On 11 September 2019, the District Court of Columbia confirmed a 2013 ICSID award in favour of Mr. Ioan Micula and the companies in which he had invested. Romania repealed economic incentives the Micula brothers had relied upon when making investments in 1998. In 2013, an ICSID arbitral tribunal rendered an award in favour of the Micula brothers. However, the claimants have had difficulties in enforcing the award in various countries, including the U.S., because of the European decision holding that EU State aid rules prohibited payment of the award as it would amount to illegal State aid.
On 18 June 2019, the Micula brothers prevailed in the CJEU General Court which annulled the European Commission’s decision finding the Micula award to be illegal State aid and preventing Romania from paying it, and clarified that the Achmea judgment does not apply to a situation predating Romania’s accession.[1]
The District Court of Columbia held that its role was only to examine the judgement’s authenticity and to enforce the obligations imposed by the award.[2] The Court proceeded to answer Romania’s four arguments (1) that the Court lacks subject matter jurisdiction under the FSIA, (2) that Romania has fully satisfied the award, (3) that the act of state doctrine prohibits the award’s enforcement and (4) that the foreign sovereign compulsion doctrine also prohibits the award’s enforcement. The European Commission joined these arguments except for the contention that Romania had satisfied the award in full.[3]
The District Court asserted its subject matter jurisdiction under the FSIA arbitration exception 1605(a)(6) for three reasons.[4] First, the Court distinguished the case from Achmea. Unlike Achmea, where the Slovak Republic was already part of the EU when the events occurred, here, all key events occurred before Romania joined the EU.[5] The chronology of events is as follows:
Second, the Court also distinguished the Micula case from the Achmea issue whereby the arbitration clause in the BIT improperly allowed an arbitral tribunal to apply EU law. Here, the arbitral tribunal considered EU law only for factual context and not as a source of controlling law, and it “did not decide a question of EU law in a way that implicates the rationale of Achmea”. Because Romania had not joined the EU at the time it repealed the incentives, EU law was not directly applicable. However, the context of EU accession was relevant to the determination of whether Romania’s actions were reasonable in light of all circumstances or whether claimant’s expectations were legitimate.[6] Third, “the General Court’s ruling overturning the State Aid Decision confirms that the ICSID arbitral tribunal did not tread upon substantive EU law and, for that reason, Achmea does not affect the Award’s validity”.[7]
Moreover, Romania argued the act of state and foreign sovereign compulsion doctrines. Under these doctrines, Romania argued that the State aid Decision required the Court to reject confirming the award and to dismiss the petition.[8] However, the General Court ruling overturning the State aid decision provided that the Commission lacked competence to review Romania’s actions in the pre-accession context and the award’s compatibility with EU State aid law.[9] The Commission also lacked competence to open an investigation or to issue a suspension injunction with regard to Romania’s acts that are not subject to EU law. Hence, the Commission’s preparatory acts of opening an investigation and issuing a suspension injunction did not bar Romania from paying.[10]
The Commission appealed the General Court’s decision and argued that the General Court’s decision is “merely a judgment of the lower of two courts in the EU judicial system” and is thus subject to reversal. However, the District Court held that it was not prepared to delay confirmation any longer based on the mere possibility that the CJEU, at some undefined time in the future, might reverse the General Court’s decision.[11]
On 9 October 2019, Romania filed a civil notice of appeal before the United States District Court for the District of Columbia.[12]
The District Court decision confirming the award may be found here.
[1] Judgment of the General Court of the CJEU, 18 June 2019
[2] United States District Court for the District of Columbia, Ioan Micula et al. v. Government of Romania, Case No. 17-cv-02332, 11 September 2019, pp. 13-14
[3] United States District Court for the District of Columbia, Ioan Micula et al. v. Government of Romania, Case No. 17-cv-02332, 11 September 2019, p. 14
[4] United States District Court for the District of Columbia, Ioan Micula et al. v. Government of Romania, Case No. 17-cv-02332, 11 September 2019, pp. 15-16
[5] United States District Court for the District of Columbia, Ioan Micula et al. v. Government of Romania, Case No. 17-cv-02332, 11 September 2019, pp. 19-20
[6] United States District Court for the District of Columbia, Ioan Micula et al. v. Government of Romania, Case No. 17-cv-02332, 11 September 2019, pp. 20-21
[7] United States District Court for the District of Columbia, Ioan Micula et al. v. Government of Romania, Case No. 17-cv-02332, 11 September 2019, p. 21
[8] United States District Court for the District of Columbia, Ioan Micula et al. v. Government of Romania, Case No. 17-cv-02332, 11 September 2019, p. 22
[9] United States District Court for the District of Columbia, Ioan Micula et al. v. Government of Romania, Case No. 17-cv-02332, 11 September 2019, p. 23
[10] United States District Court for the District of Columbia, Ioan Micula et al. v. Government of Romania, Case No. 17-cv-02332, 11 September 2019, p. 25
[11] United States District Court for the District of Columbia, Ioan Micula et al. v. Government of Romania, Case No. 17-cv-02332, 11 September 2019, p. 26