Strabag SE, Raiffeisen Centrobank AG and Syrena Immobilien Holding AG v. Republic of Poland

Case summary

At a glance

Parties: Strabag SE, Raiffeisen Centrobank AG and Syrena Immobilien Holding AG (Austria) v. Republic of Poland
Case no.: ICSID Case No. ADHOC/15/1; Paris Court of Appeal RG 20/13085
Forum and rules: Ad hoc arbitration under Article 8(2)(b) of the Treaty, administered by ICSID, governed by Procedural Order No 1 (ICSID Convention and Additional Facility Rules used as guidance); seat Paris
Treaty: Austria–Poland BIT of 24 November 1988
Tribunal: V. V. Veeder (President), Karl-Heinz Böckstiegel, Albert Jan van den Berg
Court: Paris Court of Appeal, International Commercial Chamber (Pôle 5 – Chambre 16): François Ancel (President), Fabienne Schaller, Laure Aldebert
Underlying award(s): Partial Award on Jurisdiction, 4 March 2020
Sector: Hotels; real estate; privatisation
Outcome: The Tribunal upheld jurisdiction over the claims under Articles 2(1), 2(2), 3 and 4 and rejected the Achmea objection (4 March 2020). The Paris Court of Appeal annulled the award for lack of jurisdiction under EU law (19 April 2022).
Amount: Costs of the jurisdictional phase: USD 716,227.10, with the decision on their allocation reserved. The Court ordered the investors to pay Poland EUR 50,000 under Article 700 of the Code of Civil Procedure, plus the costs of the court proceedings.

The dispute

In 1997 Strabag (through its predecessor Bau Holdings AG) bought 80% of Syrena Hotels from the City of Warsaw under a Share Purchase Agreement of 18 March 1997. Syrena Hotels held the perpetual usufruct of Plot No 39, on which the Hotel Polonia and the Hotel Metropol stand, and owned the hotel buildings. The land had been expropriated under the 1945 Warsaw Decree. Polish authorities later acted on the restitution claims of former owners. They annulled the 1993 Enfranchisement Decision (2003), issued the 24 December 2012 "Christmas Decision" naming Jolanta Lubomirska-Pierre owner of the Hotel Polonia, deleted Syrena Hotels from the building register and began proceedings to divide the land. The City of Warsaw also drew on Strabag's bank guarantee in 2004. The investors claimed breaches of fair and equitable treatment, full protection, national and MFN treatment, the expropriation clause, the umbrella clause and other provisions of the BIT. Poland objected that the claims were contractual, that the arbitration was an abuse of process, that the claimants had lost standing by putting a Cypriot company (SIHOL) into the ownership chain, and that Article 8 of the BIT was invalid under EU law after the CJEU's Achmea judgment.

Key holdings

The claimants must establish jurisdiction definitively but need only a prima facie case on the merits. The claims are treaty claims, not contract claims. A prima facie case was shown for breach of Articles 2(1) (fair and equitable treatment), 2(2) (full protection), 3 (treatment of investments) and 4 (expropriation). Award ¶¶ 5.27–5.36, 5.93
The claims under Article 5 (transfers), Article 7(1) (which the claimants used to invoke the ECHR) and Article 8(1) (amicable settlement) were dismissed for lack of a prima facie case. The objections to the umbrella-clause claim (Article 7(2)) and to the standing of Raiffeisen and SIHAG in relation to the SPA and the bank guarantee were joined to the merits. Award ¶¶ 5.94–5.95
No abuse of process. Bringing contract claims under Polish law in the Polish courts does not make it abusive to bring treaty claims under Article 8. Award ¶¶ 6.11–6.14
Standing upheld. SIHOL is a shell company interposed for tax reasons. The BIT protects indirect ownership. Any risk of parallel claims under the Cyprus–Poland BIT was premature, since no such claim had been made. Award ¶¶ 7.27–7.33, 7.53–7.59
The Achmea objection was timely, because the Achmea judgment of 6 March 2018 was a new fact under Article 45(2) of the Additional Facility Rules. But it was rejected on the merits. Under French law at the Paris seat, the arbitration agreement is governed by Article 8 of the BIT and transnational principles, not by EU law. The EU Treaties and the BIT do not concern the same subject matter, so Articles 30 and 59 VCLT do not apply. Award ¶¶ 8.96, 8.111–8.118, 8.138, 8.143
The Paris Court of Appeal annulled the award under Article 1520-1° of the Code of Civil Procedure: the Tribunal had wrongly declared itself competent. Procedural Order No 1 was not a separate ad hoc arbitration agreement; it only supplemented Article 8. Following Achmea and PL Holdings, the Article 8 clause is incompatible with Articles 267 and 344 TFEU, whether the offer is unilateral or bilateral and whether or not there is an applicable-law clause. Judgment ¶¶ 79–91
The Court held that annulment was not disproportionate and did not deny access to a judge. The investors were ordered to pay EUR 50,000 and the costs. Poland's third set of written submissions, filed on the day the pleadings closed, was struck out as late. Judgment ¶¶ 29–33, 92–99, operative part

Procedural history

19 December 2012Notice of the dispute sent to Poland by Baier Law Firm on behalf of the claimants.
9 September 2014Request for Arbitration served on Poland.
23 December 2014Tribunal constituted.
7 July 2015Procedural Order No 1 issued. ICSID acts as administering authority; seat in Paris; jurisdiction and merits split into separate phases.
7–8 June 2017Hearing on jurisdiction held at the World Bank in Paris.
30 November 2018The European Commission files an amicus curiae brief on the consequences of Achmea.
4 March 2020Partial Award on Jurisdiction: jurisdiction upheld in part; decision on costs reserved.
16 September 2020Poland applies to the Paris Court of Appeal to annul the award. On 19 October 2020 the Tribunal suspends the arbitration pending the court's final ruling.
19 April 2022The Paris Court of Appeal annuls the Partial Award for lack of jurisdiction.