|Application for Annulment||Application for Annulment, dated 25 February 2020|
|Applicant||Kingdom of Spain|
|Arbitration Rules||ICSID Rules of Procedure for Arbitration Proceedings 2006|
|C-[#]||OperaFund and Schwab's Exhibit|
|CL-[#]||OperaFund and Schwab's Legal Authority|
|Committee||Ad Hoc Committee constituted on 17 June 2020|
|C-Mem. Stay||OperaFund and Schwab's Counter-Memorial in Opposition to the Request for the Continuation of the Stay of Enforcement of the Award, dated 31 July 2020|
|ICSID Convention||Convention on the Settlement of Investment Disputes Between States and Nationals of Other States dated 18 March 1965|
|ICSID or the Centre||International Centre for Settlement of Investment Disputes|
|Mem. Stay||Kingdom of Spain's Memorial in Support of the Continuation of the Stay of Enforcement of the Award, dated 16 July 2020|
|OperaFund||OperaFund Eco-Invest SICAV PLC|
|R-[#]||Kingdom of Spain's Exhibit|
|RL-[#]||Kingdom of Spain's Legal Authority|
|Reply Stay||Kingdom of Spain's Reply in Support of the Continuation of the Stay of Enforcement of the Award, dated 15 September 2020|
|Rej. Stay||OperaFund and Schwab's Rejoinder in Opposition to the Request for the Continuation of the Stay of Enforcement of the Award, dated 30 September 2020|
|Schwab||Schwab Holding AG|
|Spain||Kingdom of Spain|
This Decision addresses the application by the Kingdom of Spain for the continuation of the stay of enforcement of the award rendered on 6 September 2019 in the arbitration proceeding captioned OperaFund Eco-Invest SICAV PLC and Schwab Holding AG v. Kingdom of Spain, ICSID Case No. ARB/15/36, as rectified by the Tribunal's Decision on Rectification of the Award dated 28 October 2019 (the "Award").
On 25 February 2020, Spain submitted an Application for Annulment of the Award ("Application for Annulment"), accompanied by Annexes 1 to 24. In its Application for Annulment, Spain requested, among other things: (i) a provisional stay of enforcement of the Award in accordance with ICSID Convention Article 52(5) and ICSID Arbitration Rule 54(2); and (ii) the continuation of the stay of enforcement of the Award until the Committee renders its Decision on the Application for Annulment1
The ad hoc Committee was constituted in accordance with ICSID Convention Article 52(3). Its members are Mr. Timothy J. Feighery, a U.S and Irish national, President; Mr. Milton Estuardo Argueta Pinto, a Guatemalan national; and Prof. Fausto de Quadros, a Portuguese national, (the "Committee"), all appointed by the Chairman of the ICSID Administrative Council.
Spain invokes ICSID Convention Article 52(5) and ICSID Arbitration Rule 54(2), which it reads to freely permit the continuation of a stay "if it [the Committee] considers that the circumstances so require."11 Relying on Occidental v. Ecuador and Victor Pey Casado v. Chile, it submits that there is a prevailing practice that a stay of enforcement should be granted absent unusual circumstances.12
Spain submits that it has already notified the Award to the European Commission requesting clearance to pay, which demonstrates its intention to honor the Award.53 It maintains, however, that since EU law is international law, fulfillment of its international obligations includes its obligations as an EU Member State, in particular by seeking permission to pay the Award from the European Commission.54 Spain submits that it has an obligation to seek such clearance because the European Commission has already determined that payment of the Award constitutes notifiable State Aid under Articles 107 and 108 of the Treaty on the Functioning of the European Union ("TFEU"), and the Commission is the only competent body to make such determination.55 Lastly, Spain argues that this clearance process before the Commission is a circumstance that should be assessed by the Committee in deciding whether to maintain the stay of enforcement, given that the stay would prevent a potential conflict of international obligations that would affect both Parties.56
Finally, Spain takes issue with OperaFund and Schwab's reliance on the decisions on the applications for stay of enforcement in other cases involving Spain, such as Antin v. Spain, Cube v. Spain and NextEra v. Spain, arguing (i) that the analysis should be case specific to the circumstances of the present case;57 (ii) that OperaFund and Schwab have provided only a partial picture of the cases omitting, for example, reference to the recent ruling in SolEs v. Spain that authorized the unconditional continuation of the stay of enforcement, or to the annulment decision in Eiser v. Spain, which Spain asserts serves to demonstrates the risks of lifting the stay;58 and (iii) that a number of the conclusions reached in the decisions on stay in Eiser v. Spain, Antin v. Spain, Masdar v. Spain and NextEra v. Spain, are either flawed, or actually support Spain's position.59
Spain views the provision of security or guarantee as the equivalent of penalizing it for exercising its right to an annulment process under ICSID Convention Article 52.65 Furthermore, it cites Tenaris v. Venezuela II for the proposition that the Committee should not facilitate enforcement or put OperaFund and Schwab in a better place than they would have been in absent the guarantee.66
"[R]equest  that the Committee order (i) the lift of the provisional stay of enforcement of the Award; and (ii) the Applicant (Spain) to bear all costs resulting from this procedural incident."70
OperaFund and Schwab further contend that there is no presumption in favor of a stay; rather, Spain has the burden of showing "compelling circumstances" requiring the stay, such as prejudice to the Applicant.74 They argue that the applicable presumption in this case is the presumption in favor of enforcement of ICSID awards, and the imposition of a permanent stay is an exceptional measure,75 as demonstrated by recent ICSID committee decisions in Eiser v. Spain, Antin v. Spain, NextEra v. Spain, and Cube v. Spain, which refused requests for the permanent stay of the underlying awards.76
OperaFund and Schwab argue that the Committee's analysis must start from ICSID Convention Article 53(1), which establishes that an award is final and the award debtor has an international obligation to pay in full.79 They remark that the annulment remedy should not be equipoised with the finality of awards. The remedy of annulment is an exceptional one, and therefore the granting of a stay during the pendency of an annulment process is equally exceptional, as recognized in Burlington v. Ecuador, Kardassopoulos v. Georgia, Tenaris I v. Venezuela, and Cube v. Spain.80
Referring to the explicit language of ICSID Convention Article 52(5), pursuant to which "[t]he Committee may, if it considers that the circumstances so require, stay the enforcement pending its decision […],"81 OperaFund and Schwab submit that the Parties agree that the Committee has discretion to decide whether to lift or continue the stay, and that Article 52(5) is open-ended in that it does not limit or specify the circumstances that the Committee can take into account.82
Relying on Border Timbers v. Zimbabwe, Antin v. Spain, Karkey v. Pakistan and OI European v. Venezuela, OperaFund and Schwab further submit that the imperative verb "require" underlines that the circumstances to stay enforcement must be "compelling" or "rise beyond the ordinary," and otherwise the stay should be lifted.83 According to OperaFund and Schwab, this language in Article 52(5) is clearly intentional and reveals a "stringent standard."84 They further argue that the verb "require" also demonstrates that there is no presumption in favor of continuation of the stay of enforcement, and instead, the presumption is the opposite one, as supported by the decisions in Valores Mundiales v. Venezuela, Caratube v. Kazakhstan, Sempra v. Argentina, SGS v. Paraguay, Eiser v. Spain and Antin v. Spain.85 Nor is there any prevailing practice in granting requests for continuation of a stay of enforcement.86 OperaFund and Schwab rely on Caratube v. Kazakhstan for the proposition that prior decisions and statistics "do no create a binding precedent for ad hoc committees, much less a rule that the stay is automatic in all cases or that there is a presumption in favor of automaticity."87
ICSID Convention Article 52(5) sets forth the standard to be applied by ad hoc Committees in assessing requests for stays of enforcement of ICSID awards. It states that: "The Committee may, if it considers the circumstances so require, stay enforcement of the award pending its decision. If the applicant requests a stay of enforcement of the award in his application, enforcement shall be stayed provisionally until the Committee rules on such a request."149
With regard to the standard of proof, Spain argues in the main that ICSID Convention Article 52(5) does not require "exceptional" circumstances to continue a stay of enforcement, rather, "normal" or "usual" circumstances may be sufficient to grant a stay.151 Spain also contends that there is a "prevailing ICSID practice of granting stays of enforcement," and that "continuation of a stay should be granted unless it is obvious that the application is 'without any basis under the Convention' and is 'dilatory' in nature."152 It cites the decision in Victor Pey Casado v. Chile for the proposition that granting a stay of enforcement "has now become almost automatic."153 In its Reply on Stay, Spain clarifies its position on the alleged "prevailing practice" in favor of stays of enforcement, by noting that this does not mean that stays should "automatically" be granted, but rather that "the  statistics demonstrate that 'greater restraint is [not] needed in deciding whether a stay be continued.'"154 Fundamentally, Spain argues that "the threshold for the stay is not as high as OperaFund contends."155
For their part, OperaFund and Schwab maintain that "continuation of the stay remains an exception within the exceptional and narrow remedy of annulment in the ICSID framework."156 They contend that there is a presumption in favor of enforcement of ICSID awards,157 and no presumption in favor of the continuation of a stay.158 They assert in addition that there is no "prevailing practice" that supports the granting of a stay of enforcement159 With reference to the language of ICSID Convention Article 52(5) – "if it [the Committee] considers that the circumstances so require" – OperaFund and Schwab contend that it is "clearly intentional" and "reveals a stringent standard."160 In sum, according to OperaFund and Schwab "the applicant must show circumstances that rise beyond the ordinary to reach the level that requires continuation of the stay."161
In the Committee's view, the ordinary meaning of the language of ICSID Convention Article 52(5) provides clear guidance as to the standard to be applied to continue the stay of enforcement. The language, "[t]he Committee may, if it considers that the circumstances so require," makes three aspects of the standard clear: first, that the Committee has the discretion to decide whether the stay should be continued,162second, that this discretion warrants consideration of the particular factual circumstances of the case at hand,163 and third, that the standard of proof is not, as OperaFund and Schwab contend, "stringent" nor indeed that it must "rise beyond the ordinary." The standard is straightforwardly based on the factual circumstances of the specific case and whether those circumstances require, in the discretion of the Committee, the continuation of the stay, its termination, or indeed its modification. Put in more concrete terms, it requires, on the part of the Committee, an appreciation of prejudice that warrants a continuation, termination or modification of a stay.
Likewise, the Committee does not accept the proposition that there is a heightened standard by virtue of the contention that a stay of enforcement is "an exception within the exceptional and narrow remedy of annulment in the ICSID framework."164 In the Committee's view, the ICSID annulment process – including its stay of enforcement provisions – is an integral part of the ICSID regime, and there is no suggestion in the language of ICSID Convention Article 52(5) or in ICSID Arbitration Rule 54 that indicates the imposition of a heightened standard for decisions on stays of enforcement.
While ICSID Convention Article 52(5) does not indicate which party carries the burden of establishing the circumstances requiring a stay, ICSID Arbitration Rule 54(4) requires that the person making the request "shall specify the circumstances that require the stay or its modification or termination." Rule 54(4) continues: "A request shall only be granted after the Tribunal or Committee has given each party an opportunity of presenting its observations."
"The Committee agrees with earlier decisions to the effect that, unless there is some indication that the annulment application is brought without any basis under the Convention, i.e., that it is dilatory, it is not for the Committee to assess as a preliminary matter whether or not it is likely to succeed. In requesting annulment, and applicant avails itself of a right given by the Convention. There is no indication here that Chile is acting in a merely dilatory matter. Thus the Committee does not need to form any view as to the likelihood of success of the application for annulment in this case."170
However, the Committee is of the view that prima facie grounds for annulment do not amount to a circumstance that requires a stay of enforcement of an ICSID award.175 As observed by other ad hoc Committees, if this were the case, "the vast majority of annulment applications under the ICSID Convention would have been made in good faith, such that allowing a stay of enforcement in all such cases would in effect create a presumption in favor of granting a stay."176 As the Committee has indicated in paragraph 72 supra, it is not prepared to recognize such a presumption. Nor apparently is Spain in this proceeding.177
"In any case, and for the avoidance of doubt: the Kingdom of Spain voluntarily, on its own initiative, confirms its commitment to pay the Award if it is not annulled in this proceeding, specifically, by seeking authorization from the European Commission consistent with its obligations under EU law and regulations, and then to pay promptly upon receiving such authorization."205
The Committee has no doubt that Spain will pay the Award on the terms it states if the Application for Annulment is denied; that is, after seeking and receiving authorization from the European Commission. The Committee accepts that Spain's position in this regard is guided by its concerns for its international obligations as a Member State of the European Union. However, as Spain recognizes at the same time, this position conflicts with its obligations under ICSID Convention Article 53.206
ICSID Convention Article 53 is clear: it provides that an ICSID award "shall be binding on the parties and shall not be subject to any appeal or to any other remedy except those provided for in for in this Convention. Each party shall abide by and comply with the terms of the award […]." It does not permit a party to refuse to pay an award, nor does it permit a party to impose conditions on payment.
(1) Reject Spain's request for a continuation of the stay of enforcement of the Award;
(2) Orders that the stay of enforcement of the Award currently in place be lifted;
(3) Reserves the right to modify this Decision if requested by either Party upon a modification of the prevailing circumstances; and
(4) Reserves the decision on costs for a later stage of the proceedings.
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