Recognition and enforcement of arbitral awards Archives - Page 2 of 3 - international litigation blog
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Recognition and enforcement of arbitral awards

Yukos Case: Brussels Court of First Instance Unfreezes Russia’s Assets

On 8 June 2017, the Brussels Court of First Instance handed down its decision on the legality of the seizures of assets belonging to Russia carried out by Yukos Universal Ltd (YUL) in the context of the Belgian enforcement proceedings of the Yukos case. As you certainly know, the Yukos case refers to an arbitral saga that saw three arbitral tribunals issuing three arbitral awards which cumulatively ordered Russia, in 2014, to pay USD 50 billion as reparations for the irregularities committed during the nationalisation of the Russian oil company Yukos (click here for a report of the hearing that took place before the Brussels Court of First Instance in November 2016).

Following the issuance of the award in 2014 in its favour, YUL (one of Yukos‘s former shareholder) sought the exequatur and the enforcement of the award in several countries, including Belgium. The Belgian exequatur of the award was granted to YUL in June 2015. In addition, YUL was also allowed to freeze and seize several key assets belonging to Russia as well as assets belonging to two Russian press agencies (ITAR TASS and Ria Novosti).

As a response to those precautionary seizures, Russia filed a third-party opposition before the Brussels Court of First Instance in which it challenged the legality of those seizures. As explained earlier, Russia’s main argument in opposing those seizures was that the three awards rendered in favour of Yukos‘s former shareholders had all been annulled by the District Court of the Hague (the Netherlands being the seat of the arbitration) in April 2016. As a consequence of this judgment by the District Court of the Hague, Russia argued that the Belgian exequatur order which had initially been granted to YUL in June 2015 was null and void and YUL was thus not entitled to proceed with the seizure of Russia’s assets.

In its decision of 8 June 2017, the Brussels Court of First Instance fully sided with Russia on this point.READ MORE

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Belgian Constitutional Court Rules on State Immunity From Execution

In a judgment dated 27 April 2017, the Belgian Constitutional Court (the Constitutional Court) largely confirmed the validity of the Belgian legal provision on State immunity from execution (Article 1412quinquies of the Belgian Judicial Code).

As a general rule, Article 1412quinquies of the Belgian Judicial Code provides that assets located in Belgium that belong to a foreign State are immune from execution and cannot be subject to enforcement proceedings by creditors. As mentioned before, France recently adopted a similar provision which largely mirrors Article 1412quinquies of the Belgian Judicial Code.

Exceptions to that rule are, however, possible if very strict conditions are met: a party wishing to seize the assets belonging to a State needs to obtain a prior authorisation from a judge (juge des saisies). This judge will only authorise the seizure if (i) the foreign State has “expressively” and “specifically” consented to the seizure of the assets; (ii) the foreign State has specifically allocated those assets to the enforcement of the claim which gives rise to the seizure; and (iii) the assets are located in Belgium and are allocated to an economic or commercial activity.

Given the difficulty of meeting those requirements, two entities (NML Capital Limited (NML), an American hedge fund which holds debts securities against Argentina, and Yukos Universal Limited (YUL), an entity that had been granted a multi-billion arbitral award against Russia) initiated legal proceedings before the Constitutional Court seeking the annulment of Article 1412quinquies of the Belgian Judicial Code.READ MORE

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U.S. Second Circuit Clarifies Law on Arbitral Award Enforcement

On 18 January 2017, the U.S. Second Circuit Court of Appeals (the Second Circuit) overturned a ruling by the Southern District of New York (SDNY) dismissing an action to enforce an ICC arbitration award rendered in Paris. The judgment (subject to a later correction issued in March) will likely be cited often as it helps clarify how the influential Second Circuit views the enforcement of awards, the applicable law regarding who an award may be enforced against, and what issues an award may preclude from later judgment.READ MORE

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U.K. Supreme Court Clarifies Rules to Order Security As Condition to Challenge Arbitral Awards Enforcement Proceedings

On 1 March 2017, the U.K. Supreme Court (the Supreme Court) found that an arbitral award debtor should not be required to pay USD 100 million in security as a pre-condition to adjourn the enforcement of the arbitral award until a decision is taken on the annulment of the award.

The Supreme Court’s decision was issued in proceedings between Nigerian National Petroleum Corporation (NNPC) and IPCO (Nigeria) Ltd (IPCO). The latter was awarded USD 152 million following arbitration proceedings seated in Nigeria. NNPC sought to set aside the award before the Nigerian courts initially on jurisdictional grounds and, from 2009 onwards, on allegations of fraud.

Meanwhile IPCO sought the enforcement of the arbitration award before the U.K. Commercial Court. This was granted on an ex parte basis, but was soon challenged by NNPC which sought to have the enforcement order set aside or adjourned, in light of NNPC’s ongoing challenge against the award in Nigeria. In response, the U.K. Commercial Court agreed to adjourn the enforcement order under section 103(5) of the U.K. Arbitration Act 1996 (the Act). This provision allows a court before which an enforcement action is pending to adjourn its decision pending the decision on the setting aside or suspension of the award at the seat of arbitration. In this case, however, the Commercial Court subjected the adjournment of the order to the payment of security worth USD 50 million, later increased to USD 80 million in 2008.READ MORE

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France Amends Rules on State Immunity from the Execution of Judgments and Arbitral Awards

On 9 December 2016, the French Parliament adopted a law (the Law) which amended the rules on State immunity from the execution of judgments and arbitral awards contained in Article L 111-1 of the French Code on Civil Enforcement Procedures (Article L 111-1). The Law now makes it more difficult for a creditor to enforce, in France, a judgment or an arbitral award on goods belonging to a foreign State.READ MORE

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Belgian Court Dismisses Russia’s Attempt to Block Yukos Awards Enforcement Proceedings

Despite the fact that I had initially told myself that I would not write about the Yukos (Yukos) case before 2017, my wish has evaporated after the Brussels Court of First Instance handed down its judgment on the matter earlier than expected (click here, for an analysis of the background of the case).

In short, in its judgment of 9 December 2016, the Brussels Court of First Instance found that Russia’s attempt to block the enforcement of Yukos Universal Ltd (YUL)’s award was inadmissible. Unfortunately (for the sake of the debate) the court therefore didn’t examine the merits of the case.READ MORE

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Yukos Awards Enforcement Proceedings – The Belgian Aspects (Part 4 – The Seizures)

Last but not least, here’s the fourth (and final) article devoted to the Belgian enforcement proceedings in the Yukos (Yukos) case.

As mentioned in previous posts, this last article is devoted to the proceedings in which Russia challenged the legality of seizures, carried out by Yukos Universal Ltd (YUL), of assets belonging to the Russian Federation or to State-related entities.READ MORE

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