Czech Republic v European Media Ventures SA

On a challenge under section 67 of the Arbitration Act 1996, the court conducts a rehearing and decides whether the tribunal was correct on jurisdiction. Treaty wording is interpreted objectively under Articles 31 and 32 of the Vienna Convention, by examining ordinary meaning, context and object and purpose. The court should avoid substituting an assumed unilateral or fictional common intention for the agreed text. A treaty arbitration clause referring to disputes concerning compensation may extend to entitlement to compensation as well as its quantification. Where the clause connects compensation to specified expropriation provisions, the tribunal may determine whether the relevant events occurred and whether compensation is due. The jurisdiction may nevertheless exclude claims for relief other than compensation.

European Media Ventures SA commenced UNCITRAL arbitration against the Czech Republic under Article 8 of a bilateral investment treaty concerning the protection of investments. It claimed compensation arising from the alleged indirect expropriation of its investment in a Czech television station.

The tribunal held that the words concerning compensation limited its jurisdiction, but that the limitation excluded claims for relief other than compensation rather than claims concerning entitlement to compensation. The Czech Republic applied under section 67(1)(a) of the Arbitration Act 1996 to set aside the tribunal’s award on jurisdiction. The central issue was whether Article 8 permitted the tribunal to decide whether compensation was payable, or only the amount of compensation.

1. The application was dismissed. The court conducted a rehearing under section 67 of the Arbitration Act 1996. The question was whether the tribunal was correct on jurisdiction, not merely whether its decision was one it was entitled to reach.
2. The Treaty had to be interpreted under Articles 31 and 32 of the Vienna Convention as customary international law. The court adopted an objective and independent interpretation based principally on the agreed words in their context. It treated the ordinary meaning as the meaning attributable when the Treaty was concluded. The court accepted that object and purpose were relevant, including the conferral of a valuable right to arbitrate, but cautioned against converting investor protection into a general rule requiring uncertainties to be resolved in the investor’s favour.
3. Historical and contextual materials did not establish the Czech Republic’s proposed restricted meaning. They were equivocal and showed only that the negotiations involved competing positions and compromise. The court therefore interpreted the Treaty itself rather than attempting to reconstruct a common intention.
4. Article 8(1) contained four jurisdictional preconditions: a dispute; a dispute concerning compensation; compensation due by virtue of specified provisions; and an event within Article 3(1) or (3). The phrase concerning compensation was broad and was not confined to quantification. It covered questions of entitlement as well as amount. The tribunal therefore had to determine whether an expropriation or other specified event had occurred and whether compensation was due.
5. The limitation remained material. The tribunal’s jurisdiction was directed to compensation and did not necessarily extend to claims for restitution or declaratory relief. That issue did not alter the proper construction of Article 8(1). The tribunal had substantive jurisdiction to determine whether compensation should be awarded.