Revision of arbitration laws in Russia, Sweden, and Switzerland

In September 2016, the newly-enacted Russian arbitration regulation1 took effect introducing a number of amendments to the regulation of arbitrations in Russia, including (i) mandatory licensing of arbitral institutions; (ii) clarification of the scope of non-arbitrable disputes; (iii) regulation of arbitrators and co-operation between State courts and arbitral institutions.

The Swedish Arbitration Act is currently under review by a committee which proposed the main following improvements: (i) the repeal of the distinction between the grounds for setting aside an arbitral award and the grounds for declaring an award invalid; (ii) improvements related to the determination of the applicable law and the challenge of arbitrators’ fees; and (iii) the option to plead in the English language before the Svea Court of Appeal in setting aside applications (the court’s decisions, however, would still be rendered in Swedish, with a simultaneous English translation if requested).

In Switzerland, the proposed amendments to Chapter 12 of the Swiss Federal Private International Law Act 1987 relating to International Arbitration were published in January 2017. These amendments inter alia (i) simplify the formal requirements for arbitration agreements which would now be valid even if the form is fulfilled by one party only (i.e. an arbitration clause may be valid if contained in a written offer submitted to the counterparty, who accepts it only orally or tacitly); (ii) entitle parties to request the assistance of State courts in case a counterparty does not voluntarily comply with provisional measures ordered by the tribunal (under the current law, only the tribunal is entitled to do so); and (iii) allow submissions to the Federal Supreme Court such as requests for revision or setting aside applications to be filed in English, although the Court’s decision will still be issued in one of the official languages.

Spanish Supreme Court confirms arbitrators’ liability to parties

In a dispute between sportswear brand Puma and its former Spanish distributors, the Spanish Supreme Court2 upheld a first instance judgment and a decision of the Madrid Court of Appeal holding that two of the three members of the arbitral tribunal violated the applicable arbitration rules by excluding the third arbitrator from deliberations, leading to the setting aside of the award for violation of the principle of collegiality of the tribunal. The Court declared the two arbitrators professionally liable for the setting aside of the award, and ordered each of the arbitrators to reimburse their fees to Puma in the amount of €750,000 plus interest and costs.

Third-party funding developments in England and Ireland

Along with a growing international consensus on its acceptance, third-party funding of arbitral claims continues to raise new concerns; including whether third-party funding costs are recoverable in arbitration. In Essar Oilfields Services Ltd v. Norscot Management Pvt Ltd, 3 the English High Court held that the arbitral tribunal has the discretion to award costs relating to third-party funding to a successful claimant. The Court concluded that costs for obtaining litigation funding could be included in ‘other costs’, and that identifying the scope of recoverable costs narrowed down to a functional criteria reflected through the following question: ‘Do the costs relate to the arbitration and were they incurred for its purpose?’4

This finding raises the question of whether a tribunal may include other sums in its decision on costs (i.e. success fees under damages-based agreements and after-the-event insurance premiums). The arbitrator, in this specific case, concluded that ‘Norscot’s impecuniosity was deliberately caused, or substantially contributed to by Essar’5, and left Norscot with no alternative other than to resort to this sort of funding.

The arbitrator was noticeably influenced by the fact that Norscot’s impecuniousness had a strong causal connection with Essar’s conduct. As the decision seems strongly based on the case’s particular facts, arbitral tribunals may well decide to exercise their discretion differently in future cases.

Detractors of third-party funding still remain. For instance, in its first case relating specifically to the practice of third-party funding, the Irish Supreme Court held that third-party funding amounted to unlawful maintenance and champerty, which continue to be torts and offences in Ireland.6

Investor-state arbitration in Europe

In response to the vociferous criticism of the existing investor-State dispute settlement (ISDS) system from certain quarters, the European Commission expressed its determination to replace the current arrangements with a dispute settlement mechanism centred on a permanent investment court. The European Court of Justice rendered an opinion 2/15 on 16 May 2017 regarding the EU-Singapore free trade agreement (FTA) relating to foreign investments other than direct. Many observers wondered whether the ECJ has put the last nail in the coffin of Investor-State Arbitration in its current guise. In this opinion the ECJ declared that the EU has the exclusive competence to sign and ratify FTAs alone, however if FTAs contain provisions on either ISDS, or non-direct foreign investment, then each Member State would need to sign off on those specific provisions.7

Poland has recently appointed a Working Group to prepare recommendations on a new Polish investment policy, including the revision of the ISDS system. The European Commission requested Austria, the Netherlands, Romania, Slovakia and Sweden, by way of reasoned opinion, to terminate their intra-EU bilateral investment treaties. According to the European Commission, intra-EU bilateral investment treaties affect the single market by conferring rights to some EU investors on a bilateral basis, which are in conflict with EU Law and the principles of a single economic market.8

In the Netherlands, the Hague District Court set aside on 20 April 2016 the $50 billion Yukos award against the Russian Federation9. The Court reached its decision on the grounds that the arbitral tribunal that had rendered the awards lacked jurisdiction as the arbitration clause of Article 26 of the Energy Charter Treaty did not have a legal basis in Russian law, and was incompatible with the principles therein, specifically as Russian law limits arbitration to civil law disputes and does not provide a basis for the arbitration of disputes of a predominantly public law nature arising from legal relations between foreign investors and the Russian Federation. An appeal is pending.

Enforcement and setting aside proceedings in France, the Netherlands, Belgium, and Germany

French, Dutch and Belgian laws have increased the protection of States regarding seizures of their assets (so-called ‘Yukos laws/decisions’). Pursuant to an Act of 9 December 2016, French law now provides that interim measures on State assets can only be granted by a national judge and requires an additional consent of the State to these measures. The attached assets must not be used in the context of public services.10 In Belgium, the Act of 23 August 2015 provides that assets belonging to sovereign States are, by their very nature, not attachable and protected by immunity from enforcement. By exception to this principle, a creditor may seek the authorisation to attach assets of a sovereign State by fulfilling strict conditions.11 In the Netherlands, the Dutch Supreme Court ruled in 2016 that assets of foreign States located in the Netherlands cannot be subject to attachment and enforcement, unless they are used for non-governmental purposes. The same court also made clear that a possible waiver of State immunity cannot be implied from the general provisions contained in bilateral or multilateral arbitration agreements between State parties.12

In Germany, the Supreme Court rendered a decision of 7 June 2016 in the Claudia Pechstein saga confirming that the Court of Arbitration for Sport (CAS) seated in Switzerland is a properly constituted arbitral tribunal, and that an arbitration clause included in agreements between an athlete and a monopolistic international sports association referring all disputes to the CAS is generally valid.13

See Federal Law No. 382-FZ of 29 December 2015 on Arbitration in the Russian Federation; Federal Law No. 409-FZ of 29 December 2015 on ‘Incorporation of Amendments of Certain Legislative Acts of the Russian Federation’ in connection with enactment of the law on arbitration.

Tribunal Supremo, Sentencia nº102/2017, 15 February 2017, available at 2017_02_15_sentencia_tribunal_supremo_puma_211117_1322.pdf.

[2016] EWHC 2361 (Comm), available at .

Ibid. at para. 58.

Ibid. at para. 27.

Persona Digital Telephony Ltd., and Sigma Wireless Networks Ltd. and The Minister for Public Enterprise, Ireland, and the Attorney General [2017] IESC 27, available at

European Court of Justice, Opinion 2/15, 16 May 2017, available at

European Commission, 2 September 2016 at point 6 ‘Financial Stability, Financial Services and Capital Markets Union’, available at

The Hague District Court, 20 April 2016, available at

‘LOI n° 2016-1691 du 9 décembre 2016 relative à la transparence, à la lutte contre la corruption et à la modernisation de la vie économique’, at Art. 60, available at

‘Loi du 23 août 2015 insérant dans le Code judiciaire un article 1412 quinquies régissant la saisie de biens appartenant à une puissance étrangère ou à une organisation supranationale ou internationale de droit public’, available at

Dutch Supreme Court, 14 October 2016:

GFT (BGH) SchiedsVZ 2016.