The Czech Republic v Diag Human SE & Anor

When an arbitration award is challenged for lack of substantive jurisdiction over one claimant, the court must assess the award made for each claimant separately. A valid award in favour of one claimant is not invalidated merely because the tribunal lacked jurisdiction over another claimant, even where both claims concern the same loss. Whether a claimant’s change of ownership defeats its claim ordinarily concerns the merits, not jurisdiction. An alleged logical inconsistency is not, by itself, a ground under sections 67 or 68 of the Arbitration Act 1996. The court should respect the statutory principle of minimal interference, while retaining power to confirm, vary, set aside in whole or part, or remit an award.

The Court of Appeal heard three conjoined appeals arising from challenges by the Czech Republic under sections 67 and 68 of the Arbitration Act 1996 to a bilateral investment treaty award in favour of Diag Human SE and Josef Stava. The High Court determined different stages of the challenge in judgments reported at [2024] EWHC 503 (Comm) and [2024] EWHC 2102 (Comm).

In an earlier judgment, reported at [2025] EWCA Civ 588, the Court of Appeal held that the tribunal lacked substantive jurisdiction over Diag SE’s claim but rejected the challenges concerning Mr Stava. The present hearing concerned the consequential order, principally whether setting aside Diag SE’s award also required setting aside Mr Stava’s award, and what orders should be made concerning costs, double recovery and a later remittal award.

The Court of Appeal dismissed the First Appeal and the Second Appeal, allowed the Third Appeal, confirmed the award in favour of Mr Stava, and set aside the award in favour of Diag Human SE.

1. Statutory remedies. Section 67(3) of the Arbitration Act 1996 permits the court to confirm, vary, or set aside an award in whole or in part. Although remission is not expressly mentioned, the court accepted that the power to remit is included. Section 10 of the Arbitration Act 2025 is declaratory of that existing law.
2. Separate jurisdiction and merits. The tribunal had jurisdiction over Mr Stava’s claim and had decided on the merits that he suffered loss equivalent to the 2008 Award. The fact that the 2008 Award was in favour of Diag SE did not prevent the tribunal from finding that Mr Stava suffered loss in the same amount. Whether his divestment of shares meant that his claim should fail was a merits issue for the tribunal, not an issue concerning its jurisdiction.
3. Effect of the jurisdictional decision. The tribunal’s lack of jurisdiction over Diag SE’s claim did not undermine its decision concerning Mr Stava. The tribunal could have determined Mr Stava’s claim, including the amount of his loss, even if Diag SE had never been a party to the arbitration. An alleged lack of logic in the award was not itself a ground of challenge under sections 67 or 68 of the Arbitration Act 1996. This conclusion accorded with the principle of minimal interference with arbitral awards.
4. Double recovery and costs. The further undertakings given by Diag SE and Mr Stava adequately protected against double recovery. Remission of the arbitration costs was impracticable after the tribunal’s resignation and would have caused disproportionate delay and expense. The court therefore made the best discretionary assessment available, ordering payment of 70% of Mr Stava’s legal and arbitration costs while leaving the tribunal’s figures undisturbed.
5. Further orders. The Court of Appeal declined to undertake miscellaneous amendments to the award. The Remittal Award could not stand insofar as it confirmed an award in favour of Diag SE, but the remaining issues were left to the Commercial Court on the pending challenge to that award. The question of costs of the appeals was adjourned.

• Court of Appeal (Civil Division) — In [2025] EWCA Civ 588, the court held that the tribunal lacked substantive jurisdiction over Diag SE’s claim but rejected the challenges concerning Mr Stava. In the present consequential judgment, reported at [2025] EWCA Civ 998, the First and Second Appeals were dismissed and the Third Appeal was allowed.
• High Court of Justice, King’s Bench Division, Commercial Court — Mr Justice Foxton determined stages of the challenges in judgments reported at [2024] EWHC 503 (Comm) and [2024] EWHC 2102 (Comm), granting permission for the three appeals.