Micula & Ors v Romania & Anor

An ICSID award must be registered where the statutory conditions are satisfied. Registration is distinct from enforcement and does not itself conflict with a Commission decision prohibiting payment of the award. Enforcement may nevertheless be stayed where it would conflict with a binding State aid decision or where proceedings challenging that decision create a real and material risk of inconsistent decisions. The duty of sincere cooperation requires national courts to avoid decisions conflicting with Commission decisions. An ICSID award registered under the Arbitration (International Investment Disputes) Act 1966 is treated for enforcement purposes like a final domestic judgment and gains no privileged status over such a judgment. A first-instance court need not make an Article 267 TFEU reference where the issues are already before the European courts and the questions are not straightforward.

The claimants held an ICSID award against Romania arising from a Sweden-Romania bilateral investment treaty. The award was registered in the High Court under the Arbitration (International Investment Disputes) Act 1966. The European Commission later decided that payment or execution of the award would constitute incompatible State aid and prohibited Romania from making payment.

Romania applied to set aside or stay the Registration Order and alternatively sought a reference to the CJEU. The claimants argued that registration and enforcement were mandatory under the 1966 Act and the ICSID Convention. The central questions concerned the distinction between registration and enforcement, the effect of EU State aid obligations, the finality of the award, and whether security should be ordered during any stay.

1. Registration. The application to set aside the Registration Order was refused. Section 1(2) of the Arbitration (International Investment Disputes) Act 1966 confers an entitlement to registration, subject to the Act’s express conditions. Registration did not itself place Romania in breach of the Commission’s Injunction Decision because that decision prohibited Romania, rather than the claimants, from implementing or executing the award. Registration is distinct from enforcement and does not itself create a conflict with the Commission’s decision.
2. Enforcement and stay. For enforcement purposes, registration equates an ICSID award with a final domestic judgment. It does not require the English court to enforce the award in circumstances where enforcement of an equivalent domestic judgment would conflict with EU law. The Commission’s Final Decision prohibited Romania from paying the award. Enforcement by the English court would therefore conflict with that decision and breach the duty of sincere cooperation under Article 4(3) TEU.
3. The court accepted that the award was res judicata in English law from the date of the award for enforcement purposes. That conclusion did not remove the need for a stay because the issue of the interaction between finality and State aid law was substantially overlapping with issues before the European courts. There was a real risk of inconsistent decisions.
4. The court therefore stayed enforcement pending resolution of the claimants’ annulment proceedings concerning the Commission’s Final Decision. The stay did not place the United Kingdom in breach of the ICSID Convention because an ICSID award has the same enforcement position as a domestic judgment.
5. The court declined to make an Article 267 TFEU reference. The reference was discretionary, the questions were not straightforward to identify, and the dispute was already before the European courts.
6. The claimants had made a persuasive case for security as a term of the stay, but the court deferred final determination. Further submissions were required on the legal power to order security and whether security or enforcement for non-compliance could itself conflict with EU law.