England and Wales High Court of Justice, 13 July 2018, PAO Tatneft v. Ukraine, [2018] EWHC 1797 (Comm)

In the OAO Tatneft v. Ukraine case (“investor” and “Respondent” respectively), the arbitral tribunal seated in Paris and constituted under the UNCITRAL Rules rejected all of Respondent’s jurisdictional objections in its decision on jurisdiction and ordered it to pay the investor 12 million dollars in its award. Respondent initiated annulment proceedings in France, the USA and Russia. The investor’s ex parte motion on recognition and enforcement of the arbitral award was granted by the English Court.

Thereafter, Respondent requested to set aside both the decision on jurisdiction and the arbitral award, relying on the requirement of consent to arbitrate expressly provided for under the Section 9 of the Immunity State Act (“ISA”) as an exception to the State’s immunity. In particular, according to Respondent’s position, it had never given consent to arbitrate any claim related to the fair and equitable treatment (“FET”), absent in the applicable BIT. Alternatively, it did not consent to arbitrate the dispute at stake because no investment was made, or because it was made with the sole purpose of bringing the claim before an arbitral tribunal (abuse of process). Therefore, it benefited from immunity before English Courts. The investor contended that Respondent raised new jurisdictional points and opined that it waived its rights to do so. It explained that since the Most Favourable Nation clause was set up in the treaty, the FET was correctly imported from another BIT to the applicable one. The investor added that it had “active relationships with investments” and argued that the abuse of process was rather an admissibility issue.

The High Court of Justice dismisses Respondent’s application.

It considers first that there is no foreclosure requirement under ISA that would be similar to the Arbitration Act.

Second, having found that the scope of the subject matter of the arbitration agreement is broad as it refers to any dispute related to investments, the High Court of Justice rejects Respondent’s arguments on this issue.

Third, the notion of investments under the applicable BIT does not contain any reference as to active or passive relationships between the investor and investments. The High Court of Justice adds that even if it did, in the present case, the investor meets this requirement.

Fourth, it accepts that the State’s consent is limited to disputes over investments made prior to the dispute. However, in the present case, investments were made before the moment when the State failed to comply with its international obligations.

Finally, with regard to the abuse of process, the High Court of Justice holds that the abuse of process is a question of admissibility, not of jurisdiction.

Leave A Comment