International Arbitration Newsletter - December 2018 | Regional Overview: Europe
The most relevant European updates from the global International Arbitration and ADR practice group at Garrigues.
Cyprus hit by ICSID banking claim from Belarusian investor
On 2 November 2018 ICSID registered a claim filed by Belarusian investor Alexander Nelin against Cyprus under the Belarus-Cyprus bilateral investment treaty.While there are little details on the underlying dispute, Nelin, acting as the Chairman of the Board at the Belarus-British bank Golden Taler Bank, may have been pressured by the Cypriot government to stop providing easy access to lines of credit to local and foreign companies outside of the government’s control.
EU Commission reveals plans on mulilateral investment treaties
European Union trade commissioner Cecelia Malmström has laid out the EU’s plans for a multilateral investment court, saying that “only a permanent body” with an appeal facility and full-time adjudicators can “create predictability and inconsistency…ensure correctness…address the politically perverse incentives of the current system… eliminate ethical concerns…bring about the expertise that the system needs…address costs and duration…[and] assure equal representation.” Ms Malmström believes that a “systemic reform” of investor state dispute settlement is needed and having a permanent body to resolve disputes is the “only one of the options on the table that can effectively address…concerns”.UNCITRAL is reforming the system by hosting multilateral discussions on ISDS, and, according to Malmström, its “efforts”, supported by the EU, are “paying off”.
New third party asset management funder opens in Paris
Former Managing Director of Vannin Capital Iain McKenny has launched a Luxembourg-based asset management fund called Profile Investment or “Pi” based in Paris,
Germany’s´ Federal High Court follows Achmea´s reasoning
On 31 October 2018 the Federal Court of Justice of Germany, which is the country’s highest court for civil and criminal matters, set aside an €22 million UNCITRAL award in favour of Dutch insurer Achmea in light of the European Court of Justice’s recent ruling that the arbitration provisions of such treaties are incompatible with EU law. This ruling means there was no valid offer to arbitrate the claim under the Netherlands-Czechoslovakia bilateral investment treaty and the tribunal lacked jurisdiction to hear it, the court said.The court also ordered Achmea to cover the costs of the proceedings before it.
Greece hit by ICC award enforcement on Olympics dispute
In 22 October 2018, US defence contractor Leidos filed a motion in the US District Court for the Southern District of New York for leave to begin attaching Greece’s US assets to satisfy a €48 million ICC award relating to a project commissioned for the 2004 Olympic Games that has been dogged by allegations of corruption.
Leidos obtained the ICC award in 2013 in a dispute relating to security systems commissioned for the 2004 Olympic Games in Athens.
The underlying dispute relates to a €255 million contract in 2003 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. Greece used C4I during the Olympics and Paralympics and for nearly two years afterwards despite refusing to formally accept the system or to pay for it.
Romania defeats ICSID claim
An ICSID tribunal recently issued an award rejecting the claim against Romania brought by Swiss energy group Alpiq under the Romania-Switzerland bilateral investment treaty and the Energy Charter Treaty in an energy supply claim.
The underlying dispute concerned two energy supply contracts that Alpiq´s local subsidiaries, Alpiq RomIndustries and Alpiq RomEnergie, had signed with Romania’s state-owned energy company Hidroelectrica. Romania cancelled the contracts in August 2012, two months after Hidroelectrica had been declared insolvent.
The tribunal rejected Alpiq´s claim on alleged expropriation and concluded that Romania was not liable for the decision to terminate Hidroelectrica’s contracts, which it said had been taken not by the government but by a judicial administrator in the insolvency proceedings.
Spain loses new ECT arbitration
Danish company Athena Investments, which is one of five claimants, has announced a victory in an Energy Charter Treaty arbitration with Spain in another dispute that arose over reforms to its renewable energy subsidy regimeThe award, issued by a Stockholm Chamber of Commerce tribunal, awarded it damages, the costs of the arbitration and certain other costs, amounting to a net award of €11 million, interest on the damages, assessed from June 2014 until the date the award is finally paid.
The underlying dispute related to Athena´s and other investors´ three photovoltaic plants in the city of Cordoba in southern Spain and claims for compensation of €50 million for the Spanish government’s 2013 decision to repeal an inflation-linked feed-in tariff to qualifying installations for their operational lifetime, which negatively affected the value of its investment.