By nature, set-aside decisions of investment arbitration awards are few and far-between. As the 1965 Washington Convention shields ICSID arbitral awards from review by national courts, only ICSID Additional Facility awards are subject to review by national courts. Remarkably, in the first five months of 2019 alone, the Paris Court of Appeal already had the opportunity to review the jurisdiction of arbitral tribunals in investment arbitration cases three times: République bolivarienne du Vénézuela c/ Société Rusoro Mining Limited (‘Venezuela v Rusoro’),1 discussed here, where the Court set aside an Additional Facility award rendered in favour of the investor; Vincent J. Ryan et al. c/ République de Pologne, where the Court upheld an Additional Facility award rendered in favour of the State;2 and Société Oxus Gold PLC c/ République d’Ouzbekistan, where the Court rejected an application by the investor for partial annulment of an UNCITRAL award rendered in favour of the investor.3 The award in Venezuela v Rusoro therefore joins the ranks of investment arbitration awards set aside, in whole or in part, by the Paris Court of Appeal in recent years.4

In the late 2000s, Rusoro (a Canadian mining company) was a majority shareholder in 24 Venezuelan companies, which altogether held 58 mining concessions and contracts for exploration and exploitation of gold and other minerals in the state of Bolivar, Venezuela.

According to Rusoro, its investment in Venezuela became impaired when:

  • Venezuela adopted a series of measures restricting gold exports in 2009-2010; and
  • Venezuela signed a nationalization decree transferring gold-mining activities to state-owned entities on 16 September 2011.

Rusoro and Venezuela failed to reach an agreement on the terms of the transfer of the mining rights to the newly-formed state entities. Therefore on 15 March 2012, Venezuela terminated all concession agreements and contracts and took over and assumed control of Rusoro’s plants and exploration sites in April 2012.

Rusoro immediately thereafter filed for arbitration against Venezuela on the basis of the Canada-Venezuela Bilateral Investment Treaty (the ‘Treaty’).5 The dispute was one of the last registered at ICSID before Venezuela’s withdrawal from ICSID on 25 June 2012. Because Canada had not yet acceded to the ICSID Convention (it would do so only in 2013), the case proceeded under the ICSID Additional Facility rules.6

The arbitration

Before an Arbitral Tribunal seated in Paris and composed of J. Fernández-Armesto (president), F. Orrego Vicuña (appointed by Rusoro) and B. Simma (appointed by Venezuela), Rusoro claimed that Venezuela’s actions between 2009-2012 were in breach of the expropriation, fair and equitable treatment, protection and security, national treatment obligations, and restrictions on exportations provisions under the Treaty.

In an award rendered on 22 August 2016,7 the Arbitral Tribunal notably held that:

  • Venezuela’s actions prior to July 2009 were outside the jurisdiction ratione temporis of the Tribunal. Article XII of the Treaty provides for a three-year statute of limitations which prevented the Tribunal from adjudicating claims for alleged Treaty breaches that pre-dated filing of the arbitration (in July 2012) by more than three years;
  • Venezuela’s actions in 2012 amounted to expropriation in violation of the Treaty, such that Venezuela was ordered to pay USD 966 million plus interest to Rusoro; and
  • Venezuela’s restrictions issued in 2010 on gold exports were also in violation of the Treaty, such that Venezuela was ordered to pay an additional USD 1.2 million plus interest to Rusoro.

On 19 October 2016, Venezuela filed an action to set aside the award in front of the Paris Court of Appeal, arguing that:

  • The Arbitral Tribunal lacked jurisdiction because Rusoro had not complied with the pre-arbitral requirement of sending a trigger letter in the form and manner provided for in the Treaty;
  • The Arbitral Tribunal had ruled beyond its mandate by assessing damages arising out of the wrongful expropriation on the basis of circumstances that either, by its own admission, fell outside of its jurisdiction ratione temporis or were not constitutive of the expropriation. Indeed, the Arbitral Tribunal took into consideration inter alia (1) the value of Rusoro’s shares as of 2008 and (2) the amounts invested by Rusoro between 2006 and 2008.

The Paris Court of Appeal decision

On 29 January 2019, the Paris Court of Appeal partially set aside the award, on the ground that the Arbitral Tribunal’s computation of the damages for expropriation resulted in a wrongful extension of its jurisdiction, as it took into account facts falling outside of its jurisdiction ratione temporis. The Court therefore struck down the corresponding USD 966 million main head of damages.

The Court of Appeal, however, did not accept Venezuela’s argument that the Arbitral Tribunal did not have jurisdiction over the dispute as a whole and therefore left the portion of the award ordering Venezuela to pay a comparatively meagre amount of damages (USD 1.2 million) standing.

The pre-arbitral requirement as an admissibility issue not subject to judicial review

Venezuela had first argued that the entire award should be set aside because Rusoro’s notice of dispute of 15 December 2011 did not comply with the requirements in Article XII of the Treaty that the nature of Rusoro’s claims and amount of damages be specified. Consequently, according to Venezuela, the letter had not triggered the six-month cooling off period of the Treaty, and the Arbitral Tribunal did not have jurisdiction to hear the dispute.

The Paris Court of Appeal quickly disposed of this argument, holding that pre-arbitral requirements are not jurisdictional in nature, and therefore not reviewable under the limited grounds in Article 1520 of the French Code of Civil Procedure.

This holding is consistent with French courts’ approach to pre-arbitral negotiation requirements in commercial cases.8 It is however, far from universal and a number of jurisdictions would potentially conclude that the failure to comply with the trigger letter formal requirements should lead to the set aside of the award.9

The French position seems the most sensible because non-compliance with a pre-arbitral requirement does not go to the core issue of consent to arbitration, and setting aside an award after years of litigation even as the parties always had the opportunity to settle their dispute amicably would hardly have seemed practical in the present case.

Statutes of limitations subject to judicial review in set aside proceedings

The ground on which the Court ultimately decided to set aside the award proves to be more questionable.

Continuing the same jurisdiction v. admissibility debate, Venezuela complained that the Arbitral Tribunal’s damage award’s partial reliance on elements pre-dating the three-year time bar of the dispute resolution clause of the Treaty was jurisdictional in nature while Rusoro argued that statute of limitation issues pertain to the admissibility of claims. Although the pre-arbitral negotiation requirement and the three-year time bar were found in the same Article XII of the Treaty, the Court concluded that the latter was of a jurisdictional nature.

The Court consequently looked at the award and ‘at all elements, in fact and at law, allowing it to ascertain the scope of the arbitration agreement’.10 The Court reviewed the tribunal’s reasoning on liability and quantum, and found that the manner in which the tribunal conducted its quantum analysis incorporated consequences of events falling outside of its jurisdiction ratione temporis, and therefore resulted in a finding on quantum and liability exceeding the tribunal’s jurisdiction ratione temporis.

While the Court held this ground warranted a partial set aside of the award, its review effectively amounted to a review of the merits of the award - conducted under the guise of a jurisdictional inquiry.

The aftermath of the partial set aside

In reaction to the set aside decision, Rusoro communicated its intention to ‘vigorously pursue all available remedies to reinstate the Award's finding on damages in full or otherwise obtain fair compensation for the unlawful expropriation of its investments in Venezuela, including the appeal of the French court decision before the French Supreme Court [which it filed on
1 February 2019] and (if necessary) the resubmission of the case to arbitration to re-determine the amount of damages owed to Rusoro’.11

The two main issues are now the following:

  • Damages: Because the arbitral tribunal’s finding of liability is not impacted by the Court of Appeal’s decision, and if that decision is upheld on appeal, arbitrators will only reassess the issue of damages. Whether this issue will be revisited by the same or a new Tribunal is still to be determined.
  • Further proceedings: In related enforcement proceedings initiated by Rusoro before the US Court of Appeals for the District of Columbia Circuit, attorneys for the Venezuelan government, originally instructed by the Maduro government, have sought a stay of proceedings in order for the Guaidó interim government to review the case.12 However, the Maduro government has since then instructed other lawyers to appear in the case, disputing the Guaidó government’s legitimacy to take over management of the case.13 Because the newly-instructed Maduro lawyers have since withdrawn from the case, the Maduro Government’s attorney general is appearing pro se in the proceedings.14 Whether and how a similar scenario might arise in the French Supreme Court, and possibly in future arbitral proceedings, remains to be seen.

République bolivarienne du Vénézuela c/ Société Rusoro Mining Limited, CA Paris, 29 Jan. 2019, n° 16/20822.

Vincent J. Ryan et al. c/ République de Pologne, CA Paris, 2 April 2019, n° 16/24358.

Société Oxus Gold PLC c/ République d’Ouzbekistan, CA Paris, 14 May 2019, n° 16/16502.

Against Madagascar (PGM, DS 2 et MM. de Sutter v la République de Madagascar, CA Paris, 15 March 2016, n° 14/19164, confirmed by the Supreme Court in PGM, DS 2 et MM. de Sutter v la République de Madagascar, Cass. Civ. 1, 1 June 2017, n°16-18.029) ; Kyrgyzstan (République du Kirghizistan v Belokon, Paris, 21 févr. 2017, n° 15/01650) ; Venezuela (République bolivarienne du Venezuela v M. Garcia Armas et Mme Garcia Gruber, CA Paris, 25 April 2017, n° 15/01040i; and Moldova (République de Moldavie v Société Komstroy, CA Paris, 12 April 2016, n° 13/22531, reversed by the Supreme Court in Société Komstroy v. République de Moldavie, Cass. Civ. 1, 28 March 2018, n° 16-16568).

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Article 2 of the Additional Facility Rules notably authorizes the ICSID Secretariat to administer investment arbitrations ‘which are not within the jurisdiction of the Centre because either the State party to the dispute or the State whose national is a party to the dispute is not a Contracting State’. Article 3 confirms that none of the provisions of the ICSID Convention apply to such proceedings.

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See for instance Vijay v Eastern Europe Engineering, CA Paris, 28 June 2016, n° 15/03504.

E.g. in Switzerland (X v Y, Swiss Federal Tribunal, 4A_628/2015, 16 March 2016), in Singapore (International Research Corp v Lufthansa, Singapore Court of Appeal [2013] SGCA 55, 16 Aug.; 18 Oct. 2013).

See for instance Abela Foundation, French Supreme Court, Cass. Civ. 1, 6 Oct. 2010, n° 08-20.563.

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