Operafund ECO-Invest Sicav Plc (a company incorporated in Malta) v Kingdom of Spain

Hearing Dates: 4 and 5 December 2024

Draft judgment distributed to parties on 12 January 2024

This judgment is in the following parts:

A. Introduction

B. Procedural Background

C. The Issues on the Applications

D. Part 1: Issues of State Immunity and Jurisdiction

E. Part 2: Issues of Non-Disclosure

F. Discussion on Part 2

G. Conclusions

A. Introduction

This is a judgment upon two applications, which are related, and both go to enforceability of the same arbitration award. The first application is by the defendant, the Kingdom of Spain (“Spain”) dated 6 January 2023, to set aside an Order of Cockerill J made on 14 September 2021 (“the Registration Order”) which registered an arbitration award (“the Award”) which the two claimants had obtained following an arbitration against Spain. The Registration Order was amended pursuant to the slip rule but nothing turns on that. The arbitration was one that had been conducted under the Convention which established the International Centre for Settlement of Investment Disputes (“the ICSID Convention”), and I therefore refer to the Award as an ICSID award. This case has remarkable similarities, so far as the basic facts and challenges to the court's jurisdiction are concerned, to another case, also involving registration of a different ICSID award against Spain by two other separate claimants in an entirely separate dispute. That other case was heard by me in March and April 2023 and the judgment in that case is (1) Infrastructure Services Luxembourg SARL (2) Energia Termosolar BV v Kingdom of Spain [2023] EWHC 1226 (Comm). In that case I dismissed Spain's application to set aside that registration order, finding against it on all its arguments challenging the jurisdiction of the court. I deal with the relevance of that case at [5], and then also [13] and following, below. My first-instance judgment, and its current status as being under appeal, are directly relevant to some of the central issues in the instant case. The second application is by the second claimant and I come to that in more detail at [6] and [15] below.

Both the dispute in this case, and the dispute in the earlier different case, arose under the Energy Charter Treaty or ECT. The terms of the ECT were agreed by the European Energy Charter Conference in 1994. The treaty was approved (in its provisional form) on 15 December 1994; Spain signed the ECT, and its accession to the treaty entered into force on 16 April 1998. For completeness I will record that the signatories of the ECT are numerous, and include a great many countries which are now Member States of the EU, and also those who will never be Member States, such as the United States and the Russian Federation. Whether any particular country is a Member State of the EU or not is relevant to some of Spain's arguments on jurisdiction. The ECT expressly incorporated the ICSID Convention as a means of dealing with disputes.

Because the Award in question in this case was one made under the ICSID provisions, this means the application to the Commercial Court by the claimants for registration in this case, and the Registration Order itself, were made under the Arbitration (International Investment Disputes) Act 1966 (“the 1966 Act”). Ordinarily, arbitration awards that are more routinely encountered are sought to be registered and enforced in this jurisdiction under the New York Convention, and therefore the Arbitration Act 1996 (“the 1996 Act”) will apply. That is not the case here, and this case is therefore somewhat different. There are many reported cases relating to registration of awards under the New York Convention, but only very few in relation to ICSID awards. The underlying dispute in this case between the claimants and Spain which was referred to arbitration arose under the ECT, and the claimants proceeded to arbitration under the ICSID Convention as permitted and required in that treaty. The Award was made in 2019 and is in excess of €33 million if one takes into account interest, costs and expenses (the latter two being expressed in US dollars). The precise sums are set out in Schedule A to the Registration Order and the amount of damages awarded recorded at paragraph 3 of that order is €29.3 million. Originally damages were also awarded in US dollars, but this was corrected to Euros under the procedure available under the ICSID Convention for such corrections to be made.

The application to Cockerill J to register the Award, which is what led to her making the Registration Order, was made ex parte by the claimants under CPR Part 62.21(2)(b) and CPR 74.3(2)(b). The Order expressly granted Spain liberty to apply to have it set aside, which is the usual term included in any order that is made without notice to any party. Spain consequently applied to have the whole Order set aside. That application was in January 2023 and was therefore some months before the hearing (and therefore obviously also the judgment) in the Infrastructure Services case took place. The judgment in that case disposed of the jurisdictional arguments based on state immunity raised by Spain, and found against Spain. Almost identical legal arguments are advanced in this case by Spain as the ones that I dismissed in the Infrastructure Services case.

The terms of the Registration Order in the instant case are also subject to an application before me by the second claimant, Schwab, to have paragraph 2 in particular varied; that application is dated 24 November 2023. That application seems to have been issued by Schwab as part of a tactical move to deal with the fact that the court accepted, in case management terms, that at least some of the arguments Spain was advancing to set aside this Registration Order could not be fairly resolved in advance of the appeal being heard and resolved in the Infrastructure Services case. I will deal with that below.

There are two broad areas or grounds upon which Spain seeks to set aside the Registration Order in this case. In outline terms only, the first part is grounds related to Spain's state immunity and the jurisdiction of the court to register the Award at all. The second part is alleged non-disclosure by the claimants in the application for registration that was made to the Commercial Court.

The claim for state immunity is broadly based upon lack of jurisdiction both on the part of the ICSID arbitral panel that made the Award, and also the court to register it. The foundations of these arguments are decisions of the Court of Justice of the European Union (“the CJEU”) which are said by Spain to be authority, both in the law of the European Union (“the EU”) and also international law, to found the absence of jurisdiction. This case therefore raises questions of sovereign immunity, recognition by the High Court of ICSID Convention awards, and the effect and operation of the 1966 Act, including potentially issues of international law. I shall explain the non-disclosure issues in Section E of this judgment below at [48] and following.

The judgment in (1) Infrastructure Services Luxembourg SARL (2) Energia Termosolar BV v Kingdom of Spain [2023] EWHC 1226 Comm, in which Spain challenged the registration of the different ICSID award in that case on broadly the same grounds as in this case, was handed down on 24 May 2023. I considered all of Spain's arguments of law, both those of international law challenging the jurisdiction of the ICSID tribunal, and those of English law concerning Spain's claim of state immunity, at a four day hearing. In my reserved judgment, I dismissed the application to set aside the registration order, which had also been made by Cockerill J. Spain sought permission to appeal and I refused permission on 25 July 2023, the delay between handing down and the refusal of permission being caused by reasons of availability both of the court and of counsel. Spain had sought permission to appeal against my findings on its jurisdiction arguments, but did not seek permission to appeal my findings on non-disclosure. If that were where the matter had rested, then all of Spain's arguments concerning the same issues in this case would of course have been heard, but given the law is the same as it was in that case, and the arguments were the same, the outcome may well have been the same. This would have led to Spain's application to set aside the Registration Order on jurisdictional grounds being dismissed for the same reasons.

B. Procedural Background

However, on 5 October 2023 Spain was successful in obtaining permission to appeal in that earlier case from the Court of Appeal itself, and Males LJ gave Spain permission to appeal on all its grounds (which were broadly the same as those advanced before me). These grounds were those relating to state immunity and jurisdiction. Spain had not sought permission from me to appeal my findings on non-disclosure, and did not seek permission from the single Lord Justice to appeal that part of the judgment either. The appeal in respect of which Males LJ gave permission will be...