1. ENFORCEMENT OF AWARDS- EMERGING TRENDS Talat Ansari Kelley Drye & Warren LLP New York March 16, 2013

2. Investment Treaty Arbitration  Last ten years seen a huge increase in treaty based international arbitration.  Generally started by claimant-investor challenging conduct by government that adversely affected claimant's investment.  Often based on bilateral investment treaty (“BIT”) between two states  BITs intended to protect and promote investment's by nationals of each state.  Contains dispute settlement mechanism allowing investor-state arbitration. 2

3. Investment Treaty Arbitration  International Centre for the Settlement of Investment Disputes (“ICSID Centre”) established by the ICSID Convention.  Provides parties a neutral forum to resolve disputes  ICSID awards directly enforceable in states party to the Convention.  Centre has jurisdiction to hear legal disputes arising out of investment between a contracting state and national of another contracting state. 3

4. Investment Treaty Arbitration  BITs usually contain a choice-of-law clause.  In absence of such clause applicable law is a hybrid of international and municipal law.  Parties retain large degree of autonomy in regard to composition of the tribunal, substantive law and procedural rules.  Domestic courts do not have the power to intervene in ICSID proceeding. 4

5. Problems of enforcing awards against States: Sovereign Immunity  Defense of sovereign immunity  Commonly used by States in forum courts to prevent enforcement  State Courts vary in their willingness to enforce awards against a foreign sovereign and its assets 5

6. Developments in law of Sovereign Immunity  USA  UK  HONG KONG 6

7. Problems of enforcing awards against States: Sovereign Immunity  Practice Tips  Consider these issues before entering into contract  Express waiver clause: include clause requiring waiver of immunity from jurisdiction, enforcement and execution, including pre-judgment execution when drafting arbitration agreement  Minimizes risk of successful challenge to enforcement petition  Gives opportunity of enforcing award against assets of government agency without defense of sovereign immunity 7

8. The Saipem Decision and Its Aftermath  Saipem v. The People’s Republic of Bangladesh (2009), ICSID tribunal ruled that orders of Bangladeshi court denying Saipem (an Italian company) the benefits of an ICC award, made in its favor, constituted unlawful expropriation of its investment. Held:  The award resulted in substantially depriving Saipem of benefit of the ICC award  Investors were entitled to compensation based upon value of the ICC award 8

9. The Saipem Decision and Its Aftermath (cont’d)  Post Saipem, reflect reluctance of treaty tribunals to act as de facto appellate body sitting in judgment over national court decisions.  GEA Group Aktiengesellschaft v. Ukraine,  German investor commenced ICSID proceedings against Ukraine pursuant to unsuccessful efforts to enforce ICC award in Ukrainian domestic courts  Tribunal found that “the ICC Award -in and of itself- cannot constitute an ‘investment” within the meaning of the BIT”.  Mere fact that Ukrainian courts came to a conclusion different to that which GEA had hoped could not be reason to find a breach of the Germany-Ukraine BIT 9

10. The Saipem Decision and Its Aftermath (cont’d)  Frontier Petroleum Services Limited v Czech Republic, tribunal held that the refusal by Czech courts to recognise and enforce New York Convention award on grounds of public policy did not constitute a breach of the Canada-Czech Republic BIT.  Decision refusing to enforce an arbitral award on public policy grounds had to be (i) arbitrary, (ii) discriminatory, or (iii) made in bad faith, in order to constitute breach of the applicable BIT.  Saipem’s decision leaves open possibility that an international commercial arbitral award may constitute an investment pursuant to a BIT 10