Five investors, four of whom were based in different EU countries and the fifth in Switzerland, commenced arbitration against Poland on the basis of the Energy Charter Treaty. The treaty aims to promote cooperation in the energy sector by, among other things, protecting investors. It also contains provisions on dispute resolution by arbitration. The investors claimed damages on the ground that their investments had become worthless as a result of Poland's actions. The arbitral tribunal denied the claims for damages.
According to the case-law of the Court of Justice of the European Union, the provisions of the Energy Charter Treaty on arbitration do not apply to disputes between one Member State and an investor from another Member State. It follows from the Supreme Court's previous judgment "The Investment Agreement", case NJA 2022 p. 965, that an arbitral award based on such an arbitration clause is invalid on the basis of procedural public policy pursuant to Section 33, first paragraph (2) of the Swedish Arbitration Act.
Against this background, the court of appeal declared the award invalid in its entirety.
The Supreme Court states that an arbitral award should not be considered invalid to a greater extent than is necessary. An assessment must be made of whether the ground for invalidity affects the award in its entirety or whether there are parts that are not affected. If a certain part of the arbitral award is not affected, the court must assess whether that part can be separated from the rest of the award. This assessment must be made taking into account, among other things, the party's possibility of obtaining a re-examination of the part that is to be declared invalid. In this assessment, the general Swedish principles of res judicata should as a rule be applied.
In this case, the Supreme Court concludes that the ground for invalidity does not concern the investor who is based in Switzerland and who is therefore not from an EU country and that the award in the part that concerns him can be separated from the rest of the case. The Supreme Court therefore modifies the judgment of the court of appeal and declares that the arbitral award is not invalid in so far as it relates to the relationship between Poland and that investor.
Case name
"Blue Gas Holding"
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