Brussels, 13/05/2015 (Agence Europe) - Member states' courts are required to recognise and enforce arbitral awards handed down in another member state only if the decision is one of applicable international law or of the procedural law of the member state in which recognition and application of the award are sought.
Such was the response given by the Court of Justice of the EU on Wednesday 13 May to a referral for a preliminary ruling (case C-536/12) by the Supreme Court of Lithuania which has to rule on a dispute between the Lithuanian authorities and the Russian gas company Gazprom. At issue is a shareholder agreement, concluded in 2004 between Gazprom, other companies and a Lithuanian state fund, which contained a clause which stated that disputes related to the agreement should be resolved through arbitration. After the Lithuanian authorities called for a judicial investigation to be opened in Lithuania into the activities of a legal person belonging to Gazprom and the other parties to the agreement, Gazprom took the view that this was a breach of the arbitration clause and won an injunction in a Swedish court for the Lithuanian authorities to withdraw or moderate some of the demands put to the Lithuanian courts.
The Lithuanian Supreme Court, to which the case had been referred, asked the Court of Justice for interpretation of Regulation 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters to determine, in short, whether a member state's courts are required to recognise and enforce arbitral awards, delivered in other member states, which restrict that member state's authorities (in this instance, by preventing the Lithuanian authorities from submitting certain demands to the Lithuanian courts).
In its ruling, the Court considers that, in the absence of EU legal measures governing the recognition and enforcement in a member state of arbitral awards delivered in another member state, the procedures for the recognition and enforcement of these awards are a matter for the national and international law applicable in the member state in which recognition and enforcement are sought. Consequently, the courts of the member state concerned are required to recognise and enforce arbitral awards made in another member state only if they devolve from applicable international law or the national law of their state.
In light of the lack of common provisions in this area in the EU, it must be wondered if the leeway afforded the member states by the Court in the enforcement of arbitral awards could affect the way in which member states enforce arbitral awards delivered in the EU under company-state dispute settlement mechanisms, such as the ISDS currently being negotiated in the TTIP talks between the EU and the United States. (Francesco Gariazzo)