White & Case Secures Major Victory for Ioan Micula in Battle to Enforce ICSID Arbitration Award
Global law firm White & Case LLP has secured a significant victory for Ioan Micula and the companies in which he has invested in a judgment from the European Union’s General Court (General Court) that annuls a decision by the European Commission (EC) prohibiting enforcement of an ICSID award under European Union (EU) State aid rules.
This case raised important questions about the scope of the EU State aid rules, and the tension between EU law and States’ international law obligations under ICSID. “The judgment vindicates our clients’ position that EU State aid rules cannot be used to frustrate implementation of the Award,” said local partner Kai Struckmann, one of the counsel of record in the General Court proceedings.
In a decision in 2015, the EC applied EU State aid rules to prohibit the payment of compensation under an ICSID award of €82 million plus interest in favour of Mr Ioan Micula, his brother and co-investor, and their companies European Food SA, Starmill SRL, Multipack SRL and Scandic Distilleries SA. The 2013 ICSID award, resulting from a claim under the Sweden-Romania bilateral investment treaty (BIT), arose out of the repeal by Romania of investment incentives that the Miculas had relied on when making substantial investments in western Romania in the early 2000s.
The 2015 decision held that payment of damages under the award was incompatible State aid and ordered Romania not to make any payments under the Award and to recover any payments already made. The EC reasoned that the award reinstated the benefits of an incentive scheme that itself constituted incompatible aid, and which Romania was required to terminate before joining the EU. The EC also took issue with the underlying Romania-Sweden BIT, which it considered to be incompatible with EU law.
In its judgment, the General Court annulled the EC’s decision in full. The General Court upheld the arguments put forward by White & Case that the EC had no prerogative over the payments under the award, because the claimants’ right to compensation arose out of events arising before Romania’s accession to the EU and therefore could not be covered by EU State aid rules. It also clarified that the European Court of Justice’s Achmea judgment, regarding the incompatibility of arbitration clauses in intra-EU BITs, does not apply in this pre-accession context.
Efforts to enforce the award – which currently totals approximately €300 million with interest – continue, with actions pending in multiple jurisdictions including the UK, US and Belgium. The EC has also intervened in these proceedings, arguing that its decision, and EU law more broadly, prevents such enforcement. The judgment of the General Court also remains subject to appeal to the European Court of Justice.
Ioan Micula and his investments were represented in the General Court by partner Genevra Forwood, local partner Kai Struckmann (both Brussels), and associate Aqeel Kadri (London).
The White & Case team representing Ioan Micula and his companies in the pending enforcement actions includes partners David Goldberg (London), Francis Vasquez (Washington, DC), and Nathalie Colin (Brussels) and associates Aqeel Kadri (London), Jacqueline Chung (New York), and Alexandre Hublet (Brussels).
The judgment of the General Court can be found here.
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