On 27 July 2018, the Court of Appeal (Arden, Hamblen and Leggatt LLJ) handed down its judgment in Micula and others v Romania, a case concerning the intersection of international law rules for investment arbitration with EU law rules on State aid.
In 2013, an ICSID Tribunal awarded the Micula brothers and associated companies substantial damages against Romania in respect of Romania’s withdrawal of an investment incentive programme. The withdrawal occurred in the context of Romania’s accession to the EU and the introduction of EU State aid rules.
The European Commission issued first an injunction and later a final decision declaring that implementation or execution of the ICSID award by Romania (including payment) would constitute new State aid, incompatible with the internal market. The Claimants have applied to the EU Courts for the final decision to be annulled in proceedings that remain pending.
In January 2017, Blair J ordered a stay of enforcement of the ICSID Award pending the resolution of the Claimants’ proceedings in the European courts. In June 2017, Blair J refused to order Romania to pay security.
The Claimants appealed both of these rulings.
In its judgment on the stay appeal, the Court of Appeal dismissed the Claimants’ first ground of appeal, which contended that Blair J had failed to have regard to the fact that the award was res judicata. The Court of Appeal unanimously held that any res judicata “must yield to the need for the effective application of EU State aid law” (§100). In relation to the other grounds of appeal raised by the Claimants, all members of the Court of Appeal agreed that the enforcement of the Award should be stayed pending the determination by the General Court of the annulment proceedings or further order. However, they each gave different reasons for this conclusion and, in the course of doing so, touched on important issues, including the interaction between investment treaties and the EU treaties, the interpretation of the ICSID Convention and the enforcement of ICSID awards in domestic law.
However, the Court of Appeal overturned Blair J’s findings on security and ordered Romania to pay security of £150 million into court. Although the Court could not make continuation of the stay dependent on the payment of security, it accepted the Appellants’ submission that there were a number of other measures the Court could take if necessary in order to enforce the order.
The judgment is available here.
Marie Demetriou QC and Hugo Leith appeared for Mr Ioan Micula and several associated companies, instructed by White & Case LLP. Robert O’Donoghue QC and Emily MacKenzie appeared for Romania, instructed by Thrings LLP.