The Czech Republic v Diag Human SE & Anor

Under s.73 of the Arbitration Act 1996, a jurisdictional objection must be identified with sufficient substance and maintained before the tribunal. A general reservation, non-admission or broad challenge to investment status does not preserve every later objection. The court should assess the objection fairly and pragmatically, while preserving the tribunal’s primary role.

For s.67 purposes, jurisdiction concerns the existence, scope and parties to the arbitration agreement. In investment treaty arbitration, this includes the persons to whom the offer to arbitrate is made and the disputes covered by it. Issues concerning the merits, loss or the weight given to a domestic award do not become jurisdictional merely because they are recast in that language.

A s.68 challenge requires a serious procedural irregularity causing substantial injustice. The statutory remedy is not a route for correcting an alleged error on the merits.

An investment treaty tribunal awarded damages and interest to Diag Human SE and Mr Josef Stava against the Czech Republic. The Czech Republic challenged the award under ss.67 and 68 of the Arbitration Act 1996.

This hearing addressed whether particular jurisdictional objections were barred by s.73, whether certain objections were truly jurisdictional, and whether the tribunal had failed to comply with its procedural duties or failed to determine essential issues. The principal disputes concerned the identification and maintenance of jurisdictional objections, the effect of post-2011 transactions, the status of the 2008 commercial arbitration award, and alleged omissions concerning damages.

1. Section 73. A ground of objection must be communicated to the tribunal and the other party as a substantive jurisdictional objection. The court should take a broad, fair and commercially realistic approach, but each distinct ground must be identified. A generalised no-investment objection does not preserve every specific objection concerning indirect ownership, illegality, bribery or particular assets. A point raised in an early request for bifurcation must also be maintained so that the tribunal reasonably understands that it remains required to decide it.
2. A bare putting to proof or non-admission is insufficient. The claimant bears the burden of proving jurisdictional matters essential to its claim, while the respondent bears the burden of establishing a jurisdictional objection. The substance of the objection, rather than its drafting form, is decisive. Where a tribunal addresses a late objection on its merits without a timing objection being taken, pragmatic considerations ordinarily support treating the point as admitted in time or as having received an extension.
3. Jurisdiction under s.30(1) concerns the existence and scope of the arbitration agreement, the constitution of the tribunal and the matters submitted to arbitration. In an investment treaty, the court must determine to whom the offer to arbitrate is addressed and which disputes it covers. A dispute about the amount of compensation for breaches already within jurisdiction was therefore a dispute with respect to the investments. The challenge to the tribunal’s treatment of the 2008 award was a merits challenge, not a jurisdictional challenge.
4. The objection that Mr Stava could not claim for breaches after June 2011 because he no longer owned the investments was not jurisdictional. Article 9 did not contain a continuing-ownership limitation of that kind. The corresponding objection concerning Diag Human SE was jurisdictional because an alleged loss of control could affect whether it was a qualifying Swiss investor when the offer to arbitrate was accepted. The objection that the Bojar Letter dispute arose before the treaty entered into force was also jurisdictional.
5. Section 68 imposes a high threshold. The focus is procedural fairness, not the correctness of the award. A failure to deal with an issue arises only where an essential issue was put to the tribunal and the tribunal failed to determine it. The alleged assignment of 30% of the claim was such an issue and had not been determined, causing potentially substantial injustice. The tribunal had, however, dealt with the ownership-percentage issue and had determined the post-2011 argument.
6. Section 57(3)(a) is not a ritual precursor to every s.68 application. It applies where the award contains genuine uncertainty or ambiguity about whether an issue was determined. It does not apply where the award objectively contains no determination of the issue.
7. The First and Fourth s.68 challenges were dismissed. The Second s.68 challenge was upheld. The position on the Third s.68 challenge was reserved. The s.67 challenges were partly barred and partly allowed to proceed in the limited respects identified in the judgment.

not stated in the judgment.