International Arbitration Newsletter - November 2021 | Regional Overview: Europe
The most relevant European updates from the global International Arbitration and ADR practice group at Garrigues.
Dutch Supreme Court overturns Yukos judgment
The Highest Court of the Netherlands has overturned a 2020 ruling of the Hague Court of Appeal upholding part of Russia’s appeal and remanding the case back to the Amsterdam Court of Appeal.
The Dutch Supreme Court was asked to to reinstate a series of Energy Charter Treaty (ECT) awards worth US$ 57 billion in favour of Yukos Oil Company’s former majority shareholders. The Supreme Court held that, although all other grounds for appeal could not prosper, the appellate court had erred by preventing the Russian government from raising a procedural allegation related to fraud. Now, the Amsterdam court will have to hear this fraud-related argument.
The original UNCITRAL tribunal issued these awards in 2014 for US$50 billion plus interest, concluding that Russia had breached the ECT with its expropriation of Yukos, soon forced into bankruptcy after being hit with retroactive tax demands worth billions of dollars.
In 2016, after the District Court had set aside the awards arguing that Russia was not bound to provisionally apply the ECT as the government had never ratified it. The Court of Appeal decided to reinstate the awards in 2020, which has now led to this latest appeal.
The Prestige saga continues
Far from coming to an end, the battle between the Spanish and French states against the London Steam-Ship Owners' Mutual Insurance Association (better known as The London P&I Club) still goes on.
The latest milestone in this long-running dispute took place on 4 November when the London Court of Appeal ruled that Spain and France were not entitled to invoke sovereign immunity to avoid new arbitration claims or English lawsuits brought by the The London P&I Club.
This ruling decides the four claims brought by The London P&I Club before the British courts that arise out of the London arbitration awards rendered in 2013. By means of these claims the Club argues that the actions taken by Spain and France are in breach of the above-mentioned awards, as well as the judgments confirming them.
With respect to the claims concerning the arbitration awards, the Court held that they were “bad in law” and that, in any event, the Club could pursue them in its new arbitrations. Regarding the claims for non-compliance with the English judgments confirming those awards, the Court held that they should be brought in the national courts of the States.
Thus, although the Spanish Supreme Court ruled in 2016 in favour of Spain and France and ordered The London P&I Club to pay €855 million for being civilly liable, this ruling has not yet been enforced in the United Kingdom.
However, everything appears to indicate that the enforcement of the Spanish High Court's ruling in the UK is still far away, since the 2013 arbitration awards , as confirmed by the English courts, found that the Club was not liable to Spain and France.
Vattenfall settles claim against Germany
An ICSID tribunal recently issued an order discontinuing proceedings after the parties announced a settlement and an agreement on costs. The agreement includes a new public contract between Swedish state-owned company Vattenfall and three other German energy companies with the German government, as well as an amendment to the German Atomic Energy Act (Das Atomgesetz).
In March 2021, Germany announced that it would pay Vattenfall close to 1.5 billion euros to settle the arbitration, which, according to some sources, was worth more than €8 billion.
In the aftermath of Fukushima, German authorities decided to cancel permit extensions for 17 nuclear power plants and began to enact legislation to phase these plants out by the end of 2022. In this context, Vattenfall, with investments in three nuclear facilities, filed an ICSID claim against Germany under the ECT.