Facts:
This is a judgment upon an application by Spain to set aside an order which registered an arbitration award in the UK. The said award was obtained in an arbitration conducted under the ICSID Convention in the ICSID Case No. ARB/13/31. In the arbitration, Spain was found in breach of the Energy Charter Treaty and was ordered to pay compensation to Luxembourgish investors.
Seemingly unimpressed by the Achmea-line of CJEU jurisprudence, the English judge, Fraser J., found that the EU treaties did not supersede the UK’s obligations under the ICSID Convention. He dismissed Spain’s objections to jurisdiction of (i) the ICSID tribunal in the arbitration proceedings, and (ii) the High Court in the English registration proceedings.
Held:
(i) In relation to the first objection, Fraser J. followed the Supreme Court’s reasoning in Micula v Romania. He found that EU law did not trump UK’s obligations under the ICSID Convention, which arose prior to its accession to the EU and were implemented through the Arbitration (International Investment Disputes) Act 1966. Fraser J. said: “Where an application is made to the High Court for recognition of an award made by a tribunal under the ICSID Convention, the court is restricted to ascertaining the award’s authenticity. It may not re-examine the ICSID tribunal’s jurisdiction. It may not re-examine the award on the merits. Nor may it examine the fairness and propriety of the proceedings before the ICSID tribunal. The High Court may not refuse recognition or enforcement of an award on grounds covered by the challenge provisions in the ICSID Convention itself. Nor may it do so on grounds based on any general doctrine of ordre public.”
Alternatively, Fraser J. reasoned that even if the UK’s international obligation to enforce the award had been affected by the TFEU, as interpreted by the CJEU’s judgments in Achmea and Komstroy, the obligation to enforce an ICSID award should still be given precedence under the rules on “successive treaties relating to the same subject-matter” laid down by the Vienna Convention on the Law of Treaties, the Article 30(4)(b) of which dictates that “when the parties to the later treaty do not include all the parties to the earlier one: […] as between a State party to both treaties and a State party to only one of the treaties, the treaty to which both States are parties governs their mutual rights and obligations”. On this point, Fraser J. concluded that, given that many state parties to the ICSID Convention, such as the UK, are not parties to the TFEU, the ICSID Convention governs the mutual rights and obligations of the UK and Spain. Accordingly, Spain could not validly rely on EU law to resist the registration of the award.
(ii) Turning to the second objection posited by Spain, Fraser J. affirmed the jurisdiction of the English High Court to register the award in the UK. Whilst states are generally cloaked with immunity and cannot be subject to the jurisdiction of other states’ courts, in this case Spain waived and lost immunity within the terms of Section 9(1) of the State Immunity Act 1978, which reads: “Where a State has agreed in writing to submit a dispute which has arisen, or may arise, to arbitration, the State is not immune as respects proceedings in the courts of the UK which relate to the arbitration.” This is precisely what occurred here through Spain’s ratification of (i) the ICSID Convention, the Article 54 of which compels Spain to recognize and enforce ICSID awards, and (ii) the Energy Charter Treaty, the Article 26 of which provides the jurisdictional basis for the award against Spain.
Infrastructure Services Luxembourg and Energies Term solar v Spain [2023] EWHC 1226 (Comm).
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