Who watches the watchers? – German court grants an anti-anti-anti-suit injunction in respect of a dispute over enforceability of an ICSID award


In a 2 May 2023 judgment, the Higher Regional Court of Hamm issued an injunction enjoining the German investors, RWE Innogy GmbH and RWE Innogy Aersa SAU, from pursuing court proceedings outside the EU aimed at enjoining pending court proceedings in Germany, in which Spain is seeking an order to prohibit German investors from applying for enforcement of an arbitral award that would order Spain to pay compensation and damages in the amount of EUR 31 million.


The origin of this cascade of injunctions is an investor-state arbitration under the Energy Charter Treaty (ECT): RWE Innogy GmbH and RWE Innogy Aersa S.A.U. v. Kingdom of Spain, ICSID Case No. ARB/14/34. In it, an ICSID tribunal held Spain liable for a breach of the fair and equitable treatment standard based on the reversal of the county's renewable energy investment regime. In its decision on jurisdiction, liability, and certain aspects of quantum, the tribunal directed the parties to attempt to reach an agreement on the amount of compensation to be paid to the investor. After the parties failed to reach such agreement, the tribunal ordered Spain in December 2020 to pay compensation in the amount of roughly EUR 31 million (including legal fees and arbitration costs) for the economic damages to the investors' wind farm and hydroelectric plants projects.

Spain filed an application to annul the award with the ICSID annulment committee, which is the only process by which a final award of an ICSID tribunal may be reviewed on its merits under the ICSID Convention. In its annulment application, Spain requested that enforcement of the award be stayed until the annulment proceeding was resolved. The ICSID annulment committee granted Spain a provisional stay but declined its request to indefinitely stay enforcement of the award, as long as German investors provided binding assurances that they would promptly repay Spain if the award were annulled.

In light of the EU policy against intra-EU investment arbitration, manifested notably through the decisions by the European Court of Justice in Slovak Republic v. Achmea BV and Republic of Moldova v. Komstroy LLC, the extent to which ICSID awards rendered under the ECT are enforceable within the EU is controversial.

Following in the footsteps of other international investors, the German investors initiated enforcement proceedings against Spain in the US District Court for the District of Columbia. Spain moved to dismiss the case or stay the proceedings until the ICSID annulment committee rendered its decision. On 13 April 2023, the DC Court stayed the proceedings.

In parallel, and as in other cases, Spain launched cease-and-desist motions on the US enforcement proceedings before the courts in the home states of the investors. With RWE Innogy, Spain turned to the Essen Regional Court in Germany requesting an anti-suit injunction.

The German investors responded by filing a motion for preliminary injunction and temporary restraining order against the German proceedings – in effect, an anti-anti-suit injunction. The investors argued that they would suffer grave and irreparable harm if Spain was not prevented from blocking the US enforcement proceedings via the German courts.

In response and before the DC Court had a chance to rule on the German investors' motion, Spain applied with the German courts to enjoin the investors from pursuing this anti-anti-suit injunction.

German Court Decision

On 7 March 2023, the Regional Court of Essen rendered a decision on Spain's motion for anti-anti-suit injunction, which has not been published so far.

Upon appeal, the Higher Regional Court of Hamm amended the decision of the Regional Court and, in essence, granted requested relief. In doing so, the court emphasised at the outset that it was only seized with the question of enabling the conduct of the main proceedings before the Regional Court of Essen (docket number 2 O 447/22) – and not with the broader matter of discontinuation of the US enforcement proceedings.

The Higher Regional Court first held that it had jurisdiction to hear the motion by the virtue of § 32 of the German Civil Procedure Code (ZPO) and, in any event, Article 8(1) of the Brussels Ia Regulation. The court clarified that the arbitration exception in Article 1(2)(d) of the same Regulation was inapplicable since the proceedings before the Higher Regional Court did not directly concern the arbitral award, as opposed to the main proceedings before the Regional Court.

On substance, the Higher Regional Court referred to Spain's right of access to justice within the meaning of §§ 823 (1) or (2) of the German Civil Code (BGB). In the Higher Regional Court’s view, the German investors' motion in the DC Court unlawfully infringes upon Spain's right to access to justice and, at the same time, on Germany's judicial sovereignty since it would prevent a German court from deciding on a matter brought before it.

In contrast, the Higher Regional Court noted that Spain's underlying attempts to prevent the investors from pursuing the US enforcement proceedings were irrelevant to its decision, holding that it was exclusively up to the Regional Court of Essen to decide whether Spain’s claim is admissible and well founded. For the same reason, the Higher Regional Court rejected the German investors' argument that the US proceedings were initiated in self-defence.

The Higher Regional Court's injunction was issued as a matter of urgency, given that the motion to prevent the German proceedings was filed in the US on 24 March 2023. In any case, even if the US enforcement proceedings were not pending, the Higher Regional Court cited the risk of repetition of similar attempts to support the assumption of urgency.

US Courts' Positions

It is yet unclear how the DC Court will respond to the decision of its German counterpart in the RWE case.

Of note are the NextEra Energy Global Holdings B.V. and NextEra Energy Spain Holdings B.V. v. Kingdom of Spain and 9REN Holding S.a.r.l v. Kingdom of Spain cases currently pending in the US court and involving similar procedural constellations, but without a comparable injunction from a court in the investors' home country. In those cases, in February 2023, the DC Court issued injunctions against the proceedings initiated by Spain in the investors' respective home states.

The DC Court held that it had jurisdiction over Spain under the US Foreign State Immunities Act (FSIA). Under the FSIA, the US courts’ jurisdiction over a sovereign State is limited (e.g. for actions to enforce an award made pursuant to an arbitration agreement). The DC Court limited its analysis to the existence of an arbitration agreement (i.e. the ECT arbitration clause) but not its validity under EU law. In both cases, the DC Court made a preliminary finding that the underlying intra-EU awards were likely to be eventually enforced, as the likelihood of success of the main dispute is one of the elements of the legal standard for granting a preliminary measure, such as an anti-suit injunction. The DC Court also concluded that public interest – protecting US courts' jurisdiction and encouraging the enforcement of international arbitration law – supports granting the injunctions to the investors.

In general, the ICSID awards enjoy a special regime elevating them to the decisions of the state courts for the purposes of direct enforcement. The DC Court's indication in NextEra and 9REN proceedings that it was open to enforcing the intra-EU ICSID awards is in line with the US courts' overall approach favouring arbitration.

However, in March 2023, a different DC Court justice issued a decision for the first time refusing enforcement of an intra-EU ICSID award. In Blasket Renewable Invs. LLC v. Spain (previously, The PV Investors v. Spain), the judge ruled that under the EU law no valid agreement to arbitrate existed and, as a result, the US court lacked subject-matter jurisdiction under the FSIA. It remains to be seen whether this decision will set a convincing precedent for the similar enforcement proceedings pending in the US court.

The decision of the Higher Regional Court Hamm can be accessed in the German language at: https://openjur.de/u/2468715.html

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