République de Moldavie v. Société Stileks Scientific and Production Firm LLC intervenante volontaire à titre principal pour la société Komstroy

At a glance

Parties

Republic of Moldova (applicant for annulment) v. Stileks Scientific and Production Firm LLC (Ukraine), intervening as successor to Komstroy, itself successor to Energoalians

Case no.

Cour d'appel de Paris, Pôle 5 – Chambre 16, RG No. 18/14721 (on remand after cassation)

Court

Paris Court of Appeal, International Commercial Chamber: Daniel Barlow (President), Fabienne Schaller, Laure Aldebert

Underlying award(s)

Final award rendered in Paris on 25 October 2013 by an ad hoc UNCITRAL tribunal (Mr Pellew, president; Messrs Savranski and Volcinski), awarding Energoalians USD 48.7 million; the president dissented

Treaty

Energy Charter Treaty (Lisbon, 17 December 1994), Articles 1(6) and 26(1)

Sector

Electricity supply

Outcome

Award annulled under Article 1520(1) of the Code of Civil Procedure: the arbitral tribunal had wrongly upheld its jurisdiction because there was no protected investment under the ECT.

Amount

Award annulled: USD 48.7 million. Stileks ordered to pay EUR 250,000 to Moldova under Article 700 CPC, plus the costs of the proceedings.

The dispute

In 1999 the Ukrainian company Energoalians supplied electricity under contract No. 24/02 to Derimen Properties Limited (British Virgin Islands). Derimen bought the electricity for the benefit of Moldtranselectro, the Moldovan State electricity enterprise, with delivery on the Ukrainian side of the border. Moldtranselectro did not pay in full; Derimen's claim stood at USD 18,132,898.94 on 1 January 2000. By contract No. 06-20 of 30 May 2000, Derimen assigned this claim to Energoalians. Energoalians began UNCITRAL ad hoc arbitration under the Energy Charter Treaty on 8 July 2010, and the tribunal awarded it USD 48.7 million. Moldova sought annulment on the ground that the tribunal lacked jurisdiction: in its view there was no "investment" made "by" the investor "in the area" of Moldova. Stileks, the successor to the claim, argued that the CJEU's interpretation did not bind the court in a dispute between non-EU parties, that the facts showed an investment, and that annulment would breach Article 1 of Protocol No. 1 to the European Convention on Human Rights.

Key holdings

1. Stileks's voluntary principal intervention is admissible. As assignee of Komstroy's claim under a contract of 1 November 2019, its claims are sufficiently linked to those of the original parties (Article 325 CPC). ¶¶ 20–24
2. The CJEU's preliminary ruling of 2 September 2021 binds the referring court as a matter of law. Its operative part makes no distinction between disputes inside and outside EU law. The notion of investment does not depend on the investor's nationality, and the CJEU's interpretation is consistent with Article 31 of the Vienna Convention. ¶¶ 53–63
3. The CJEU had a sufficient factual record: the award's detailed statement of facts and contracts Nos. 24/02 and 06-20. The court therefore rejected the argument that the ruling rested on incomplete or erroneous facts. ¶¶ 64–67
4. The claim is an asset held by an investor, but it gives only a right to payment under a commercial sale. It is not a right conferred to carry on an economic activity in the energy sector (Article 1(6)(f) ECT), and it is not a claim under a contract associated with an investment (Article 1(6)(c)). The tripartite structure, the motives for the contract, contract No. 1/01 and Mr Chelombitko's testimony do not change this, because Derimen's interposition places the claim within a separate factoring transaction. ¶¶ 69–82
5. The arbitral tribunal therefore wrongly declared itself competent, which is a ground for annulment under Article 1520(1) CPC. The court did not examine the other grounds raised. ¶¶ 83, 91
6. Annulment does not breach Article 1 of Protocol No. 1 to the ECHR. The ECtHR judgment in BTS Holding v. Slovakia concerned the non-enforcement of a final award and expressly left open review by the courts of the seat. ¶¶ 84–90
7. Stileks bears the costs of the proceedings and must pay Moldova EUR 250,000 under Article 700 CPC, the amount on which both parties agreed. ¶¶ 92–93; operative part

Procedural history

1. 8 July 2010Energoalians commences ad hoc UNCITRAL arbitration under the ECT.
2. 25 October 2013Award rendered in Paris: the tribunal upholds jurisdiction by majority and orders Moldova to pay USD 48.7 million; the president, Dominic Pellew, dissents on jurisdiction.
3. 25 November 2013Moldova files an action to annul the award before the Paris Court of Appeal.
4. 12 April 2016The Paris Court of Appeal annuls the award, finding that the assigned claim was not an investment.
5. 28 March 2018The Cour de cassation (appeal No. Q 16-16.568) quashes the 2016 judgment because it added a condition (a contribution) that the ECT does not provide, and remands the case.
6. 24 September 2019On remand, the Paris Court of Appeal stays the proceedings and refers questions to the CJEU for a preliminary ruling.
7. 2 September 2021The Grand Chamber of the CJEU rules that the acquired claim arising from an electricity supply contract is not an 'investment' under Articles 1(6) and 26(1) ECT.
8. 10 January 2023The Paris Court of Appeal admits Stileks's intervention and annuls the award for lack of jurisdiction.

Tribunal, counsel and experts

Decided by

• Daniel Barlow President, Cour d'appel de Paris
• Fabienne Schaller Judge, Cour d'appel de Paris
• Laure Aldebert Judge, Cour d'appel de Paris

For the claimant

SCP Grappotte Benetreau · SELAS Teynier Pic

For the respondent

SELARL Lexavoue Paris-Versailles · DLA Piper France LLP

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Keywords

• Komstroy
• Energoalians
• Energy Charter Treaty
• notion of investment
• Article 1(6) ECT
• Article 26 ECT
• annulment
• set-aside
• Article 1520 Code of Civil Procedure
• CJEU preliminary ruling
• jurisdiction
• electricity supply contract
• assignment of claim
• Moldtranselectro
• Derimen
• Protocol No. 1 ECHR
• BTS Holding v. Slovakia
• Vienna Convention Article 31

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