The Czech Republic v Diag Human SE & Anor

The absence of a qualifying investment, on the basis that the following were not qualifying investments:

The allegation that any investments made by Mr Stava before he acquired Swiss nationality and were not qualifying investments for that reason (“theNo Swiss Investments Objection”).

The allegation that assets held be Conneco are not investments of Mr Stava (the “No Indirect Investments Objection”).

The allegation that the Co-operation Agreements were “unauthorised and contrary to Czech law and/or regulation” and “not protected by the Treaty” (“the Illegal Investments Objection”).

The allegation that the Claimants obtained the investments by bribing members of staff of public health institutions, and that investments made in such circumstances are “not protected by the Treaty” (“the Bribery Objection”).

The allegation that the award of the amount of the 2008 Award and associated interest award were not “with respect” the investments found to exist (“the No Nexus Objection”).

The allegation that Mr Stava did not hold the investments held by the tribunal to exist when the arbitration was commenced because he had transferred his interest to the Koruna Trust (“the Koruna Trust Objection”).

The allegation that Mr Stava did not hold the investments held by the tribunal to exist when the arbitration was commenced because he had sold his interest under the Lawbook Transaction (“the Lawbook Transaction Objection”).

The allegation that Diag SE was not controlled by Mr Stava, or not controlled by him from June 2011 (“the No Control Objection”).

The allegation that Mr Stava was not Swiss but Czech for the purposes of the Investment Treaty, with the result that neither he nor Diag SE were qualifying investors (“the No Swiss Nationality Objection”).

The findings as to the status of the 2008 Award and the 2014 Resolution fell outside the substantive jurisdiction of the tribunal (“the No Substantive Jurisdiction Objection”).

Objection to substantive jurisdiction of tribunal.

An objection that the arbitral tribunal lacks substantive jurisdiction at the outset of the proceedings must be raised by a party not later than the time he takes the first step in the proceedings to contest the merits of any matter in relation to which he challenges the tribunal's jurisdiction. A party is not precluded from raising such an objection by the fact that he has appointed or participated in the appointment of an arbitrator.

Any objection during the course of the arbitral proceedings that the arbitral tribunal is exceeding its substantive jurisdiction must be made as soon as possible after the matter alleged to be beyond its jurisdiction is raised.

The arbitral tribunal may admit an objection later than the time specified in subsection (1) or (2) if it considers the delay justified.”

“Loss of right to object

If a party to arbitral proceedings takes part, or continues to take part, in the proceedings without making, either forthwith or within such time as is allowed by the arbitration agreement or the tribunal or by any provision of this Part, any objection—

Where the arbitral tribunal rules that it has substantive jurisdiction and a party to arbitral proceedings who could have questioned that ruling—

The arbitral tribunal shall have the power to rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause that forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null shall not entail automatically the invalidity of the arbitration clause.

A plea that the arbitral tribunal does not have jurisdiction shall be raised no later than in the statement of defence or, with respect to a counterclaim or a claim for the purpose of a set-off, in the reply to the counterclaim or to the claim for the purpose of a set-off. A party is not precluded from raising such a plea by the fact that it has appointed, or participated in the appointment of, an arbitrator. A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. The arbitral tribunal may, in either case, admit a later plea if it considers the delay justified.”

The 1996 Act reflects a distinction between jurisdictional complaints arising “at the outset of the proceedings” and those arising “in the course of the arbitral proceedings”. That distinction is most clearly delineated in s.31, but it is also apparent in s.73 in the references to “takes part” and “continues to take part.” That distinction is not clearly recognised in Article 23 of the UNCITRAL Rules as to lack of jurisdiction, only as to excess of authority.

Taking jurisdictional objections arising “at the outset of the proceedings” first, the 1996 Act provides various dates by which the objection must be taken “not later than the time he takes the first step in the proceedings to contest the merits of any matter in relation to which he challenges the tribunal's jurisdiction” (s.31 and, through the words “any provision of this Part”, s.73(1)); “forthwith” (s.73); within the time allowed by the arbitration agreement (s.73); and within the time allowed by the arbitral tribunal (ss.31 and 73, the former stating such an extension of time can be granted if the tribunal “considers the delay justified”). There is an open issue, which it is not necessary to determine here, as to whether the arbitration agreement could shorten the time available for a challenge so that it had to be made before the “first step” (see A v B [2017] EWHC 3417 (Comm), [31]-[33]). That potential wrinkle apart, it is clearly sufficient if the party meets one of those time limits – such that, for example, a challenge brought before “the first step” is not out of time simply because it was not brought “forthwith”, a challenge brought within the time permitted by the arbitration agreement is not out of time simply because it was not brought before “the first step” etc. Article 23 of the UNCITRAL Rules closely resembles s.31, reflecting their common ancestry (cf. A v B, [33]-[34] noting the influence of the similarly worded UNCITRAL Model Law on s.31).

As to jurisdictional objections arising in the course of the arbitral proceedings, these must be raised “as soon as possible after the matter alleged to be beyond its jurisdiction is raised” (s.31). or “forthwith” (s.73), which ordinarily at least will have the same effect (cf. Exportadora de Sal SA de CV v Corretaje Maritimo Sud-Americano Inc [2018] EWHC 224 (Comm), [45]).

In all cases, a jurisdictional objection which is not taken on a timely basis can nonetheless be raised if the party raising the challenge “shows that, at the time he took part or continued to take part in the proceedings, he did not know and could not with reasonable diligence have discovered the grounds for the objection.”

The fundamental principle, or policy, is fairness, and justice, in the sense of openness and fair dealing between the parties…

There is also a concern to seek to avoid waste of time and expense…

The issue as to jurisdiction must normally have been raised at least on some grounds before the arbitrator …

In addition, each ground of challenge to jurisdiction or of objection to jurisdiction must have been raised if it is to be raised; by this is meant the jurisdictional objection that the party considers renders the whole or the relevant part of the arbitral process invalid…

It is wrong to be prescriptive or try to lay down precise limits in the abstract for the meaning of the phrase ‘ground of objection’, but it is usually easy to recognise (or obvious) in particular cases whether a party is attempting to raise a new ground of objection to jurisdiction on an appeal …

The ‘grounds of objection’ should not be examined closely as if a pleading, but broadly, or adopting a broad approach. The fact that different and broader arguments are raised or new evidence is put forward does not mean that there is a new ground …

This is not to suggest an unduly relaxed approach, especially bearing in mind sub-para (1) above. The substance of each ground of objection relied upon should have been communicated to the other party (and the arbitral tribunal).”

It would be unfair if a party took part in arbitration yet kept an objection up his sleeve and only attempted to deploy it later ...

It is not enough that the party mention an issue; the issue must be distinctly put to the arbitral tribunal as denying jurisdiction.”

First, s.73 is concerned not just with jurisdictional objections, but objections as to the conduct of the arbitration, the procedure followed or other irregularities. Where an objection of the latter kind is taken, it will often be possible for the tribunal to put matters right on the spot, and this is one of the reasons for requiring objections to be taken promptly (Rustal Trading Ltd v Gill & Duffus SA [2000] 1 Lloyd’s Rep 14, 20). That suggests that some degree of specificity is required when identifying whether an objection taken in court is the same as one taken before the tribunal, and if reasonable actions which the tribunal could take to address the point taken in the arbitration would not have addressed the issue raised with the court, there is a new objection.

Second, s.32 provides for the court to determine “any question as to the substantive jurisdiction of the tribunal in certain circumstances.” If the ground of objection raised at the hearing had been the subject of a s.32 order, but the Court’s determination of the s.32 issue as then formulated would not have determined the issue raised on the s.67 application, that would suggest the s.67 challenge involves new ground of jurisdiction.

Third, ss.31 and 73 contemplate the tribunal being able to extend time, the former where the tribunal is satisfied the delay is justified (sc, justified in all the circumstances of the case). It is easy to envisage a tribunal considering matters such as how easy it would be to investigate an issue, prejudice caused to the other party by allowing the point to be taken late etc. That too weighs against too broad an interpretation of the grounds of objection, otherwise a tribunal allowing one formulation to be raised late would open the door to an objection being raised in court which would not have merited an extension of time on its own terms.

Fourth, and for similar reasons, the due diligence requirement in s.73 also tells against too broad a formulation of what constitutes one ground of objection, to avoid a situation (for example) in which a party puts forward an objection which, with due diligence, could have been deployed at the hearing but avoids the consequences of that lack of due diligence because the point falls within the broad chapeau of an objection which was taken.

Section 3(1) of the Carriage of Goods by Sea Act 1992 imposed “liabilities under shipping documents”, inter alios, upon (a) “the lawful holder of a bill of lading” who (b) “makes a claim under the contract of carriage against the carrier.”

Section 5(2) defined three classes of persons who were lawful holders for this purpose, including “(b) a person with possession of the bill as a result of the completion, by delivery of the bill, of any indorsement of the bill or, in the case of a bearer bill, of any other transfer of the bill” and “(c) a person with possession of the bill as a result of any transaction by virtue of which he would have become a holder falling within paragraph (a) or (b) above had not the transaction been effected at a time when possession of the bill no longer gave a right (as against the carrier) to possession of the goods to which the bill relates” (which would, in turn, raise an issue as to whether the bill no longer gave the relevant right).

Before the arbitral tribunal, Primetrade contended that they had not become the lawful holder because the bills of lading were held by UBS by way of pledge, the “lawful holder” issue having been argued within the context of s.5(2)(b). Before the court, it argued that the issue should be approached within the context of s.5(2)(c), and that Primetrade was not the lawful holder on that basis, and a further argument was made that the underwriters became the holders of the bills to who any rights of suit and liability had passed. Mr Justice Aikens defined the relevant ground of objection as “not the lawful holder” ground, and held that the new arguments concerned the same ground of objection.

“The Corruption Allegation is defined to mean the allegation by the Province of Balochistan that the ICC tribunal lacked jurisdiction because the CHEJVA and related agreements were void due to the existence of corruption.

In my judgment, the jurisdictional issue (relevant for present purposes) that was raised before the ICC tribunal by the Province was whether the Supreme Court of Pakistan had decided that the arbitration agreement was void, including on the basis of corruption, and if so whether the ICC tribunal should give effect to that decision.

The Corruption Allegation as defined is a wider and different allegation to the jurisdictional issue that was raised.”

The jurisdictional objection in the arbitration focussed on the fact that there was a separate arbitration agreement in the CGC-CNGC contract.

The jurisdictional objection in court focussed on the interpretation of the arbitration agreement in the GSPC, which was said to be narrow in scope under its governing law, to which CNGC was not a party, with CGC’s liability to CNGC arising under a separate contract with a different dispute resolution mechanism.

Describing the argument as “close to the borderline” ([38]), Mr Justice Butcher found that the objection in both cases was that the arbitration agreement in the GSPC did not embrace a claim based on CGC’s alleged liability to CNGC under a different contract.

A bare putting to proof of either jurisdiction in general, or broad categories of jurisdiction (“you are put to proof of rationae materiae, temporis and personae”) cannot be sufficient to give free rein for any jurisdictional challenge at the s.67 stage. Nor can “non-admission” be treated as a category of jurisdictional objection in its own right, because at the s.67 stage, it is for the challenging party to establish lack of jurisdiction (cf. Dallah Real Estate and Tourism Holding Co v Ministry of Religious Affairs [2010] UKSC 46, [160]; s.66(3) of the 1996 Act and Sovarex SA v Romero Alvarez SA [2011] EWHC 1661 (Comm), [43]).

That suggests that a mere “putting to proof” in the arbitration would not, of itself, be a jurisdictional objection sufficient to reserve the point for s.67, as would the language of ss.31 and s.73 which contemplate a positive assertion (“an objection that the arbitral tribunal lacks substantive jurisdiction”; “making … any objection”). Where a respondent does not know at the start of an arbitration whether or not the requirements for jurisdiction are satisfied, the ability to obtain further time from the tribunal, or the safeguards provided by s.31(2) or the “forthwith” and “due diligence” parts of s.73, will provide protection if the process of obtaining evidence in the arbitration (or elsewhere) puts the respondent in a position to make a positive assertion at some later point. I would note that Mr Justice Beatson held that the reservation of a right to bring a jurisdictional challenge did not amount to making a jurisdictional objection, which is, in many ways, the functional equivalent of a non-admission: The Republic of Serbia v Imagesat International NV [2009] EWHC 2853 (Comm), [74].

However, the issue of whether or not a positive assertion is made is a matter of substance, not drafting style. If the substance of what the respondent is saying is “the tribunal does not have jurisdiction on ground X”, the fact that it may be formulated by reference to what the claimant has failed to establish will not prevent this being a jurisdictional objection for ss.31 and 73 purposes.

“I consider that Mr Males is right in his submission that, in circumstances where the Board of Appeal allowed the objection to the exercise of discretion by it to be fully argued on the merits and decided the point, albeit against Gulf, it would be bizarre if Bunge could successfully argue before the Court that the objection was too late by reference to either section 71 or section 73(1) . In effect, Gulf would be worse off than if Bunge or the Board of Appeal had protested about the point being raised late and the Board had then ruled that the objection could still be argued. It seems to me that the Board has allowed the point to be argued and if it would otherwise have been too late, it is not precluded by section 31 or section 73(1) , either because section 31(3) comes into play or because the objection has been raised ‘within such time as is allowed by … the tribunal’ within the meaning of the opening words of section 73(1)”.

[A]t the arbitration, although the issue of delay was in issue in general terms, ImageSat did not rely on section 31 as a ground for contending that the jurisdictional objection Serbia had raised in its Defence was too late. ImageSat did not argue before the arbitrator that Serbia was out of time and could not raise the jurisdictional objection because it had not done so in its Answer. There are obiter statements by Flaux J … indicating that, if no objection was taken to the jurisdictional point being argued before the arbitral tribunal, and the tribunal has dealt with it, it is too late to say in response to an application under section 67 that the jurisdictional point cannot be raised. Mr Owen submitted this could not be so. He argued that since section 31 is mandatory, the only basis for stating that the jurisdictional objection can be relied upon, is if the arbitrator considered that the delay was justified (see section 31(3)) and that there cannot be a deemed extension of time.

It appears that the preliminary issue before the arbitrator, who had full submissions and skeleton arguments, was conducted on the assumption that the issue as to delay by Serbia in raising the point concerned the effect of inter-party correspondence and the Terms of Reference and not because of its failure to do so in its Answer. Serbia would, in these circumstances, not have known that it should make an application under section 31((3) in respect of the Answer. Not surprisingly it did not do so. It cannot now do so. The point could have been taken by ImageSat at the arbitration. ImageSat took other points on delay but not this one. Serbia cannot now make an application under section 31(3). I share Flaux J’s view that there are difficulties in saying that an application pursuant to section 67 is barred because the jurisdictional objection was not raised in the Answer where the point could have been, but was not, raised in the arbitration, and the arbitrator has dealt with it.”

“150 I do not think that I need to express any concluded view on whether or not the comments of Flaux J set out above are correct, since in my judgment the issue must always depend on the facts of the individual case. On the facts of the current case, I have concluded that there was no implicit extension of time. I have reached this conclusion for the following reasons:

Accordingly, I hold that Stockman also waived its right to object to the jurisdiction of the arbitrator….”

As noted in Bunge and Republic of Serbia, if the respondent to such a challenge takes the point that it was made out of time for the first time before the court, it will be too late for the challenging party to seek an extension of time from the arbitral tribunal.

The 1996 Act does not provide for a right to challenge to the determination of the arbitral tribunal on a jurisdictional point on the basis that it was taken out of time unless it can be brought within ss.67 or 68. Section 1(c) of the 1996 Act tells against the suggestion that, without invoking s.68, a respondent to a s.67 challenge in respect of a jurisdictional challenge considered and determined on its merits can, in effect, submit to the court that the arbitral tribunal should not have entertained the objection. In considering the difficulties which might arise, it is helpful to consider the position where the arbitral tribunal upholds a jurisdictional challenge said to have been taken late. If the other party wishes to challenge that determination not on the basis that it was wrong on its merits, but that the point was taken too late, it must bring itself within s.68.

Where the respondent to the challenge is required to take the timing objection before the tribunal, the tribunal is able to consider not simply whether to grant an extension, but whether one is required (there being scope for dispute as to whether a challenge is a new challenge or a permissible development of one which has already been made). The tribunal will not be able to do so if the timing objection is taken for the first time in court. The policy of the 1996 Act, as reflected in s.30, is better given effect by a rule which requires a party wishing to take the timing point to do so before the arbitral tribunal.

A rule which requires the respondent to take the timing objection, and thereby crystallise the issue for the tribunal, reflects the essentially collaborative nature of the arbitral process, in which parties are expected to take positive steps to support the “proper conduct” of the arbitration (s.40 of the 1996 Act), and to raise any irregularities promptly during the arbitration (s.73(1)(b)-(d)).

That would be to permit the Czech Republic to formulate the jurisdictional objection at a very high level of abstraction, cutting across the indicia as to the appropriate level of granularity outlined at [67] above, and would effectively allow the Czech Republic to advance now a jurisdictional objection which the tribunal would not have known it was being asked to decide, and which the Czech Republic did not provide it with any assistance in deciding.

A jurisdictional objection taken in the arbitration is intended to permit the tribunal to identify and deal with the ground, not simply to act as a placeholder for some future hearing. The tribunal would not understand those generalised introductory statements to be freestanding jurisdictional objections in their own right (which is how the Czech Republic is now seeking to treat them) but would look to the development of the argument for the purposes of identifying what the issue was and what they needed to decide.

The issue of which assets the tribunal has jurisdiction over is a significant issue when it comes to identifying what relief can be ordered in respect of what breaches. A contention that alleged asset A was not a protected investment and an argument that alleged asset B was not a protected investment are not simply alternative routes to the same destination which will have the same consequences, however it may be reached.

In these circumstances, it is necessary to consider the four protected investments found by the tribunal which the Czech Republic now challenges.

I asked the Claimants to identify where in the arbitral record they had identified a contract with Novo Nordisk not simply as a relevant fact, but as an investment said to have been made in the Czech Republic. An aspirational list of alleged references, including headings, sub-headings, footnotes and witness evidence followed. I am confident that the irony of the stylistic resemblance between this list, and the Czech Republic’s much-criticised list of references where they say that jurisdictional objects were taken, was not lost on those who prepared it. I have diligently followed those references up. The existence of a commercial relationship with Novo Nordisk and its importance to the Claimants’ business enterprises generally (including in the Czech Republic) were asserted, as was the contention that the Czech Republic’s breaches had wiped that relationship out. However, I have been unable to find a particularly clear assertion that any co-operation agreement was itself an investment for jurisdictional purposes. This may well be because the relationship was central to the means by which the Claimants were intending to carry out the Czech business, rather than an investment in Czechoslovakia in its own right, but that is an issue for another day.

Thus, the existence of a co-operation agreement with Novo Nordisk was not clearly identified as an alleged investment by the Claimants in the Czech Republic in the Request for Arbitration (A2(ii)) nor in the Claimants’ Memorial, which pleaded the issue of “investment” in unhelpfully general terms (A9(ii)). The high point for the Claimants is that assertion in the quantum section of the Memorial, when explaining why the Claimants had suffered loss internationally, to the fact the relationship was “part and parcel of the Claimants’ investment and a cornerstone of its global business model.” This and other references to interference with the relationship as a means by which the Claimants suffered loss are not the same as identifying a co-operation agreement with Novo Nordisk as an investment establishing jurisdiction under the Investment Treaty. Nor does the statement in Mr Stava’s witness statement that the Novo Nordisk relationship “was a critical component of the Diag Human’s investment in the Czech Republic” suffice: the Memorial in Section IIIC had specifically identified the investments relied upon as establishing jurisdiction, and a co-operation agreement with Novo Nordisk was not among them.

The Counter-Memorial made various comments about the fragile nature of any co-operation agreement between Novo Nordisk and the Claimants, and alleged that the co-operation had been terminated by the date the Czech Republic came into existence. It also made the point in the introductory section that “Claimants also predicate much of their claim on the relationship between Conneco and Diag Human AG and the Danish pharmaceutical company Novo Nordisk … There is also no credible evidence that Novo Nordisk ever in fact had any long-term commitment to working with Diag Human AG or Conneco, Claimants have failed to identify or produce any agreement to that effect.” There was also a denial that any co-operation was established “in relation to Czechoslovakia”. Later, referring to the Memorial’s statements about “the importance of the Claimants’ relationship with Novo Nordisk for their international business model”, the Czech Republic denied that Novo Nordisk had any commitment to work with the Claimants. Mr Bastin KC characterised the first of these submissions as “very much the same thing as saying that contract is an investment for the treaty when the Czech Republic’s submission [is it] is not an investment.” In my view, that affords a charitable interpretation to both the Claimants’ case and the Czech Republic’s response. However, if the Czech Republic understood that this case was being advanced, I should be very slow to conclude otherwise. However, if the Claimants had done enough to raise a case that there was a co-operation arrangement with Novo Nordisk which was itself an investment for jurisdictional purposes, I accept that a challenge had been mounted to that case on the basis that there was no binding or sufficiently substantial relationship or which extended to Czechoslovakia (but not otherwise).

The Claimants’ Reply did not identify an alleged co-operation arrangement between the Claimants and Novo Nordisk as a covered investment: A42(ii). While it did state that the relationship was “central to [the Claimants’ business in the Czech Republic]” in the Statement of Facts section, it did not feature in Section V addressing jurisdiction.

The Czech Republic did not deny that there was an investment in the form of a co-operative relationship between the Claimants any Novo Nordisk in its Rejoinder (perhaps because no such contention had clearly been advanced): A52(iv).

The finding in the Award that there had been an investment in the form of co-operation agreement between Novo Nordisk and the Claimants is the first occasion when this agreement is specifically and unequivocally identified as an investment for jurisdictional purposes.

In these circumstances, I am satisfied that either the Czech Republic has taken this objection in the Counter-Memorial (by way of a somewhat exiguous response to a somewhat exiguous assertion) or that it has acted with reasonable diligence in raising this challenge for the first time in its s.67.

The Claimants relied on “know-how and goodwill” as an investment in the Request for Arbitration and the Memorial. If it matters, it also drew attention to the fact that the Czech Republic had neglected to address its case that these were investments in its Answer to the RFB.

The Czech Republic never responded specifically to this contention and is unable now to point to any objection that the tribunal lacked jurisdiction because this was not an investment. All that is relied upon is criticism of the Claimants’ case being “vague about the details – and timing – of their supposed investment” and that “while they repeatedly assert that ‘[their] case is that [they] had a plasma business’, [Ds] neglect to explain what specifically such business consisted of or entailed or when or how particular ‘business’ activities were being conducted” (in the Czech Republic’s Rejoinder). However, that was followed by a list of eight specific matters addressing the position in January 1993, none of which address the issue of know-how or goodwill.

In these circumstances, the tribunal’s finding in relation to know-how and goodwill at Award, [393] cannot be challenged under s.67.

The Claimants asserted that the Arbitration Agreement constituted an investment in their RFA (A2(ii)).

While the Memorial referred to the Arbitration Agreement in its factual section (A8(ii)), and in its breach section where it was said to constitute “an asset” (A10(ii)), it did not rely upon it to establish the tribunal’s jurisdiction (A9(ii)). It was, no doubt, for this reason that the Claimants (having overlooked the RFA) did not originally allege that a s.73(1) argument arose in relation to this challenge. The Claimants sought permission to raise this contention at this hearing and I am satisfied that I should grant such permission. The Czech Republic could not realistically assert that it was unable fairly to deal with the point at the hearing.

The Czech Republic did not challenge the tribunal’s jurisdiction by reference to the Arbitration Agreement in its Counter-Memorial: A24(vii).

The Claimants clearly took the point that the Arbitration Agreement was an investment in their Reply: A42(ii).

The Czech Republic clearly challenged that assertion in their Rejoinder: A52(vi).

The Claimants’ Rejoinder on Jurisdiction did not suggest that this point was taken too late: A58(vi).

The Czech Republic repeated this challenge in its First PHB: A71(vii). There was no suggestion this had been made too late in the Claimants’ Second PHB.

The tribunal noted the parties’ argument on this issue (Award, [255], [295]-[296]) and found that the Arbitration Agreement qualified as an investment (Award, [393]). In these circumstances, I am satisfied that this point was taken within the time permitted by the arbitral tribunal. This issue provides a very good example of the appropriateness of the pragmatic rule outlined at [86] above. There is a very real issue as to whether the Claimants had made their own reliance on the Arbitration Agreement as an investment clear before the Reply – to the point where they have only raised the point themselves by way of amendment before the court. If I had not reached the conclusion that the tribunal had allowed the point to be taken in the Rejoinder, I would have held that the need for this jurisdictional objection only became clear when the Claimants’ Reply was served, and that the Czech Republic exercised due diligence by taking the point in the Rejoinder.

“The Claimant refers in particular to Counter-Memorial paragraphs 84 and 85 (referring to the “short-term” nature of these agreements and the minimal performance under them), paragraph 219 (referring to the short duration of these contracts and their limited number) and paragraph 220 (stating that these agreements ‘fail to assist Claimants in establishing jurisdiction”); to the Claimant’s FPHB pp 48 – 50 (where the Claimant described these as “alleged investments’ and made various points regarding them, including that they were concluded in violation of the Ministry’s instructions, were short-term and were executed with Conneco (Czech) at a time when Mr Stava had not yet acquired Swiss nationality); to the Request for Bifurcation, paragraph 55; and to the Award at paragraphs 387 – 388 (where the Tribunal noted in its discussion of jurisdiction that the parties disagreed on how many contracts had been concluded and whether they could be considered long-term, but held that the Treaty does not set a de minimis threshold for what is protected as an investment

the Co-operation Agreements were too “short-term” and/or too insubstantial in number or content to constitute an investment for the purposes of the Investment Treaty; and

the Co-operation Agreements were “barter-sale transactions” which were transitory in nature and for that reason do not constitute an investment for the purposes of the Investment Treaty.

I shall leave any issue of the legality of these agreements to the Illegal Investments Objection which I address below.

The Claimants made it clear that they were relying upon the Co-operation Agreements as an investment in the Request for Arbitration (A2(ii)) and in the Memorial (A9(ii)).

The RFB indicated intended jurisdictional objections based on the fact that “the Co-operation Agreements were merely barter trade contracts”, had been prohibited by the Ministry of Health when executed, were terminated in 1992 and were limited in scope (A14(vi)(c)). For the reasons set out at [79] above, I do not regard the assertions in the RFB as the making of a ground of objection in themselves, although they are relevant context to the interpretation of later documents whose purpose was to identify the case the Czech Republic was actually advancing, rather than material which sought to outline intended jurisdictional objections for the purposes of assisting the tribunal in determining the procedural course of the arbitration.

The Counter-Memorial submitted that the Co-operation Agreements “failed to assist Claimants in establishing jurisdiction, as all of them were signed in direct contravention of the Ministry’s February 1991 direction …” and they had “all terminated by mutual consent by November 1992”: A24(i)-(ii). While it referred to the Co-operation Agreements as “barter contracts” (A19), it did not expressly repeat the jurisdictional objection in the RFB relating to “barter trade contracts”.

The Claimants’ Reply referred to the arguments in the RFB that the Claimants were not entitled to protection because the Co-operation Agreements were prohibited by the Ministry of Health” or that “the relevant contracts were only barter-sale transactions”, asserting that these were no longer being advanced: A42(i).

The Czech Republic’s Rejoinder pleaded that the Co-operation Agreements were executed “in defiance of the Ministry’s earlier instructions” and all of which were terminated by mutual consent before February 1994, which was alleged to be the date when the Czech Republic became bound to the Investment Treaty (A52(iv)(b)).

The Czech Republic’s opening presentation asserted that the Co-operation Agreements contravened the Ministry’s February 1991 directive and were replaced within a short period: A62(ii).

The Czech Republic’s First PHB referred to the Co-operation Agreements as “barter contracts …. signed under questionable circumstances” (A70(i)) and as “short-term”, and said that they had been “entered into in violation of ministry instructions, had ethically questionable aspects and Conneco had agreed to terminate them all by the end of 1992” (A71(iii)).

The tribunal addressed and rejected an objection based on the number and duration of the Co-operation Agreements (Award, [387]-[388]). They did so, on my reading of the Award, not in performance of some independent duty to establish their jurisdiction under the Investment Treaty motu proprio (cf. Metal-Tech Ltd v Republic of Uzbekistan ICSID Case No RB/10/3, Award of 4 October 2013 (Kaufmann-Kohler, Townsend and von Wobestar) [41]) but on the basis of the position the tribunal understood was being taken by the Czech Republic.

As explained at [88] above, I am not persuaded that that is a sufficient objection to cover any challenge premised on the absence of a protected investment, nor is this how the Czech Republic would reasonably have been understood as formulating its case.

The No Swiss Investments Objection raises distinct issues as to the interpretation of the Investment Treaty (see e.g. the split on this issue in Pugachev v Russia Award on Jurisdiction 18 June 2020 (Jaramillo, Clay and Cremades)) as well as factual issues concerning the date when particular assets were required. If the point had been taken, it would have involved drawing a distinction between Co-operation Agreements entered into before and after 10 June 1991, and a fine analysis of those Co-operation Agreements entered into before 10 June 1991 and amended afterwards (see Award, [122], [388] footnote 317).

In short, this point turns entirely on unique legal and factual issues which did not arise in those jurisdictional objections which the Czech Republic did make, and is a distinct jurisdictional objection.

I have already held that, fairly construed, the jurisdictional objection which the tribunal was asked to determine in the arbitration was not some blanket “no investment” objection, but the specific contentions developed under that heading, and that a blanket “no investment” objection without more would not be sufficient given the specific issues and consequences which would arise in relation to different objections falling within some broad “no investment” chapeau ([88]).

Nor is this objection the same or similar to that advanced in the Counter-Memorial at [267] – as the Czech Republic has asserted. That argued that Mr Stava’s shares in Conneco were not a sufficient investment because “the registered company had no assets or rights that relate to the disputed measures” – i.e. the No Nexus Objection considered below. This assumed the very opposite of the No Indirect Investments Objection – that the shares would have been a relevant investment of Mr Stava if Conneco had had assets or rights that relate to the disputed measures.

The “No Indirect Investment” raises distinct issues as to the interpretation of the Investment Treaty, and engages a well-trammelled body of international and investment treaty jurisprudence as to the effect of investments through locally registered corporate entities. Both sides of the arbitration and the tribunal would have been fully alive to this as a potential argument, and the tribunal would have been on the “look out” for it. None of that material was deployed or developed before the arbitral tribunal, because this ground of objection was not taken.

“the conclusion of the Co-operation Agreements”;

“the business model which the Defendants contend their investment would operate (i.e. export of blood plasma acquired from Czech hospitals / clinics with surplus fractionated products being sold outside the Czech Republic.”

The RFB (as to which I repeat the general comment at [79] above) includes the general assertion that the investments were “unsubstantiated, irrelevant or illegitimate” (A14(vi)(e)), and the fact that had been prohibited by the Ministry of Health (14(vi)(c)).

The Counter-Memorial in the chronology section made reference to the fact that Conneco’s permits did not extend to blood plasma (A20(iv)) and in a jurisdictional chronology, referred both to the limited permits Conneco had in 1990, and the fact that the Co-operation Agreements were signed in contravention of the Minister’s directive (A24(i)). However, there was no attempt to link these facts to a jurisdictional objection, nor to deploy the extensive investment treaty jurisprudence on the nuanced issue of whether and to what extent non-compliance with particular forms of local regulatory requirements impact on protection under an investment treaty. The highpoint of the Czech Republic’s case – the entry in the chronology at A24(i)(c) – is aimed at showing the transient nature of the Co-operation Agreements, and the fact that they had ceased to exist by the time the Czech Republic was alleged to have become a party to the Investment Treaty. I am not persuaded that a reasonable arbitral tribunal would have understood from these passages in the context in which they appeared in a 232-page filing that it was being asked to rule on an illegal investment jurisdictional objection.

The Rejoinder included reference to the Minister’s directive to hospitals not to enter into Co-operation Agreements in the lengthy section on “the Claimants’ ‘Factual’ Case” (A48(i)) and a list of the permits the Claimants did and did not have, and what they permitted (A48(ii)). Section III referred to the instructions given in relation to the Co-operation Agreement, and the lack of evidence of permits, but this was all in support of a contention that no investment continued to exist by February 1994: A52(iv). Once again, I am not persuaded that a reasonable arbitral tribunal would have understood from these passages in the context in which they appeared in a 391-page filing that it was being asked to rule on an illegal investment jurisdictional objection.

The Claimants’ Rejoinder on Jurisdiction responded to criticism of the decision to enter into the Co-operation Agreements (A58(iii)) and on the issue of permits (A58(iv)). However, that response was made as part of the Claimants’ answer to the objection that there was no investment in existence at the relevant date, not to deal with an argument which had not been made that there was no jurisdiction because the investment was illegal.

whether the Minister’s letter made the Co-operation Agreements void under Czech law (an issue not raised before the tribunal, albeit the general flavour of the Czech Republic’s filings were that agreements did come into existence but were voluntarily terminated);

whether the Claimants were even aware of the letter (their case was that they were not) and, if not, whether this could be an illegal investment;

whether the Claimants intended to operate their business without the requisite permits (or whether or not they were obtained), or to obtain such permits as they required;

whether and to what extent this was said to be illegality in the making of an investment, or in the operation of the investment, there being suggestions in investment treaty jurisprudence that these may have different effects see e.g. ECE Projektmanagement International GmbH v The Czech Republic PCA Case no 2010-05, Final Award 19 September 2013 (Berman, Bucher and Thomas), [3.169]; Muszynianka v Slovak Republic UNCITRAL, PCA Case No 2017-08, Award 7 October 2020 (Kaufmann-Kohler, Volterra and Thomas), [301], [314]);

the degree of proximity between the illegality and the investment (Cortec Mining Kenya Limited, Cortec (Pty) Ltd and Stirling Capital Limited v Republic of Kenya ICSID Case No ARB/15/29, Award, 22 October 2018 (Binnie, Dharmananda and Stern), [366]); and

the severity of the illegality (Michael Anthony Lee-Chin v Dominican Republic Final Award, 6 October 2023 (Arroyo, Leathley and Kohen), [187]; Kim v Uzbekistan ICSID Case No ARB/13/6, Decision on Jurisdiction, 8 March 2017 (Caron, Fortier and Landau), [413], [435]; Alvarez y Marin Corporation SA and others v Republic of Panama ICSID Case No ARB/15/14, Award, 12 September 2018 (Fernádez-Armesto, Naón and Álvarez), [151]; Anthony Del Valle Ruiz and others v Kingdom of Spain PCA Case No 2019-17, Final Award, 13 March 2023 (Kaufmann-Kohler, Park and Mourre), [491]).

Knowing which points are said to be jurisdictional is relevant to the tribunal’s management of the arbitration, when determining whether to hold a bifurcated hearing.

It will also be relevant to the parties and the tribunal in knowing whether there is scope for a s.32 order (although I accept that such orders are not made in investment treaty arbitrations).

It is relevant for the parties and the tribunal in knowing whether the specific time periods for making jurisdictional objections apply and/or have been met.

If an issue is flagged as jurisdictional, the other party will itself have a right to challenge an adverse decision under s.67, and that should be clear at the time the point is taken.

“C raised the objection that the Tribunal lacked substantive jurisdiction in the arbitration proceedings. That objection included the ground that there was no protected investment. C deployed a number of arguments in respect of it, though did not argue in support of that ground that the investment was obtained by or tainted by bribery.”

pleaded a sale of Mr Stava’s interest in Diag SE in June 2011 in the factual section, which was said to give rise to a “standing” objection to any claim relating to the 2008 Award: A50(i);

raised the same objection in relation to Diag SE, which was said to prevent it bringing any claim under the Investment Treaty: A50(ii); and

raised a jurisdictional objection based on the Lawbook transaction (A52(i)-(iii)) which “in practical terms means that Mr Stava cannot assert any claim herein in respect of events that occurred after June 2011” and “for the period after June 2011, there is no basis on which the Tribunal could deem Diag Human SE to be a Swiss ‘investor’” (emphasis added).

In relation to Mr Stava, I am satisfied that the objection is limited to breaches post-dating June 2011 (which is also how the tribunal understood the objection: Award, [258]).

In relation to Diag SE, the position is much more difficult, but I have ultimately come to the conclusion that the objection is not so limited (in particular given the terms in which the tribunal summarised it at Award, [259] and dealt with it in the Award, [412]). Without needing to determine whether this could never be the case, it must be a very rare case in which the tribunal addresses as a jurisdictional objection a point correctly classified as a jurisdictional objection (which is the assumption that I am required to make at this point), and yet the court refuses to permit that same point to be run as a s.67 challenge on the basis that the same objection was not made in the arbitration.

The Czech Republic had questioned Mr Stava’s interest in the Koruna Trust in the jurisdictional section of the Counter-Memorial and maintained that as a potential jurisdictional issue in the disclosure phase.

The movement of the bearer shares into the Koruna Trust and the documenting of what was presented as the Lawbook transaction were undertaken at the same time, as part of what was presented as one process (Award, [257], [404]-[405]).

Both fall within the scope of the objection that Mr Stava had lost control of the bearer shares in June 2011, which was taken.

I have set out the tribunal’s treatment of the issue at [51]-[52]] above. I attach particular significance to the fact that the tribunal do consider and address the Koruna Trust and associated No Control Objections as jurisdictional objections which they address on the merits. Accordingly, the Koruna Trust and No Control Objections are not barred by s.73(1).

However, the scope of those objections was not advanced on any wider basis than the Lawbook transaction – they relate to Mr Stava so far as claims from June 2011 are concerned, and as to Diag SE’s status as an investor: see [123].

I will refer to the objection relating to Mr Stava’s inability to claim in respect of conduct after June 2011 as the Stava June 2011 Objection.

I will refer to the objection relating to Diag SE’s ability to claim if it was not Swiss after June 2011 as the Diag SE June 2011 Objection.

To the extent that the argument is that the moving of the shares in Diag SE into the Koruna Trust and/or the Lawbook Transaction in June 2011 had the effect that Diag SE was not a protected investor from June 2011 onwards, that falls within the three objections I have just addressed. That leaves two arguments.

First, that Mr Stava did not meet the Swiss nationality requirement even after he acquired Swiss nationality on 10 June 1991, with the result that neither he nor Diag SE met the Swiss nationality requirement of the Investment Treaty at any point.

Second, that the Claimants have not shown that Mr Stava controlled Diag SE even before June 2011.

Finally, I should note (for the avoidance of doubt) that I am not at this stage considering a further issue which the Czech Republic seek permission to raise, namely whether Mr Stava has at some point lost Swiss nationality for the purposes of the Investment Treaty (if he otherwise had it) by reason of his having homes in and holding the nationality of other countries and his connection to those countries.

Paragraph 201 of the Counter-Memorial, which does not address the nationality of the Claimants at all, but the need for them to be the investors.

Paragraphs 448-449 of the Rejoinder, which make the same point.

Paragraphs addressing the position from June 2011, which do not relate to Mr Stava’s nationality, but to the alleged sale or disposal of the investment with which I have dealt separately above. That is also the issue addressed in Section E of the Claimants’ Rejoinder on Jurisdiction.

The Indirect Investments Objection.

The Illegal Investments Objection.

The Bribery Objection.

The No Nexus Objection.

The Stava June 2011 Objection.

The Diag SE June 2011 Objection.

Whether a dispute arose prior to the entry into force of the Investment Treaty (“the Dispute Timing Objection”).

Unless otherwise agreed by the parties, the arbitral tribunal may rule on its own substantive jurisdiction, that is, as to—

“Issues of jurisdiction go to the existence or otherwise of a tribunal's power to adjudge the merits of a dispute; issues of admissibility go to whether the tribunal will exercise that power in relation to the claims submitted to it. The distinction was expressed by the International Court of Justice in Oil Platforms (Islamic Republic of Iran v United States of America) [2003] ICJ Rep 161, para 29 as follows:

… it is clear to the tribunal that, where the claim is founded upon an alleged breach of the Treaty's substantive standards, a tribunal's jurisdiction is limited to a dispute between the host state and a national or company which has acquired its protected investment before the alleged breach occurred. In other words, the Treaty must be in force and the national or company must have already made its investment when the alleged breach occurs, for the tribunal to have jurisdiction over a breach of that Treaty's substantive standards affecting that investment.

This conclusion follows from the principle of non-retroactivity of treaties, which entails that the substantive protections of the BIT apply to the state conduct that occurred after these protections became applicable to the eligible investment. Because the BIT is at the same time the instrument that creates the substantive obligation forming the basis of the claim before the tribunal and the instrument that confers jurisdiction upon the tribunal, a claimant bringing a claim based on a Treaty obligation must have owned or controlled the investment when that obligation was allegedly breached.

[A claimant] must therefore prove that [it] had already acquired [its] investment at the time of the impugned conduct.”

“I accept, in line with this extensive jurisprudence, that the offer to arbitrate contained in article 9 of the BIT should be construed as one subject to a temporal limitation by reference to the relationship between the date on which a protected investment was acquired and the date of the occurrence of the breaches of the BIT complained of. More specifically, I accept that the limitation is, as indicated by the tribunal in the Philip Morris case, as to whether the relevant investment had been acquired before the time at which the alleged breach of the BIT occurred, and that the offer to arbitrate is only in respect of disputes where that was the case.”

“The argument that the issue is jurisdictional depends on being able to read into the offer to arbitrate contained in article 9 of the BIT a restriction that it does not extend to an ‘abusive claim. I do not consider that such a restriction can be read in. On the contrary, especially considering the nature of the test and what is involved in a determination of whether a claim is abusive, to which I revert below, I consider that the offer to arbitrate includes an offer to arbitrate disputes as to whether or not a claim is abusive. This is what both contracting parties to the BIT would be expected to desire and is the result which is likely to foster the aims of the treaty, because each host state would be expected to want its investors to benefit from an independent arbitral tribunal deciding questions of whether a claim in relation to a particular investment was abusive.

I consider that the nature of a determination as to whether there is an abuse of rights reinforces the conclusion that the issue is not jurisdictional:

In order to determine whether a claim is an abuse of rights, what is required is the application of an imprecise principle of international law to the particular, and it may be strongly contested, facts of the case, including issues as to the characterisation of the purpose of the parties in taking certain steps. One would not expect the result of an exercise of that type to determine jurisdiction.

This is especially so, given that it has been recognised that “the threshold for finding an abusive initiation of an investment claim is high ... The binary question of whether a tribunal does or does not have jurisdiction would not be expected to depend on whether or not the facts are sufficiently out of the ordinary as to pass a ‘high threshold’”.

“Consent serves as the touchstone for whether an objection is jurisdictional because arbitration is a consensual dispute resolution process: jurisdiction must be founded on party consent. For this reason, arguments as to the existence, scope and validity of the arbitration agreement are invariably regarded as jurisdictional, as are questions of the claimant’s standing to bring a claim or the possibility of binding non-signatory respondents.

Conversely, admissibility relates to the ‘nature of the claim, or to particular circumstances connected with it’ … It asks whether a tribunal may decline to render a decision on the merits for reasons other than a lack of jurisdiction, and is determined by the tribunal on the basis of their discretion guided by, amongst others, principles of due administration of justice and any applicable external rules …”

I remind myself that, ultimately, the issue for me to determine is whether the Czech Republic’s challenge falls within s.30(1)(a) or (c).

Those provisions reflect a requirement that these parties must have agreed to arbitrate this dispute. Challenges which raise those same issues in the investment treaty context will be jurisdictional for s.30(1) purposes, those raising different issues will not.

As Mr Justice Butcher notes, in the investment treaty context (in which a treaty between two states on the international law plane contains an offer to non-parties – investors who are qualifying nationals of each state – to arbitrate certain disputes against the other state), the s.30(1) and (c) questions require the court to determine the questions of who the offer to arbitrate is addressed to, and the disputes to which the offer applies. As the arbitral tribunal noted in Micula, this is ultimately a question of interpretation of the treaty.

In resolving that question of interpretation, it is helpful to consider the nature of the issue, and issues which are not “hard-edged”, but involve the application of principles which have weight and permit of a range of responses rather than all or nothing effect are less likely to be jurisdictional.

Finally, in my view it is helpful to keep in mind that s.67 challenges can involve a challenge to a tribunal’s decision that it does not have jurisdiction, as well as a challenge to the decision that it has.

It is for the court to interpret the Bilateral Investment Treaty in accordance with international law, and the principles of interpretation contained in articles 31 and 32 of the Vienna Convention on the Law of Treaties 1969 (‘the Vienna Convention’), which codifies customary international law …

Article 31 sets out the primary rule of interpretation:

There shall be taken into account, together with the context: (a) any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions; (b) any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation; (c) any relevant rules of international law applicable in the relations between the parties.

A special meaning shall be given to a term if it is established that the parties so intended.”

“The rule of interpretation is textual, not teleological ... That is, ‘interpretation must be based above all upon the text of the treaty’ (per the International Court of Justice in Territorial Dispute (Libya/Chad) [1994] ICJ 6, para 41). Accordingly, the text is presumed to be the authentic expression of the intention of the parties and is not to be substituted for or overridden by the presumed intention of the parties …”

“Claimant TLGI urges that since it had the requisite nationality at the time the claim arose, and, antedate the time that the claim was submitted, it is of no consequence that the present real party in interest - the beneficiary of the claim - is an American citizen. Both as a matter of historical and current international precedent, this argument must fail. In international law parlance, there must be continuous national identity from the date of the events giving rise to the claim, which date is known as the dies a quo, through the date of the resolution of the claim, which date is known as the dies ad quem.”

First, it is alleged that the tribunal made their award of Head of Damages 1 on a basis which was not argued (giving rise to a challenge under s.33 and 68(2)(a) of the 1996 Act) or alternatively did not decide all of the issues before it in relation to Head of Damages 1 (giving rise to a challenge under s.68(2)(d) of the 1996 Act) (“the First S.68 Challenge”).

Second, it is alleged that the tribunal failed to determine whether the award of damages should be reduced to reflect “an assignment by [Conneco] of 30% of the value of its claim to its former lawyer, Mr Oršula” (giving rise to a challenge under s.68(2)(d) of the 1996 Act) (“the Second S.68 Challenge”).

Third, it is alleged that the tribunal failed to determine whether the award of damages should be reduced to reflect the percentages of ownership Mr Stava had in Diag AG and Diag AG in Conneco (giving rise to a challenge under s.68(2)(d) of the 1996 Act) (“the Third S.68 Challenge”).

Finally, there is a s.68 challenge relating to the so-called post-2011 measures (“the Fourth S.68 Challenge”).

A party to arbitral proceedings may (upon notice to the other parties and to the tribunal) apply to the court challenging an award in the proceedings on the ground of serious irregularity affecting the tribunal, the proceedings or the award. A party may lose the right to object (see section 73)) and the right to apply is subject to the restrictions in sections 70(2) and (3).

Serious irregularity means an irregularity of one or more of the following kinds which the court considers has caused or will cause substantial injustice to the applicant—

The test of serious irregularity was intended to limit intervention to “extreme” cases where it could be said that “the tribunal has gone so wrong in its conduct of the arbitration that justice calls out for it to be corrected” ([30]).

Serious irregularity has been recognised as imposing a “high threshold” or as “the hurdle” ([31]).

The focus is on due process, not the correctness of the decision reached ([32]).

Even if a case is shown to fall within one or more of the kinds of irregularities listed in section 68 this will only amount to a serious irregularity if the court considers that it “has caused or will cause substantial injustice”, which means “more than some injustice” ([33]).

There will be substantial injustice where it is established that, had the irregularity not occurred, the outcome of the arbitration might well have been different, but it is not necessary to show that the outcome would “necessarily or even probably be different” ([34]).

Some irregularities may be so serious that substantial justice is “inherently likely” or “likely in the very nature of things” to result ([35]), including where “on a central matter a finding is made on a basis which does not reflect the case which the party complaining reasonably thought he was meeting, or a finding is ambiguous, or an important issue is not addressed.”

In general, there will, however, be no substantial injustice if it can be shown that the outcome of the arbitration would have been the same regardless of the irregularity ([37]).

At [46], the Board approved the observations of Bingham J in Zermalt Holding SA v Nu-Life Upholstery Repairs Ltd [1985] 2 EGLR 14, 16 that:

An arbitrator will not have acted fairly if a party is learning for the first time in the award about findings and matters in the decision of the arbitrator which that party has not had the opportunity to address.

Dealing with assessments of damages, the Board approved Mr Justice Popplewell’s statement in Reliance Industries Ltd v Union of India [2018] 2 All ER (Comm) 1090, [32] that “it is enough if the point is ‘in play’ or ‘in the arena’ in the proceedings, even if it is not precisely articulated … [A] party will usually have had a sufficient opportunity if the ‘essential building blocks’ of the tribunal's analysis and reasoning were in play in relation to an issue, even where the argument was not articulated in the way adopted by the tribunal. Ultimately the question which arises under section 33(a), whether there has been a reasonable opportunity to present or meet a case, is one of fairness and will always be one of fact and degree which is sensitive to the specific circumstances of each individual case.”

The Board also cited with approval the observation of Judge Humphrey Lloyd QC in Weldon Plant Ltd v Commission for the New Towns [2001] 1 All ER (Comm) 264, [33] that “matters of quantification and valuation frequently lead to the tribunal taking a course which is not that put forward by either party, but which lies somewhere between. ‘Doing the best one can on the material provided’ almost inevitably produces such a result. Provided that the finding is not based on a proposition which the parties have not had an opportunity of dealing with the arbitral tribunal will not be in breach of its duties … if it makes such a finding without giving the parties a chance of dealing with it.”

“Against this background it must have been obvious to the parties, and wholly within their contemplation, that if the case reached the question of damages, then unless the Tribunal either awarded the entire amount claimed or nothing (and I cannot believe any lawyer with experience of international arbitration would have regarded either outcome as a likely scenario), then the Tribunal would have to make its own adjustments or allowances to reflect LMH's attacks on EGK's quantum case to the extent that they were regarded as having merit.”

Section 68(2)(d) can be broken down into three questions. What is an issue? Has the issue been put to the arbitrators? Have the arbitrators failed to deal with it? ([38]).

There is a distinction to be drawn between ‘issues’ on the one hand and ‘arguments’, ‘points’, ‘lines of reasoning’ or ‘steps’ in an argument, although it can be difficult to decide quite where the line demarking issues from arguments falls. However, the authorities demonstrate a consistent concern that this question is approached so as to maintain a ‘high threshold’ that has been said to be required for establishing a serious irregularity ([40(ii)]).

A matter will constitute an ‘issue’ where the whole of the applicant's claim could have depended upon how it was resolved, such that ‘fairness demanded’ that the question be dealt with ([40(iii)]).

There will be a failure to deal with an ‘issue’ where the determination of that ‘issue’ is essential to the decision reached in the award. An essential issue arises in this context where the decision cannot be justified as a particular key issue has not been decided which is critical to the result and there has not been a decision on all the issues necessary to resolve the dispute or disputes ([40(iv)]).

The issue must have been put to the tribunal as an issue and in the same terms as is complained about in the section 68(2) application ([42]). It is necessary to consider the arbitration proceedings as a whole, including the pleadings and the written and oral submissions. Having done so, in general what is required is that the tribunal's attention has been sufficiently clearly drawn to the issue as one which it is required to determine, such that it would reasonably be expected to deal with it.

If the tribunal has dealt with the issue in any way, section 68(2)(d) is inapplicable and that is the end of the enquiry; it does not matter for the purposes of section 68(2)(d) that the tribunal has dealt with it well, badly or indifferently ([43]). It matters not that the tribunal might have done things differently or expressed its conclusions on the essential issues at greater length. A failure to provide any or any sufficient reasons for the decision is not the same as failing to deal with an issue. Nor is a failure by a tribunal to set out each step by which it reach its conclusion or deal with each point made by a party a failure to deal with an issue that was put to it.

A tribunal may deal with an issue by so deciding a logically anterior point such that the other issue does not arise. If the tribunal decides all those issues put to it that were essential to be dealt with for the tribunal to come fairly to its decision on the dispute or disputes between the parties, it will have dealt with all the issues ([43]).

Whether there has been a failure by the tribunal to deal with an essential issue involves a matter of a fair, commercial and commonsense reading (as opposed to a hypercritical or excessively syntactical reading) of the award in question in the factual context of what was argued or put to the tribunal by the parties (and where appropriate the evidence) ([43]).The court can consider the pleadings and the written and oral submissions of the parties to the tribunal in this regard.

The Czech Republic did not have a fair opportunity to deal with the tribunal’s decision that the 2014 Resolution would not be recognised under international law with the result that the 2008 Award was to be recognised as binding, because this had not been either party’s case.

The Claimants had not alleged that the level of compensation quantified in the 2008 Award accurately quantified the loss flowing from the Bojar Letter but contended for a far higher loss.

The Claimants had not pleaded that, as a consequence of breaches of international law, the 2008 Award was still binding.

It is accepted that the Claimants were always asserting breaches in relation to both the Bojar Letter and the 2014 Review, and always claimed damages both in the amount of the 2008 Award (which became Head of Damage 1), and a much larger claim for loss of the Czech business (which became Head of Damage 3). I do not accept any suggestion that the former loss was only claimed for breach of Article 11 (which the tribunal did not find it necessary to decide). Both the RFA (see A5) and the Memorial (see A11) advanced a compendious claim for “all losses for all breaches”, accompanied by an expert report (A12) which similarly failed to address any issue of overlap. The alternative submission – that no loss was being claimed for the Article 4(2) breaches in relation to the 2014 Review – is wholly unrealistic.

The Counter-Memorial expressly raised the overlap between Heads of Damage 1 and 3 (A27-A28) as did the accompanying expert report (A31, A35). The Counter-Memorial also made it clear that the Czech Republic understood that the Claimants were alleging that the Article 4(2) breaches in relation to 2014 Review caused the invalidation of the 2008 Award (A25(ii)).

At that point, therefore, the Claimants were clearly pursuing claims for both Head of Damage 1 and Head of Damage 3, (which the Czech Republic rightly recognised were for overlapping losses) and, for good or ill, pursuing all of those Heads of Damage for all of the alleged breaches.

The Claimants advanced a case that the awards in the Commercial Arbitration gave rise to some species of estoppel or were entitled to deference (A38 – I shall use the term “preclusive effect” to cover both formulations). The Reply Memorial sought to walk a difficult line between contending – as it clearly did (e.g. A38, A39) – that the 2008 Award was binding, and including examples of findings said to have preclusive effect for the purposes of its quantum case (A38(ii)) while trying to claim a higher sum than the 2008 Award had awarded because “wider issues” were in play (A37).

It was alleged that the 2008 Award had preclusive effect against the Czech Republic and that the Czech Republic’s expert was seeking to re-litigate matters determined in the Commercial Arbitration (A45).

The Claimants also advanced an argument that, if the 2014 Review had the effect of annulling the 2008 Award under the Czech law, the tribunal should not acknowledge that effect: either by not allowing the Czech Republic to rely on the 2014 Resolution (A39); or because it would be “abusive” (A40(i)); or contrary to natural justice, fairness or public policy (specifically submitting that the courts of the seat would not “recognise” the 2014 Resolution) (A40(ii)).

The reply did not expressly mention Head of Damage 1 in the “Relief Sought” section (A45(vi)), which may have been the first attempt to address the overlapping claims issue. Subject to that, this was still an “all damages for all breaches” pleading. For all their protestations, the Czech Republic cannot have seriously believed that any Head of Damage 1 claim had been abandoned, and they did not bring a challenge on this basis.

Mr Shopp’s report had still failed to engage with the overlap between Heads of Damage 1 and 3, albeit there was some recognition of overlap (A47).

It mounted a series of strong attacks on the reliability of the quantum findings in the 2008 Award as one of the reasons why it should not be given preclusive effect (A48(iii), A49(ii), A54(i)). It clearly understood that the tribunal was being asked to give these findings some form of preclusive effect.

Contrary to its previous position in the Counter-Memorial (A26(ii)) it now contended that the Claimants were not alleging that the interference in the 2014 Review caused the 2014 Resolution (A48(v) and, in relation to pre-2008 Award conduct only, A53).

It correctly understood that the tribunal was being invited to reach a conclusion that the 2008 Award was valid and submitted it would have no authority to do so (A48(vi)).

The overlap between Heads of Damage 1 and 3 was noted (A54(ii)).

There was a clear overlap between Heads of Damage 1 and 3, and the Claimants could not claim both.

The obvious consequence of the Claimants’ reliance on the 2008 Award as having preclusive effect, including on issues relevant to quantum, was that it might have preclusive effect in its entirety, not just on the parts the Claimants liked, but the parts they hoped to do better than.

Not surprisingly, those issues did not escape the attention of the tribunal at the oral hearing.

The Claimants clearly argued that the 2008 Award had preclusive effect, with a non-exhaustive list being given (A87(i)-(iii)). In that context, the Claimants relied on the arbitral award in Desert Line v Republic of Yemen ICSID Case No ARB/05/17, Award of 6 February 2008 (Tercier, Paulsson and El-Kosheri). However, they did not (as they do now) seek to rely on that award to support a proposition that events nullifying a commercial arbitration award on the domestic plane can be ignored on the international law plane. That particular refinement reflects further and better thoughts in this litigation.

The Claimants accepted that their heads of loss overlapped (A61(ii)).

It was clear that at least one member of the tribunal, Professor Knieper, had identified an award of the amount of the 2008 Award as a potential “cut through” (A61(iii)).

The Czech Republic put forward its case as to why the quantum findings in the 2008 Award should not have preclusive effect (A63(v)). I would note that the extensive criticism made by the Czech Republic in the investment treaty arbitration of the quantum findings in the 2008 Award provide a complete answer to the Czech Republic’s submission that it was deprived of the opportunity to show “just how untenable” the 2008 Award quantum figure was. It is clear that repeated submissions were made to that effect.

The obvious consequence of the Claimants’ preclusion argument was finally articulated by the Czech Republic– that they would be stuck with the findings in the 2008 Award as a ceiling, as well as a floor (A63(vi)).

That provoked what everyone would have understood was a highly significant intervention from one of the arbitrators, Mr Price – if the tribunal accepted preclusion, should it apply to both sides. Understandably, given the obvious significance of that question, the Czech Republic preferred to consider it overnight before answering, in effect, “yes”: A63(vii). That, of necessity, meant that if the tribunal accepted the Claimants’ preclusion argument in relation the 2008 Award, they would get the amount of loss assessed in it, no more and no less. The Claimants said that they would revert on a question raising this issue but never did (A63(viii)).

The complete overlap between the loss claimed was stressed by the Czech Republic (A63(ix)).

It was absolutely clear that the Claimants were arguing that the effect of the interference in the 2014 Review was that the Respondent could not rely on the 2014 Review but the Claimants could rely on the 2008 Award: (see A67(i)-(v)) and they accepted a “substantial overlap” between Heads of Damage 1 and 3: A69.

It was absolutely clear that the Czech Republic recognised the “double-edged” nature (from the Claimants’ perspective) of the preclusion arguments in relation to the 2008 Award, and deployed them, in particular in relation to the cut-off date which was one of the principal differences between Heads 1 and 3: A70(ii) and A73.

It argued for a causation requirement, the Claimants having to show the Article 4(2) breaches in relation to the 2014 Review affected its outcome: A70(iii). At the same time, it sought to argue the (inconsistent) position that it was “simply not the role of this Tribunal to speculate how the Review Proceeding would have unfolded, absent the alleged flaws in the constitution of the Review Tribunal.” However, the Czech Republic clearly understood the Claimants were arguing for a response by which the effect of the Article 4(2) breaches would be to entitle the tribunal to “ignore” or “disregard” the 2014 Review: A72; A74(ii).

The Czech Republic did not suggest that the Claimants’ case as to the consequences of any Article 4.2 breach in the 2014 Review was not open (and as noted at [172(iii)] above, they had anticipated it in their first PHB).

The Czech Republic stressed the “double-edged” nature of the Claimants’ preclusion arguments again (A70(ii)).

The Czech Republic reiterated its argument that the Claimants had to prove the causal consequences of any Article 4.2 breach in the 2014 Review (A70(iii)).

The tribunal was clearly being asked by the Claimants to ignore, or not give effect to, the 2014 Resolution to the extent that it had the effect of invalidating the 2008 Award under Czech law and the Czech Republic understood this, had the opportunity to challenge the argument and did so.

The tribunal clearly rejected the Czech Republic’s (unattractive, intuitively unpersuasive and, it must be said, wholly underdeveloped) argument that it was for the Claimants to prove what the outcome of the 2014 Review would have been but for the Czech Republic’s Article 4(2) breaches. In any event, the tribunal found “the entire review proceedings” (i.e from the commencement to the 2014 Resolution) were riddled with due process violations ([754], [795], [10279) and that the Czech Republic’s interference was “successful” ([828]), and expressly contrasted the interference with the 2008 Award which “did not affect the actual outcome” with the interference with the 2014 Review ([1027]-[1028]).

Both parties clearly understood that there was a very real possibility that the Claimants’ preclusion argument in relation to the 2008 Award would limit the Claimants’ recovery for the Bojar Letter breach to the amount of the 2008 Award, and while the Claimants never faced up expressly to that fact, they had no answer to it. The Respondents pointed out the logical consequence of the Claimants’ own argument on more than one occasion.

The Claimants were clearly asking the tribunal to treat the 2008 Award as still binding notwithstanding the effect of the 2014 Resolution under Czech law, and the Czech Republic understood this and availed themselves of the opportunity to make submissions on this issue.

The answer to the first question was that there was no reason not to defer to the assessment of that very loss in the 2008 Award: see [1026], [1028]- [1029] and [1037].

The answer to the second question was that this issue did not arise because the tribunal found that the effect of the Article 4(2) breaches which “riddled” the entire 2014 Review was that the 2014 Resolution should not be recognised as having effect, which was itself sufficient compensation for the breach [1030].

Nor can I accept, if relevant, the suggestion that the two findings are “linked and cannot be separated”, such that if (for example), the tribunal had decided not to defer to the quantification of the Bojar Letter loss in the 2008 Award, it necessarily follows that they would not have held that the value of the 2008 Award was the appropriate compensation for the 2014 Review breach, having held that the Arbitration Agreement was itself an investment (see [50(vi)]).

In dealing with the Czech Republic’s many arguments that the 2014 Resolution provided an answer to the Claimants’ claims relating to the 2008 Award, the tribunal accepted that they were entitled to disregard (or “not recognise”) the invalidating effect of the 2014 Resolution.

The arbitral tribunal made no order purporting to invalidate the 2014 Resolution on the domestic law plane (where it retains its status with whatever efficacy it had), which is why there is no reference to any “invalidation” in the dispositif. That itself answers Mr Bastin KC’s submission that “the effects of its dispositif go well beyond the international legal system.”

The contrary conclusion is not supported by the tribunal’s decision to require undertakings that the Claimants would not seek to enforce the 2008 Award under the New York Convention. That was necessary to avoid a risk of “double recovery” if it was able to persuade some enforcement jurisdiction that the 2014 Resolution did not have the consequence under Czech law for which the Czech Republic contended. Those undertakings did not “deprive [the Czech Republic] of the ability to continue to resist the 2008 award” in enforcement proceedings, as Mr Bastin KC suggested, but obviated its need to deploy what is a purely passive defensive response to an enforcement attempt. This amounts to a suggestion that a party has been deprived of the right to defend themselves if attacked by an order preventing the attack. It is a particularly wicked dog who deprives you of the opportunity to defend yourself by not attacking you.

“As a matter of comity, efficiency, good order and promotion of justice, it makes sense, we believe, in some instances for investment tribunals to defer to a local adjudicatory ruling, but it kind of depends on the nature and source of the ruling. So, for example, a well-reasoned and well-substantiated supreme court or constitutional court decision, with a well-developed lower court record, for example, even though not binding on an international tribunal, is at least entitled to some deference or consideration by the international tribunal. But a domestic decision, whether judicial or arbitral, that is clearly deficient in some fashion -- due to lack of due process or corruption, or whatever other reason -- is entitled to no deference at all, since it would not promote the goal of promoting justice or of reaching a fair result to adopt the findings of such a decision.”

On the arbitral tribunal’s findings, the 2014 Resolution was “clearly deficient in some fashion – due to lack of due process [and] corruption” and the tribunal was acting within its powers in deciding to give it no effect for those reasons.

The tribunal found that various investments had been established, which attested to “the reality of Conneco’s business in Czechoslovakia, and to Claimants’ investments in Conneco” (Award, [384]). For the purposes of this challenge, it is to be assumed that those findings cannot be challenged.

It is accepted by the Czech Republic (in the sense that these are not the subject of any similar s.67 challenge) that the breaches of Article 4(2) of the Investment Treaty found by the tribunal in relation to those investments fell within the tribunal’s jurisdiction.

In these circumstances, the approach taken by the tribunal to the quantification of the breaches found in respect of the investments made must fall within the tribunal’s jurisdiction, and a dispute about the amount of such compensation must be a “dispute with respect to” such investments.

I am satisfied that the Czech Republic’s contrary argument is an attempt to dress up what is, in effect, an attempt to challenge the tribunal’s findings on the merits as a jurisdictional challenge, which, if it were to be accepted, would largely obscure the very different legal distinctions between those two types of challenge. Indeed, I find it difficult to see how a finding as to the amount of compensatory damages for breaches of legal obligations over which an arbitral tribunal have jurisdiction can ever be subject to a jurisdictional challenge.

deferring to findings made in the 2008 Award as to the amount of loss for essentially the same breach; and

awarding compensation for breaches of Article 4(2) which “riddled” the 2014 Review by disregarding the setting aside of the 2008 Award by the 2014 Review as a matter of Czech law.

any award of Head of Damage 3 to Diag SE should be reduced by 30%; and

any award of Head of Damage 1 to Diag SE should be reduced by 30%.

At [466], when summarising the Czech Republic’s case as to what the 2014 Resolution decided.

At [959], when noting the Claimants’ case that the assignment was invalid “so there is no reason to reduce Claimants’ claim by 30% (as Mr Laputa suggests)”.

At [1006], when noting the Czech Republic’s case that there were no documents confirming the alleged invalidity of the assignment.

Correction of award or additional award.

The parties are free to agree on the powers of the tribunal to correct an award or make an additional award.

If or to the extent there is no such agreement, the following provisions apply.

The tribunal may on its own initiative or on the application of a party—

Any application for the exercise of those powers must be made within 28 days of the date of the award or such longer period as the parties may agree.”

Where parties have agreed that disputes between them in respect of a defined legal relationship, whether contractual or not, shall be referred to arbitration under the UNCITRAL Arbitration Rules, then such disputes shall be settled in accordance with these Rules subject to such modification as the parties may agree.

…

These Rules shall govern the arbitration except that where any of these Rules is in conflict with a provision of the law applicable to the arbitration from which the parties cannot derogate, that provision shall prevail.”

Within 30 days after the receipt of the award, a party, with notice to the other parties, may request that the arbitral tribunal give an interpretation of the award.

The interpretation shall be given in writing within 45 days after the receipt of the request. The interpretation shall form part of the award…”

First, that it was open to the Czech Republic to seek an interpretation of the Award for the purposes of ascertaining whether the tribunal had dealt with the assignment issue.

Second, if such a request cannot be made under Article 37, such a request could have been made under s.57.

The failure to follow one or other of these courses is said to preclude the Second S.68(2) Challenge.

“Interpretation is not a mechanism for revisiting an issue … that the tribunal should have decided but did not.”

“There may be situations where a statement needs to be clarified, or it is uncertain whether some specific issues have been dealt with in the award or reserved for future determination.

Interpretation can be used whenever the final award does not contain the minimum information necessary to grasp the tribunal’s line of reasoning.”

Once again, this commentary presupposes a genuine lack of clarity or “uncertainty”, or an inability to “grasp” reasoning. I would note that the scope for abusive requests for interpretation under the UNCITRAL Model Law led to a requirement that both parties consent before it can be exercised (see the 329th meeting of the UNCIRAL Working Group on the UNCITRAL Model Law, on 18 June 1985 for discussion of this issue).

At [14], Mr Justice Bryan held that “the present case would appear, at first blush, to be a classic example of a case where the claimant should have applied to the Tribunal under section 57 for clarification or the removal of any ambiguity in the case of arguments 1, 2 and 4.” It is not possible to determine from the judgment what the award did or did not say in relation to the challenged matters.

The Judge agreed with the decision of Mr Justice Robin Knowles in Xstrata that "clarifying or removing ambiguity" would fall within the words "any errors of a similar nature" in Article 27.1.

He also held that even if that was not right, “it does not follow that Article 27 is an agreement on the part of the Tribunal that ousts or excludes the power under section 57(3)” and that “a clearer agreement would be needed to exclude or oust the power under section 57(3) to clarify or remove an ambiguity. Put another way, Article 27 is contractually permissive in terms of the Tribunal's powers but it is not to be construed as thereby excluding the powers under section 57(3).”

It clearly must be possible to exclude s.57, which is not a mandatory provision of the 1996 Act, and which expressly recognises in s.57(1) the parties’ right to agree other arrangements.

While the words “to the extent that” in s.57 make it clear that simply addressing one of the topics covered by s.57 will not necessarily preclude the default rules in relation to another applying (e.g. as to the time within which such an application may be made), where the parties’ rules appear to make comprehensive provision for post-Award adjustments by the tribunal, and do so in narrower terms than s.57, I am not persuaded that the provisions of s.57 can apply alongside those powers.

The word “and” in s.70(2) does not assist – there may be a right of appeal within s.70(2)(a) (e.g. as with certain forms of commodity arbitrations) alongside recourse under s.57.

In this case, the UNCITRAL Rules are intended to be a comprehensive set of arbitration rules which will ensure a uniformity of procedure for those who arbitrate on them, whatever the seat of the arbitration. That much is clear from Article 1(3) (see [197] above), which only allows for mandatory laws of the seat to supplement the rules. Section 57 does not satisfy this requirement.

Further, the care taken by the parties and the tribunal to identify the specific UNCITRAL Rules which would apply, with amendments as necessary, itself tells strongly against the suggestion that the rules are simply permissive, existing alongside any “default” non-mandatory rules of the seat.

In Torch Offshore LLC v Cable Shipping Inc [2004] EWHC 787 (Comm), the applicant had brought claims that it had entered into a charterparty in reliance on two misrepresentations. The arbitrator found that both misrepresentations had been made, albeit innocently. The claim for rescission and damages failed, but a claim for breach of contract which had the same subject as one of the misrepresentations succeeded. There was a s.68(2)(d) challenge on the basis that the arbitrator had failed to address the issue of inducement in relation to one of the misrepresentations, albeit the arbitrator had rejected the claim for rescission.

At [25] and [27]-[28], Mr Justice Cooke held:

In that case, far from it being unclear whether the arbitrator had addressed the issue of inducement in relation to the second arbitration, Mr Justice Cooke found that it was clear he had: [44] and [46]. Torch was a case in which the claimant was seeking to bring appeals on points of law on both inducement and loss of the right to rescind, and if it was not clear on what ground or grounds the arbitrator had refused rescission in respect of the second misrepresentation, it would not be possible to determine the practical effect of each s.69 application on its own (cf. [64]). To that extent, the claimant was seeking to raise a specific kind of ambiguity: ambiguity as to the precise basis on which it had lost.

In Buyuk Camlica Shipping Trading and Industry Co Inc v Progress Bulk Carriers Limited [2010] EWHC 442 (Comm), [42], Gavin Kealey QC (as a Deputy High Court judge) rejected the argument that s.57(3)(a) applied to an alleged failure to deal with an issue (whether a breach had been waived) where there was “no ambiguity in the Reasons (and thus in the Awards) that requires clarification”. He distinguished the case before him from “cases where there is an element of real doubt as to whether or not an issue has been deal with”, where that might be scope for s.57(3)(a) to apply ([43]). He suggested that Torch was such a case, in which “a tribunal has come to a decision but there is some inadequacy or absence of analysis that leaves it unclear whether, and if so how, it has dealt with certain issues in order to arrive at its decision.”

In Pulis v Crystal Palace [2016] EWHC 2999 (Comm), a section 68 challenge was brought on the basis that the tribunal had failed to consider evidence as to the date of a key meeting, and failed to address arguments as to the tax consequences of ordering damages in the amount of a payment made to the applicant on the basis of fraudulent misrepresentations he had made. Sir Michael Burton rejected the argument that the failure to seek relief under s.57(3)(a) barred the s.68 challenge, holding at [6]:

Finally, in Gracie v Rose [2019] EWHC 1176 (Ch), His Honour Judge Russen KC reviewed the authorities on this issue. He referred to Mr Justice Toulson’s observation in Ascot Commodities NV v Olam International Ltd [2002] CLC 277, [29] that “where there is a finding which addresses a central issue, but leaves its reasoning unclear, the appropriate course is to ask for further reasons, But if an award as delivered fails to contain a finding on a central issue, it would be odd to ask for reasons for something which is not there.” Judge Russen KC observed at [37] that “if there are no words to be corrected, removed or clarified – because [of] the complete absence of them on an essential issue means there has been a ‘failure’ in the section 68(2)(d) sense – then an application under section 57(3)(a) aimed at ‘correcting’ the omission on that issue would risk blurring the distinction between the exercise of taking up clerical points and that of repeating earlier substantive submissions as if the [award] had been remitted for further consideration under section 68.”

In the arbitration (which is what matters), it articulated its argument as to what had been assigned in inconsistent terms: sometimes as the assignment of 30% of the claim (which might have provided a basis for awarding it only 70% of the loss in the Commercial Arbitration) and sometimes an interest in the claims or of the value of the award (which would not): compare A14(vii); A29, A32; A48(iv); A54(v) and A64(ii) among other references.

Those submissions may reflect the lack of clarity in the document relied upon as the purported assignment, which offers something for both interpretations (albeit, clause 2 appears to contemplate Diag SE pursuing the claim, meeting the costs of doing so and charging Mr Oršula 30% of the expenses, something which suggests that it is the recovery rather than the cause of action which is assigned). I accept, however, that this is not a point which can or should be resolved in the context of the “substantial prejudice” issue.

To the extent that Mr Oršula, rather than Diag SE, was said to have title to bring some of the claim against the Czech Republic in the Commercial Arbitration, this would have provided a pro tanto defence in the Commercial Arbitration. However, the Commercial Arbitration tribunal rejected any attempt by Mr Oršula to intervene in the arbitration or to be awarded some amount, held that he had not “presented any relevant evidence that in this case, there is no legitimisation of [Diag SE] regarding the asserted claim, or part thereof” and it awarded the full amount of the 2008 Award in Diag SE’s favour, which 2008 Award the investment treaty tribunal held was entitled to recognition on the international law plane and the terms of which were held to bind the parties.

To the extent that the assignment was of the value of the Commercial Award, there has been no recovery under the Commercial Award and the Claimants have now undertaken not to enforce it. To the extent that the assignment extends to the value of any Investment Treaty award of the tribunal, this would not provide a basis for reducing the amount of the Czech Republic’s liability (but would give Mr Oršula a claim against Diag SE). A party may often have to pay over some of the benefit of an award to a third party – most commonly a litigation funder. The suggestion that this provides a basis for reducing the award is difficult to understand.

There was a finding that Mr Stava owned 100% of Conneco and/or controlled 100% of its bearer shares from 6 April 2001 onwards ([401]-[403]), there having been no disposal through the Lawbook transaction ([407]-[408], [412]).

“The tribunal awarded the amount of the 2008 Award as compensation for the damage suffered as a result of the Respondent’s interference with the review process” ([1030]), which took place during the period of Mr Stava’s 100% ownership.

It follows, therefore that at the date of breach as found by the tribunal, Mr Stava was the 100% owner of Conneco, and the 66.7%, 80% and 53.4% issues simply do not arise in relation to that breach.

The Tribunal did consider and determine this argument, because they rejected the Czech Republic’s case as to the effect of the June 2011 transactions (Award, [410]).

I have held that it is not open to the Czech Republic to re-open the post-June 2011 issue so far as Mr Stava is concerned, because the point is not jurisdictional ([145]-[146]).

If, however , a jurisdictional challenge to Mr Stava’s right to claim post-June 2011 loss did exist and was upheld, the Czech Republic could seek to set aside the Award to the extent of any such award (under s.67(30(c)).

Save for (i) the No Investments Objection so far as it concerns the existence and extent of the Novo Nordisk co-operation agreement, the issue of whether the Arbitration Agreement constitutes an investment and the existence and extent of the Co-operation Agreements; (ii) the Koruna Trust, Lawbook and No Control Objections to the extent set out at [121] (subject to (ii) below) and the Dispute Timing Objection, the s.67 challenges brought by the Czech Republic are not open to them.

The Koruna Trust, Lawbook and No Control Objections to the extent set out at [121] are only open to the Czech Republic against Diag SE, and not Mr Stava.

The First S.68(2) Challenge is dismissed.

The Second S.68(2) Challenge is upheld.

The position on the Third S.68(2) Challenge is reserved.

The Fourth S.68(2) Challenge is dismissed.