“1. Any dispute between one Contracting Party and an investor of the other Contracting Party arising in connection with investments, including disputes concerning the amount, terms, and payment procedures of the compensation provided for by Article 5 hereof, or the payment transfer procedures provided for by Article 7 hereof, shall be subject to a written notice, accompanied by detailed comments, which the investor shall send to the Contracting Party involved in the dispute. The parties to the dispute shall endeavor to settle the dispute through negotiations if possible. 2. If the dispute cannot be resolved in this manner within six months from the date of the written notice mentioned in paragraph 1 of this article, it shall be referred to: … c) an "ad hoc" arbitration tribunal, in accordance with the Arbitration Rules of the United Nations Commission for International Trade Law (UNCITRAL). 3. The arbitral award shall be final and binding upon both parties to the dispute. Each Contracting Party agrees to execute such award in conformity with its respective legislation.”
“The claimant is a Ukrainian joint stock company …which owned the formerly State-owned electricity network in Crimea, buying electricity from a Ukrainian state-owned wholesaler, and then selling the electricity to industrial and domestic customers in Crimea. Claimant alleges that it held an investment protected under the Treaty and that the Russian Federation took a series of measures that led to the dispossession and nationalization of its electricity network and associated assets in Crimea without any compensation. It therefore requests an award of USD 421.2 million … plus fees, costs, and interest in compensation for its expropriated assets.”
“Russia's argument is contradicted by the facts. Krymenergo's role in 1995, when it was incorporated, was anything but passive: it took the corporate decision to issue shares and to deliver these shares for subscription by the State. In exchange, as capital contribution for the new shares, the State transferred and Krymenergo acquired certain rights over the Soviet Assets (be it ownership rights, as defended by Claimant, be it the right of economic authority, as submitted by Respondent - the transfer of both types of rights requires the consent of the acquirer).”
“In sum, the Tribunal agrees with Respondent that, under Article 1(1) of the BIT, investments must meet three requirements (activity, cross-border and compliance with local legislation). But the Tribunal disagrees with Respondent's additional contention that the three requirements must be met concurrently at the inception of the investment.”
“The English courts have wide case management powers, and they include the power to impose a temporary stay on proceedings where to do so would serve the Overriding Objective: seeCPR 1.2 (a) and 3.1(2)(f). … A temporary stay may be ordered where there are parallel proceedings in another jurisdiction, raising similar or related issues between the same or related parties, where the earlier resolution of those issues in the foreign proceedings would better serve the interests of justice than by allowing the English proceedings to continue without a temporary stay [see Reichhold Norway ASA v Goldman Sachs International[2000] 1 WLR 173 ]. But this would be justified only in rare or compelling circumstances …”. 67. Factors identified in the cases as justifying a case management stay in the context of parallel proceedings include the following: i) The risk of inconsistent decisions in proceedings in different jurisdictions is "always capable of amounting to a very strong reason for granting a stay, as the cases … show and emphasise": Bundeszentralamt v Heis[2019] EWHC 705 (Ch) § 113; Ferrexpo AG v Gilson Investments Ltd[2012] EWHC 721 (Comm) § 155. ii) The "costs and inconvenience of duplicated proceedings" to the parties, the court and other court users may favour a stay: Citigroup Global Markets Ltd v Amatra Leveraged Feeder Holdings Ltd[2012] EWHC 1331 (Comm) § 76; Reichhold at p.182; Department of Trade and Industry v British Aerospace plc and Rover Group Holdings plc[1991] 1 CMLR 165 §§ 12-13. iii) The existence of issues that are more appropriate for determination in the foreign proceedings is a factor favouring a stay. For example: a) In Bundeszentralamt, Hildyard J granted a stay pending parallel litigation in Germany involving issues of systemic importance to German law, holding that: "[T]he 'potential disaster from a legal point of view', as in The El Amria … Brandon LJ (as he then was) described the risk of inconsistent decisions in concurrent proceedings in different jurisdictions, is the more acute when in one of the jurisdictions the issue is a systemic one or may be decided in a manner which has systemic consequences." (§ 116) b) In Department of Trade and Industry v British Aerospace plc, the validity of a decision of the EC Commission was regarded as more appropriate for determination by the CJEU than by the English court (§§ 12-13). c) In Prifti it was held to be "inherently inappropriate" for the English court to determine questions of Spanish law bearing on the validity of the first instance Spanish judgment while a Spanish appeal remained pending (§ 22). iv) A stay is more likely to be appropriate where there is a greater degree of overlap of issues between the English proceedings and the foreign proceedings, or where the foreign proceedings are likely to be determinative of all or part of the English proceedings: Department of Trade and Industry v British Aerospace §§ 12-13; Prifti §§ 21 and 34. v) The grant of a stay is more likely where any prejudice to the party resisting a stay can adequately be compensated by an award of interest or is outweighed by the prejudice which would be caused by refusing a stay: Prifti § 34; Reichhold p.181 (see § 62.vii) above).”
“The principles relevant to granting a stay under section 103(5) were summarised by Gross J in IPCO at [14]-[15] (references removed): “s.103(5) achieves a compromise between two equally legitimate concerns. On the one hand, enforcement should not be frustrated merely by the making of an application in the country of origin; on the other hand, pending proceedings in the country of origin should not necessarily be pre-empted by rapid enforcement of the award in another jurisdiction. Pro enforcement assumptions are sometimes outweighed by the respect due to the courts exercising jurisdiction in the country of origin-the venue chosen by the parties for their arbitration. …the Act does not furnish a threshold test in respect of the grant of an adjournment and the power to order the provision of security in the exercise of the court's discretion under s.103(5). In my judgment, it would be wrong to read a fetter into this understandably wide discretion (echoing, as it does, Art. VI of the New York Convention). Ordinarily, a number of considerations are likely to be relevant: (i) whether the application before the court in the country of origin is brought bona fide and not simply by way of delaying tactics; (ii) whether the application before the court in the country of origin has at least a real (i.e., realistic) prospect of success (the test in this jurisdiction for resisting summary judgment); (iii) the extent of the delay occasioned by an adjournment and any resulting prejudice. Beyond such matters, it is probably unwise to generalise; all must depend on the circumstances of the individual case. As it seems to me, the right approach is that of a sliding scale, in any event embodied in the decision of the Court of Appeal in Soleh Boneh v Uganda Government [1993] 2 Ll Rep 208 [("Soleh Boneh")] in the context of the question of security: ‘… two important factors must be considered on such an application, although I do not mean to say that there may not be others. The first is the strength of the argument that the award is invalid, as perceived on a brief consideration by the Court which is asked to enforce the award while proceedings to set it aside are pending elsewhere. If the award is manifestly invalid, there should be an adjournment and no order for security; if it is manifestly valid, there should either be an order for immediate enforcement, or else an order for substantial security. In between there will be various degrees of plausibility in the argument for invalidity; and the Judge must be guided by his preliminary conclusion on the point. The second point is that the Court must consider the ease or difficulty of enforcement of the award, and whether it will be rendered more difficult … if enforcement is delayed. If that is likely to occur, the case for security is stronger; if, on the other hand, there are and always will be insufficient assets within the jurisdiction, the case for security must necessarily be weakened.’”
“Russia’s argument is contradicted by the facts. Krymenergo’s role in 1995, when it was incorporated, was anything but passive: it took the corporate decision to issue shares and to deliver these shares for subscription by the State. In exchange, as capital contribution for the new shares, the State transferred and Krymenergo acquired certain rights over the Soviet Assets (be it ownership rights, as defended by Claimant, be it the right of economic authority, as submitted by Respondent – the transfer of both types of rights requires the consent of the acquirer).”
“67 The second and third strands of Ukraine’s argument are closely intertwined. The first of the two is, as Mr Edey put it, the investor must actually do something. It can also be put as an argument that there must be an active relationship between the investor and the investment: the investor must actively invest or put in resources. The second of the two is that the investment must be made, or the resources put in, within the territory of Ukraine. These two aspects flow, as Ukraine submits, from the words "are invested by an investor of one contracting state within the territory of the other contracting state" which appear in article 1(1). Given that what Tatneft did was to acquire the shares of a Swiss and a US company, in each case from a shareholder which was a Seychellois company, there was no investment within the territory of Ukraine. 68 I do not consider that this argument is correct. In my judgment the phrase "are invested by" does not import a requirement that, in order to be an investment, there should have been an active process of the commitment of resources by the investor therein. The purpose of the words "are invested by" is to permit, within the definition of "investment" , a link between the specification of the types of assets which are comprised within the term and the person who owns or is otherwise interested in those assets (who must be an investor of the other contracting state) and also with the requirement that that investor must have acquired those assets in accordance with the legislation of the home state. They do not mean that even though the asset would ordinarily and naturally be described as an investment of an investor of the other contracting state, nevertheless they will not qualify as such because the investor has not actually made an active contribution of resources to the host state.”
“In its statement of defence in the Set Aside Proceedings, DTEK Krymenergo sets out its case that, even if Article 12 of the BIT contains an "action requirement", DTEK Krymenergo has complied with it. In that respect, it is specifically alleged that the share issue by DTEK Krymenergo which formed the consideration for the assets contributed to its share capital by the Ukrainian State was the relevant investment 'act'.”
“76 In the Gold Reserve case, Teare J had to construe a bilateral investment treaty between Venezuela and Canada. The issue which arose before him was as to whether the entity which had claimed in the arbitration, Gold Reserve Inc (or “GRI”) was “an investor” within the meaning of that treaty. That was the relevant question for the purposes of ascertaining whether the exception to state immunity in section 9 of the SIA was applicable … The definition of “investor” was “in the case of Canada: (i) any natural person possessing the citizenship of Canada in accordance with its laws; or (ii) any enterprise incorporated or duly constituted in accordance with applicable laws of Canada, who makes the investment in the territory of Venezuela and who does not possess the citizenship of Venezuela . . .” (Emphasis added [in original].
“the strength of the argument that the award is invalid, as perceived on a brief consideration by the Court… If the award is manifestly invalid, there should be an adjournment and no order for security; if it is manifestly valid, there should either be an order for immediate enforcement, or else an order for substantial security. In between there will be various degrees of plausibility in the argument for invalidity; and the Judge must be guided by his preliminary conclusion on the point.”
“…in Naftogaz The Hague Court of Appeals merely ruled that the definition of “investment” in Article 1(1) of the treaty does not require that the investment was cross border at the time that it was made (par 5.8.8) …The court did not address the argument made in the present case namely that Article 12 (rather than Article 1(1)) requires that the investment was cross border at the time it was made.”
“although it is true that the Russian Federation's cross-border argument in Naftogaz was based on Article 1(1), it is difficult to see why such a limitation would be laid down in Article 12 where, according to the Court of Appeal, it is not laid down in Article 1(1), which contains the definition of the term 'investment' for the purposes of the Treaty. That would render irrelevant the Court of Appeal's extensive discussion on the interpretation of Article 1(1).”
“…the current debate addresses the specific situation where the territory of a state expands and such expansion is not accepted by the other treaty state. Whilst Naftogaz concerned the same scenario the debate did not focus on its implications.”
“A good faith interpretation of the wording of the BIT 1998 in its context and in the light of its object and purpose is that treaty obligations rest on the party to the treaty which has the power to provide the relevant protection effectively in a territory, by exercising jurisdiction and effective control over that territory and, as a corollary thereof, has assumed responsibility for foreign relations in respect of that territory.”
“In its contested considerations, the court of appeal assessed whether the notion of territory in Article 1(4) BIT 1998 refers solely to sovereign territory. In doing so, it – rightly – took as a starting point that a treaty must be interpreted in good faith according to Article 31 VCLT in accordance with the ordinary meaning given to its terms in their context and in light of its object and purpose (para. 5.5.7). Subsequently, among other things, it considered that there is no indication from the wording of BIT 1998 that the parties intended to limit its application to sovereign territory (paras. 5.5.8-5.5.9) and that this does not appear from the travaux préparatoires related to the treaty either (para. 5.5.14). According to the court of appeal, such an interpretation would also not fit with the intention of the contracting parties, which was and remains to encourage and protect investments reciprocally on their territories (paras. 5.5.15-5.5.18). The court of appeal concluded that there is no reason to assume that Crimea does not fall under the territory of the Russian Federation as intended in the treaty, and this is not affected by the fact that the parties did not foresee the current factual situation at the time, as it depends on what aligns with the intentions of the parties regarding the operation of the treaty at the time of its conclusion (para. 5.5.20). In doing so, the court of appeal has clearly applied the rule of treaty interpretation laid down in Article 31 VCLT and has not otherwise shown an incorrect interpretation of the law regarding that provision or any other provision of that treaty, nor given an incomprehensible judgment. Therefore, the complaint fails.”
“It is common ground that the Dutch Supreme Court is likely to issue its decision later this year or early next year, thus within about the next 10 months. There will be a further delay of uncertain duration if the Supreme Court decides to remit issues to the Court of Appeal. If the Dutch Supreme Court decides to refer any question(s) to the CJEU, then both parties would expect a decision by late 2024 or early 2025, i.e. about an additional 3 years' delay.”
“a strategy calculated to maximise delay (e.g., it has been careful not to accept that the Dutch court's findings would be dispositive for the purposes of the Immunity Application; and it appears to envisage yet another phase of challenge in England, even if the Immunity Application fails).”
“However, entitlement to such interest is not necessarily an answer to any prejudice caused by delay. Russia refers to Prifti v Musini Sociedad Anonima de Seguros y Reaseguros[2005] EWHC 832 (Comm) (“Prifti”), a non-arbitration case where Christopher Clarke J did not regard delay in payment as a ground for refusing a stay, given that the relevant party if successful would recover interest, and simple interest would be sufficient compensation for the delay (§§ 29-30). In Reichhold Norway ASA v Goldman Sachs International[2000] 1 WLR 173 (“Reichhold”) (stay of proceedings pending arbitration), Lord Bingham MR quoted with apparent approval the first instance judge’s statement that “the only prejudice which Reichhold is likely to suffer if this action is stayed is a delay of about a year. Since delay of that kind can be compensated by an award of interest if Reichhold is ultimately successful, that might be considered a small price to pay for the prospect of avoiding complex and costly litigation.”
“Given the size of the award, it may be inferred that any delay in enforcement is likely to prejudice IPCO. Very few commercial entities would not be prejudiced by delay in the availability of US$152 million . It must be right to seek to minimise any such prejudice, so far as it is practicable and appropriate to do so.” (§ 52(v)) Similarly, in Continental Transfert Technique v. Nigeria[2010] EWHC 780 (Comm) Hamblen J said “given the very large amounts at stake, it is apparent that any delay in being able to obtain the fruits of the judgment is likely to cause significant prejudice” (§ 28). Thus a right to interest can be viewed as merely a quantification of one form of prejudice which the award creditor suffers as a result of delay to payment of its award.”
“FAAN also submitted that there could be no prejudice to AIC because of the 18% interest rate applicable to the Award per annum. They submitted that 18% per annum is a very significant rate of interest on an Award denominated in US dollars and has been since the 2008 financial crisis. However, whilst that is no doubt correct, the fact of the matter is that AIC will continue to be kept out of its money. The Award was in the sum of US$48,124,000 and interest totalling some US$74,590,881 had already accrued by10 January 2019 . These are significant sums by any standards and represent money that AIC would otherwise have available for use in its business. In my judgment that alone is sufficient to give rise to prejudice…”
“the Claimant is a corporate vehicle for an extremely wealthy individual. It has no residual business other than pursuing this claim. There can be no question of any non-compensable prejudice arising for it.”
“Furthermore, it is now ten years since the awards were issued. The prejudice to the claimants in being kept out of their money is increasing daily. Nothing has been paid and all the indications are that the Russian Federation will not pay voluntarily and that the claimants will be required to search out assets for enforcement. In the current climate, following Russia's invasion of Ukraine and the imposition of sanctions on the state, it seems more than likely that it has taken and is taking steps to place as many of their assets as possible out of the reach of the sanctions regime. Meanwhile, the list of creditors is growing and the claimants risk getting bumped progressively further down the queue of those trying to enforce the judgments against a diminishing pool of accessible assets.”
“None of the press articles to which Mr Gimblett refers even state (let alone prove) that the Defendant is moving assets in order to “insulate sovereign assets from… creditors” – this is an artificial gloss by Mr Gimblett which finds no reflection in the evidence on which he relies.”
“does Russia have the motive, the means and the opportunity to remove or to protect assets from enforcement by DTEK in circumstances where DTEK is an entity from Ukraine, where the award debt relates to an expropriation in Crimea, where Russia is a well−resourced and sophisticated litigant with access to offshore structures that can facilitate the transfer and secretion of value?”
“112. The first such factor is the point at the forefront of Mr Smith's (and indeed Mr Fisher's) submissions and has particular weight in consequence of the fact that the Later MFGUK Refund Claims are to be adjudicated in Germany. If no stay is granted, broadly the same issues would fall to be considered by the court here and the court there at (again speaking broadly) the same time and between the same parties. There is an obvious risk of inconsistent, indeed conflicting, judgments. 113. That is always capable of amounting to a very strong reason for granting a stay, as the cases I have referred to in paragraph [61] above show and emphasise. Thus, in Curtis v Lockheed Martin UK Holdings Ltd, it was because the grant of a stay would not, in circumstances where the claimant was not a party to the foreign proceedings and would not be bound by their result, remove the risk of inconsistent findings that such stay was refused; but the potential weight of the possibility of inconsistent findings (and a fortiori decisions) was expressly recognised. And in Prifti (again see paragraph [61] above) the fact that there were concurrent proceedings in Spain in which the Spanish court would be required to determine also the principal issue in the English proceedings, being whether a 'pre-existing conditions' clause had been validly incorporated into the parties' contractual arrangements, so that there was a risk of inconsistent determinations on a fundamental issue, appears to have been the decisive factor in favour of a stay (although the judge considered also that the stay would be unlikely to cause material prejudice which could not be compensated for by an award of interest).”
“…it is, as it seems to me, inherently inappropriate that this Court should have to determine questions of Spanish law bearing on the validity of the first instance Spanish judgment during the pendency of an appeal to a superior court against that judgment.”
“…the clause paramount (clause 2) in the bills of lading expressly incorporated the Hague Rules, and there is no evidence to show that an Egyptian court would interpret or apply those rules any differently in any material respect from an English court.”
“…I do not regard it merely as convenient that the two actions, in which many of the same issues fall to be determined, should be tried together; rather that I regard it as a potential disaster from a legal point of view if they were not, because of the risk inherent in separate trials, one in Egypt and the other in England, that the same issues might be determined differently in the two countries.”
“where a challenge in the curial court has a realistic prospect of success, of allowing that process to run its course, in the interests of comity, avoidance of inconsistent decisions and efficiency”. “A real risk of serious prejudice to Russia”
“214. Viewing the matter in the round, I have come to the conclusion that the Stay should be continued. I consider that the prejudice to the Claimants arising from further delay in potential enforcement measures, without security in the meantime, is outweighed in the present case by the advantages referred to in § 213.viii) and 213.ix) above of awaiting the ultimate outcome of the viable challenge which Russia is bringing in the courts of the Netherlands.”
“where a challenge in the curial court has a realistic prospect of success, of allowing that process to run its course, in the interests of comity, avoidance of inconsistent decisions and efficiency;” and “the specific risk of unfairness that would arise if Russia were to be unable to advance (or to fail in) its full case on state immunity as a result of the binding effect of the decision of the Hague Court of Appeal on essentially the same issues, only for that decision to be later reversed by the Dutch Supreme Court (with or without a reference to the CJEU).”
“I am unable to accept those submissions. In my view, any exercise of powers under section 103 would constitute the assertion of adjudicative jurisdiction over Russia which the court has not yet held to exist. There can be no question of exercising any such powers unless and until Russia's claim to state immunity has been determined and rejected.”
“32. …Of course, it was open to Nigeria, given that the order was made ex parte, to make an application to set aside the order on grounds of state immunity or any other grounds, but if it wished to do so, it had to comply with the procedural timetable laid down by the court, which in fact gave a generous period of 74 days for such an application to be made. … 34. That jurisdiction must encompass the imposition of whatever procedural rules are appropriate for that determination. This is clear from what Kerr LJ said in JH Rayner where he spoke of the issue of state immunity being determined ‘in whatever form and by whatever procedure the court may consider appropriate’. In the present case, Nigeria was given two months and 14 days under the CPR to make an application to set aside the enforcement order and raise state immunity if so advised. If Nigeria needed more time to make an application, it was incumbent upon it to make an application in time underCPR 3.1 (2)(a) for an extension of time. If such an application was not made in time (as in the present case) then Nigeria would need to seek relief from sanctions as the notes in the White Book make clear and, if it could not satisfy the Denton criteria (as the judge found here), then the sanction of not obtaining an extension of time would follow, so that Nigeria could not raise state immunity because it was too late. There is nothing in the CPR or the authorities which suggests that these normal procedural consequences do not follow merely because the defendant is a state.”
“The Claimant’s Security Application pursuant toCPR r. 3.1 (3) is made on the basis that the delay occasioned by the stay requested will make it substantially less likely that the Claimant will be able to execute the full Award amount, or any substantial portion thereof, against the Defendant’s assets in England and Wales, if the Stay Application is granted without requiring the posting of security.”
“the evidence does not indicate, in my view, that the continuation of the Stay creates a risk or augmented risk of dissipation of assets, or of other events that would likely make enforcement more difficult, though (as also noted earlier) there is always a chance that events over time could have that effect. Rather, a requirement for security would probably in effect give the Claimants the bonus of a significant enforcement advantage.”
“I mention only for completeness that there also appears in my view to be some force in the view that where an award defendant has a properly arguable challenge that goes to the jurisdiction of the tribunal, then an analogy may be drawn with challenges under section 67 of the 1996 Act. In that context, section 70(7) permits the court to order that any money payable under the award be brought into court or otherwise secured pending the determination of the application or appeal. In that situation it has been held that security should be ordered only where the challenge is "flimsy" and any delay caused by the challenge will prejudice enforcement of the award, and security should not be used simply to help the claimant enforce the award (see Peterson Farms Inc v C&M Farming Ltd[2003] EWHC 2298 (QB) § 30, IPCO (Supreme Court) § 43 and X v Y[2013] EWHC 1104 (Comm) § 32).”
“… in general, the primary and usually the only question is whether the making of the challenge is likely to prejudice the ability of the award creditor to enforce the award or the ability of the award debtor to honour it.”
“As the Claimants submit, the result is that the court has a stark choice between no adjournment, and an unconditional adjournment. I do not though agree with the Claimants' further submission that the balance of prejudice between the parties then becomes decisive and falls clearly in the Claimants' favour. In reaching my decision as to whether the Stay should be continued, I have already taken account of the fact that (in my view) there is no power to require security.”