Micula and others v Romania

A domestic court may stay execution of a registered ICSID award only within narrow procedural limits consistent with the ICSID Convention. It cannot use that power to suspend enforcement on a substantive ground which the Convention does not recognise.

Article 351 TFEU preserves obligations under a pre-accession treaty where those obligations are owed to non-member states. The duties to recognise and enforce ICSID awards are owed to every contracting state. They therefore prevail over inconsistent EU Treaty obligations, including the duty of sincere co-operation.

An ICSID tribunal awarded compensation to investors after finding that Romania had breached a bilateral investment treaty. The award was registered in the High Court under the Arbitration (International Investment Disputes) Act 1966. Romania sought to prevent enforcement because the European Commission considered payment to be unlawful State aid.

The Commercial Court stayed enforcement. The Court of Appeal dismissed the investors’ appeal against that stay but ordered Romania to provide £150m security: [2018] EWCA Civ 1801. After the General Court annulled the Commission’s State aid decision, the Commercial Court imposed a fresh stay and security order: [2019] EWHC 2401 (Comm).

The central issues were whether domestic courts could stay enforcement consistently with the ICSID Convention and whether article 351 TFEU protected the United Kingdom’s pre-accession Convention obligations from inconsistent EU duties.

1. The investors’ cross-appeal was allowed unanimously and the stay was lifted. Domestic courts possess a limited power to stay the execution of a registered ICSID award for procedural reasons. The Court of Appeal exceeded that power by imposing a substantive prohibition pending resolution of the State aid dispute. That stay frustrated an award which the United Kingdom was obliged to recognise and enforce under articles 53 and 54 of the ICSID Convention.

2. The Convention creates a self-contained system of review. Once authenticity is established, a domestic court cannot reconsider an award’s merits, jurisdiction, procedural fairness or conformity with public policy. It was arguable that article 54(1) permits exceptional defences available against final domestic judgments, provided they do not overlap with the Convention’s exclusive challenge procedures. No such defence arose here.

3. Article 351 TFEU protects pre-accession treaty obligations owed to non-member states. National courts may determine the existence and scope of those international obligations because that question is not reserved to the EU courts. The relevant inquiry concerns the persons to whom the treaty obligations are owed, rather than whether the particular dispute is intra-EU.

4. The duties under articles 54 and 69 of the ICSID Convention are owed to every contracting state. The Convention establishes a system of mutual trust and reciprocal enforcement whose effectiveness depends upon compliance by all participants. As the United Kingdom assumed those duties before joining the European Communities, article 351 TFEU prevents EU Treaty provisions from affecting them.

5. The duty of sincere co-operation therefore did not require a stay. Although a subsisting State aid investigation and a pending EU appeal would ordinarily create a sufficient risk of conflict, they could not displace the protected ICSID obligations. The prospect that an EU court might later determine the distinct question concerning the United Kingdom’s obligations was contingent and remote.

6. Romania’s appeal concerning security had become academic. The security order was discharged.

1. United Kingdom Supreme Court: Allowed the investors’ cross-appeal, lifted the stay of enforcement and discharged the security order: [2020] UKSC 5.
2. Commercial Court: Following the General Court judgment, Phillips J stayed enforcement pending the EU appeal and ordered £150m security: [2019] EWHC 2401 (Comm).
3. Court of Appeal: Dismissed the appeal against the stay but allowed the appeal concerning security and ordered £150m security: [2018] EWCA Civ 1801; [2019] Bus LR 1394.
4. Commercial Court: Blair J refused to set aside registration but stayed enforcement: [2017] EWHC 31 (Comm); [2017] Bus LR 1147. He later refused security: [2017] EWHC 1430 (Comm).