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In a striking new episode of the long-running Micula saga, the General Court of the CJEU has quashed the European Commission’s 2015 decision that Romania’s payment of the €178 million award rendered by an ICSID tribunal back in 2013 would constitute illegal State aid in the meaning of Article 107 of the TFEU. In its judgment rendered this week, the General Court considered that the award recognised a right to compensation for the investors existing before Romania’s accession to the EU. As a result, the Commission was precluded to apply EU State aid rules to this situation, at least with respect to the pre-accession period. The General Court’s decision can be appealed before the Court of Justice.
In 2005, in the framework of the accession process of Romania to the EU, the country repealed incentives offered to certain investors in disfavoured regions in order to eliminate domestic measures that could constitute State aid incompatible with the acquis communautaire. Romania subsequently acceded to the EU on 1 January 2007.
Two of these investors, the Micula brothers (and their investment vehicles), launched ICSID arbitration proceedings on the basis of the 2002 Sweden-Romania BIT. In a majority award dated 11 December 2013, the arbitral tribunal ruled that Romania impaired the Micula brothers’ investments in breach of the fair and equitable treatment or the prohibition of expropriation clauses of the BIT. The investors were awarded c. €178 million, despite the claim of the European Commission, intervening as amicus curiae during the arbitration proceedings, that any ruling of the arbitral tribunal reinstating the privileges abolished by Romania, or compensating the investors for the loss of these privileges, would lead to the granting of new aid incompatible with EU State aid rules. Romania requested the annulment of the award before an ad hoc ICSID Committee, but its application was rejected on 26 February 2016.
Following partial payment of the award by Romania, the European Commission ruled on 30 March 2015 that such payment constituted illegal State aid. It precluded any further payment by Romania and ordered it to recover the partial payment that had been made. The Micula brothers filed an annulment application of this decision with the General Court of the CJEU.
In parallel, the Micula brothers lodged applications for recognition and execution of the arbitral award before national courts, including in Romania, Belgium, France, Luxembourg, Sweden, the UK and the US. Most of these courts stayed the proceedings, pending the General Court’s decision (by contrast, the Swedish Nacka District Court ruled that it was compelled to implement the Commission’s decision and to decline enforcement). Interestingly, in March of this year, the Brussels Court of Appeal made a preliminary ruling reference to the CJEU, requesting guidance on the interplay between the Member States’ contradictory obligations under EU State aid rules and the ICSID convention.
20 June 2019
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