Nord Stream 2 AG v The European Union - PCA Case No 2020-07 - Claimant's Response to the EUs Request for Bifurcation - 16 October 2020
AN AD HOC ARBITRATION UNDER THE RULES OF ARBITRATION OF THE UNITED
NATIONS COMMISSION ON INTERNATIONAL TRADE LAW, 1976
PURSUANT TO THE ENERGY CHARTER TREATY
PCA CASE NO. 2020-07
NORD STREAM 2 AG (Claimant) - and - (Respondent)
THE EUROPEAN UNION
CLAIMANT'S RESPONSE TO THE EU'S REQUEST FOR A PRELIMINARY PHASE ON JURISDICTION AND ADMISSIBILITY
Contents of document:
II. SUMMARY OF CLAIMANT'S SUBMISSIONS WITH RESPECT TO THE EU'S REQUEST FOR BIFURCATION
III. KEY LEGAL PRINCIPLES WITH RESPECT TO THE EXERCISE OF THE TRIBUNAL'S DISCRETION TO RULE ON A PLEA CONCERNING ITS JURISDICTION AS A PRELIMINARY QUESTION
III.1 The Tribunal must exercise its discretion notwithstanding any `presumption' under the 1976 UNCITRAL Rules
III.2 The Tribunal's discretion should be guided by fairness and procedural efficiency
III.3 In any event, the Glamis Gold criteria for bifurcation are not satisfied in this case
IV. THE EU'S FORK-IN-THE-ROAD OBJECTION SHOULD NOT BE BIFURCATED
IV.1 Determination of the fork-in-the-road argument requires a full consideration of the nature of the CJEU and ECT claims, which is not possible at this stage
IV.2 The fork-in-the-road objection is not, even on a prima facie basis, a serious or substantial objection such as to justify bifurcation
IV.2.i The "fundamental basis" test is an outlier, and even on that basis the objection is not serious or substantial
IV.2.ii The "triple identity" test is also clearly not met
V. THE EU'S JURISDICTION RATIONE PERSONAE OBJECTION SHOULD NOT BE BIFURCATED
V.1 Intrinsic connection with the merits of the case
V.2 The EU's ratione personae objection is inherently flawed
V.3 The potential significance of the Tribunal's decision on jurisdiction ratione personae further justifies refusing bifurcation
VI. BIFURCATION OF ANY ONE OF THE EU'S TWO JURISDICTIONAL DEFENCES WOULD NOT BE FAIR OR PROCEDURALLY EFFICIENT
VI.2 Procedural efficiency
VII. BIFURCATION RISKS NSP2AG BEING UNABLE TO BRING CLAIMS FOR DENIAL OF JUSTICE UNDER ARTICLE 10(1) AND / OR BREACH OF ARTICLE 10(12) IN THIS ARBITRATION
1. This Response to the EU's Request for a Preliminary Phase on Jurisdiction and Admissibility (the "Response") is filed by the Claimant, Nord Stream 2 AG ("NSP2AG"). This Response is being submitted pursuant to the procedural timetable set out in Procedural Order No. 1 dated 24 April 2020. It is accompanied by one factual exhibit (Exhibit C-183) and 14 legal exhibits (Exhibit CLA-17A and Exhibits CLA-157 to CLA-169).
2. Factual and legal exhibits are referred to using the same numbering as in the Claimant's Notice and the Claimant's Memorial, in the form C-* for factual exhibits, with an additional factual exhibit at C-183, and in the form CLA-* for legal exhibits, with additional legal exhibits starting at CLA-157. Unless otherwise defined, the capitalised terms used herein bear the meaning defined in the Notice and the Memorial.
3. This Response contains six sections in addition to this Introduction:
i. Section II provides a summary of NSP2AG's arguments in this Response, and of why the Tribunal should reject the EU's request for a preliminary phase on jurisdiction and admissibility.
ii. Section III describes the key legal principles derived from treaty jurisprudence concerning the exercise by the Tribunal of its discretion to rule on jurisdictional objections as a preliminary question.
iii. Section IV explains why it would neither be fair nor procedurally efficient for the Tribunal to rule as a preliminary question on the Respondent's argument that NSP2AG is prevented from bringing the dispute before the Tribunal due to the fork- in-the-road clause in the ECT.
iv. Section V explains why it would neither be fair nor procedurally efficient for the Tribunal to rule as a preliminary question on the Respondent's argument that the Tribunal lacks jurisdiction ratione personae.
v. Section VI sets out why bifurcation of any one of the EU's two jurisdictional arguments would neither be fair (due to the inherent contradictions in the EU's two jurisdictional objections) nor procedurally efficient.
vi. Section VII explains why bifurcation may not lead to procedural economy.
4. This Response addresses the merits of the EU's jurisdictional objections in the context of the Claimant's submissions on the EU's request for bifurcation only. The Claimant reserves its right to address in full the merits of the EU's jurisdictional objections at a later stage of these proceedings.
II. SUMMARY OF CLAIMANT'S SUBMISSIONS WITH RESPECT TO THE EU'S REQUEST FOR BIFURCATION
5. The EU's request for a preliminary phase on jurisdiction and admissibility continues its bid to defer, and ultimately to avoid, any adjudication of its unlawful actions in connection with the Amending Directive, and any articulation of its interpretation of the legislative instrument it adopted and which is at the heart of this claim.
6. The EU brings two jurisdictional objections: fork-in-the-road and a ratione personae argument, the latter of which it had not previously raised.
7. The overarching principle to be applied to the question of whether the EU's jurisdictional objections should be determined as a preliminary question is one of fairness and procedural efficiency, having regard to the totality of the circumstances.1 Based on this principle, taking into account the inextricable link between the EU's jurisdictional arguments and the wider merits of the dispute, as well as the inherently weak nature of the EU's jurisdictional arguments, bifurcation cannot be justified.
8. In summary:
i. It would be unfair and procedurally inefficient to bifurcate the EU's jurisdictional objections because:
(a) Determination of the fork-in-the-road objection requires a full consideration of the nature of the ECT claims, including the factual basis of such claims, and is therefore intertwined with the merits.
Indeed, NSP2AG cannot properly address, and the Tribunal cannot fairly rule upon, this objection as not all potentially relevant information is available, particularly as the EU has not filed its Statement of Defence.
(b) The EU's objection that the Tribunal lacks jurisdiction ratione personae is also intertwined with the merits of NSP2AG's claims in the ECT arbitration because it raises precisely the substantive questions that these proceedings seek to answer: (i) whether the EU has breached the ECT; and (ii) whether the EU's breaches have caused loss to NSP2AG.
(c) Both of the EU's jurisdiction arguments are unmeritorious and, in any event, insufficiently substantial to justify bifurcation.
ii. In its objection to jurisdiction ratione personae, the EU seeks to rely on the peculiarities of its own legal order to avoid the exercise by the Tribunal of its jurisdiction, arguing that any breach of the ECT and damage therefrom is attributable to Germany. The EU's objection thus raises the important and novel question of its liability as a Regional Economic Integrated Organisation ("REIO") for, and in connection with, its own legislative acts, and the liability of its Member States. This gives further reason why the EU's objection to jurisdiction ratione personae should be determined with the merits with which it is intrinsically linked.
iii. Bifurcation of any one of the EU's two jurisdictional arguments would not be fair due, among other reasons, to the fundamental inconsistencies between them. The EU argues in its jurisdiction ratione personae objection that it is not the proper respondent to NSP2AG's claims and, at the same time, its fork-in-the-road objection assumes that it is the proper respondent to the ECT proceedings. Further, the EU's fork-in-the-road and jurisdiction ratione personae objections rely on fundamentally different and irreconcilable characterisations of NSP2AG's case.
iv. Bifurcation of any one of the EU's two jurisdictional arguments would not be procedurally efficient. Moreover, any decision on bifurcation that gave rise to a decision on the merits of the EU's fork-in-the-road claim before the merits of the EU's objection to jurisdiction ratione personae would be illogical because the fork-in-the- road objection is premised on the EU being the proper respondent to NSP2AG's claim.
v. Bifurcation of the EU's jurisdictional arguments may not lead to disposal of the case and may preclude the Claimant from bringing claims for denial of justice under Article 10(1) of the ECT and / or breach of Article 10(12) of the ECT in this arbitration.
9. The EU's request for a preliminary phase on jurisdiction and admissibility should therefore be rejected.
73. For all of the above reasons, the Parties having addressed the question of bifurcation in full in their submissions, the Claimant invites the Tribunal to rule upon, and dismiss, the EU's request for bifurcation. The Claimant submits that the question of the costs of the application should be reserved.
Submitted for and on behalf of
NORD STREAM 2 AG
Professor Dr Kaj Hobér
Herbert Smith Freehills LLP
16 October 2020