Svenska Petroleum Exploration AB v Lithuania & Anor [2006] EWCA Civ 1529 (13 November 2006)

Svenska Petroleum Exploration AB v Lithuania & Anor [2006] EWCA Civ 1529 (13 November 2006)

On the true construction of the Agreement, applying Lithuanian law, the Government of Lithuania did not agree to submit disputes with Svenska to ICC arbitration. The language of the arbitration clause (Article 9) referred only to disputes between the 'Founders' (Svenska and EPG/Geonafta), and the evidence from negotiations and drafting history did not establish a common intention that the Government would be bound to arbitrate. The Government's signature and rubric indicated approval and a willingness to be bound by certain obligations, but not to the extent of agreeing to ICC arbitration. Therefore, the Government was entitled to rely on state immunity, and the English courts had no...

Citation
[2006] EWCA Civ 1529
Parties
Claimant/respondent: Svenska Petroleum Exploration AB; Respondent/appellant: Government of the Republic of Lithuania; Respondent/appellant: AB Geonafta
Jurisdiction
England and Wales
Judgment Date
13 November 2006
Procedural Posture
Appeal From High Court (commercial Court) / Court of Appeal Judgment
Outcome
Appeal allowed; enforcement order set aside
Legal Topics
Enforcement of Foreign Arbitral Awards, State Immunity From Jurisdiction, Interpretation of Arbitration Agreements, Issue Estoppel, Waiver of Sovereign Immunity
Arbitration Commercial Law State Immunity Enforcement of Foreign Arbitral Awards State Immunity From Jurisdiction Interpretation of Arbitration Agreements Issue Estoppel Waiver of Sovereign Immunity

Case Brief

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Parties

Svenska Petroleum Exploration AB

Claimant/respondent

Government of the Republic of Lithuania

Respondent/appellant

AB Geonafta

Respondent/appellant

Procedural Posture

Appeal From High Court (commercial Court) / Court of Appeal Judgment

Legal Issues

  1. 1 Whether the Government of Lithuania agreed to submit disputes to ICC arbitration under the Joint Venture Agreement
  2. 2 Whether the Government is entitled to state immunity under the State Immunity Act 1978 in respect of enforcement proceedings for the arbitral award
  3. 3 Whether the first arbitral award (on jurisdiction) creates an issue estoppel binding the Government

Ratio Decidendi

On the true construction of the Agreement, applying Lithuanian law, the Government of Lithuania did not agree to submit disputes with Svenska to ICC arbitration. The language of the arbitration clause (Article 9) referred only to disputes between the 'Founders' (Svenska and EPG/Geonafta), and the evidence from negotiations and drafting history did not establish a common intention that the Government would be bound to arbitrate. The Government's signature and rubric indicated approval and a willingness to be bound by certain obligations, but not to the extent of agreeing to ICC arbitration. Therefore, the Government was entitled to rely on state immunity, and the English courts had no...

Court Disposition

Appeal allowed; enforcement order set aside

Orders

  • Order of Gloster J. granting enforcement of the arbitral award set aside
  • Application by Svenska for enforcement of the award dismissed