Brexit: dispute resolution between the EU and the UK, under the withdrawal agreement and in the event that there is “no deal”

At a critical time in the Brexit negotiations, in the latest podcast on the Herbert Smith Freehills Podcast channel, Andrew Cannon and Hannah Ambrose discuss dispute resolution between the UK and the EU. They look at the way in which the withdrawal agreement may be enforced, including the possible role of the CJEU, as well as considering how disputes may be resolved in the event of “no deal”.

Andrew and Hannah consider both the common ground and the important gaps between the EU’s and the UK’s proposals for dispute resolution. In particular, they consider the possibility of seeking political resolution before a joint committee, and discuss the limited but apparently agreed role of the CJEU in enforcing the financial settlement. They also address the proposals for mitigation of harm in the event that one side breaches the withdrawal agreement, including financial penalties and suspension of treaty rights and obligations.

Andrew and Hannah also reflect on other state to state dispute resolution procedures which may be palatable to both sides, including the use of arbitration and EFTA docking, as well as explaining why the International Court of Justice is not the right body to enforce the withdrawal agreement.

Moving on to a possible no-deal scenario, Andrew and Hannah contemplate the possibility of disputes about how much the UK is obliged to pay and when. They look at the role of the WTO dispute resolution framework in determining trade disputes, pointing out its restricted remit in the broader context of EU/UK relations, and consider whether individual Member States may have a role in seeking to enforce the UK’s international law obligations.

The podcast can be accessed here: https://soundcloud.com/herbert-smith-freehills/brexit-ep5

Our podcasts are available on iTunesSpotify and SoundCloud and can be accessed on all devices. You can subscribe and be notified of all future episodes.

For further information, please contact Andrew Cannon, Partner, Hannah Ambrose, Senior Associate, or your usual Herbert Smith Freehills contact.

Andrew Cannon
Andrew Cannon
Partner
Email | Profile
+44 20 7466 2784
Hannah Ambrose
Hannah Ambrose
Senior Associate
Email | Profile
+44 20 7466 7585

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Filed under Brexit, EU, EU Law, Europe, State to state claims, Treaty negotiation, interpretation and impact, UK

English Court rejects Ukraine’s attempt to set aside enforcement order on grounds of state immunity

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“).

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Filed under Abuse of process, Arbitration Proceedings, Award, Enforcement, Europe, Immunity, Investment Arbitration, ISDS, MFN, Oil & Gas, Privileges and immunities, Sovereign Immunity/State Immunity, Ukraine

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.

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Filed under Act of State Doctrine, Arbitration Proceedings, Award, India, Jurisdiction, Oil & Gas, Public International Law, UK

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

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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.

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Filed under Brexit, EU, EU Law, Europe, State to state claims, Treaty negotiation, interpretation and impact, UK

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.

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Filed under Europe, Investment Arbitration, ISDS, ISDS Reform, MFN, Public International Law, Structuring Investments, Treaty negotiation, interpretation and impact

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.

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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.

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Filed under Africa, Investment Arbitration, ISDS, Mining, Oil & Gas, Public International Law, State Contracts, Stabilization Clauses and Disputes, Structuring Investments

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.

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Filed under Advice on State Contracts and Disputes, Enforcement, Privileges and immunities, Sovereign Immunity/State Immunity, State Immunity

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.

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Filed under Asia, Economic partnership agreement, EU, Europe, Japan, Treaty negotiation, interpretation and impact