Shearman & Sterling has secured a major victory for Swedish twin brothers, Viorel and Ioan Micula, and their Romanian companies after the English High Court rejected Romania’s application to set aside the Court’s 2014 order registering a US$250 million ICSID Award against Romania.
The 2013 Award was rendered by an ICSID Tribunal which found that Romania had violated the Sweden-Romania BIT by failing to ensure fair and equitable treatment to the claimants’ investments by prematurely repealing certain economic incentives extended to them. It is one of the largest awards in ICSID history. By an order dated October 17, 2014, the award was registered in the High Court pursuant to the Arbitration (International Investment Disputes) Act 1966, which implements the ICSID Convention in the UK.
Romania argued that the registration order should be set aside because: (1) Romania had paid the award in full; and/or (2) registration of the award conflicted with a May 26, 2014 injunction decision or a March 30, 2015 final decision, issued by the European Commission to Romania, the latter of which declared that the award amounted to incompatible new state aid contrary to Article 107(1) of the Treaty on the Functioning of the European Union and prohibited Romania from making any payment to the claimants under the award.
Alternatively, Romania argued that enforcement of the award be stayed: (1) pending the outcome of the claimants’ applications to the General Court of the European Union to annul the final decision; or (2) until the High Court made a request to the Court of Justice of the European Union for a preliminary ruling and the CJEU issued such a ruling.
Mr. Justice Blair accepted the claimants’ arguments that the award was res judicata and that setting aside the registration order would conflict with the terms of the 1966 Act (which provides for “automatic” registration of an ICSID award). Justice Blair rejected Romania’s claim that registration of the award was a breach of either of the Commission’s decisions and found that, aside from nominal amounts already received by the some of the claimants, Romania had not made any payments under the award. Justice Blair declined to make a request to the CJEU for a preliminary ruling and refused to stay enforcement of the award on this ground.
While the Court has stayed enforcement of the award in the UK pending the determination of the claimants’ annulment applications before the GCEU, the Court indicated that it was inclined to grant the claimants’ cross-application for security for damages as a condition of the stay, and has ordered a further hearing to consider that application. The hearing is expected to be held in the spring.
The first claimant, Viorel Micula, was represented by Shearman & Sterling Paris partners Emmanuel Galliard, Head of the International Arbitration Group, and Yas Banifatemi, Head of the Public International Law practice, and by associate Simon Cohen from the firm’s Litigation Group in London.