The enforcement of an ICSID Investment Arbitration Award in the United Kingdom is a complex matter. In January 2017, the UK High Court delivered a judgement to stay enforcement proceedings of the final ICSID award in the case of Ioan Micula and others v Romania, following a request by Romania and the EU Commission to do so.

Under EU law, State aid to commercial entities is prohibited, which is why Romania was required to cancel a series of tax incentives, in preparation for its accession as a member State of the EU in 2007. This cancellation gave rise to the investment dispute in question, which was brought under the Sweden-Romania BIT and resulted in an ICSID arbitration tribunal finding that Romania had failed to respect the investors’ legitimate expectations and to safeguard their fair and equitable treatment. Because of the EU law issues that arose (including those concerning infra-EU BITs), the EU Commission participated in the arbitration as amicus curiae, where it raised, among others, issues concerning the enforceability and compatibility of an eventual award with EU law. The problem with enforcement lay in the fact that, should Romania be required to compensate the investors, as the award ultimately found, it was alleged that this would in itself constitute illegal State aid in breach of EU obligations.

Among the many interesting EU and investment law questions that the Court considered, it notably had to strike a balance between two sets of international obligations that were incumbent on the UK: the UK’s obligations under the ICSID Convention and the UK’s obligations under EU law.

Even more, the High Court did not exclude the possibility of making the stay of enforcement provisional upon the granting of security by Romania. Instead, it withheld its decision on this issue until an additional hearing on the matter took place. After the award was rendered against Romania, it unsuccessfully sought its annulment. In the meantime, the European Commission also issued a Final Decision and an Injunctive Order, which prohibited Romania from paying the award. The investors are seeking to annul the Commission’s decision at the Court of Justice of the EU (CJEU).

The High Court managed to navigate around the issue of conflict between EU and investment law, by finding a way to facially comply with both sets of obligations. The distinction the High Court drew between registration and enforcement of an ICSID investment arbitration award highlights that investors seeking enforcement in the UK should be wary of the legal regime of enforcing national judgements, which may be impacted by other international obligations incumbent on the enforcing forum.

Aceris Law’s United Kingdom Arbitration Lawyers Desk is a dedicated team of lawyers at Aceris Law, a specialized international arbitration law firm, which accompanies clients involved in arbitrations concerning London, where a contract is executed in the United Kingdom, the dispute is brought by or against a party in the United Kingdom, or the seat of arbitration is London. For more information, feel free to visit https://www.acerislaw.com.