Successful challenges to arbitral awards made in London are rare. It is also unusual for the English courts to be asked to consider the scope of protections arising under a bilateral investment treaty ("BIT"). It is even more unusual for a court to overturn a tribunal's finding that it did not have jurisdiction. In a recent case all three occurred: the English Commercial Court in GPF GP Sàrl v The Republic of Poland  EWHC 409 (Comm) set aside a ruling of a tribunal that it lacked jurisdiction to hear certain claims arising under the BIT between Belgium/Luxembourg and Poland.
In 2008 Griffin, the Luxembourg-incorporated claimant, invested in a development project in Warsaw on land formerly used as a military barracks. The Warsaw Monuments Conservator had already said it supported the development. However, in 2009 the Conservator reversed that decision, and, based on this, the City of Warsaw refused to issue a new building permit. Griffin challenged those decisions through the Polish courts; and while that challenge proceeded, the Conservator ordered a halt to demolition work at the property and added the property to a register of historical monuments. In June 2013, the Warsaw Regional Court cancelled Griffin's rights over the property because the development had not begun within the specified time-period. That cancellation was confirmed by the Warsaw Court of Appeal in December 2014.
Griffin said that this meant that it had been deprived of its investment. It also claimed that the City of Warsaw had a hidden agenda throughout, namely, to transfer the property to the museum next door which wanted to use it as a car park.
Claim under the BIT
The BIT gives various rights to an investor and states that an arbitration claim may be brought in London under the arbitration rules of the Stockholm Chamber of Commerce. In 2015, Griffin commenced arbitration against Poland. Its claims fell into three broad categories: expropriation, indirect (or "creeping") expropriation, and violation of the fair and equitable treatment ("FET") standard in the BIT. In an award rendered in February 2017, the arbitral tribunal accepted jurisdiction over Griffin's claim that there had been expropriation, but declined jurisdiction over Griffin's claims of indirect expropriate and breach of the FET standard on the basis that the BIT only permitted direct expropriation claims to be brought in arbitration. Griffin challenged that decision in the courts under section 67 of the English Arbitration Act 1996.
The English court proceedings
In a judgment dated 2 March 2018, Mr Justice Bryan held that the tribunal was mistaken in finding that it did not have jurisdiction over the indirect expropriation and FET claims. He ruled that the arbitration provision in the BIT extended to an FET claim based on measures involving a deprivation or restriction of property rights and which leads to or causes consequences similar to expropriation. He also considered that a claim for indirect or creeping expropriation (which involves a chain of events that, taken together, might amount to expropriation) is not precluded where there is a specific event in the chain of events that might ultimately be found to be itself a form of expropriation. He therefore remitted both the claims back to the tribunal.
This decision, although unique to its facts and the wording of the arbitration provision of the specific BIT, is interesting for a number of reasons.
First, this award is a rare example of a successful challenge to a negative ruling on jurisdiction. The English Arbitration Act is different from equivalent legislation in many other countries in that it allows challenges to both positive and negative findings on jurisdiction. The UNCITRAL Model Law, on which many jurisdictions have based their arbitration legislation, does not envisage a challenge to decision of a tribunal declining jurisdiction, only a challenge where a tribunal has decided it has jurisdiction.
Second, this is a rare example of a national court considering the scope of an arbitration provision in a BIT, and matters such as the relationship between direct expropriation, indirect expropriation and FET. That is because many claims made under bilateral investment treaties are made under the ICSID Arbitration Rules. There is ordinarily no recourse to national courts under those Rules; instead, an application for annulment would be made within the ICSID system.
Finally, this case concerns a BIT between EU countries and, coincidentally, a mere four days after the English court judgment the Court of Justice of the European Union ("CJEU") held that the arbitration provision in a similar intra-EU BIT was incompatible with EU law (Slovak Republic v Achmea BV (Case C-284-16)). The implications of that CJEU judgment are yet to be worked out, but Poland has reserved its right to make submissions on it in any appeal of Mr Justice Bryan's judgment. It is possible therefore that this saga may come to an end on the basis that the tribunal had no jurisdiction from the start.