PAO Tatneft v Ukraine [2020] EWHC 3161 (Comm) (23 November 2020)

PAO Tatneft v Ukraine [2020] EWHC 3161 (Comm) (23 November 2020)

The $81 million claim under the arbitral award is unenforceable because the underlying investments were not made in accordance with Ukrainian law, as determined by the Ukrainian Supreme Court, and thus fall outside the scope of the arbitration agreement under the BIT. Ukraine is not precluded by issue estoppel or abuse of process from raising the illegality argument in these proceedings.

Citation
[2020] EWHC 3161 (Comm)
Parties
Claimant/respondent: PAO Tatneft; Defendant/applicant: Ukraine
Jurisdiction
England and Wales
Judgment Date
23 November 2020
Procedural Posture
Commercial Court Enforcement of Arbitral Award / Application to Set Aside Enforcement Order Under Arbitration Act 1996, S.103(2)(d)
Outcome
Application granted in part; enforcement of the $81 million portion of the award refused.
Legal Topics
Enforcement of Foreign Arbitral Awards, State Immunity, Issue Estoppel, Illegality of Investment, Interpretation of Bilateral Investment Treaty (bit), Res Judicata, Abuse of Process
Arbitration International Law Commercial Law Enforcement of Foreign Arbitral Awards State Immunity Issue Estoppel Illegality of Investment Interpretation of Bilateral Investment Treaty (bit) +2 more

Case Brief

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Parties

PAO Tatneft

Claimant/respondent

Ukraine

Defendant/applicant

Procedural Posture

Commercial Court Enforcement of Arbitral Award / Application to Set Aside Enforcement Order Under Arbitration Act 1996, S.103(2)(d)

Legal Issues

  1. 1 Whether the $81 million portion of the arbitral award is unenforceable under s.103(2)(d) Arbitration Act 1996 due to illegality under Ukrainian law
  2. 2 Whether issue estoppel or abuse of process precludes Ukraine from raising the illegality argument
  3. 3 Whether the investments were made in accordance with Ukrainian legislation as required by the BIT

Ratio Decidendi

The $81 million claim under the arbitral award is unenforceable because the underlying investments were not made in accordance with Ukrainian law, as determined by the Ukrainian Supreme Court, and thus fall outside the scope of the arbitration agreement under the BIT. Ukraine is not precluded by issue estoppel or abuse of process from raising the illegality argument in these proceedings.

Court Disposition

Application granted in part; enforcement of the $81 million portion of the award refused.

Orders

  • Refusal to enforce the $81 million portion of the arbitral award under s.103(2)(d) Arbitration Act 1996
  • No order as to enforcement of the $31 million portion, which remains unaffected