Monday, January 19, 2015

Diag Human v. Czech Republic [2014] EWHC 1639 (Comm)

Eder J. has refused to enforce a 'well-travelled' award which has been denied enforcement in multiple jurisdictions including, Austria (S. Court), France (C. Cass) and Geneva (1st instance), with enforcement proceedings in Luxembourg and the US still pending.  Eder J., describing the background to the case as 'long and tortuous', held: (i) that the Austrian Supreme Court's decision which held that the award was not binding created an issue estoppel in favour of the Czech Republic (paras. 62-63); and (ii) in the event that he was wrong, the award was not binding within the meaning of s. 103(2)(f) of the English Arbitration Act '96 because the arbitration agreement between Diag and the State provided for a special review process (by a second arbitral tribunal) that was validly triggered by the Czech Republic after the award was rendered (paras. 87-91). 


Earlier   the Czech Ministry of Health has announced that the review arbitration panel has overturned the first award made in favour of Diag.  In a related enforcement proceeding in the US, the District Court for the District of Columbia held that it had no subject-matter jurisdiction to consider Diag's request to enforce the first award because the dispute did not arise from a commercial relationship.


The French Cour de cassation has refused to enforce a £275 million award in favour of Diag Human because the award was not yet binding on the parties as the Czech Republic had exercised its right under the parties' arbitration agreement to seek review of the award by a second arbitral tribunal.  The parties had, rather unusually, provided that they may submit the first award for review to a newly constituted second arbitral tribunal.  The decision from France's highest court provides a strong reminder to parties that they will be held to their bargain when they agree to appellate or review mechanisms in their arbitration agreement.  The Cour de cassation's decision follows similar earlier decisions from the Austrian and Swiss courts.  However, it is reported that the English courts granted Diag Human an ex parte enforcement order in 2011 and that the Czech Republic's application to resist enforcement is listed in May 2014. 
 

See GAR report


See PLC Note re US decision


See GAR report.

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