RSE Holdings AG v. Republic of Latvia

At a glance

Parties

RSE Holdings AG v. Republic of Latvia

Case no.

PCA Case No. AA861 (as printed on the decision; database reference PCA Case no. 2022-41)

Forum and rules

UNCITRAL Arbitration Rules 1976; Secretary-General of the PCA as appointing authority

Treaty

Energy Charter Treaty (Article 26)

Decision-maker

Marcin Czepelak, Secretary-General of the PCA, as appointing authority

Sector

Energy; combined heat and power (cogeneration)

Outcome

Latvia's challenge to the claimant-appointed arbitrator Amy Frey was accepted (24 June 2022).

Amount

Not stated. The claimant's request for its costs of the challenge was left to the tribunal.

The dispute

RSE Holdings AG started an arbitration against Latvia under Article 26 of the Energy Charter Treaty and the UNCITRAL Rules 1976. The dispute concerns changes to Latvian regulations on cogeneration (combined heat and power) plants, in which the claimant had invested. The claimant appointed Amy Frey as arbitrator. Latvia challenged her for lack of impartiality. It relied on her work as counsel for investors in 13 pending Energy Charter Treaty arbitrations, which it said raised the same issues on fair and equitable treatment and impairment, and on her failure to disclose that work. The claimant answered that these were unrelated cases with different parties, sub-sectors and measures, and that the respondent's supplement to its challenge was out of time.

Key holdings

1. The supplement to the challenge was admissible. The 15-day limit in Article 11(1) of the UNCITRAL Rules applies to the notice of challenge. It does not stop a party from elaborating on the circumstances behind a pending challenge, as long as it raises no wholly independent new grounds. ¶¶ 39–40
2. The "justifiable doubts" test in Article 10(1) is objective: it is judged from the view of a reasonable and informed third party. An appearance of bias is enough; actual bias need not be shown. ¶ 41
3. The other cases involved different parties and did not concern the Latvian cogeneration regulations. Even so, Ms. Frey acted for investors in 8 concluded and 13 pending ECT arbitrations. That number of cases under a single multilateral treaty creates a serious risk that overlapping questions of ECT interpretation will arise. This seeds justifiable doubts that her duty to her investor clients may influence her view of this case. ¶¶ 44–46
4. Ms. Frey's assurance that she had no preconceived notions could not resolve those doubts without full disclosure of her other ECT cases. The decision expressly does not question her professional integrity. The challenge was accepted. ¶¶ 47–48; Decision
5. The claimant's request for costs of the challenge falls outside the appointing authority's competence. Under Articles 38 and 40 of the UNCITRAL Rules, costs are for the arbitral tribunal to fix and apportion. ¶ 49

Procedural history

1. 22 December 2021RSE Holdings AG files its Notice of Arbitration under the ECT and the UNCITRAL Rules 1976.
2. 24 February 2022The claimant appoints Amy Frey as arbitrator.
3. 11 March 2022Latvia files its Notice of Challenge to Ms. Frey. On 17 March 2022 she declines to withdraw.
4. 28 March 2022Latvia appoints Sabina Sacco as arbitrator. It files a supplement to its challenge on 8 April 2022.
5. 19 April 2022The parties agree that the Secretary-General of the PCA will act as appointing authority. On 26 April 2022 Latvia asks him to decide the challenge.
6. 24 June 2022The Secretary-General of the PCA accepts the challenge to Ms. Frey.

Tribunal, counsel and experts

Decided by

• Marcin Czepelak Secretary-General of the Permanent Court of Arbitration (appointing authority), Secretary-General of the Permanent Court of Arbitration (appointing authority) — appointed by the parties jointly (decided the challenge)
• Amy Frey Co-arbitrator — appointed by the claimant (challenged by respondent; challenge accepted 24 June 2022)
• Sabina Sacco Co-arbitrator — appointed by the respondent

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Keywords

• arbitrator challenge
• double-hatting
• issue conflict
• justifiable doubts
• impartiality
• Energy Charter Treaty
• UNCITRAL Rules 1976
• Article 10 UNCITRAL Rules
• Article 11 UNCITRAL Rules
• timeliness of challenge
• IBA Guidelines on Conflicts of Interest
• disclosure
• appointing authority
• PCA Secretary-General
• cogeneration
• combined heat and power
• Latvia

Summary generated with AI from the published documents — refer to the award for the authoritative text.