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gpt letter:

Spain has the right to adjust its policies for legitimate public purposes, but this right must be balanced against its contractual and treaty-based obligations. If Spain’s policy changes result in harm to investors without fair treatment or compensation, it could still face liability under the ECT or other international agreements. The focus should be on ENFORCING any regulatory changes in a manner that respects both sovereign rights and existing SPAIN contractual duties

<>  COCOO TO SCOUT REG.CHANGES/ENFORCEMENT TO IDENTIFY WHETHER THEY BREACH EXISTING SPAIN CONTRACTUAL DUTIES.

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COCOO TO FILE COMPLAINT TO THE EC, ARGUING THAT ECT IS ILLEGAL S.A.     +    NOTES.achmea.komstroy caselaw

-The Energy Charter Treaty (ECT) itself is not inherently illegal state aid. However, the financial compensation awarded to investors under the ECT could potentially be regarded as illegal state aid under EU law, depending on the specific circumstances.

–Arbitration awards under the ECT could potentially be classified as illegal state aid under EU law if they involve public resources, provide a selective advantage, and distort competition. Spain could use this argument to challenge or delay enforcement of awards, especially within the EU, but this approach could create further legal conflicts in non-EU jurisdictions

compensation awarded through arbitration under the Energy Charter Treaty (ECT) could potentially be classified as illegal state aid under EU law. Here’s a detailed explanation of how this could happen:

1. The Concept of State Aid Under EU Law

According to Articles 107 and 108 of the Treaty on the Functioning of the European Union (TFEU), state aid includes:

• Public resources provided directly or indirectly by the state,
• Selective economic advantage conferred on specific undertakings,
• Distortion of competition in the internal market,
• Effect on trade between Member States.

If arbitration awards involve compensation paid out of public funds that meet these criteria, they could be classified as state aid.

 2. How Arbitration Awards Could Be Regarded as State Aid

• Public Resources: Compensation payments are typically funded by state budgets, fulfilling the “public resources” criterion.
• Selective Advantage: The awards benefit specific investors or companies, not the general public, making them selective.
• Distortion of Competition: Such compensation could affect competition, particularly in the energy sector, by providing an economic advantage to the award recipient.
• Impact on Intra-EU Trade: Given that many ECT cases involve EU-based investors and Member States, the compensation could influence trade between EU countries

3. Precedent: Micula v. Romania

The European Commission has previously classified arbitration compensation as illegal state aid in Micula v. Romania:

• In this case, the Commission ruled that paying compensation under a bilateral investment treaty (BIT) constituted illegal state aid because it provided the claimant with a selective economic advantage, distorting competition in the internal market.

This precedent could apply to ECT awards, particularly in intra-EU disputes

4. EU Legal Conflict with ECT Awards

• Achmea and Komstroy Rulings: The CJEU has ruled that intra-EU investment arbitration is incompatible with EU law, which includes the prohibition on granting illegal state aid.
• Role of the European Commission: The Commission could intervene to block or claw back compensation payments, arguing they breach state aid rules

5. Potential Defense Arguments by Spain

• International Treaty Obligations: Spain could argue that arbitration awards result from binding international obligations under the ECT, distinguishing them from discretionary state aid.
• Compensation, Not Advantage: Spain may claim that arbitration awards are meant to remedy losses, not provide an economic advantage, and therefore do not distort competition

6. Implications for Investors and Enforcement

• Risk of Non-Payment or Clawback: If awards are classified as state aid, the European Commission could prohibit payment or require the investor to return the compensation.
• Jurisdictional Conflicts: Courts outside the EU (e.g., in the U.S. or Switzerland) might enforce awards despite the EU’s state aid rules, creating tension between international arbitration and EU law

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Several EU institutions and Member States, including Spain, have argued that compensation awards under the ECT could amount to illegal state aid: In cases like Micula v. Romania, the European Commission ruled that compensation awarded under an investor-state dispute settlement (ISDS) mechanism violated EU state aid rules because it provided the claimants with a selective economic advantage.

• Risk of Non-Enforcement: If ECT compensation is classified as illegal state aid, the European Commission could prohibit Spain from paying the award or require the recipient to return the funds.
• Conflict Between International and EU Law: The classification of ECT compensation as state aid highlights the legal tension between EU state aid rules and international investment treaties.

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Claimants are more likely to succeed in non-EU jurisdictions, while intra-EU enforcement remains contentious and case-specific.

Enforcement Within the EU: Challenges Due to Spain’s EU Law Argument

1. The Achmea and Komstroy Judgments:
   • The Court of Justice of the European Union (CJEU) ruled in Achmea (2018) and Komstroy (2021) that investment arbitration between EU Member States (INTRA.EU.DISPUTES) under treaties like the ECT, violates EU law < > ALSO, Spain can invoke the public policy exception under the New York Convention or national laws, arguing that enforcing awards arising from intra-EU disputes undermines the EU legal order
   • Spain argues that this applies to ECT arbitrations, invalidating arbitral tribunals’ jurisdiction in intra-EU cases.
2. Impact on Enforcement in EU Courts:
   • Pro-Spain Decisions: Some EU courts (e.g., Germany, Belgium) have refused to enforce ECT awards, siding with Spain’s argument that EU law prohibits such arbitration.
   • Pro-Claimant Decisions: Other EU courts (e.g., Sweden, Luxembourg) have enforced awards, rejecting the notion that EU law automatically invalidates ECT arbitrations

Enforcement Outside the EU: Less Impact of EU Law

1. Non-EU Jurisdictions:
   • Courts in countries like the U.S., UK, Switzerland, and Australia have generally rejected the EU law-based argument.
   • These courts prioritize international treaties like the ICSID Convention or the New York Convention over internal EU conflicts, treating arbitral awards as enforceable unless procedural defects are proven.
2. Precedents:
   • In the UK High Court case (Infrastructure Services v. Spain), the court dismissed Spain’s EU law-based objection, enforcing the award because the UK was no longer bound by EU law after Brexit.
   • Similarly, in the U.S. (NextEra v. Spain), courts held that EU law does not affect the enforceability of ECT awards under international treaties

Does Spain’s Argument Completely Bar Enforcement?

No, Spain’s argument that the ECT conflicts with EU law does not categorically prevent enforcement:

• In the EU, it creates a strong legal basis for challenging enforcement, but outcomes vary by jurisdiction.
• Outside the EU, courts are likely to enforce the awards, as they are less influenced by EU law and prioritize international arbitration treaties

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IS SPAIN’S DECISION TO NOW GO OFF-FOSSIL, NOT , PER SE, A RETROSPECTIVE APPLICATION OF THE 2021 LAW AGAINST ENERGY INVESTORS?

ChatGPT said:

Spain’s decision to shift away from fossil fuels, as formalized in Law 7/2021 (Climate Change and Energy Transition Act), is not inherently a retrospective application of the law against energy investors. However, the manner of its implementation could raise concerns about retrospective effects, particularly under the Energy Charter Treaty (ECT). Let’s break this down:

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1. Prospective Nature of Law 7/2021

Law 7/2021 applies prospectively, setting targets for climate neutrality and renewable energy by 2050. Its key measures—such as banning new hydrocarbon exploration—are forward-looking and do not retroactively alter past contracts or investments.

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2. Legitimate Expectations and Retrospective Effects

While the law is not retroactive per se, it could have a retrospective effect on investors’ legitimate expectations:

• Pre-2021 Investments: Investors who entered Spain’s fossil fuel or energy sector under previous regulations might argue that the sudden shift to anti-fossil policies undermines their investment’s value.
• ECT’s Fair and Equitable Treatment (FET) Standard: If investors relied on specific commitments, such as long-term licenses or favorable tariffs, they could claim Spain failed to provide a stable legal framework, even if the law itself is not retroactive.

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3. Key Legal Distinction: Retroactive vs. Retrospective

• Retroactive Application: Directly altering past legal rights or obligations.
• Retrospective Effect: A new law impacts the economic value or feasibility of pre-existing investments without directly changing past obligations.

Spain’s decision to shift to renewables may not retroactively invalidate contracts or licenses, but it indirectly affects investors’ profitability, leading to potential claims.

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4. Arguments Spain Can Use to Defend Its Shift

• Public Policy Justification: Spain can argue that the transition aligns with its commitments under the Paris Agreement and EU climate directives, which require urgent action to combat climate change.
• Proportionality and Necessity: Regulatory changes were necessary to address the climate crisis and ensure the long-term sustainability of the energy sector.

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Conclusion

Spain’s move to phase out fossil fuels is not a direct retrospective application of Law 7/2021 but could have retrospective effects on investors’ legitimate expectations under the ECT. These effects may lead to claims of regulatory unfairness, but Spain can defend its actions as necessary for public policy and environmental objectives. The distinction between legitimate public policy and investment protection will be central in resolving disputes.

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i ask:

CAN THE SPAIN PARLIAMENT BE LIABLE FOR ACTING NEGLIGENTY (by approving ECT and then the 2021 law, which are contradictory) ?

The Spanish Parliament is unlikely to be held liable for negligence in approving the Energy Charter Treaty (ECT) and later passing Law 7/2021 (Climate Change and Energy Transition Act), even though these legal instruments may appear contradictory in their impact on fossil fuel and renewable energy investments. Here’s why:

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1. Sovereign Legislative Authority and Policy Evolution

• Parliamentary Immunity: As a legislative body, the Spanish Parliament has sovereign authority to enact laws and ratify treaties. It cannot typically be held liable for legislative decisions, even if they later create legal or economic conflicts.
• Policy Shifts and Public Interest: Changes in policy—such as the move from promoting fossil fuel investments under the ECT to prioritizing renewable energy under Law 7/2021—are within Parliament’s discretion. These shifts reflect evolving societal priorities, including Spain’s commitments to combat climate change.

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2. No Established Duty of Care Toward Investors

• Parliament does not owe a legal duty of care to foreign or domestic investors. Its role is to legislate in the public interest, not to guarantee a stable or unchanging regulatory environment.
• Investment treaties like the ECT do not impose liability on parliaments for enacting laws; they create obligations for the State as a whole to provide fair treatment to investors. Thus, disputes focus on State actions, not parliamentary conduct.

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3. International Law and State Responsibility

• Under the ECT, investors can claim damages for breach of treaty obligations (e.g., Fair and Equitable Treatment or indirect expropriation), but liability falls on the State of Spain, not its legislative body.
• Spain’s defense could argue that regulatory changes under Law 7/2021 were justified by public policy objectives, mitigating potential treaty breaches.

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4. Incompatibility Between ECT and EU Law

• Spain’s membership in the EU introduced tensions between its obligations under the ECT and EU climate directives. Parliament’s actions may reflect this legal conflict, but such conflicts are not grounds for liability.
• The Achmea and Komstroy rulings further emphasize that intra-EU disputes under the ECT are incompatible with EU law, complicating the legal landscape but not constituting negligence.

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5. Potential Legal Risks for the State, Not Parliament

• The State of Spain could face financial liability in arbitration if tribunals find that Spain violated the ECT by failing to uphold legitimate expectations of investors. However, such claims would target the government or administrative actions implementing parliamentary decisions, not the legislative process itself.

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Conclusion: The Spanish Parliament is not liable for negligence in approving the ECT and later passing Law 7/2021. Any claims for compensation by investors would be directed against the State of Spain under international law. Spain’s defense should focus on justifying its regulatory changes as necessary for public policy and environmental sustainability

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i ask:

something is missing here. you are the expert lawyer. . 2.browse online to bolster your knowlege, read related instruments, utilizing arguments that other parties might have overlooked. 3.Finally, redraft the letter outlining key grounds and insights to bolster , not Spain’s defense, but the opponents’ claim

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[DRAFT: Letter on Grounds to Defend Spain]

[Header Information]
[Include the appropriate sender and recipient details, date, and reference to the case(s)]

Subject: Strategic Legal Grounds to Defend Spain in ECT-Based Arbitrations

I. Introduction

This letter highlights key arguments and insights to fortify Spain’s position in arbitration disputes arising under the ECT. It addresses jurisdictional, procedural, and substantive issues to potentially mitigate liabilities, invalidate adverse awards, and preserve sovereign policy space.

II. Primary Legal Grounds

1. Lack of Jurisdiction under Intra-EU Disputes
   • Following the Achmea and Komstroy rulings, arbitration provisions in intra-EU BITs are incompatible with EU law. Spain should emphasize that EU law is lex superior, and tribunals cannot override the CJEU’s interpretations. The ECT’s Article 26 arbitration mechanism must be deemed inapplicable to disputes between EU Member States and EU investors.
   • As noted in Green Power v. Spain, tribunals must respect the EU’s primacy and the binding nature of the Komstroy judgment on intra-EU disputes​​.
2. Sunset Clause and Legitimate Expectations
   • The ECT’s sunset clause (Article 47(3)) protects investments made before Spain’s withdrawal from the treaty. However, it does not safeguard unreasonable or speculative expectations of unchanged regulatory frameworks.
   • Spain can argue that retroactive changes to incentives were necessary to address economic imbalances and that these changes do not amount to an expropriation or unfair treatment​​.
3. Public Policy and State Sovereignty
   • Spain should invoke public policy defenses under Article V(2)(b) of the New York Convention when contesting award enforcement. The regulatory adjustments to renewable energy incentives were critical for fiscal sustainability and alignment with EU directives on state aid and climate change mitigation​.
4. Procedural Irregularities and Lack of Due Process
   • Highlight discrepancies in procedural fairness during arbitration. For example, failure to adequately bifurcate proceedings to address jurisdictional objections could undermine the award’s validity​​.
5. Economic Justifications for Policy Revisions
   • Emphasize the economic rationale for Spain’s reforms. Given the 2008 financial crisis, maintaining the original incentives would have been unsustainable. Spain’s changes to the tariff and subsidy framework were proportionate and justified by overriding public interest in financial and energy sector stability​​.

III. Unique Insights and Untapped Arguments

1. Non-Energy Investments and Regulatory Distinction
   • Spain should distinguish between energy investments directly covered by the ECT and speculative investments in non-energy sectors. Such differentiation could narrow the scope of claims eligible for ECT protection.
2. Inconsistencies in Claimants’ Due Diligence
   • Highlight evidence of claimants’ inadequate due diligence regarding potential regulatory risks. Investors who failed to anticipate adjustments in Spain’s renewable energy regime cannot claim legitimate expectations​.
3. Use of Alternative Dispute Mechanisms
   • Spain could explore promoting mediation or other ADR methods to reduce exposure to adverse arbitration outcomes, aligning with CIAM’s new rules for expedited procedures​​.

IV. Conclusion and Recommendations

We recommend integrating these grounds into Spain’s ongoing defense strategy while reinforcing Spain’s commitment to climate change mitigation and regulatory coherence. These measures will help balance investment protection with sovereign regulatory authority.

[Closing Formalities]
[Name, Title, Contact Information]

ARBITRATION CASES AGAINST SPAIN:  gd.FOLDER

TIMELINE FOR ALL CASES AGAINST SPAIN:

1. ECT =(the protection for fossil fuel investments) >>  regulatory chill for States seeking to phase out fossil fuels >> EU, UK, SPAIN HAVE DECIDED TO EXIT FROM ECT.       EX:SPAIN regulator changed regulations to phase out fossil fuels. but, many investors have taken Spain to Arbitration on the basis:  the spanish regulator, in choosing to promote the phasing out of fossil fuels, instead of their phasing in ) was directly against ECT was therefore JR unreasonable.

2.  spain has faced over 40 arbitrations

3. ECJ HAS RULED THAT ECT IS CONTRARY TO EULAW >> ARB. LACKS JURISDICTION >> SPAIN IS HAPPY AS MAY NOT HAVE TO PAY THE ARB.AWARDS AGAISNT

– EVEN THOUGH SPAIN HAS EXITED ECT, THE CLAIMS V SPAIN ARE VALID FOR 20 YEARS

-COULD ECT BE S.A.? IF YES, COULD BE ILLEGAL S.A.?    S.A.= [SELECTIVE.ADVANTAGE + COMPETITION LAW (potential) DISTORTION]

EXAMPLE OF AGREEMENT GIVING RISE TO ARBITRATION AGAINST SPAIN:

ACUERDO DE PROMOCION Y PROTECCION
RECIPROCAS DE INVERSIONES ENTRE EL REINa
DE ESPANA Y LA REPUBLICA DE FllIPINAS
EI Reino de Espana y la Republica de Filipinas. en
adelante las Partes; .
Deseando intensificar la cooperaci6n economica
entre ambos paises.
Proponiendose crear condiciones favorables para las
inversiones realizadas por inversores de una de Ills Partes
en el territorio de la otra Parte. as! como increnlentar
la prosperidad en sus territorios respectivos;
. Reconociendo que la promoci6n y protecciM dE’ esas
Inversiones.redundara en beneficio de la proWf”ndad
economica de ambos paises;
Han convenido en 10 siguiente:
Articulo 1. DefiniC;ones.
A los efectos del presente Acuerdo,
1. Por ccinversiones .. se entendera tada clase de acti-
vos aceptados de conformidad con las respectivas dis-
posiciones legales y reglamentarias de cualquiera de las
dos Partes, y mas en particular, aunque no exclusiva-
mente, los siguientes:
a) Bienes muebles e inmuebles y otros derechos
reales ta!ss como hipotecas, gravamenes, prendas, usu-
fructos y derechos simi lares.
b) Acciones y obligaciones de sociedades 0 parti-
cipaciones en la.propiedad de esas sociedades.
c) Derechos de aportaciones monetarias realizadas
con el fin de crear un valor econ6mico 0 de cualquier
prestacion que tenga valor economico.
d) Derechos de autor (copyrights), derechos de pro-
piedad intelectual e industrial, patentes, procedimientlJs
tecnicos, know-how, marcas comerciales, nombres
comerciales y foncio de comercio, y
e) Concesiones comerciales otorgadas por la ley,
incluidas las concesiones para la prospeccion, extraccion
o explotacion de recursos naturales.
Cualquier modificacion admitida en la forma en que
se inviertan los activos no afectara a su clasificaci6n
como inversiones.
2. Por ccterritorio .. se entendera:
a) Con respecto al Reino de Espana, el territorio
terrestre y las aguas territoriales de Espana, asi como
la zona economica exclusiva y la plataforma continental
que se extiende fuera del limite de sus aguas territoriales
y sobre la cual tiene 0 puede tener, segun el derecho
intemacional. jurisdicci6n y derechos 50beranos a efec-
tos de prospecci¢n, exploration y conservaci6n de recur-
50S naturales.
b) Con respecto a la Republica de Filipinas, el archi-
pielago filipino, con todas las islas y aguas comprendidas
en til. y todos los de mas territorios sobre los que Filipinas
tenga soberania 0 jurisdicci6n, formadcs por sus domi

In the wake of E.ON’s substantial damages award against Spain, we look at the pitfalls facing both States and investors when policies are changed.

On 18 January 2024, an arbitral tribunal (under the aegis of the International Centre for Settlement of Investment Disputes (ICSID)) issued an award against Spain to the German energy group E.ON in a case involving Spain’s renewable energy subsidy reforms. E.ON’s counsel referred to the award as “one of the largest awards against Spain,” stating that its client secured “95 per cent of the damages requested”.

Potential consequences of investment incentive repeals: lessons from Spain and Italy

The experiences of Spain and Italy illustrate the significant financial and legal consequences of policy reversals after investment incentives have been promised – and show how an arbitral tribunal is likely to assess a dispute over the withdrawal of incentives and which provisions of investment treaties are essential.

2.1 Spain’s complex trajectory

In the early 2000s, Spain attracted global investments through incentive frameworks, culminating in a 2007 decree that guaranteed specific feed-in tariffs for renewable energy projects. However, from 2010[9] it modified and eventually repealed these frameworks – resulting in over 50 arbitration cases and claims around EUR 8bn. Tribunals found Spain liable for breaching its investment treaties (E.ON being the most recent example).

In deciding these cases, tribunals have (among other factors[10]) generally investigated:

• the specific terms of the framework and how public authorities promoted it;
• the level of due diligence investors carried out on the Spanish legal framework;
• whether the authorities made any specific promises to investors (e.g., through a communication addressed to that investor, or through other administrative documents such as registration certificates confirming the incentive that they would receive); and
• the scope of the changes and the process followed in making them (e.g., was it transparent or discussed with the industry sector in advance; were the changes “radical”).

2.2 Italy’s parallel journey

Italy’s experience is similar. It introduced attractive incentives for renewable energy investments in the early 2000s (particularly for photovoltaics) but then adopted a decree in 2013 reducing the level and duration of incentives for existing plants. This triggered arbitration proceedings under the ECT, resulting in around 12 arbitration cases and damages to investors.[11]

2.3 Other States

Spain and Italy are not alone; Germany, Canada, the Czech Republic, Romania, Bulgaria and Latvia have all faced claims due to modifications in their incentives frameworks.[12]

3. Restructuring investments to gain legal protection

What can investors do to anticipate possible adverse policy changes and what can States do to avoid claims brought by disgruntled investors?

3.1 States

States can ensure that policy changes are in line with the applicable bi- and multinational investment protection treaties. Such treaties generally provide for the right of investors to fair and equitable treatment (FET) and protection against expropriation.

3.2 Investors

• Proactive restructuring: in general, restructuring has to occur before disputes are foreseeable.[13] Ideally, when planning the investment, consideration should also be given to how the investment can be structured to obtain treaty protection.
• Networks of investment protection treaties: Investors with foreign investments can explore restructuring through any other state that has a treaty in place with the host state of the investment. Such restructuring grants access to the third state’s treaty network, providing an additional layer of security for investments through investment treaty protection.[14]

Experience shows that securing investments through investment protection agreements can effectively ensure the profitability of foreign investments. Analysing the host State’s treaty network and any possibilities for restructuring the investment to gain access to treaty protection will be time well spent.

The E.ON case highlights the importance of:

• investors’ awareness of potential risks;
• proactive engagement with the host state’s legal framework; and
• precautionary structuring of a company’s investments to ensure effective legal protection.

The case also signals to States that policy changes must be in line with commitments undertaken in international investment protection agreements

Spain says it will not pay. Now what? A strategic approach to the enforcement of awards in the renewable energy saga

Significant changes in Spain’s renewable energies’ regulation from 2010 to 2013 led numerous foreign investors to commence international arbitration proceedings against Spain – the latest count is over 50.  Many of those arbitrations have found in favour of the investors, and have resulted in awards ordering the State to pay compensation, which currently amounts to €2 billion.  Spain has yet to pay any compensation, highlighting one of the main weaknesses of investment arbitration as an efficient means of dispute resolution: once a foreign investor has obtained a favourable arbitral award, enforcement against a State can be a protracted, uphill battle.  What options does a claimant have to transform its favourable award into something more valuable than wet paper?  Beyond the legal enforcement proceedings, a successful enforcement strategy will need to explore angles to engage with the State and motivate it to voluntarily comply with the compensation due.  In the case of Spain, it urgently needs to regain the confidence of large foreign investor groups to achieve its goals of decarbonisation of the economy and complete its energy transition process.  Complying with its obligations under international law towards foreign investors is a key step to re-establish this trust and rebuild its reputation as a fair, stable and attractive investment destination.  The current Spanish government has set ambitious targets for achieving decarbonisation, taking the Paris Agreement for sustainable development as a reference. Spain’s commitment is mainly framed within the National Integrated Energy and Climate Plan, which must be submitted to the European Commission for approval, and which serves as a roadmap for investors and public bodies. The document contains objectives such as reducing CO2 emissions by up to 32% and developing an energy mix that allows for 81% renewable electricity generation. The commitments made regarding energy transition will require a massive entry of new renewable assets and a large-scale national and international investment effort by 2030.  Foreign funds will stay at bay unless Spain is perceived as a country with legal certainty which honours its obligations under international law and the international treaties it voluntarily enters into as signatory.  Spain’s track record of non-compliance with its obligations under international treaties sounds alarm bells for foreign investors considering business in Spain. Its refusal to even consider negotiated agreements further deteriorates the perception of Spain and its reputation.  A pragmatic approach from the Spanish government would help leave behind past conflicts and focus on the future and achieving its ambitious goals in the energy transition.  These goals will only be met if Spain takes action to regain the confidence of large foreign investor groups

ICSID: SPAIN.RESPONDENT.PENDING:

Berkeley Exploration Ltd. v. Kingdom of Spain (ICSID Case No. ARB/24/22)

• PROCEEDING

• MATERIALS

• PROCEDURAL DETAILS

• Subject of Dispute:
• Mining concession
• Economic Sector:
• Oil, Gas & Mining
• Instrument(s) Invoked: (i)
• ECT (Energy Charter Treaty)
• Applicable Rules:
• ICSID Convention – Arbitration Rules

(a) Original Proceeding

• • • Claimant(s)/Nationality(ies): (i)
    • Berkeley Exploration Ltd. (British)
    • Respondent(s):
    • Kingdom of Spain (Spanish)
    • Date Registered:
    • June 27, 2024

Party Representatives

• • Claimant(s):
  • Herbert Smith Freehills, Madrid, Spain
    LCS Abogados, Madrid, Spain
  • Respondent(s):
  • Abogacía General del Estado, Departamento de Arbitrajes Internacionales, Madrid, Spain
  • Status of Proceeding:
  • Pending
  • Latest Development:
  • September 30, 2024 -Following appointment by the Respondent, Zachary Douglas (Australian/Swiss) accepts his appointment as arbitrator.

Only four arbitrations of the 32 filed against Spain have been resolved: three in Stockholm, two favorable to our country and the last one in against, and one:    Spain has initiated the process of withdrawing from the Energy Charter Treaty (ECT), which offers protections to investors in energy projects, but it will continue to face a raft of claims as a result of the regulatory changes in the late 2000s that reduced the country’s support for its renewable energy sector.   Spain is one of the most affected states in arbitration proceedings based on the ECT. A large number of foreign renewable energy investors have sought compensation from the government under the treaty following policy changes between 2008 and 2014 that reduced incentives and subsidies it previously introduced to support investment in its renewable energy sector in accordance with EU Directives. German utility company E.ON is the latest to have won an arbitration award against Spain for the policy changes.   According to the Spanish government, the total amount claimed by foreign investors stands at almost €8 billion. The government has since taken action in various jurisdictions to annul some of the renewable energy arbitral awards against it. In 2023, it achieved mixed results in its claims for annulment.  Two ad hoc committee annulment decisions of the Administrative Counsel of the International Centre for the Settlement of Investment Disputes (ICSID) have been issued which confirmed adverse awards against Spain.  The first application for annulment was against an award in favour of Malta-incorporated OperaFund Eco-Invest SICAV Plc and Swiss company Schwab Holding AG. The second was to annul a 2015 award towards a group of companies under Watkins Holdings, which have installed and operated wind farms in Spain.

-ARB.CASE:  spain.cuts.eco.incentives.no.immunity: October 22, 2024:  (Reuters) – Spain on Tuesday lost an appeal in its bid to claim immunity in a London court in a multimillion-euro case over cuts to renewable energy incentives. Two investors, Infrastructure Services Luxembourg and Energia Termosolar, took Spain to arbitration under the Energy Charter Treaty 10 years ago for withdrawing subsidies for renewable energy.  The World Bank’s International Centre for Settlement of Investment Disputes (ICSID) awarded Infrastructure Services Luxembourg and Energia Termosolar 101 million euros ($109 million).  The investors’ award was later registered at London’s High Court, which last year refused Spain’s attempt to overturn the award on the grounds it had sovereign immunity.  Spain challenged that decision at the Court of Appeal at a hearing in June, at which lawyers representing the investors said in court filings that their 101 million euro award was “one of 25 such awards against Spain, which have not been paid”.    The Court of Appeal dismissed Spain’s appeal, with Judge Stephen Phillips saying in a written ruling that states that have signed up to the ICSID convention cannot oppose the registration of ICSID awards against them on the grounds of state immunity.  Spain’s appeal was heard at the same time as an appeal brought by Zimbabwe in a separate case worth up to $125 million concerning the alleged expropriation of land.

High Court rejects Spain’s immunity challenge to recognition ofICSID awardClifford Chance :

|Arbitration & ADR – United Kingdom Introduction Background Facts Decision CommentCHRIS T I NACAT HEYS CHUET ZIntroductionIn Infrastructure Services Luxembourg SARL (formerly Antin Infrastructure Services Luxembourg SARL) and Energia Termosolar BV(formerly Antin Energia Termosolar BV) v Kingdom of Spain,(1) the English Commercial Court rejected an application by the Kingdom ofSpain to set aside an order for registration of an International Centre for Settlement of Investment Disputes (ICSID) award pursuant toarticle 1 of the Arbitration (International Investment Disputes) Act 1966 (the 1966 Act). Spain argued that the Court lacked jurisdictionand complained of alleged material non-disclosure in the without-notice registration application. The judgment highlights the approachtaken by English courts in dealing with state objections to the registration of an ICSID award in light of the ongoing debate over intra-EUinvestment disputes.BackgroundICSIDThe 1965 ICSID Convention (the Convention) provides a framework for the resolution of international investment disputes. ICSIDadministers arbitrations between contracting states and investors from other contracting states and proceedings before ad hocannulment committees which hear challenges to ICSID awards on the limited grounds set out in the Convention.Article 53 of the Convention provides that ICSID awards are binding on the parties and not subject to any appeal or other remedy exceptas provided for in the Convention.Article 54 of the Convention provides that each contracting state shall recognise an award rendered pursuant to the Convention asbinding and enforce the obligations imposed by that award within its territories as if it were a nal judgment of a court in that state.1966 ActThe United Kingdom acceded to the ICSID Convention in 1966. It enacted the 1966 Act to implement the Convention.Section 1 of the 1966 Act entitles a person seeking recognition or enforcement of an ICSID award to have such award registered in theHigh Court subject to proof of the prescribed matters and to the other provisions of the Act.Section 2 of the 1996 Act provides that an award registered under section 1 shall be of the same force and effect as a judgment of theHigh Court.Energy Charter TreatyThe 1994 Energy Charter Treaty (the ECT) is a multilateral investment treaty which provides protections for investments made in theenergy sector and establishes a dispute resolution process whereby investors can seek to enforce these protections.Article 26(3) states that contracting parties to the treaty give their unconditional consent to disputes being referred to internationalarbitration. Article 26(4)(a) provides for arbitration under the Convention as one method of dispute resolution.The United Kingdom, Spain, the Netherlands and Luxembourg have all acceded to the Convention and the ECT.State Immunity ActState immunity protects a state from the jurisdiction of the courts of other states. The State Immunity Act 1978 (the SIA) sets out theUK law on state immunity.Section 1 of the SIA establishes that UK courts have no jurisdiction to adjudicate disputes against sovereign states unless one of theexceptions apply. One of those exceptions is where a state has agreed in writing to submit a dispute to arbitration. In suchcircumstances, the state does not enjoy immunity in respect of proceedings in the UK courts which relate to the arbitration.Achmea and Komstroy casesBefore turning to the present case, it is worth recalling briey the intra-EU investment arbitration.ndings in the seminal cases of Achmea and Komstroy relating toThe matter Slovak Republic v Achmea BV,(2) was heard by the Grand Chamber of the Court of Justice of the European Union (the CJEU)and decided in March 2018. The underlying dispute between a Dutch company and the Slovak Republic arose under the 1991 bilateralinvestment treaty (BIT) between the Netherlands and the Czech and Slovak Federative Republic, which at article 8 foresaw the arbitrationof disputes between one contracting party and an investor of the other contracting party. Following the commencement of an arbitrationby Achmea, the Slovak Republic objected, arguing that the arbitral tribunal lacked jurisdiction and that, following its accession to the EU,recourse to an arbitral tribunal appointed pursuant to article 8 of the BIT was incompatible with EU law. Achmea lost the arbitration. TheGerman court reviewing Achmea’s setting-aside application made a referral to the European Court of Justice (ECJ), enquiring whetherarticles 267 and 344 of the Treaty on the Functioning of the European Union (the TFEU) must be interpreted as precluding a provision inan international agreement concluded between EU member states allowing for the international arbitration of their investment treatydisputes. The CJEU concluded that treaty provisions permitting or establishing international arbitration for disputes involving EUmember states and investors from EU member states (intra-EU arbitration) were contrary to the TFEU and were therefore effectivelyinvalid.In Republic of Moldova v Komstroy LLC (successor in law to Energoalians),(3) decided in September 2021, the CJEU conrmed thatarticle 26 of the ECT was not applicable to disputes between EU member states and EU investors. Applying the same reasoning as inAchmea, it further held that, because the EU was a contracting party to the ECT, that treaty was itself an act of EU law; an arbitraltribunal hearing an intra-EU arbitration under article 26 of the ECT might be required to interpret and apply that and other EU law incircumstances where the tribunal was not entitled to make a reference to the CJEU for a preliminary ruling. This situation wasincompatible with the supremacy of the CJEU as the ultimate arbiter of matters of EU law under the EU treaties, and for this reasonarticle 26 of the ECT was in conict with EU member states’ obligations arising under the EU treaties.FactsUnderlying arbitrationIn 2011, Infrastructure Services Luxembourg SARL (then known as Antin Infrastructure Services Luxembourg SARL) and EnergiaTermosolar BV (then known as Antin Energia Termosolar Netherlands BV) (the claimants) invested in certain solar power installationsin Spain. Subsequent to the investment, Spain reduced and then removed the tariff advantages available for solar energy, to integratetariffs and tax treatments within the European Union.The claimants considered that Spain had breached its obligations under the ECT and in November 2013 commenced an ICSIDarbitration. In its award dated 15 June 2018, the tribunal dismissed Spain’s jurisdictional objection which, among other grounds, hadalleged that the tribunal lacked jurisdiction on account of the dispute arising on an intra-EU basis. On the merits, the tribunal found thatSpain had breached the fair and equitable treatment obligation under article 10(1) of the ECT and ordered the payment of damages of€112 million plus interest. A notable aspect of the arbitration was that the EU Commission applied to intervene as a non-disputing party,but ultimately did not do so, because it was unwilling to submit to the tribunal’s demand that it give an undertaking that it would complywith any costs order made against it.Spain applied to have the award annulled on the basis that the tribunal had exceeded its powers by exercising jurisdiction over thearbitration in breach of EU law. Spain again argued that any intra-EU arbitration under the ECT is precluded by EU law. On 30 July 2021, anICSID annulment committee rejected Spain’s application.English proceedingsIn June 2021, the claimants made an ex parte application to the English Court for an order of registration of the award under the 1966Act. Ms Justice Cockerill granted the application and made the registration order (the order).Spain issued proceedings to set aside the order, on the grounds that:a written agreement to arbitrate the underlying dispute did not exist and the award was, therefore, invalid (the intra-EU objectionissue);Spain was entitled to immunity because the exceptions in the SIA did not apply and the court therefore did not have jurisdiction(the sovereign immunity issue); andthe claimants allegedly failed to disclose material information when making their ex parte application (the non-disclosure issue).DecisionIntra-EU objection issuePlacing reliance on the Achmea and Komstroy decisions of the CJEU, Spain argued that the order was made without jurisdiction,because any intra-EU arbitration under the ECT is precluded by EU law.Mr Justice Fraser, in considering this argument, noted that Spain had presented the points of EU law as if they were decisions of anover-arching international court which must bind all nations. He agreed with the claimants that this approach ignored other aspects ofinternational law requiring observance of existing express treaty obligations, such as the ICSID Convention and the ECT. He noted thatthe EU treaties do not trump other treaties, nor do they override the relevant domestic law mechanism in the United Kingdom.In deciding on the intra-EU objection issue, Fraser J referred to the prior decision of the UK Supreme Court in Micula & Ors v Romania(European Commission intervening).(4) That matter concerned an injunction issued by the EU Commission in 2014 ordering thesuspension of any action to execute an ICSID award against Romania(5) until the Commission had taken a compatibility of the award with EU State aid rules. When the Commission subsequently issued a decision nal decision on thending that the awardamounted to state aid, this was challenged by the claimant. Romania in turn obtained a stay of parallel English proceedings forregistration of the Micula award under the 1966 Act. This order was appealed to the UK Supreme Court, on the grounds that:there was no power to order a stay under the ICSID Convention and the 1966 Act;such a stay was incompatible with the ICSID Convention;the European Communities Act 1972 did not require the United Kingdom to breach pre-accession obligations under the ICSIDConvention; andarticle 351 of the TFEU applied, meaning that the obligations of the United Kingdom under the pre-accession ICSID Conventionwere not subject to the overriding effect of EU law.The Supreme Court unanimously granted the appeal, noting that the provisions of the 1966 Act must be interpreted in the context of theICSID Convention, under which, once the authenticity of an award was established, a domestic court had no authority either to examinethe award on its merits or to refuse to enforce the award on grounds of national or international public policy. This included aprohibition on re-examining the ICSID tribunal’s jurisdiction.As concerned Romania’s argument that the ICSID Convention and the 1966 Act should be interpreted as far as possible in accordancewith EU law, the Supreme Court commented that by operation of Article 351 of the TFEU, obligations arising from the ICSID Conventionprecluded the application of the EU treaties. In any event, the proper interpretation of the ICSID Convention was given by principles ofinternational law applicable to all contracting states. Moreover, under the terms of the European Communities Act 1972 (the 1972 Act),EU law had effect within the United Kingdom only to the extent that it had been given such effect by section 2(1) of the 1972 Act.Successive EU treaties, which had been given effect in the domestic law of the United Kingdom by section 2(1) of the 1972 Act, includeda provision equivalent to the current article 351 of the TFEU, as a result of which the 1972 Act made provision for the effect ofaccession on pre-accession treaties.Additionally, Fraser J referred to the High Court decision in Unión Fenosa Gas SA v Arab Republic of Egypt.(6) That case concernedregistration of an ICSID award in England and the question of whether the part 8 claim form should have been served on Egypt. In thecontext of considering articles 53 and 54 of the ICSID Convention, Mr Justice Males (as he then was) noted that the defences toenforcing an ICSID award under the 1966 Act were far narrower than those that would have been available if the award had beenenforced under the 1958 New York Convention.Reecting on these cases, Fraser J opined that Spain (or any other member state) could not rely on Achmea and/or Komstroy to dilutethe United Kingdom’s own multilateral international treaty obligations nor rely on those cases to interpret the 1966 Act differently towhat its clear terms required. He accordingly was not prepared to accept Spain’s argument that the ECT and the ICSID Conventionwhich, as he noted both had signatories which were not EU member states, should be interpreted by ignoring their clear terms regardingdispute resolution, in preference to granting the decisions of the CJEU complete primacy over those pre-existing treaty obligations of allstates.Sovereign immunity issueSpain further argued that it was entitled to immunity from the registration of the ICSID award based on section 1(1) of the SIA. In turn,the claimants argued that under section 2(2) of the SIA, a state loses its adjudicative immunity if, by prior agreement, it has submitted tothe jurisdiction of the English courts. This agreement was set out at article 54 of the ICSID Convention. Spain responded that only anexpress submission (or waiver) by the state itself would qualify as a submission pursuant to section 2(2) of the SIA and denied thatarticle 54 of the ICSID Convention amounted to a submission or waiver.Fraser J rejected this argument on the basis that article 54 of the Convention and article 26 of the ECT both constitute a “prior writtenagreement” for the purpose of the SIA 1978. He considered that the content and effect of the ICSID Convention and terms of the 1996were clear. If Spain’s reasoning were correct, section 1(1) of the 1966 Act would only apply to awards in which the United Kingdom was aparty, which would be an absurd result.Additionally, the claimants had invoked section 9(1) of the SIA, pursuant to which a state’s adjudicative immunity is removed withrespect to proceedings related to an arbitration in which it has agreed to arbitrate, including for recognition of any resulting award. Spainresponded by arguing that under customary international law, a distinction was to be made between commercial arbitrations and thoseinvolving sovereign acts, which were not covered by the exception.Fraser J disagreed – the wording of section 9(1) was not restricted only to commercial arbitration. Further, Spain’s argument invitedconsideration of the substantive, underlying dispute in respect of which the award had been made as part of the court’s consideration ofwhether the award should be recognised. This, he judged, was not appropriate.Non-disclosure issueSpain alleged that the claimants failed to comply with their duties of full and frank disclosure and fair presentation in obtaining theorder. In particular, Spain complained that the claimants had failed to:update the court when the judgment of the CJEU in the Komstroy case was handed down on 2 September 2021;inform the court of various developments following the CJEU’s judgment in Achmea, including the fact that EU member states,including (still) the United Kingdom, had signed a declaration whereby the committed to terminate their intra-EU BITs (intra-EUdeclaration);(7)update the court on developments within the EU relevant to Spain’s argument that section 9(1) of the SIA cannot apply to displaceits immunity; anddraw the attention of the Court specically to a passage in one of the authorities it had cited concerning inter partes hearings.Fraser J summarised the principle that on applying for an ex parte order, an applicant must disclose to the Court any matters adverse tothemselves which are material, because this was essential to ensuring due process where an order was to be made against a partywithout giving them the opportunity to be heard. He noted that materiality depends in every case on the nature of the application and thematters relevant to be known by the judge when hearing it. He accepted that the duty of full and frank disclosure also applied in respectof questions of state immunity.As to the four complaints made by Spain, Fraser J considered the following:The failure to provide the court with a copy of the Komstroy judgment was not material, because whilst the decision did add to theweight of the material supporting Spain’s arguments, it did not give rise to a new argument, and in any event the judgment washanded down about two and a half months after the order had been made and after the claimants had initiated the process forservice of the order.The intra-EU declaration did not bind the English court or the judge who made the order, nor did it apply in priority over the 1966Act or in preference to the ratio of the UK Supreme Court in Micula and, accordingly, was not relevant to the issues on theapplication;The Court was not likely to be assisted by a steady notication of material relevant to the development of EU law consistent withthe Achmea judgment, as the issue was already put fairly by the claimants in the material already lodged with the court supportingthe application; andThe failure to cite a passage in one of its authorities concerning inter partes hearings was not a non-disclosure issue at allbecause inter partes hearings were not the procedure generally adopted for recognition of arbitral awards. Additionally, the judgeconsidering the claimants’ application (Cockerill J) was the judge in charge of the Commercial Court at the time and, therefore,will have been aware of the powers of the Court to order the holding of inter partes hearings.Further, Fraser J disagreed with Spain’s assertion that the judge making the order should have set the matter down for a fully contestedhearing. He considered that Spain had been given the opportunity to address all the arguments that it wished to advance. Spain sufferedno prejudice whatsoever. In particular, the claimants did draw the jurisdiction issues to the attention of the Court in their rst witnessstatement and the extensive evidence lodged in support of their application. Further, listing the matter for an inter partes hearing wouldlikely have required four court days, invariably some way in the future, which would not have been in accordance with the overridingobjective,(8)let alone with the terms and ethos of the 1966 Act and the ICSID Convention itself.CommentThis judgment conrms the United Kingdom’s position that it will register ICSID awards made in intra-EU arbitrations, including under theECT. This aligns the United Kingdom with the approach taken for example in several US federal courts and in Australia. In otherjurisdictions, courts have been less willing to recognise and enforce intra-EU awards. No doubt, Britain’s exit from the European Unionmakes it easier for the English courts to take this position, as EU law no longer is binding on the United Kingdom.Fraser J dismissed Spain’s arguments and observed that the ECJ is not the ultimate arbiter under the ICSID Convention nor under theECT. Equally, he discouraged cases being brought to the Commercial Court for repetition or rehearing of jurisdictional objectionsalready raised before and dismissed by an ICSID tribunal and/or annulment committee. This approach, which upholds the ICSID regime,will reassure investors.The judgment makes clear that hearings and judgments of this length are uncommon and will only occur in exceptional cases, as thiswould ultimately contradict the Convention and the main purpose of international arbitration.For further information on this topic please contact Christina Cathey Schuetz at Clifford Chance LLP by telephone (+44 20 7006 1000) oremail (christina.schuetz@cliffordchance.com). The Clifford Chance LLP website can be accessed at www.cliffordchance.com.Abi Dhanji, trainee solicitor, assisted in the preparation of this article.Endnotes(1) [2023] EWHC 1226 (Comm).(2) Case C-284/16.(3) Case C-741/19.(4) [2020] UKSC 5.(5) Ioan Micula, Viorel Micula, SC European Foods SA, SC Starmill SRL and SC Multipack SRL v Romania [I] ICSID case No. arb/05/20,award dated 11 December 2013.(6) [2020] EWHC 1723 (Comm).(7) Declaration of the Representatives of the Governments of the member states of 15 January 2019 on the Legal Consequences of theJudgment of the Court of Justice in Achmea and on investment protection in the European Union. The declaration stated in relevantpart:International agreements concluded by the [EU], including the [ECT], are an integral part of the EU legal order and must becompatible with the [EU] Treaties. Arbitral tribunals have interpreted the [ECT] as also containing an investor-State arbitrationclause applicable between Member States. Interpreted in such a manner, the clause would be incompatible with the Treaties andthus would have to be disapplied.(8) The overriding objective requires the court to consider the full list of matters at CPR part 1 in everything it does, including savingexpense, acting proportionately, dealing with court business expeditiously and fairly, and allotting to any cases appro

-antitrust infringements are followed by civil actions.
-enforcement of clp is arbitrable...except on public aspects of cl..which are reserved to the
 Commission or national competition authorities (e.g., imposing fines).
in merger clearance decisions are binding on the merged entity and provide interested third parties,
with a right to arbitration. Those ‘interested third parties consent to arbitration by commencing
arbitral proceedings pursuant to those arbitration clauses. This mechanism provides a recourse for
the interested third parties adversely affected by a merged companys failure to comply with what are
essentially conditions upon which the merger had been cleared. Nevertheless, despite the frequent
insertion of these arbitration clauses in clearance decisions, in practice, these arbitrations remain
very rare. The first (and to date only) reported case decided in February 2012 arose out of the
acquisition of sole control by Newscorp over two Italian pay-TV broadcasters (Reti Televisive Italiane v.
Sky Italia, ICC Case No. 16974/FM/GZ).
Whilst the Directive does not expressly contemplate follow-on claims to be pursued by
arbitration rather than litigation in national courts, there is nothing in the Directive or elsewhere that
prevents claimants to submit damages claims to arbitration. Damages claims may be referred to
arbitration in two main ways. First, for a number of reasons, parties may agree to have such claims
resolved through arbitration by way of a submission agreement. The obvious reason is confidentiality
but, depending on the other fora available to the claimant, expertise of the decision makers.
Whether the infringement materialised as a breach of merger clearance commitment or has been the subject of a decision
by a competition authority, commercial stakeholders financially impacted by these violations of EU
competition law will inevitably recognise the shortfall and the prospects of recovery that arbitration may bring to the table

the tortious nature of a claim for damages would generally not prevent the use of arbitration,
provided that the claim falls within the scope of the relevant arbitration agreement. However, the law
applicable to the tort claim may be different than the governing law of the contract. In this regard, Article
6(3) of Rome II Regulation – which an arbitral tribunal may or may not choose to apply to designate the
applicable substantive law – provides that the law applicable to a non-contractual obligation arising
out of a restriction of competition, shall be the law of the country where the market is, or is likely to be,
affected.

                              EU and US Antitrust Arbitration

The three principal competition law issues raised by arbitration clauses are:

(1) whether they might be unenforceable as in violation of competition law, 
(2) whether the arbitration clause covers competition law questions and all matters relating
 to competition
law, and 
(3) what might be done by drafters of an arbitration clause to increase or decrease
competition law enforcement under it.

First, while it is true that most legal systems now consider competition law to be arbitrable,
1 it nonetheless
remains that an arbitration clause possessing certain features can be found unenforceable as
in violation of competition law. Secondly, competition law will generally be treated as any
other legal question and, by consequence, will generally be found to fall within the material
scope of any tolerably broad arbitration clause. Thirdly, the enforcement of competition
law through arbitration can be rendered particularly efficacious by judiciously selecting the
location of the arbitration, relaxing confidentiality requirements, and ensuring that the
arbitral tribunal possesses sufficient evidence-gathering powers.

THE ASSESSMENT OF ARBITRATION CLAUSES FOR COMPLIANCE WITH COMPETITION LAW

Arbitrability:
It does not ensue from the generalized acceptance of the arbitrability of
competition law in most if not all major arbitration jurisdictions around the world that any
particular arbitration clause is necessarily in conformity with relevant competition law.
Conformity with relevant competition law is a matter that is completely independent of
arbitrability. That said, if an arbitration clause is not in conformity with competition law, it
will probably be invalid and unenforceable, which is of course the effect that would obtain
due to lack of arbitrability.
Arbitrability is a determination that disputes over particular subject matter or involving 
particular persons can freely be subjected to arbitration. The consequence of lack of
arbitrability, that the arbitral jurisdiction chosen falls away, ensues without the need for any
substantive enquiry. The arbitrability determination entails no conclusion as to substantive
consequences. On the other hand, the substantive application of competition law can of
course lead to the unenforceability of an arbitration clause. So it would be very wrong to
treat the virtually universal acceptance of the arbitrability of competition law as a
guarantee of the validity of an arbitration clause.

Summary of competition law analysis applicable to arbitration clauses:
Arbitration clauses are subject to the same competition law analysis as any other contractual clause in
an agreement. In what follows, our concern shall be exclusively competition violations
based on non-unilateral conduct. It is difficult to see how arbitration clauses might raise
abuse of dominant position and monopolization problems.

The test under EU competition law. Article 101 TFEU (formerly Article 81 EC) requires
a two-stage examination of the agreement: first, considering the ‘object’, and second, the
‘effect’, and concluding whether the agreement has as its ‘object or effect the prevention,
restriction or distortion of competition’. The ‘object’ of the agreement is to be found by an

Chapter 1.Arbitration Clauses and Competition Law

objective assessment of the aims of the agreement in question,2 and it is unnecessary to
investigate the parties’ subjective intentions.

If the object of an agreement is indisputably the distortion of competition, for
example, by price-fixing, it is unnecessary to show that price competition has in fact
been affected in order to establish an infringement, that is that the ‘effect’ of the agreement
is to distort competition. This restricted analysis was set out by the European Court of
Justice (ECJ) in Consten and Grundig v. Commission:4 ‘there is no need to take account of
the concrete effects of an agreement once it appears that it has as its object the prevention,
restriction or distortion of competition’. Agreements of this kind are often referred to as
per se infringements of Article 101(1) TFEU (formerly Article 81(1)EC).5
In cases where it is not plain and obvious that the object of the agreement is to restrict
competition, it will be necessary to consider the effects of the agreement in considerable
detail. The effect of the agreement is to be judged by reference to the entire economic
context in which competition would occur in the absence of the agreement in question.7
This hypothetical position is often referred to as the ‘counterfactual’, and the correct
determination of what this position would be is critical to a proper assessment of the effect
of the agreement.
When considering the European analysis, it should be noted that although it has been
stated by the European Union Courts that per se infringements do not require an analysis of
the ‘effects’ of an agreement, in practice, even where the agreement obviously restricts
competition, it is believed that some analysis of its actual or potential effects will be
necessary to determine the following: 

-first, whether the agreement satisfies the requirement
of appreciable effect; 
-second, whether the agreement affects trade between Member States;
-third, in the case of an infringement, the level of the fine; and fourth, whether the conditions
for the application of Article 101(3) TFEU (formerly Article 81(3) EC) apply.

Although not held always to be necessary, considerable analysis of the effects of the
agreement is to be found in almost all the decisions of the Commission and European
Union courts. ...Thus, in practice, the European analysis continues to use the two-stage
examination as detailed under Article 101(3) TFEU (formerly Article 81(3) EC).
The US test. The US analysis of whether an agreement is anticompetitive uses the joint 2-006
notions of a ‘rule of reason’ and ‘per se’ illegality. As such, it has been stated 
that there are
two complementary categories of antitrust analysis.
Under the rule of reason, relevant facts are identified to aid the courts in making this distinction.
 Relevant facts are those that
tend to establish whether a restraint increases or decreases output, or decreases or increases
prices. Most other facts are irrelevant.
In addition, in order to determine the likely effects of an agreement or other restraints as
efficiently as possible, the US courts go through a series of investigative steps. Cases that
require a small number of steps are agreements generally labelled as ‘per se’. Those that
require more steps fall under the rule of reason.Therefore, as stated in General Leaseways v.
National Truck Leasing Assn: 'if the elimination of competition is apparent on a quick look,
without undertaking the kind of searching inquiry . . . the practice is illegal per se’.
It has been stated that the rationale for the per se rules is to avoid a burdensome inquiry
into actual market conditions in situations where the likelihood of anticompetitive conduct
is great.17 The object is to see whether the experience of the market has been so clear, or
necessarily will be, that a confident conclusion about the principal tendency of a restriction
will follow from a quick (or at least a quicker) look, in place of a more sedulous one.18
The per se rule says that ‘once we know a certain amount about a practice we can pass
judgement on its legality without further inquiry

Therefore, it is apparent that a tiered approach has been adopted by the US authorities
in their analysis of whether an agreement is anticompetitive. The rule of reason represents
the comprehensive test that should originally be applied in all cases; however, the development 
of the per se rule has allowed the US courts to reduce the time and cost of such
an examination where the anticompetitive effect of the agreement is so obvious. The
difference between a per se rule, and a rule of reason standard, lies in how much we need
to know before we can make that decision.... However, similarity to the European analysis,
in practice, courts and commentators often say that most agreements analysed as antitrust
violations are considered under the ‘rule of reason’, with only a limited number falling
under the per se rule.

Indeed, the fact that the Commission employs arbitration clauses in merger remedy cases
must be an indication that the choice of arbitration itself is as a rule commercially
 legitimate and is, as a rule, no per se infringement.
In the Centraal Bureau Voor De Rijwielhandel (CBR), OJ 1978 L20/18; case,23 it was
held that the ouster of national court jurisdiction may constitute an infringement of Article
101(1) TFEU (formerly Article 81(1) EC), but it is submitted that this will not be the case
where that ouster is in favour of arbitration rather than, as there, an ouster without any
replacement forum for the assertion of competition law rights.

Arbitration limited to competition law matters:
On the other hand, a choice of arbitra- 2-008
tion the material scope of which is confined to competition law matters may be treated as
per se anticompetitive, notably in the absence of any redeeming features. An example of
such a clause is as follows:
The courts of England & Wales shall have jurisdiction except as regards matters directly related
to EU competition law, which shall be finally settled under the Rules of Arbitration of the
International Chamber of Commerce by a sole arbitrator in accordance with the said Rules.

To begin, in view of the parties' ordinary interest in one-shop adjudication,24 it will be difficult
to discern a valid commercial reason for such a substantively narrow arbitration clause.
Exclusion of competition matters from arbitration. Equally, but less compellingly, a 2-009
choice of arbitration carving out competition law matters may also appear as anticompetitive. 
The inconvenience of litigating competition law questions in isolation from and often
in addition to litigating all others elsewhere would generally act as a disincentive to
enforcing competition law rights. Obviously such a charge would be met by a plea that
the competition law carve-out seeks to ensure the jurisdiction over such matters of ordinary
courts, with a view to the more efficient application of competition law.

much uncertainty and possibly great inconvenience to both
parties could arise if a suit could be maintained in any jurisdiction in which an accident might
occur or if jurisdiction were left to any place where the Bremen or Unterweser might happen to
be found. . . . The elimination of all such uncertainties by agreeing in advance on a forum
acceptable to both parties is an indispensable element in international trade, commerce, and
contracting.’ See the case of Scherk v. Alberto-Culver Co. [1974] 417 US 506, at 519 adopting
this statement in the context of arbitration clauses.

In my opinion the construction of an arbitration
clause should start from the assumption that the parties, as rational businessmen, are likely to have
intended any dispute arising out of the relationship into which they have entered or purported to
enter to be decided by the same tribunal. The clause should be construed in accordance with this
presumption unless the language makes it clear that certain questions were intended to be
excluded from the arbitrator’s jurisdiction.
For example, it may be appropriate to refer pricing and technical disputes under
certain contracts to expert determination rather than to arbitration. As another example licensors
may justifiably wish to retain the option to seek orders of specific performance and other
 injunctive relief directly from the courts in case of infringement of their intellecTUAL 
property rights or to submit decisions on the ownership or validity of these rights to courts’.

It is rare in practice to find a naked carve-out of competition law matters from
arbitration. But one does find exceedingly and unaccountably often in practice references
in arbitration clauses to the fact that the arbitrators’ mission is confined to the 
˜interpretation, application and performance’ of the contract or some such variation.
 Such a situation occurred in the case of ET Plus v. Welter,25 for instance, and is discussed below.
It might be wondered why this sort of language is so commonly found in arbitration
clauses. It is probably just a case of drafters gilding the lily. It is common currency in a great
number of cases that could never raise competition concerns, for example, in sectors with
innumerable players of modest size, and therefore cannot have competition law avoidance as
its initial inspiration. Moreover, as admirably illustrated in the ET Plus v. Welter case, this
sort of wording is generally attributed very little if any narrowing effect in practice.
2-010 Other competition-relevant intrinsic features of arbitration. Various other features of
arbitration may in and of themselves reinforce the appraisal that submission to arbitration is
per se anticompetitive:
[C]ompetition law contains norms to protect the wider public interest and not just the interests
of particular individuals or undertakings. The wide expression of party autonomy in arbitration
seems ill suited to serve these interests. Secondly, competition law is not easy to apply. It often
involves complicated economic determinations not just about one or two undertakings but about
broad phenomena in markets. Arbitrators have limited fact-finding wherewithal and the parties
themselves must foot the bill alone for expensive enquiries, not the public at large. Thirdly,
competition law violations are at once generally hugely lucrative and notoriously difficult to
detect. To those so minded, arbitration delivers a potent opportunity secretly to enforce 
contractual provisions which may be against competition laws and the private character of
 arbitration minimises and may even eliminate the opportunities for States to discover that their
competition laws are being circumvented in this way

Easier enforceability of arbitration awards:

The relative ease with which arbitration
awards can be enforced around the world, thanks to the New York Convention,28 probably
results on the whole in enhanced enforcement of competition law, taken in the round. It is
true of course that enforcing courts may not always be solicitous to police the enforcement
of foreign competition law through the public policy review under the New York
Convention. But the fact of swift and trouble-free enforcement of arbitration awards
means that competition law determinations within them are equally buoyed by this rising
tide. By contrast, foreign judgments seem forever stuck in the doldrums.

Stipulated features in arbitration clauses. Certain features of the arbitration stipulated in 2-013
the arbitration clause may strengthen the conclusion that it is per se in violation of competition law.
Place of the arbitration. The most significant of these features as far as the competition 2-014
assessment is concerned will usually be the choice of place of arbitration. If that choice is a
place outside of the jurisdiction of the competition law in question, this would tend materially 
to confirm any anticompetitive tendency in the very choice of arbitration. The
operation of this phenomenon is not difficult to see. Actions seeking the annulment of
arbitration awards are almost invariably heard by courts at the location of the arbitration.30
Courts tend to be far less anxious about the application of foreign competition law than that
of their own state. Coupled with a submission of only competition law to arbitration, a
choice of arbitral seat in a jurisdiction outside that of the competition law would look
decidedly suspect.

Of course, the converse will generally hold true. A choice of place of arbitration
within the jurisdiction of the competition law that will probably be at issue mitigates
any anti-arbitration impression inherent in the choice of arbitration alone.
Stipulated features of the arbitration. It is unusual for particular features of an arbitration 2-015
to be provided for in the arbitration clause itself. For this reason alone, any such stipulations
in the arbitration clause tending to diminish the already intrinsic tendency of arbitration to
attenuate the fact-finding process, and thus to lessen the likelihood of competition law
offences being ascertained by the arbitral tribunal, may well confirm an anticompetitive
object. For example, it might be provided that the arbitration is to proceed over a particularly 
short period and that no experts reports are admissible.
Accelerated proceedings. On the other hand, a mere submission to a set of arbitration 2-016
rules providing for an ‘accelerated procedure’ would in most cases be susceptible of
legitimate commercial purposes and not a sufficient impairment of the fact-finding process
to contribute to an anticompetitive conclusion

The WIPO Expedited Arbitration Rules

An example of such rules is the WIPO Expedited Arbitration Rules, which, by their Article 2, 
apply where the parties have specifically invoked them. The WIPO Expedited Arbitration Rules
 do indeed provide for
expeditious proceedings. Deadlines for submissions are short, twenty days generally,
and there is generally only one pre-hearing exchange of written pleadings.31 The date
of any hearing is to be scheduled (‘be convened’) within only thirty days after the claimant
receives the Statement of Defence, and the implication is that the hearing should be held as
soon as possible consistently with ‘adequate notice of its date, time and place’ (all of this is
in Article 47(b)). Post-hearing briefs may be submitted within a ‘short period of time’ as
agreed by the parties or fixed by the arbitral tribunal. The evidential stage of the proceedings, 
that is, that following the completion of the pleadings stage and ending with the
submission of any post-hearing briefs, is ‘wherever reasonably possible’ to be completed
within three months and, again ‘wherever reasonably possible’, the award is to follow
within a month (Article 56(a)).

Yet these rules contain sufficient protections such that difficult competition law
determinations will not be rendered practically impossible to make. As has been seen,
certain of them have contextually responsive short deadlines (e.g., the date of the hearing
‘as soon as possible’) and others expressly admit of extension in extraordinary circumstances
 (e.g., the evidential stage and the time for rendering the award). Importantly,
moreover, the arbitral tribunal has general power under Article 32(c), ‘in exceptional
cases’ and subject to the general requirement to ensure ‘that the arbitral procedure takes
place with due expedition’, to extend any deadline of its own motion. In addition, even
within the tight default time frame, the usual fact determination devices are fully represented. 
The arbitral tribunal has power to order the parties to produce documents
(Article 42(b)), and experts’ reports are envisaged, even their commissioning by the arbitral 
tribunal (Article 49). There is a hearing if a party requests one or if the arbitral tribunal
so wishes (Article 47(a)) although ‘[e]xcept in exceptional circumstances’, it can be of no
longer duration than three days (Article 47(b)).

One aspect of arbitration under the WIPO Expedited Arbitration Rules that may give
cause for concern is the fixed fee for the sole arbitrator, USD 20,000 for amounts in dispute
below USD 2,500,000 and USD 40,000 for amounts in dispute between USD 2,500,000
and USD 10,000,000. The prospect of such modest fees may discourage particularly
qualified and therefore in demand arbitrators from accepting such appointments or, if
they do, may in practice maintain a proportion between their fees and the extent of
work they perform in ascertaining the facts of the case and resolving it.

Accelerated procedure under the Swiss Rules:

The choice of rules that direct a case to an expedited procedure if it presents certain 
features rationally connected to such treatment
would also not generally cause competition law concern. An example here is the Swiss
Rules, the accelerated procedure of which applies where the amount in dispute is less than
CHF 1,000,000 (see Article 42(2), placing a discretion with the Swiss Chambers to derogate
 from this channelling rule ‘taking into account all relevant circumstances’).

Separability:

The doctrine of separability of arbitration clauses would not aid such clauses 2-021
in violation of competition law since the cause of their invalidity is the clause itself.
Moreover, it is unlikely that competition law would consider the competition effect of an
arbitration clause in isolation, abstracting the anticompetitive contribution of various other
clauses in a contract subject to arbitration and indeed the economic context of the contract.
Thus it would be the cumulative anticompetitive effect of, for example, a clause resulting in
the apportioning of markets with an arbitration clause restricting the evidence-gathering
adopted by parties engaged in a highly concentrated industry that would weigh together in
the competition assessment, just as it would if two separate contracts between the same
parties each contributed an anticompetitive feature to a qualifying anticompetitive result in
a particular market.

Severance of offending parts of an arbitration clause:

depending on the law applicable to the arbitration clause, a matter of some complexity, the procedural
aspects provided for in the clause may be severable from the rest of the arbitration clause,37
and the resultant clause saved. Certainly, the intent to arbitrate would probably be considered 
to be sufficiently preserved despite the removal of the procedural features provided
for. Only rarely would such procedural features be treated as being the primary motivation
behind the submission to arbitration rather than avoiding letting state courts have jurisdiction.
 One possible exception to this rule would be stipulated brief periods for the
arbitration proceedings. When parties go to the trouble of stipulating a particular period
for their arbitration, there is generally a compelling commercial reason for this. The
removal of such a brief stipulated period might eviscerate the intent to arbitrate and 
therefore prove unseverable.
Faced with such an offending or potentially offending clause, the arbitral tribunal would
form a view of its jurisdiction under the clause. If it found the clause to be in violation of
competition law and unable to be saved by severance, it would properly decline jurisdiction.
A court of a state signatory to the New York Convention would be entitled to treat an
arbitration clause that is in violation of competition law as ‘null and void, inoperative, or
incapable of being performed’. But there is a question as to the applicability of competition
law from a state that is not that whose law governs the arbitration clause. Since the seat of
an arbitration tends to be chosen for its neutrality, the chances are that the courts of the seat
will prove to be unconcerned as to a violation of competition law of such a third state, that
is, neither that of the seat nor that of the lex causae.

A court requested to enforce an arbitration award is also entitled to refuse enforcement
of the arbitral award if they find that the arbitration clause was invalid under the law to
which it was subjected by the parties, which rarely occurs, or under the law of the seat of
arbitration. Again, it is doubtful that the competition law of the seat of the arbitration will be
engaged, and therefore, a violation of competition law of a third state would not imperil the
arbitration award on this basis, although it may well be on another of the few bases designated
 under the New York Convention, that is, as a violation of public policy.

THE INCLUSION OF CL WITHIN THE MATERIAL SCOPE OF ARBITRATION CLAUSES

The central role of the parties intentions in determining whether competition law
claims are within the arbitration clause. Since arbitration is a creature of contract, it
follows that the material scope of an arbitration clause is determined by answering the
question, which disputes did the parties seek to submit to arbitration? This enquiry will
generally need to be looked at through the prism of applicable law and, in particular, the
rules of contractual construction under that applicable law. The determination of the law
applicable to an arbitration clause is a matter of some complexity38 and will not at any
event be addressed here. Arbitration law also generally supplies an assembly of helpful
presumptions

The non-contractual origin of competition law claims as basis for exclusion from the 2-024
arbitration clause:
Various characteristics of competition law might argue for its noninclusion within the substantive
 subject matter of an arbitration. For one, all competition
law rights find their origin in a source independent of the intentions of the parties, that is,
the will of the legislator. A variation of such a view was presented before the US Supreme Court
in Mitsubishi v. Soler.39 Blackmun J., writing for the court, disposed of the objection as follows:
[Q]uestions of arbitrability must be addressed with a healthy regard for the federal policy
favoring arbitration. . . . The Arbitration Act establishes that, as a matter of federal law, any
doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration,
whether the problem at hand is the construction of the contract language itself or an allegation of
waiver, delay, or a like defense to arbitrability
For Blackmun, there is no distinguishing quality of statutory actions that would
remove them from the general pro-arbitration stance employed in interpreting arbitration
clauses under federal law.
Indeed many legal norms on subject matter routinely included under arbitration
clauses arise from sources other than that of the parties’ will. This occurs, for instance,
where the parties have made no choice of substantive law as well as the application of
mandatory norms and the application of tort law.
Again, it might be contended that since the material scope of an arbitration clause is
almost invariably defined by reference to a relationship to a contract, competition law is
external to this and should not be considered as contemplated within the selection of
matters submitted to arbitration.

This, too, is fallacious, since not only pure contract law
determines contractual consequences. Competition law affects contract law where it
applies and, as such, can be considered to be integrated within that contract law.
That there is nothing in principle rendering competition law more likely to fall outside
of the material scope of arbitration is most simply evidenced in that competition law is an
integral part of contract law in respect of its contractual consequences. As a result, the 
noninclusion of competition law within the material scope of an arbitration clause would result
in a failure of substantial justice. The Arbitral Tribunal would apply the law relating to the
contract in the absence of competition law and produce an award possessing res judicata.
There would be no opportunity for a court having residual jurisdiction, that is, jurisdiction
to apply the competition law that was held to fall outside of the material scope of the
arbitration clause, to interfere with the substantive result of this award

Non-contractual effects of competition law:

If by its very nature competition law is apt to
fall within the scope of an arbitration clause, it must be noted that this does not obtain in
respect of the entirety of competition law. As noted above, the material scope of arbitration
clauses is almost invariably defined by reference to a relationship with a contract, and
competition law has consequences extending beyond the mere contractual.
The archetypal contractual consequence of competition law is nullity of the contract.
But competition law violations very often give rise to claims in damages. Indeed, in EU
competition law, there is a requirement that an action lies for damages to repair competition
law injury.
While it is possible that an action seeking damages for competition law injury be
contractual in nature, most often, such actions in damages are akin to actions for breach of a
statutory duty, which in turn operate much like a civil law action for illicit harm, that is, tort
or delict.
Again, upon the invalidity of a contract due to its incompatibility with competition
law, a claim for restitution may arise. European Union law does not stand in the way of any
such actions. Such an action seeking restitution may be characterized as contractual, but
more often than not, it will sound in unjust enrichment.
The non-contractual character of these actions will therefore generate contentions that
they do not fall within the material scope of the arbitration clause.
2-026 The presumption of material inclusivity. The beginning point in interpreting the material
scope of arbitration clauses is the acceptance that, once it is certain that the parties intended
the arbitration of their disputes, they intended to arbitrate all disputes arising upon a
particular transaction or arrangement.

Economic basis for the one-stop adjudication principle:
This acceptance operates across arbitration systems and systems of substantive contractual
 law as it is rooted in a
fundamental reality the importance of which is often belied by the elliptical and formulaic
manner in which it is typically expressed.43 This reality is that dispute settlement is a deadweight
 transaction cost. This is so even where the party that has successfully asserted its
rights is awarded costs that approximate the capital value of its actual layout, since these
costs must be financed over the period of the arbitration, and the practice is not only that no
pre-award interest is applied to costs awards, but also, that none is ever even requested.
Arbitration also constitutes an opportunity cost, since the resources tied up in contesting it,
and made uncertain because of the inherent uncertainty of all adjudication, cannot be
committed elsewhere.

Because dispute settlement entails such costs, parties are under economic incentives
to minimize the cost of it. The fragmentation of dispute settlement by subject matter
increases these transaction costs, since there is a certain incompressible cost to any dispute
settlement proceedings, which does not decrease with a reduction in the number of issues
that need to be dealt with or with the amount in dispute.
Moreover, the existence of two or more separate adjudicative proceedings each to deal
with a portion of the legal questions arising upon the same factual matrix may result in
delays. Rather than one adjudicator examining all legal issues simultaneously and composing
 them into a coherent whole, a determination in one proceeding may often prove to
be prerequisite to an adjudication on other issues, with the result that the relevant legal
issues will be heard in sequence rather than in parallel. In the result, there is a cost in time
and efficiency.

Moreover, the substantive subject matter that is the subject of one dispute settlement process
 may well impinge upon the treatment of the substantive subject matter of
another dispute settlement process, especially when they both arise out of the same
factual matrix. Consequently, the failure to deal with all substantive subject matters
arising in connection with a single factual matrix may result in a failure of substantive
justice.

In view of this, the presumption of substantive inclusiveness is a fairly powerful one
and operates widely.44 As a rule then, competition law questions, even in respect of actions
for damages for competition law injury and actions seeking restitution upon the declaration
of the nullity of a contract vitiated by its incompatibility with competition law, will be
found to lie within the material scope of arbitration clauses.
The English case of ET Plus v. Welter. The case of ET Plus v. Welter45 provides valuable 2-028
guidance as to whether non-contractual claims and competition law claims in particular
may be treated as within the material scope of an arbitration clause.

The arbitration clause to be construed read as follows:
The Parties hereby agree to submit any potential disputes regarding the performance or the
interpretation of this Contract to an arbitration tribunal constituted under the aegis of the
International Chamber of Commerce of Paris. . . .

Expansive and constrictive wording:
Gross J. observed that the wording ‘any potential
disputes’ tended to broaden but the wording ‘performance or the interpretation’ tended to
narrow the scope of the arbitration clause.47
Gross J. first adverted to the presumption under English law in favour of ‘one-stop
adjudication’.48 Next Gross J. compared the instant wording of the arbitration clause, in
particular the term ‘regarding performance of the contract’, with past judicial considerations
 of such wording.

Claims in tort included. From this, he concluded that the arbitration clause extended
beyond purely contractual matters and notably included claims in tort, providing that
they were sufficiently connected to the non-performance of the contract

The competition law claims in particular:
Rhe narrowing wording ‘performance or
interpretation caused Gross J. particular concern regarding the arbitration of
the cl claims in the case, much more so than in his analysis of whether tort claims were
included. He nonetheless stated that, upon closer inspection, he was satisfied that this
narrowing wording would not exclude the competition law claims.

This must be understood on the particular facts of the case. The substance of the claim
was that certain defendants had misused confidential information (client lists) that certain
claimants contended belonged to them. A certain clause of the contract between the parties
conferred upon the defendants concerned a right to at least some information of the defendants
 (‘sales and financial information concerning the business carried out . . . ’).
The issue was therefore whether this clause as properly construed covered the information that
 the claimants alleged the defendants had no entitlement to receive. Gross J. was
able to find that the competition claims were covered since they were in his opinion ‘a
variant on the familiar fact theme: the misuse of confidential information’.50 Gross J.
accepted that the competition claims ‘do raise considerations distinct from those of the
other tortious claims’ and referred the competition claims to arbitration.
Gross J.’s analysis of the application of the arbitration clause to the competition law
claims is remarkable in particular in his treating the reference ‘the performance and
 interpretation’ as having a meaningful restrictive effect on the material scope of the arbitration
clause. As pointed out above (paragraph 2-009), this sort of wording is, however, fairly
common in arbitration clauses, and to the extent that it is attributed any meaning (it usually
is not, and properly will not be, especially after Fiona Trust Holding Corp. v. Privalov), it is
treated as exhausting the field of possible claims and therefore of no constricting effect.

Second, having laid this unpropitious ground, Gross J.’s reasoning that the competition law
 claims are within the clause is unconvincing. Those claims raised more than mere
interpretation points, as Gross J. himself seems to acknowledge in finding them not to be
identical with others. As arbitral jurisdiction rests upon the consent of the parties, it cannot
be said that some issues are attracted into the scope of the arbitration clause by virtue of
their neighbouring issues that are really included. One needs to find some other mechanism
for this. The Fiona Trust assumption of one-stop shop is the usual mechanism, but this is no
more than implicit in this part of Gross J.’s reasoning.
Clearly, after Fiona Trust, less emphasis will be placed on the actual terms of an
arbitration clause in defining its material scope. But the case of ET Plus v. Welter instructively
 conveys the issues arising in relation to the inclusion of competition law claims
within the material scope of an arbitration clause.
The US case of JLM Industries, Inc. v. Stolt-Nielsen SA. The case of JLM Industries, 2-032
Inc. v. Stolt-Nielsen SA51 raised vital questions as to the compellability of class action
arbitrations against a respondent that has entered into identical arbitration clauses with a
multitude of potential claimants, albeit no mention of arbitration joining the ‘hundreds’ of
claimants is found in the arbitration clause. The case is currently before the US Supreme
Court.
But this case also considered whether competition claims fell within the material
scope of the arbitration clause.
In the United States, it is generally the court that makes the determination as to
whether a particular subject matter is within an arbitration clause.53 The Court of First
Instance, the District Court for the District of Connecticut, ruled that claims for damages
due to a horizontal price-fixing conspiracy contrary to the Sherman Act, Connecticut
statutes, and the common law were outside of the scope of the arbitration clause, which
reads as follows:

ARBITRATION. Any and all differences and disputes of whatsoever nature arising out of
this Charter shall be put to arbitration in the City of New York or in the City of London
whichever place is specified in Part I of this charter pursuant to the laws relating to arbitration
there in force, before a board of three persons, consisting of one arbitrator to be appointed by the
Owner, one by the Charterer, and one by the two so chosen. The decision of any two of the three
on any point or points shall be final.

Interestingly therefore, the District Court took the view that subject matters within an
arbitration clause, even one as broadly formulated as the one in question, need to bear a
particular close relationship with the contract, that is, they must relate to the ‘interpretation,
construction, or application’ of the contract.

Competition law claims as collateral matters:

The Circuit Court overturned that
decision, finding that the District Court had applied the wrong test and identifying the
test to be applied as the following: the court is to determine whether an arbitration clause is
narrow or broad, and if it is the latter, whether ‘collateral matters’ are within it.55
The Circuit Court then observed that ‘[o]ur Circuit has not precisely defined this phrase’
but that:
We have made it plain, however, that where the arbitration clause at issue is a broad one, it is
presumptively applicable to disputes involving matters going beyond the ‘interpret[ation] or
enforce[ment of] particular provisions’ of the contract which contains the arbitration clause.
Oldroyd, 134 F.3d at 77. We have said that ‘[i]f the allegations underlying the claims touch
matters covered by the parties contracts, then those claims must be arbitrated, whatever the
legal labels attached to them

To touch a matter relating to the contract is a wide net. If a subject can thus be at two
removes from the contract and still be within its arbitration clause, then the relation with the
contract can clearly be even a fairly tenuous one. The Circuit Court acknowledged that the
test is an indeterminate one, but it provided some guidance as to outcomes in directing that
the test focuses on the facts of the contested subject matter and not the cause of action.57
This too is expansive, since an approach focusing on the cause of action might exclude all
non-contractual claims, and competition law claims often originate in statute and often also
sound in tort.
The court next compared the facts of the present case to the facts of three other cases
featuring broad arbitration clauses and competition law claims. The court concluded that:
We believe that Mitsubishi, Genesco, and Kerr-McGee provide a firm basis for the conclusion
that JLM’s claims regarding a conspiracy among the Owners in violation of the Sherman Act
are arbitrable. As in those three cases, we deal here with a broad arbitration clause and the
question of its applicability to a dispute resting on factual allegations which concern matters
beyond the making of a particular contract between the parties and the performance of its
terms.58

From the context, it is clear that the court is using the term ‘arbitrable’ in the sense of within
the parties’ consent to arbitration, that is, the so-called ‘subjective’ acceptation of the term.
The lesson from these decided cases is that there is no difficulty in finding competition law
claims within an arbitration clause even though the treatment of those claims will bring the
arbitral tribunal to make determinations beyond the mere interpretation of contracts.

STRATEGY IN DRAFTING ARBITRATION CLAUSES IN VIEW OF COMPETITION LAW ISSUES

Predicting the arising of competition law issues. It is, of course, not always possible to 2-035
determine at the outset of any contractual negotiation that a competition law aspect is likely
to arise. It may be that there are no obvious aspects of the contract that indicate that a
competition law defence will be raised at a future date. However, there are certain industries
 in which competition law breaches tend to be more prevalent – industries that are
typically targeted by competition authorities include manufacturers of cement, vitamins,
and pharmaceuticals. The telecommunications industry is another where competition
issues often arise (because prior to market liberalization, there was a dominant incumbent).
Similarly specific types of agreements (exclusive arrangements, IP licenses, pub ties) are
more likely to give rise to competition concerns.

Power to influence the drafting of arbitration clauses:

The practical reality is that it is the party with more negotiating power in relation to the
 contract and arbitration clause at
issue that is likely to have market power. It is therefore the party that has more influence in
determining the terms of the contract and its arbitration clause that wants to minimize,
attenuate, if not altogether exclude the application of competition law in an arbitration.
Is it contrary to competition law to seek to diminish its enforcement by choice of 2-037
features of the arbitration clause?:
It may be asked whether it is a legitimate exercise for a
party fearing the application of competition law to use arbitration and craft its features with
a view to insulating itself in whole or in part from the effects of competition law.
This is no easy question to answer. It is nonetheless clear that one cannot invoke the
fact that private enforcement of competition law is left to the discretion of private actors,
whether or not to assert their rights, to justify any attempt to attenuate the possible
 application of competition law by virtue of an arbitration clause. This is because such a 
discretion is permitted to operate by systems of competition law on the basis that the proper
enforcement of competition law is consistent with incentives upon private actors. Indeed,
competition law systems seek to enhance those incentives, to ensure the efficiency of
private enforcement. Thus competition law systems may allow more generous damages
assessments for competition injury than for losses occasioned on other bases. This occurs,
for example, under US antitrust law where triple damages are provided for under statute.

It also occurs where damages for competition law injury are passed on to other potential
claimants in the form of higher prices but the competition law system allows their recovery
nonetheless. Thus competition law systems may decree that time limitation periods may
only start to run once a public agency has come to a determination on competition law, such
determinations may be held binding on the private law adjudicator.
By contrast, actors with market power have an incentive to attenuate the application of
competition law by, among other things, the design of their arbitration clause.
Moreover, one cannot invoke states allowing arbitration and permitting parties to
craft arbitration clauses as they will in defence of attempts to interfere with the full
enforcement of competition law. Arbitration is permitted by states for compelling
commercial reasons, and states always reserve the possibility of refusing enforcement
of arbitration awards if, because of how they treat competition law, they are contrary to
public policy.

The most that may be argued in favour of the legitimacy of attempts by arbitration to
evade competition law is that states and other legal orders, in particular the EU legal order,
have studiously neglected to concern themselves with the enforcement of competition
law within arbitration. Thus there are no preliminary references under Article 267 TFEU
from arbitrators to the European Court of Justice for an authoritative interpretation of
community competition law.60 Thus the EU regulations on the private enforcement of
EU competition law only address themselves to the activities of Member State courts.
By consequence, arbitral tribunals are not guaranteed the assistance of the Commission,
Member State competition authorities, and Member State courts. Again, the Commission’s
work on damages in competition cases with a view to enhancing private enforcement
is silent as to how any proposed measures may apply in arbitration, perhaps with the
implication that they do not. So it might be said that by increasing incentives for 
competition law enforcement before Member State courts while leaving arbitration unaffected,
the community legal order is inviting strategic behaviour concerning competition law
enforcement.

Dangers of discussing the influence of arbitration clauses on the enforcement of
competition law. In view of the illegality of any effective attempt to diminish the enforceability
 of competition law by drafting of arbitration clauses, it may be enquired whether it is
appropriate even to broach the subject here. The first point to be made is that clearly, there
is no intention to encourage such attempts. Second, it is of course a legitimate exercise to
point out to drafters of arbitration clauses how the enforcement of competition law may be
reinforced by virtue of certain features of the arbitration clause. While it is true that this
knowledge can equally be turned to illegitimate ends, it must be observed that the information 
provided here is hardly a guide to enriching uranium. This knowledge is readily
available to any lawyer who wishes to enquire after it.

As will be evident from the first section of this chapter, there is much opportunity for
such a party to use arbitration and to select the particular features of its arbitration for these
ends. Because arbitration and the usual array of procedural features of arbitration can
ordinarily be passed off as in service of important legitimate commercial ends, it is
only the most crassly transparent exclusions of competition law in arbitration that will
be readily nullified as contrary to competition law.

It may equally be observed that, despite the immense opportunity for mischief, arbitration 
and its features seem distinctly rarely in practice to be enlisted into the service of
evading competition law. This may be due to a laudable spirit of competition law compliance,
 but it is more likely on account in large part of a combination of other factors.
These include the proverbial inattention of contract drafters to dispute settlement clauses,
the fact that it may be difficult to attenuate the enforcement of competition law in arbitration
 while ensuring that the arbitral tribunal has the required wherewithal to apply other
relevant law in the arbitration proceedings, and perhaps even an ignorance of the full extent
of the possibilities arbitration offers in this relation.
It is, however, very much a legitimate enquiry how features of arbitrations that might
be stipulated for in an arbitration clause might enhance the application and therefore the
enforcement of competition law in an arbitration. It might be retorted, however, that it is
not a very practical enquiry, since the party hoping to sharpen competition law enforcement
features in arbitration will very often have little bargaining power and therefore little
opportunity to influence the arbitration clause.

The primordial role of the place of the arbitration in the enforcement of competition 2-039
law. As seen above, perhaps the most important feature in determining the level of enforcement
 of competition law is the place of the arbitration. Arbitrators are more likely to apply
the competition law of the place of the arbitration since courts hearing applications to annul
the arbitration award on the basis that it is repugnant to public policy are more likely to
apply their own competition law than that of any other legal order and to apply it with
greater anxiousness
Confidentiality as influenced by the law of the place of the arbitration. Also, the place of 2-040
the arbitration affects confidentiality protections. Most jurisdictions have express or implied
duties of confidence and privacy in arbitration proceedings, but some do not.61 Arbitral
hearings are private in the sense that no one but the tribunal, parties, their representatives, and
witnesses may attend. The obligation of confidentiality means that parties should not
disclose to third parties information or documents generated during the arbitration nor,
indeed, the award itself. Some arbitral rules also expressly provide for confidentiality –
see, for example, Article 30 of the LCIA Rules, and Article 34 of the SIAC Rules.
The relationship between confidentiality and competition law enforcement. 2-041
The greater the confidentiality, the less effective the competition enforcement. This is
because confidentiality can act as a barrier to the involvement of competition law authorities
 as amici or even as simple information providers. Confidentiality might be thought to
prevent a party from bringing an arbitration or an arbitration award that offends against
competition law to the attention of competition law authorities. But confidentiality strictures
 generally entail an exception, express or tacit, for the divulgation of information for
the purposes of a legal defence.

CONCLUSION

Given the wide recognition of the commercial usefulness of arbitration, it will be a rare
occurrence for an arbitration clause to venture into unenforceability because of its repugnance
 to competition law.
One can also feel fairly safe that competition law questions will be subject to arbitration along
 with other matters in connection with a contract. Nonetheless, it is advisable to
avoid the verbal surplussage of arbitrations extending to ‘the interpretation, application,
and performance of a contract’. This may complicate the one-stop adjudication, which will
otherwise almost universally be supposed.
Advising on the enhancement of the enforceability of competition law through judicious drafting of 
arbitration clauses is hardly a guide to the perplexed. In fact, the rarity of
such an enterprise in practice is probably due to the fact that it will be comparatively rare
for a party concerned to ensure the enforcement of competition law to have sufficient
bargaining power to influence the drafting of the arbitration clause.
The crucial factor as far as enhancing the enforcement of competition law is
concerned is the place of the arbitration. Locating the arbitration in the state whose
competition law is likely to be at issue is the single greatest factor in ensuring that this
competition law will be fully enforced, by the arbitral tribunal, and, failing that, in an action
for annulment in a court at the place of the arbitration.

TABLE OF LEGISLATION

Arbitration Act 1996 – sections 18(2), 18(3), 18(4), 18(5)
European Community (EC) Treaty – Articles 81, 81(1), 81(3), 82
London Court of International Arbitration (LCIA) Rules – Articles 14.1(i), 14.2, 30
Singapore International Arbitration Centre (SIAC) Rules – Article 34
Swiss Private International Law Act – Article 172(2)
Swiss Rules of International Arbitration – Article 42(2)
Treaty on the Functioning of the European Union (TFEU) – Articles 101, 101(1), 101(3),
102, 267 See also European Community (EC) Treaty
UNCITRAL Arbitration Rules – Article 6(2)
WIPO Expedited Arbitration Rules – Articles 2, 10, 12, 37(b), 38

EU Competition Arbitration: A Reliable Forum for Private Enforcement By Dr. Gordon Blanke

Over the past twenty to twenty-five years, arbitration has developed into a reliable 
forum for the private enforcement of EU competition law claims. Following the CJEU’s 
seminal ruling in Eco Swiss, competition arbitrability has become a fait accompli
across the majority of EU Member State jurisdictions. The adoption of Regulation 
1/2003, the EU Damages Directive and the Commission Notice on Remedies have all, 
to some extent, promoted the arbitration of competition law and more specifically the 
private enforcement of the EU competition law rules through arbitration. Arbitrators, 
in turn, have demonstrated their competence to deal with EU competition law issues 
and continue to do so in their daily arbitration practice to date. This article provides 
some insight into how and why arbitration is an ideal tool for the private enforcement 
of competition law claims within the EU.

Does Arbitration Offer an Effective Forum When Fighting for Competition Damages?
By William Towell:
Competition damages claims have become increasingly prevalent in recent years, with 
businesses and individuals looking to recover losses suffered as a result of anticom-
petitive behavior. In this article, I discuss the tactical considerations of pursuing such 
claims in the EU, analyze the different forums that aggrieved parties may consider, 
and examine how recent legislative developments may change the legal landscape. I 
then address the suitability of arbitration in such claims, including an analysis of the 
approach of the courts in different EU countries to the issue of whether such claims 
can be dealt with in arbitration.

Arbitration Clauses and Antitrust Damages in the EU: 
Where are We Now?: 
This article examines under which circumstances claimants may rely on arbitration 
clauses – contained in commercial contracts that they would have entered into with 
defendants – to bring antitrust damage claims. While the early case law showed re-
luctance to make use of arbitration clauses in the context of antitrust damage claims, 
a few EU jurisdictions have recently moved towards more arbitration friendly solu-
tions, although not without conditions and limitations. In short, the key parameter for 
enforcing an arbitration clause in an antitrust damage claim appears to be dictated 
by the foreseeability criterion, i.e. is it reasonably foreseeable for the parties to the 
commercial relationship that the arbitration clause would apply in the context of future 
antitrust damage claims?

Barriers to Entry: On Evidence in Competition Law Arbitration:
Arbitrating competition law claims poses unique evidentiary challenges, but may nev-
ertheless be advantageous from a confidentiality perspective. This article analyzes 
who is likely to possess relevant documents and information related to competition 
law claims, and considers how parties might obtain such evidence in arbitration. This 
is contrasted to mechanisms that would potentially be available in court litigation. 
While most relevant evidence will likely either be publicly available or held by one of 
the parties to a dispute, certain evidence may be held by third parties. Disclosure from 
parties in an arbitration may be had under the arbitral rules or by operation of local 
law. Non-party discovery is severely restricted, but may be available in limited circum-
stances. Although obtaining evidence in arbitration may be more difficult, preserving 
the confidentiality of sensitive information may be easier. This article discusses issues 
related to obtaining and enforcing confidentiality protections in connection with com-
petition law arbitration. The goal of this article is to identify strategic considerations for 
parties considering arbitration of competition law claims

International Arbitration and Domestic Antitrust: 
Natural Progression or Random Alliance?

National courts and arbitration laws around the globe have long proclaimed that anti-
trust claims are arbitrable, that is they can be submitted to and resolved in arbitration. 
The number of antirust arbitrations has reportedly grown in recent years, providing a 
feasible route for private enforcement of antitrust laws. This paper focuses on arbitra-
tion of domestic antitrust claims in international commercial arbitration — arbitration 
that may arise from international business transactions. Apart from antitrust claims 
and defenses, the paper explores how parties in international arbitration invoke an-
titrust to challenge the tribunal’s jurisdiction and arbitral awards in setting aside and 
enforcement proceedings. It also explores the issue of multiplicity of antitrust laws 
in international arbitration and how arbitral tribunals can address it. It concludes by 
analyzing the role of arbitrators and supervisory courts in the enforcement of antitrust 
laws, and the nature of the relationship between domestic antitrust and international 
arbitration

The Private Enforcement Directive’s Toolkit in Arbitration
By Emilio Paolo Villano
The Private Enforcement Directive, and the laws of EU Member States transposing it, 
have provided a set of instruments to make claims for the compensation of damages 
deriving from the infringement of competition law rules easier and more expedite. The 
Directive was, however, not drafted with arbitration in mind. Thus, it appears uncertain 
if, and to what extent, an injured party claiming for full compensation in arbitration may 
have access to that set of instruments. Certain alternative solutions may be envisaged 
to overcome the difficulties posed by the Directive and to allow the injured party to 
have partial access to those information, documents and assistance it would have at 
its disposal, should the case be brought in front of a national court of a EU Member 
State.

Arbitration and Competition – A Swiss Perspective

This article discusses the possibility for parties to formulate competition law claims in 
arbitration proceedings in Switzerland. It confirms that competition law claims can be 
arbitrated and that arbitration may be a valid option available to the parties even if the 
parties to a dispute did not originally agree to subject their disputes to arbitration. Swit-
zerland's pro-arbitration legislation, coupled with the liberal approach of Swiss state 
courts towards arbitration and Switzerland's neutrality, non-membership of the Euro-
pean Union, as well as a long tradition in international arbitration, make Switzerland 
a very attractive place for arbitrating disputes involving competition law arguments. 
Another argument in favor of arbitration in Switzerland is the possibility, not tested 
in practice yet, to ask to the Swiss Competition Commission to take position on the 
existence of a competition law breach. Limited possibilities of appeal and a favorable 
legislative context certainly plead in favor of such a dispute resolution mechanism.

C.M.D.W.: This year marks 30 years since the landmark decision of the US Supreme Court in
Mitsubishi Motors Corp. v Soler Chrysler-Plymouth, Inc. and just over 20 years since the ECJ’s
decision in Eco Swiss China Time Ltd v Benetton International N.V. To what extent have these
decisions paved the way to the arbitration of antitrust issues and what lessons do you think
practitioners can learn from them?

J.S.: The signi"cance of Mitsubishi [1] is hard to overstate. When it was decided, many judges in the USA and
Europe were sceptical about whether arbitration could ever deal properly with antitrust claims. The dissenting
opinion of Justice Stevens spoke for many judges in expressing the view that the “unique public interest in the
enforcement of the antitrust laws” (71) meant that antitrust disputes could never properly be dealt with by the
“rudimentary procedures” and “[d]espotic decision making” of arbitrators
The "ve-judge majority in Mitsubishi, however, forcefully swept aside these concerns, making three key points.
First, Justice Blackmun con"rmed that antitrust claims were arbitrable, encouraging the national courts to “shake
off the old judicial hostility to arbitration” so that arbitral tribunals could “take a central place in the international
legal order”. Secondly, he held that a generally worded arbitration clause could in principle cover antitrust disputes
and that there was no need for the clause “speci"cally [to] mention the statute giving rise to the claims that a party
… seeks to arbitrate” (an issue which, by contrast, still troubles European courts 35 years later). Thirdly, he held
that the public interest in the enforcement of antitrust laws emphasised by other judges could be secured by the
ability of national courts “at the award-enforcement stage to ensure that the legitimate interest in the enforcement
of antitrust laws has been addressed” 
The cumulative effect of these three key holdings in Mitsubishi was to render properly arbitrable a substantial body
of US antitrust work, with the key involvement of the national courts coming later at the “second look” enforcement
stage. As I discuss later below, the US courts have since taken matters even further with the recognition in the
JLM [2] and American Cent [3] cases that purely domestic antitrust matters and even horizontal price-"xing claims
are likewise arbitrable. The US courts have undoubtedly led the way in enabling and promoting the arbitration of
antitrust matters.
"The US courts have undoubtedly led the way in enabling and promoting the
arbitration of antitrust matters."

The signi"cance of Eco Swiss [4] is somewhat subtler. The subject matter of the case was much narrower than
Mitsubishi and concerned only the “second look” at the enforcement stage. In the underlying arbitration about a
licensing agreement, neither the parties nor the arbitrators had raised any issue under EU competition law at all. It
was instead only at the enforcement stage that the unsuccessful party sought to raise EU competition law
arguments in contending that the award was incompatible with public policy (14). The CJEU con"rmed that Article
101 TFEU (then Article 85 EC) is “a fundamental provision” which forms part of the “rules of public policy” in all
member states; so that national courts were obliged to set aside arbitration awards if they were incompatible with
Article 101 (36)-(39), (41). Although the decision did not – by contrast with Mitsubishi – directly concern
arbitrability at all, its inevitable implication was that arbitral tribunals needed to make sure that their awards were
compatible with EU competition law; and was therefore an implicit endorsement of the ability of such tribunals to
deal with such issues. Following Eco Swiss, the national courts in many current or former EU member states
including France [5], Italy [6], Sweden [7] and the UK [8] have concluded that EU competition law matters are
arbitrable. Indeed, there is now a wide consensus that Articles 101 and 102 are fully arbitrable. [9]
Perhaps the clearest lesson from Eco Swiss, however, is that EU courts have generally been slower and more
reluctant to embrace arbitration of competition law disputes than the US courts. In the CDC [10] case discussed
further below, the German courts in 2013 sent three questions to the CJEU about jurisdiction in a cartel case, the
third of which was whether a national court faced with an action for damages under Article 101 TFEU was required
to take account of “arbitration and jurisdiction clauses contained in contracts for the supply of goods, where this
has the effect of excluding the jurisdiction of the court” (emphasis added). So even in 2013 this was regarded as
open to doubt by the German courts. Although the CJEU did not address the arbitration issues at all, Advocate
General Jääskinen did, and his opinion is reminiscent of the dissenting minority in Mitsubishi thirty years earlier.
The Advocate General expressed generally negative views as to the effectiveness of arbitration as a means of
resolving competition law claims, stating that there was a “much greater” likelihood, when a case was referred to

international arbitrators, that European competition law would simply not be applied at all (100). The reservations
that motivated the minority in Mitsubishi have not therefore gone away in the EU, even if they have become less
mainstream.

C.M.D.W.: This year saw the DOJ emerge victorious in the "rst ever arbitration of a merger
enforcement action. What do you think the implications of the Novelis arbitration are and will its
effects be felt in the EU from a competition law perspective? Also, do you think we are going to
see more cases of this type in the future?

J.S.: Novelis is, I think, a good advert for the eQciencies of arbitration as a means of resolving complicated legal
and economic issues. It was, as I understand it, the first occasion on which the DOJ had exercised its power under
the Administrative Dispute Resolution Act of 1996 to resolve a matter by arbitration. The issue was whether
aluminium body sheet for cars was a relevant product market under US antitrust law. The parties chose
experienced antitrust administrators and lawyers to hear the arbitration, and it seems to have been a detailed affair
lasting ten days with more than a dozen fact and expert witnesses. The Sexibility of arbitration, and its capacity to
result in speedy justice, can be seen from the fact that the parties requested a short decision of no more than "ve
pages within 14 days of the arbitration. Prosecutors and regulators can sometimes be naturally conservative, but
this was a good example of how innovation can yield results. In terms of its wider impact, the arbitration is
obviously a good example and roadmap for other regulators. The Commission has indeed, for many years, used a
requirement for arbitration between stipulated parties as a condition of clearing mergers [11] or of granting
exemptions, or accepting commitments. 

C.M.D.W.: The decision of the CJEU in CDC Hydrogen Peroxide SA v Evonik Degussa GmbH and
Others has resulted in a great deal of interest and debate surrounding the drafting of arbitration
agreements and what they may cover in respect of damages claims arising from breaches of
Article 101 or 102 TFEU. What do you think is the key takeaway from this decision and do you
have any tips practitioners should bear in mind when drafting arbitration agreements?

J.S.: The key takeaway from CDC, and the Apple v MJA [14] case that followed it, is that the current state of the
law within the EU on whether standard-form arbitration clauses will cover competition law disputes is arguably
lacking in logic.
In CDC itself, the CJEU held that a standard-form exclusive jurisdiction clause will not cover cartel claims under
Article 101 TFEU: the clause must instead specifically mention such claims. The CJEU held that “a clause which
abstractly refers to all disputes arising from contractual relationships” could not extend to “the tortious liability that
one party allegedly incurred as a result of the other’s participation in an unlawful cartel” (69), because “the
undertaking which suffered the loss could not reasonably foresee such litigation at the time that it agreed to the
jurisdiction clause” (70). This could be different, the CJEU held, if the exclusive jurisdiction clause “refers to
disputes in connection with liability incurred as a result of an infringement of competition law” (71). (This is the
opposite of the US Supreme Court’s reasoning in Mitsubishi as explained above.) Although this point was decided
under the Brussels Recast Regulation which does not apply to arbitration (see Article 1(2)(d)), the reasoning of the
CJEU has obvious applicability by analogy to arbitration clauses and has been applied by national courts in that
context. [15] So a standard, generally worded arbitration clause is unlikely to be regarded by a court within the EU
as catching claims under Article 101.

The CJEU then, however, subsequently decided in Apple v MJA – overruling a decision of the French Court of
Cassation that had applied CDC [16] - that the CDC line of reasoning does not apply to claims under Article 102
TFEU, because an abuse of dominance “cannot be regarded as surprising one of the parties” (29). The reason for
this was said by the CJEU to be that an abuse of dominant position “can materialise in contractual relations that an
undertaking in a dominant position establishes and by means of contractual terms” (28).
It is diQcult, with respect, to reconcile the CDC and Apple decisions. Their net effect is, somewhat oddly, that a
standard-form arbitration clause will cover Article 102 claims but not Article 101 claims (or at least cartel claims). It
is hard to understand how it could fairly be said that a contracting party would be surprised that the counterparty
was participating in a cartel; but would not be surprised that it was abusing a dominant position. Indeed, if the test
is that the relevant anti-competitive conduct “can materialise in contractual relations that an undertaking …
establishes and by means of contractual terms” (Apple v MJA at (28)), then it is hard to see how that test would
not be satis"ed by an Article 101 claim concerning an allegedly cartelised price included in a sale agreement as in
CDC. The logical solution would surely have been that both, or neither, of these forms of anti-competitive behaviour
would be regarded as coming within a standard-form arbitration or jurisdiction clause. For my part, the “one stop
shop” presumption should have prevailed and both forms should have been regarded as falling within an arbitration
clause. As the UK Supreme Court has recently emphasised, the “one stop shop” presumption “…is not a parochial
approach but one which … has been recognised by (amongst other foreign courts) the German Federal Supreme
Court (Bundesgerichtshof), the Federal Court of Australia and the United States Supreme Court and … “is now
firmly embedded as part of the law of international commerce””.
Be that as it may, the sensible advice for practitioners in light of CDC remains that if a party wishes an arbitration
clause to be construed as covering claims under EU competition law, the safest course by some margin is to
reference such claims explicitly in the clause. I have suggested an amended form of the UNCITRAL model
arbitration clause in an article I have published elsewhere. [18]

C.M.D.W.: In Microsoft Mobile OY (Ltd) v Sony Europe Limited & Ors, the English Court found that
a dispute arising out of a cartel damages claim was covered by the parties’ arbitration agreement
pursuant to a good faith and pricing clause. What are the implications of this decision for follow-
on claims that you have seen in practice?

J.S.: The Microsoft Mobile [19] decision involved what I have called the “English contractual workaround” for the
CDC reasoning. Even before CDC, the courts of England and Wales had held in Ryanair [20] that a standard form
exclusive jurisdiction clause in a contract for the sale of goods would not catch an Article 101 claim by the
purchaser against the seller on the basis that the price was a cartelised price. The reasoning in Ryanair was very
similar to the later reasoning of the CJEU in CDC, with the Ryanair court focussing on whether the parties to the
jurisdiction clause would be “surprised” to learn an Article 101 claim fell within the clause.
The courts in England and Wales therefore adopted a different approach from the US court in JLM, as discussed
above, in which the Second Circuit held that an arbitration clause in nearly 80 shipping contracts was apt to cover a
claim that the four counterparties had, by reason of “a conspiracy formed independently of the specific contractual
relations”, charged a cartelised price to the plaintiff.

In order to get around the Ryanair/CDC reasoning, the defendant supplier in Microsoft Mobile, Sony, which was
accused of charging a cartelised price for batteries, argued that a standard-form arbitration clause in the contracts
of supply caught the Article 101 claim because the same facts would also have given rise to contractual claims for
breach by Sony of its obligations (a) to negotiate prices in good faith and (b) to alert Microsoft to events that might
affect Sony’s ability to meet its obligations under the agreement. The English High Court accepted this reasoning,
even though Microsoft had not pleaded any such contractual claims.
The Microsoft Mobile decision has, since it was handed down in February 2017, been cited frequently in the
English courts, but mostly for the general proposition that a party cannot circumvent what would otherwise be the
effect of a jurisdiction (or arbitration) clause by “by simply omitting to plead a pleadable claim”. [21] The speci"c
implications for competition law claims have not been further discussed in the English courts, and the decision
does not appear in itself to have led to any noticeable uptick in arbitration of competition law claims in practice.

C.M.D.W: As stakeholders take time to digest the Microsoft Mobile OY decision and contract
accordingly, do you think we will see an up-tick in follow-on claims in the coming years being
submitted to arbitration?

J.S.: In principle, the Microsoft Mobile decision ought to lead to the arbitration of more competition law claims in
the future. The type of clauses that were found to make a decisive difference in that case (by generating viable,
albeit un-pleaded, contractual claims and thus suQcient nexus) are fairly standard, even boilerplate features of
long-term supply agreements and so if correct, Microsoft Mobile would lead to the conclusion that a good deal of
claims which would not ordinarily qualify under CDC ought nevertheless to be arbitrated. In practice, however, this
does not seem, as yet, to have come about, with the bulk of competition work continuing to be litigated in the
Courts.

C.M.D.W.: Do you think that Brexit is likely to have an impact on follow-on claims being litigated in
the UK and could it lead to a greater number of these kinds of claims being settled via arbitration?

J.S.: A great deal naturally depends on what exactly is negotiated with the EU. As things stand, however, there will
be a number of substantive legal changes after 31 December 2020 that will make the UK simultaneously both
more and less attractive as a venue for litigating private competition law damages claims.
"As things stand, however, there will be a number of substantive legal
changes after 31 December 2020 that will make the UK simultaneously both
more and less attractive as a venue for litigating private competition law
damages claims."
Amongst the factors that might make the UK less attractive, I would highlight four. First, the substantive
competition law of the UK will become progressively less similar to that within the EU, making the UK feel a less
natural venue for claims under EU competition law. Under the Competition (Amendment etc) (EU Exit) Regulations
2019, Articles 101 and 102 TFEU will cease to form part of UK law, and will therefore technically become foreign
law. Domestic competition law in the Competition Act 1998, which currently mirrors EU law precisely, is likely
gradually to diverge as the UK courts are empowered to depart from pre-existing competition law wherever
“appropriate” in accordance with the new section 60 of the 1998 Act. Secondly, future Commission decisions will
cease to be binding on the question of infringement of EU competition law, as a result of amendments to section
58A of the 1998 Act, albeit they will of course remain persuasive. Thirdly, there will be important changes to the
regime governing the portability of UK judgments within the EU. The Civil Jurisdiction and Judgments (Amendment)
(EU Exit) Regulations repeal the entire Brussels Regime, including the Brussels Recast Regulation. The UK is
currently trying to rejoin the Lugano Convention but it is not yet known how that application will fare. Fourthly, there
will also be no ability to make references to the CJEU, and so UK courts will simply have to take a view on relevant
EU law issues for themselves.

It is by no means all bad news, however. On the upside, the UK will retain many of the key advantages which have
already drawn so much competition damages work to the UK, in particular the disclosure regime and the large pool
of specialised lawyers and experts practising here, especially in London. Moreover, Brexit will revive various
litigation options which have not been open for a good number of years. Perhaps most signi"cantly from an
arbitration perspective, the UK courts will be able again, in principle, to grant anti-suit injunctions to restrain actions
commenced within the EU, in favour of arbitration or litigation in another forum, an option which had not been open
since Turner v Grovit [22] and West Tankers. [23] Moreover, the UK courts will no longer in principle be obliged to
grant a Masterfoods [24] stay where there is an appeal at EU level, opening the possibility of using litigation in the
UK as a form of “English rocket” to advance a dispute even where the General Court or CJEU are due to hear
appeals against an infringement decision, an option which may prove attractive and less risky than might
otherwise appear given the relatively low success rate of such appeals at EU level.
"Moreover, Brexit will revive various litigation options which have not been
open for a good number of years."

C.M.D.W: Do you have any thoughts on the Micula v Romania litigation, the termination of intra-EU
BITs and how either might affect the future of arbitrations involving claims with a competition
law element?

J.S.: The Micula litigation [25], and the Achmea decision that resulted in the termination of inter-EU BITs,
demonstrate a marked hostility on the part of the European Commission and European Courts to the operation of
any decision-making structure within the European Union bearing on intra-EU trade which is not under the ultimate
control of the EU institutions.
The natural starting point is with the decision of the Grand Chamber of the CJEU in Achmea. That case concerned,
as is well known, an arbitral award under a bilateral investment treaty between the Netherlands and Slovakia. The
treaty provided, in a fairly standard way, for binding arbitration of any disputes “between one contracting party and
an investor of the other contracting party concerning an investment of the latter” by an arbitral tribunal applying
UNCITRAL rules. The CJEU held that such provision was incompatible with EU law, because it was one “…by which
member states agree to remove from the jurisdiction of their own courts, and hence from the system of judicial
remedies which the second sub-paragraph of article 19(1) EU requires them to establish in the fields covered by EU
law, disputes which may concern the application or interpretation of EU law” (55). This was different from ordinary
commercial arbitrations which “originate in the freely expressed wishes of the parties” 

The wider implications of this decision were obvious: member states of the EU could not continue to have
conventional BITs between themselves, because such BITs generally depend on the establishment of an arbitral
mechanism to resolve disputes; indeed that is the essential underpinning of a BIT. The CJEU had, with the stroke
of a pen, outlawed an entire category of arbitrations within the EU. In implementation of the decision, 23 EU
member states came together in May 2020 and concluded a multilateral treaty terminating the BITs between them.
It was a BIT which also gave rise to the Micula litigation, which has become a somewhat notorious saga still being
played out at EU and national level in a number of different countries. As is well known, in December 2013 an
International Centre for Settlement of Investment Disputes (“ICSID”) arbitral tribunal awarded the Micula brothers
approximately £150 million against Romania on account of the latter’s termination of investment incentives
contrary to the principles of fair and equitable treatment, legitimate expectations and transparency. The European
Commission took the view that any payment of that Award by Romania would amount to an unlawful state aid; and
issued a decision to that effect in March 2015. That decision was annulled by the General Court in June 2019, but
on the limited basis that the Commission had purported retroactively to apply its powers to events pre-dating
Romania’s accession to the EU.

The Commission has lodged an appeal with the CJEU and its decision remains outstanding. In the meantime, the
Micula brothers and their companies are pursuing enforcement proceedings in the USA, France, Belgium,
Luxembourg, Sweden and the UK. Most of those countries have so far stayed any enforcement action pending the
decision of the CJEU. The UK Supreme Court has recently, however, lifted any stay on enforcement in the UK,
holding that the UK’s obligation under Article 54 of the ICSID Convention to enforce the Award was an obligation
owed to all contracting states and pre-dated the UK’s accession to the EU, with the result that the obligation is, by
reason of Article 351 TFEU, unaffected by any obligation of the UK arising from the European treaties. Romania is
therefore currently in an impossible situation, with a national court in the UK permitting enforcement of the Award
but the European Commission taking the view that any steps by Romania to satisfy it would be an unlawful state
aid; and pursuing an appeal to the CJEU to that effect.

Taking the Achmea and Micula litigation together, it does seem to be the case that despite all of the developments
discussed in my earlier answers, there remains a lingering suspicion at EU level of arbitration as an effective
means of enforcing EU law in relation to the internal market. The CJEU is prepared to tolerate arbitration as a
means of dispute resolution between private parties applying EU law, but as soon as a member state is involved,
the analysis changes. In most competition cases, this will not of course be an issue, but in any cases involving a
state party then the analysis may be different.