stockholm Chamber of Commerce (SCC) tribunal in February 2018.

The dispute relates to yet another claim brought against Spain in breach of the ECT when it reformed its renewable energy subsidy regime in 2013, and the award issued by the SCC tribunal confirmed that breach and ordered Spain to pay damages and costs to Novenergia.

Spain seeks to rely on the decision of the Court of Justice of the European Union in Achmea in March this year as authority that the treaties governing the EU preclude member states from applying arbitration clauses in bilateral investment agreements. The European Commission has since clarified that, in the wake of that judgment, recourse to arbitrate under the ECT – a multilateral treaty which includes the EU as a signatory – is limited to investors from non-EU member states.  

UKRAINE

Ukraine hit with new UNCITRAL Treaty claim from Gazprom

In an announcement made bon 25 October 2018, Russian majority state-owned energy giant Gazprom confirmed that it had filed a request for UNCITRAL arbitration under the 1998 Russia-Ukraine bilateral investment treaty to bring an investment treaty claim against Ukraine in response to a €6.4 billion fine imposed by the country’s anti-monopoly authority.

The dispute relates to a decision of the Antimonopoly Committee of Ukraine in 2016, which found that Gazprom had abused its monopoly position and had fined Gazprom €3.2 billion, which was later doubled by a Kiev court to incorporate late payment penalties. The Supreme Court of Ukraine dismissed Gazprom’s appeal against the fine last year.Gazprom argues that the antimonopoly fine is baseless and unfair and subsequent enforcement actions by Ukrainian authorities violate its rights under the BIT.