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Home > Legal & Regulatory docs.

Nord Stream 2 AG v The European Union - PCA Case No 2020-07 - Procedural Order No 4 - Decision on Request for Preliminary Phase on Jurisdiction - 31 December 2020

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Country
  • Switzerland
Year

2020

Summary

...

IV. TRIBUNAL'S ANALYSIS

45. At the outset, the Tribunal confirms that, at this stage of the proceedings, its task is to determine whether to bifurcate the proceedings as between jurisdiction and liability, and not to decide on the merits of the Respondent's preliminary objections. Nevertheless, in making this determination, the Tribunal must consider the substance of those objections in order to decide whether their early determination is likely to be fair and efficient. In this vein, the Tribunal notes that, while Article 21(4) of the UNCITRAL Rules sets forth a presumption in favour of the bifurcation of jurisdictional objections, this presumption is seldom decisive. The Tribunal further considers that the Glamis Gold criteria constitute relevant criteria for the assessment of whether bifurcation would be fair and efficient, but these criteria do not constitute a rigid test and are not the only criteria that may be considered by the Tribunal.

46. With the foregoing in mind, the Tribunal has carefully considered each of the objections, starting with the Respondent's fork-in-the-road argument on whether the Claimant has already selected a different forum for its dispute.

A. THE FORK-IN-THE-ROAD OBJECTION

47. The Respondent contends that, under Article 26(3)(b)(i) of the ECT, it has reserved its consent "to submit disputes to international arbitration under ECT only to those disputes that have not been submitted to the courts of the European Union",116 and that this case is "before no less than three adjudication bodies."117 In its submissions, the Respondent rejects the "triple identity" test and instead supports a "fundamental basis" test which goes to whether the disputes share a "fundamental cause" and seek the same outcomes.

48. Under the fork-in-the-road clause in Article 26 of the ECT, the Tribunal is required to analyse whether the "dispute" subject to this arbitration has been already submitted to the European courts. The Tribunal is not convinced that the analysis required to rule on the Respondent's fork- in-the-road objection will be as straightforward as the Respondent argues. Irrespective of the proper test to be applied, the Tribunal does not believe that it could decide the issue at hand by merely comparing the pleas in the proceedings before the General Court and the CJEU with the claims made in this arbitration, without further analysis. Absent such analysis, the Tribunal apprehends the danger that it might apply the fork-in-the road clause in a manner too superficial to give proper effect to the clause. The analysis may also - to a certain extent at least - become intertwined with aspects of the merits. Moreover, the Tribunal's ruling may have significant implications as to the jurisdiction of arbitral tribunals in future investor-State disputes involving the EU. Consequently, the Tribunal favours a cautious approach in which it can take account of the complete picture of the claims being advanced in this case alongside the arguments brought and remedies sought before the EU courts. The Tribunal would not otherwise be confident that it could decide the objection and realize any efficiency through bifurcation.

B. THE RATIONAE PERSONAE OBJECTION

49. The Respondent argues that the "EU directives challenged by the Claimant impose no legal obligation on the Claimant."118 According to the Respondent, to rule on this objection, the Tribunal would not have to decide whether the alleged "practical effects" of the Amending Directive have been proven, but only whether those alleged "practical effects", even if they were substantiated by the Claimant, would result necessarily from the Amending Directive or rather from measures of the Member States within their margin of discretion.119 The Respondent elaborates:

The Claimant's legal situation has been left unmodified by the Amending Directive, which has no "direct effect" regarding the Claimant. Consequently, the Amending Directive cannot, as such, breach the ECT. Rather, the alleged breaches of the ECT could only result from the measures which the Member States may or may not take in order to transpose and implement the Gas Directive, as modified by the Amending Directive. As explained below, however, the Member States have a broad margin of discretion when transposing and implementing the relevant provisions of the challenged EU directives. This excludes the international responsibility of the European Union for any alleged breaches of the ECT that result from measures of the Member States within that broad margin of discretion.120

50. Even if the Tribunal were persuaded to adopt the Respondent's distinction between deciding on the alleged practical effects of the Amending Directive and the attribution of such practical effects to the enactment by the EU of the Amending Directive itself or to its implementation by EU Member States within their margin of discretion, the Tribunal will, in order to grapple with this objection, need to understand fully the role of the Amending Directive and its relationship with the specific claims brought by the Claimant. While this jurisdictional objection presents a discrete issue different from the issues raised on the merits, the same or similar arguments and facts are likely to be relevant for both the procedural and the substantive determination. Therefore, it is the Tribunal's view that this objection is closely linked to the merits of the dispute, and not apt for bifurcation.

C. THE SCOPE OF THE NEXT PHASE

51. The Tribunal wishes to make clear that in reaching this view on bifurcation, it has reached no conclusions as to the merits of the preliminary objections, both of which will have to be addressed in the next phase.

52. The Parties diverge in their proposals as to the scope of the next phase of the proceedings. In particular, the Respondent objects to the inclusion of the Claimant's request for injunctive relief along with the merits within the scope of the next phase. The Claimant, for its part, asserts that this objection is untimely and should have been raised at the time of the submission of the Claimant's Memorial.

53. The Tribunal notes that the Respondent's request to bifurcate injunctive relief into a final phase on remedies was made in its letter dated 20 March 2020, and that the Tribunal has not yet ruled on this question in any of its prior orders. Nevertheless, for the same reasons that the Tribunal decides not to bifurcate jurisdiction from merits, the Tribunal considers it appropriate to include the Claimant's request for injunctive relief along with the merits withidn the scope of the next phase of these proceedings. The Tribunal thus orders the bifurcation only of a final phase on damages, if any.

V. DECISION

54. For these reasons, the Tribunal rejects the Respondent's request for bifurcation and establishes the procedural calendar annexed to this order.

So ordered by the Tribunal.

Professor Ricardo Ramírez Hernández
(Presiding Arbitrator)
On behalf of the Tribunal

Footnotes omitted

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