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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A law on immunity from enforcement in France

The 'Law on Transparency, Anti-corruption Measures and the Modernisation of the Economy' presented by Michel Sapin, Minister for the Economy and Finance, to the Council of Ministers on 30 March 2016, known as the « Sapin II » law, has finally been approved by the French National Assembly on 8 November 2016, after undergoing two examinations by each of the French Parliament's chambers. The law is currently being reviewed by the Conseil Constitutionel to confirm its constitutionality (from which it is unlikely to emerge unscathed), and is expected to enter into force by the end of 2017.

Besides making other important reforms in a number of areas, this law will affect the enforcement of foreign decisions and arbitral awards rendered against States. The intervention of the legislator has been considered necessary especially with regard to the recent variations of French case law on this issue, which have been considered by the Government as a potential risk for French diplomatic relations. Thus, the « Sapin II » law seeks to clarify the protection of the property of foreign States situated in France. 

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