The English Court (the “Court“) has dismissed an application by Ukraine to set aside a court order permitting Russian investor, PAO Tatneft, to enforce an arbitral award against Ukraine. Ukraine argued that it was immune from the Court’s jurisdiction by virtue of the State Immunity Act 1978. The Court found that Ukraine had not waived its right to rely on state immunity arguments, despite not having raising them in the arbitration. However, it found that Ukraine had agreed to submit the disputes in question to arbitration under the Russia-Ukraine Bilateral Investment Treaty (the “BIT“) and was therefore not immune from proceedings in connection with the arbitration by virtue of s9(1) of the State Immunity Act 1978 (“SIA“).
English Court finds that the foreign act of state doctrine may apply to arbitration proceedings
In the decision of Reliance Industries Limited & Ors v The Union of India [2018] EWHC 822 (Comm) the English Commercial Court (the Court) considered a number of challenges to an arbitration award brought under sections 67, 68 and 69 of the Arbitration Act 1996 (the 1996 Act). In relation to certain of the challenges made under sections 67 and 68, the Court considered the doctrine of foreign act of state. The Court found that aspects of the doctrine are no less applicable to arbitration proceedings than litigation. It also held, obiter, that where parties including a foreign state ask a tribunal to determine the validity of that foreign state’s act, there can be no objection to the tribunal doing so. Also obiter, the Court considered that a failure to raise act of state in objection to the determination of an issue which has been put to the tribunal, could constitute a waiver of that right to object.
The judgment provides some helpful clarification on the applicability of the foreign act of state doctrine to arbitration and may be of considerable significance to parties which contract with sovereign counterparts.
The Court also considered challenges to the Award under the 1996 Act on various other bases and, in doing so, reiterated the English court’s reluctance to interfere with decisions of arbitral tribunals. A separate blog post on these other aspects of the judgment can be found here.
Save the date – resource nationalism seminar – London, 13 September 2018
We are pleased to announce that we will be holding a seminar on resource nationalism on 13 September 2018. Continue reading
Filed under News
State to state dispute resolution in the UK Government’s White Paper: arbitration with a potential role for the CJEU
The White Paper published yesterday, “The Future Relationship between the United Kingdom and the European Union”, includes the UK Government’s proposal for the resolution of disputes between the UK and the EU under what the UK Government views as an “Association Agreement”. This Association Agreement would form the institutional framework for the relationship, with a number of separate agreements (the majority falling within this institutional framework), each covering different elements of economic, security and cross-cutting cooperation.
Under the institutional framework there would be a UK-EU Governing Body, and under that Governing Body and answerable to it, a Joint Committee which would be responsible for the effective and efficient administration of the agreements. The Joint Committee, “through regular and structured dialogue”, would seek to prevent disputes arising, or otherwise play a role in resolving them.
The White Paper emphasises the potential for resolution of disputes through dialogue and non-formal means. However, it also outlines a potential dispute resolution process to ensure that the obligations contained in the institutional framework and agreements can be enforced if needed.
The new draft Dutch BIT: what does it mean for investor mailbox companies?
The Netherlands has released a new draft investment treaty for public comment (“Draft BIT“). If adopted, the Draft BIT may raise questions about the Kingdom’s attractiveness for foreign investors who have long taken advantage of Dutch treaty protections by structuring their investment via companies in the Netherlands. The Netherlands proposes to use the new model as a basis for renegotiating its existing BITs with non-EU states, and, as such, the new draft’s more restrictive provisions may be significant for existing investors with protection under existing BITs, as well as those considering future investments. Key features of the Draft BIT are considered below.
Dawood Rawat v Mauritius: Dual-national claim dismissed based on treaty context interpretation
On 6 April 2018, a Tribunal constituted under the UNCITRAL Arbitration Rules rendered an Award on Jurisdiction in the case Dawood Rawat v. The Republic of Mauritius (PCA Case 2016-20). Following a thorough analysis of the interpretation of the 1973 Investment Protection Treaty between the Republic of France and Mauritius (the “France-Mauritius BIT” or the “Treaty”), the Tribunal denied protection of the relevant investment protection treaty to a dual national – a French-Mauritian businessman – despite the treaty was silent on its application to dual nationals. This approach was contrary to prior investment treaty decisions, such as Serafín García Armas and other v Venezuela, in which tribunals have rejected jurisdictional objections brought by respondent states where relevant the bilateral investment treaty (“BIT”) was silent on the exclusion of dual nationals.
Filed under Arbitration Proceedings, Investment Arbitration, ISDS, Jurisdiction, MFN
Upheaval and uncertainty in mineral regulation in parts of Africa: resurgence of resource nationalism highlights the importance of investment treaty protections
The last few months have seen significant changes to mining regulations in various African states, giving rise to a concern that a regional trend of resource nationalism may be (re-)emerging. In this context it is important for companies associated with the mining sector to be aware of the protection international investment treaties may provide against the impact of resource nationalism on their assets, and how to maximise that protection before risks materialise. This bulletin briefly considers some of the last few months’ developments, before discussing how companies can use investment treaties to protect themselves against the risks they pose.
State immunity: English court considers service of proceedings on a State in times of political unrest, and questions relating to enforcement of a foreign judgment against a State
In the recent decision of Certain Underwriters At Lloyds London v Syrian Arab Republic & Ors [2018] EWHC 385 (Comms) the English Commercial Court (the Court) considered the difficulties which may be encountered in trying to serve on a State. The Court also considered whether a state had submitted to the jurisdiction of a foreign court for the purposes of recognition and enforcement of the foreign judgment under the Civil Jurisdiction and Judgments Act 1982 (the CJJA).
This decision demonstrates the Court’s willingness to take a pragmatic approach when dealing with service of documents on a foreign State in situations where service through standard diplomatic channels may be difficult or inappropriate in the prevailing political climate. The decision also provides useful guidance regarding the requirements to be satisfied should a party wish to enforce a foreign judgment against a State in the English courts.
EU – Japan EPA presented to the European Council, ratification begins
On 18 April 2018 the European Commission (the “Commission“) presented the finalised text of the EU-Japan Economic Partnership Agreement (“EPA“) to the European Council and thereby took the first step in the EPA’s ratification process at the EU level. Getting to this point took significant time and effort: the first of 18 rounds of negotiations began in early 2013, dozens of meetings were held within the EU itself, and the consolidated text was not finalised until (almost five years later in) December 2017. While the time required to negotiate the text of the EPA is consistent with that taken by another recent EU agreement (the EU-Canada Comprehensive Economic and Trade Agreement (“CETA“) took a little over 5 years), both parties to the EPA appear keen to kick the ratification process into high gear. If the parties’ plans come to fruition, the EPA will enter into force by 29 March 2019 and potentially will do so even before the formal conclusion of CETA, the text of which was finalised years earlier than that of the EPA.
Update on the future of ISDS: the discussions within UNCITRAL Working Group III – no apparent consensus to date
After a number of years of public debate in a variety of fora, the discussion of the future development of investor-state dispute settlement (ISDS) has recently moved to the United Nations Commission on International Trade Law (UNCITRAL). UNCITRAL Working Group III (WGIII) has been given a broad mandate to identify concerns regarding ISDS, consider whether reform is desirable and, if so, develop relevant solutions to be recommended to UNCITRAL.
WGIII started its work in the 34th session which took place from 27 November to 1 December 2017. As discussed further below, a number of key points were discussed, including: (i) the duration and costs involved in the procedure; (ii) the allocation of costs; and (iii) transparency. There was also some preliminary consideration of possible developments or changes in relation to the treatment of these issues. The Report of the 34th session indicates that some states advocate a fact-based analysis of ISDS but others note the need to address wider public perceptions of ISDS, as these can raise concerns over the legitimacy of the system.
Bringing the debate about the future of ISDS under the auspices of UNCITRAL, involving high level government representatives from across the world, and also in view of the transparent nature of WGIII’s process, raises the stakes, and perhaps also the prospects, of a more systemic reform. However, whilst the forum has the potential to generate a multilateral plan for ISDS, it is hard to discern any broad consensus at this stage either on the nature of the perceived problems associated with the current system of ad hoc arbitration, or on how those problems may be resolved. This is apparent from the Report and also from the audio recordings (helpfully summarised by IA Reporter, here). The 35th session will take place on April 23 to April 27 2018, following which further clarity on these issues may emerge.
