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Hungary's application to set aside award under Energy Charter Treaty rejected

19 October 2015

Authors: Anne-Carole Cremades

In a French-­language decision dated 6 October 2015, the Swiss Supreme Court rejected a petition to set aside an award rendered under the Energy Charter Treaty (ECT) against Hungary. The Swiss Supreme Court dismissed Hungary's argument that the arbitral tribunal had wrongly accepted jurisdiction, finding instead that the arbitral tribunal had correctly considered that the investor's claim was a "treaty claim" based on the fair and equitable treatment standard set out in the ECT, as opposed to a contract claim falling under the so-­called "umbrella clause" in the ECT, for which Hungary had withheld its consent to arbitration.
Moreover, the Supreme Court found that the arbitral tribunal did not breach the principle of equal treatment and Hungary's right to be heard by relying on the investor's expert report on damages, which contained underlying data to which Hungary had not had access.
Finally, the Swiss Supreme Court dismissed Hungary's argument that the award, under which it was ordered to pay damages in the amount of EUR107 million to the investor, obliged it to breach its international obligations arising under the ECT and was, as a result, contrary to the principle of pacta sunt servanda in the international public law sense and, therefore, to public policy. (Decision 4A_34/2015.)

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Published in Practical Law Arbitration

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