International Arbitration Newsletter - November 2019 | Regional Overview: Europe

European Union

EU Member States agree on a treaty to terminate BITs

In a statement issued by the European Commission on 24 October 2019, it has been announced that EU Member States reached agreement on a plurilateral treaty for the termination of intra-EU bilateral investment treaties.

The signed treaty text will be published on the Commission website. The Commission has urged Member States to ensure a smooth and swift ratification process.

The agreement fulfils the commitment to coordinate termination of intra-EU bilateral investment treaties after the judgment of the Court of Justice in Achmea in March 2018.

A small minority of Member States did not endorse the text (thought to be Sweden, Finland and Romania, albeit for different reasons). In those cases, the Commission is considering resuming or initiating infringement procedures against EU Member States that do not terminate their intra-EU bilateral investment treaties.

GREECE

Greece settles award on Olympics security claim

Greece has paid €53 million to US defence contractor Leidos to satisfy an ICC award over a security system commissioned for the 2004 Olympic Games after failing to have the result set aside on grounds of corruption.

Leidos will continue enforcement proceedings in the Netherlands, England and Luxembourg to recover €1.2 million in unpaid interest and tax it says has been wrongly withheld.

The dispute relates toa €255 million contract Greece signed in 2003 with Leidos, then known as Science Applications International Corporation, to develop a security system known as C4I to provide safety infrastructure for Greece’s fire brigade, coastguard and ambulance service during the 2004 Olympics.

Leidos alleged that Greece used C4I during the Olympics and Paralympics without formally accepting or paying for it. After an initial ICC claim brought by Leidos in 2007 settled, the company filed a second claim in 2009 alleging Greece failed to make agreed payments.

Spain

Abengoa agrees to sell an interest in an investment arbitration against Spain

Spanish company Abengoa has agreed to sell an interest in an Energy Charter Treaty claim being pursued before the Stockholm Chamber of Commerce against Spain over reforms to the renewable energy regime.

According to Abengoa, the agreement reached with a group of recognised funds would permit the partial monetisation of the arbitration.The agreement is subject to obtaining the necessary approvals of the company’s creditors.

Spanish Constitutional Court to hear an appeal regarding annulment of awards

In recent years, the Superior Court of Madrid has controversially set aside a number of awards on public policy grounds. The arbitral community has fiercely opposed those decisions reasoning that judicial review of awards should be minimal.

In September this year, the Spanish Constitutional Court (SCC) has agreed to hear a constitutional appeal (recurso de amparo) against a decision of the Superior Court of Justice of Madrid which annulled an award rendered in an arbitration in equity, on the basis that the arbitrator had provided insufficient reasoning for his decision.

It is expected that the SCC will finally resolve the issue about judicial review of awards. 

Spain fails to unseat arbitral tribunal

Spain has failed to disqualify an entire arbitral tribunal hearing an ECT claim by a group of German banks affected by the reform of the renewable energy regime. Spain alleged that that the tribunal had prejudged aspects of the merits in an interim decision in February rejecting Spain’s jurisdictional objection that intra-EU investment arbitration under the ECT is precluded by EU law.

The request for disqualification was dismissed on the basis that it was not filed promptly, which constituted sufficient grounds to dismiss it in its entirety. Additionally, the proposal was also assessed on the merits, where it was confirmed that the request also warranted dismissal.