A. LEGISLATION AND RULES
France has enacted law No. 2021-750 dated 11 June 2021 by which it ratifies the Agreement for the Termination of BITs concluded by 23 member states of the European Union (“Agreement“). This Agreement has been adopted notably following the ruling of the European Court of Justice (ECJ) in the Achmea case which found that the arbitration agreements contained in intra-European BITs did not comply with the provisions of European law. As a consequence, EU member states agreed to terminate the BITs existing between them. The Agreement entered into force in France on 28 August 2021. Since Achmea, two other ECJ decisions were rendered clarifying the position on Investor-State Dispute Settlement (ISDS) under European law. Firstly, a dispute between Komstroy LLC, a company incorporated under the laws of Ukraine, and the Moldovan Republic related to an alleged investment was referred to the ECJ by the Paris Court of Appeal regarding the interpretation of the meaning of an “investment” under the ECT. In a decision dated 2 September 2021, the ECJ ruled that the provisions of this treaty, which contained an arbitration agreement, violated European law insofar as it permitted an intra-European ISDS mechanism through arbitration. Secondly, in a judgment rendered on 26 October 2021 in a dispute between Poland and PL Holding Sàrl, a company incorporated under Luxembourg law, the ECJ went one step further toward prohibiting ad hoc arbitration agreements with the same content as an arbitration agreement considered as invalid according to European law, ruling that:
[t]o allow a Member State, which is a party to a dispute which may concern the application and interpretation of EU law, to submit that dispute to an arbitral body with the same characteristics as the body referred to in an invalid arbitration clause contained in an international agreement […] by concluding an ad hoc arbitration agreement with the same content as that clause, would in fact entail a circumvention of the obligations arising for that Member State under the Treaties.
The ECJ thus confirms its strict position regarding the now-terminated intra-European BITs and the ECT providing for ISDS through arbitration between member states, as it considers that such provisions do not comply with European law.
A.2 Institutions, rules and infrastructure
The Center for Mediation and Arbitration of Paris (CMAP) has published the new version of its Arbitration Rules, which will apply to all arbitration proceedings introduced on or after 1 January 2022. The revisions were necessary in order to adapt the Arbitration Rules to the evolution of practice, align with the expectations of stakeholders and continue to ensure flexibility and efficiency in proceedings. The following changes in the CMAP Arbitration Rules are worth noting in particular:
- When the arbitration agreement is entered into on or after 1 January 2022, the choice of arbitration proceedings conducted pursuant to the CMAP Arbitration Rules implies, unless the parties expressly stipulate otherwise, the applicability of the CMAP Adjudication Rules and a waiver to the right to refer the matter to local courts to request interim or conservatory measures (article 1.2 to 1.5 of the Arbitration Rules and article 2.4 to 2.6 of the Adjudication Rules)
- Pursuant to the fast-track or expedited procedure, unless otherwise agreed by the parties, there will be a single exchange of submissions and exhibits, the president of the arbitral tribunal may order the parties to communicate their submissions and produce exhibits within a specified time limit and he shall sign all procedural orders alone (article 36.3)
- The parties can communicate with the arbitration center,the arbitral tribunal and between them exclusively through electronic means (articles 2.2 and 10.1 to 10.3). The request for arbitration as well as the answer to this request can be filed electronically (articles 4.2 and 5.2)
- Whenever a party requests it, a hearing must be held. If there is no agreement between the parties on this issue, the arbitral tribunal may hold a hearing “in person, via videoconference or via other appropriate means of communication” (article 23.8)
- New provisions related to complex arbitrations have been introduced. They govern the specific matters of joinder (article 13), multi-party or multi-contract arbitration (article 14) as well as consolidation of arbitration proceedings (article 15). In particular, third parties bound by arbitration agreements may intervene in proceedings (article 13.1(a)) and proceedings arising from similar arbitration agreements can be consolidated (article 15.1(b))
- It is now provided that if a party has benefited from third-party funding to cover payment of the arbitration fees, the administrative charges, the expenses of the arbitrators and other procedural costs, then this party must disclose it to enable the members of the arbitral tribunal to meet their disclosure obligations (article 11.11)
- The tribunal arbitral can issue the arbitral award in electronic format unless one of the parties objects thereto (28.5)
- The organization of a case management conference and the establishment of terms of reference are not mandatory. The arbitral tribunal may but it is not required to do so (articles 23.3 and 23.4)
- During the arbitral proceedings, if any party wishes to be assisted by a new representative or to replace its representative, it must inform the arbitral tribunal immediately (article 9.2), which may, after consulting the parties, prohibit this addition or this replacement to avoid any conflict of interest that may arise from this change (article 9.3).
B.1 The arbitration center can appoint all the members of an arbitral tribunal to ensure the respect of the principle of equality of the parties in the constitution of the arbitral tribunal
By a decision dated 26 January 2021, the Paris Court of appeal dismissed an application lodged by Vidatel Ltd company (“Vidatel”) to set aside an award rendered in favor of PT Ventures SGPS SA (PTV) on 20 February 2019 and the addendum correcting this award, issued on 30 April 2019. On 15 December 2000, PTV, a Portuguese company (owned by Sonangol EP, an Angolan company), entered into a shareholders’ agreement with Vidatel, a British Virgin Islands company; Companies Mercury Servicios de Telecomunicacoes SA (“Mercury”), an Angolan company owned by Sonangol; and Geni SA (“Geni”), another Angolan company. The agreement governs their shareholdings in Unitel, an Angolan company and the leading mobile phone operator in Angola. Each of these companies held 25% of Unitel’s share capital. Arguing that it had been excluded from the management of Unitel by its partners, PTV initiated ICC arbitration proceedings against Vidatel, Mercury and Geni on 13 October 2015 pursuant to the arbitration clause included in the shareholders’ agreement. Following the dispute between the parties regarding the constitution of the arbitral tribunal, and their inability to reach an agreement on this issue despite invitations formulated by the Secretariat of the ICC Court of Arbitration, the ICC Court appointed the Chairman of the arbitral tribunal and the four co-arbitrators. The arbitral tribunal issued its award on 20 February 2019, ruling that PTV’s co-shareholders were liable and ordered them to pay PTV approximately EUR 646 million in damages. The tribunal then issued an addendum on 30 April 2019,orrecting the final amount ordered in the award. On 11 June 2019, Vidatel applied to set aside the final award and addendum, arguing that the ICC Court had violated the agreement of the parties on the constitution of the arbitral tribunal. The arbitration clause provided that any dispute would be submitted to a tribunal of five arbitrators, conducted in accordance with the ICC Rules of Arbitration and seated in Paris. However, it appears from the facts of the case that these terms were not followed: instead, the ICC court-appointed all the members of the arbitral tribunal. Considering that each party, i.e., each shareholder, should have appointed an arbitrator and that they should have appointed an independent arbitrator to act as the Chairman of the arbitral tribunal, PTV requested that the arbitral tribunal be constituted of three arbitrators instead of five arbitrators. Indeed, PTV alleged that there was collusion and a convergence of interests between its co-shareholders, which had led to the violation of its rights and meant that the co-shareholders could not each designate an arbitrator as initially agreed. PTV further alleged that:
[i]n these circumstances its claims could not be fairly or properly examined by an arbitral tribunal composed in majority of arbitrators appointed by the three defendants, such appointment being, in PTV’s view, likely to breach the principle of equality of the parties [in the appointment of the members of the arbitral tribunal] recognized by French law, the law of the seat of arbitration.
The Secretariat of the ICC Court refused PTV’s request to modify the number of members of the arbitral tribunal and notified the parties that the tribunal should be composed of five arbitrators in accordance with the arbitration clause. The Secretariat twice invited the parties to find an agreement on other modalities for the constitution of the arbitral tribunal, failing which the ICC Court would appoint the five arbitrators. As the parties failed to find an agreement on the constitution of the arbitral tribunal, the ICC court appointed all the members of the arbitral tribunal. The Paris Court of Appeal then proceeded to rule on Vidatel’s application to set aside the final award and addendum. In a ruling pursuant to article 1453 of the French Code of Civil Procedure, applicable in international arbitration matters by reference to article 1506 of the same code, combined with articles 11(6), 12(8) and 41 of the ICC Arbitration Rules, the Paris Court of Appeal approved the ICC Court of Arbitration’s reliance on article 12(8) of its Arbitration Rules for the constitution of a five-member arbitral tribunal. Article 41 of the ICC Arbitration Rules allows the ICC Court to make “a meaningful interpretation of the Arbitration Rules, i.e., an interpretation which gives them an effect rather than one which gives them none at all.” Moreover, the Paris Court of Appeal considered that the appointment of the tribunal members by the ICC Court did not constitute a breach of the arbitration clause, as it removed “the obstacle resulting from the opposition of the parties to the method of appointment of the arbitrators as provided for in that clause.“ Furthermore, the Paris Court of Appeal found that it was the role of the ICC, as the center in charge of the conduct of the arbitration, to organize the appointment of the arbitrators under conditions that ensure the respect of the principle of equality of the parties, which binding, is of public order and implies “the possibility for each party to be able to participate in an equal manner in the constitution of an arbitral tribunal.” The Court of Appeal found that this principle must be assessed in the light of the claims and interests of each of the parties to the dispute: in the case at hand, since the interests of several parties are common and shared against only one other party, the arbitral tribunal must be constituted in such a manner as to guarantee the respect of the equality of the parties in the appointment of its members. The principle of the equality of the parties in the arbitrator appointment process has been established by a landmark decision of the 1st Civil Chamber of the French Court of Cassation in the Dutco case, where it stated that “the principle of the equality of the parties in the appointment of the arbitrators is a principle of public order, it may only be waived after that the dispute has arisen.” This principle of international public policy implies that each party must be placed on an equal footing when it comes to the appointment of the arbitral tribunal. The arbitration clause contained in the shareholders’ agreement was clearly not adapted to a multiparty arbitration: while it provided for an arbitral tribunal composed of five arbitrators, one nominated by each of the four shareholders, it did not foresee a situation where the interests of several shareholders would be convergent against one of them, as in the case at hand. As the Court of Appeals stated, the respect for the principle of equality of the parties in the appointment of the members of the arbitral tribunal – including the parties’ interests and relationships – must be considered both at the time of the conclusion of the arbitration clause and at the time of the dispute. Had the arbitral tribunal been constituted pursuant to the exact provisions of the arbitration clause, the award would have violated the principle of equality of the parties in the appointment of the arbitral tribunal and would therefore have risked being set aside pursuant to French law.
B.2 Jurisdiction of the arbitral tribunal and applicability ratione temporis of the BIT to an investment
By a judgment dated 30 March 2021, the Paris Court of Appeal set aside an international arbitral award issued on 26 November 2018 in favor of Joint Stock Company State Savings Bank of Ukraine (“JSC Oschadbank”) in a dispute against the Russian Federation. Following the crisis in the Crimean Peninsula, this area, which was formerly part of the Ukrainian People’s Republic, was attached to Russia on 18 March 2014. On 2 April 2014, the Russian Federation adopted several laws regulating the banking sector and fixing the conditions for Ukrainian banks to continue their activity in Crimea, following its annexation to Russia. The National Bank of Ukraine, JSC Oschadbank, considered that this new legal framework led to the effective exclusion of Ukrainian banks set up in Crimea and prevented it from carrying out its mission as banking regulator. Russia then published Regulation No. 260 prohibiting Ukrainian banks from performing their activities in Crimea. On 26 May 2014, the Bank of Russia ordered Oschadbank to cease its activities in Crimea and appointed a representative to administer the latter’s activities in Crimea. On 20 January 2016, Oschadbank, which considered its activities in Crimea as an investment that had been expropriated within the meaning of the Russia-Ukraine BIT of 27 November 1998, initiated arbitration proceedings under the aegis of the Permanent Court of Arbitration against Russia. The Russian Federation challenged the jurisdiction of the arbitral tribunal and refused to participate in the arbitration proceedings. By an award dated 26 November 2018, the arbitral tribunal decided that it had jurisdiction to rule upon the dispute, and found that Russia had violated the provisions of the BIT by carrying out illegal expropriations of Oschadbank’s investments in Crimea. The tribunal further ordered Russia to pay Oschadbank approximately USD 1.1 billion in damages. The Russian Federation applied to set aside the award before the Paris Court of Appeal on 19 February 2019. In support of its application, it argued, among other things, that the arbitral tribunal lacked jurisdiction because the BIT was not applicable ratione temporis to the investments made by Oschadbank. The Court of Appeal noted that, pursuant to article 12 of the BIT, the BIT applied to investments made on or after 1 January 1992. It further pointed out that the arbitration agreement provided for in article 9 of the BIT was an offer to arbitrate inserted within the limits fixed by the BIT; in other words, the jurisdiction of the arbitral tribunal was subject to an investment made on or after 1 January 1992. Thus, it considered that the ground of annulment sustained by Russia concerned the jurisdiction of the arbitral tribunal and that it could be examined by the court on the basis of article 1520, 1° of the French Code of Civil Procedure. The Court of Appeal stressed that the issue of the applicability ratione temporis of the BIT to investments made in Crimea had not been debated before the arbitral tribunal, as opposed to its applicability ratione materiae. In light of article 31 of the Vienna Convention on the Law of Treaties of 23 May 1969, the Court of Appeal stated that:
this article [12 of the BIT] must be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.
Relying on this provision, as well as on its interpretation of the preparatory works of the BIT and recent case law, the Court of Appeal ruled that the BIT was only applicable to investments made on or after 1 January 1992 and that investments made before that date were excluded from the protection of the BIT even if they continued after that date. The Paris Court of Appeal then sought the date on which the banking activity started and the investment of Oschadbank was made in Crimea. It concluded that in view of the evidence submitted in the proceedings, and notably Oschadbank’s internal documents, this date was prior to 1992 (in 1991, directly after the dissolution of the Soviet Union). The Court of Appeal ruled that the BIT was therefore inapplicable ratione temporis to Oschadbank’s investment in Crimea and that the arbitral tribunal had wrongly accepted jurisdiction to hear the dispute. Consequently, it set aside the arbitral award issued on 26 November 2018. The decision of the Paris Court of Appeal is important not only for the significant interpretation it offers but also because it serves as a procedural reminder. On the merits, this decision clarifies the scope ratione temporis of the BIT and the position of the Court of Appeal is clear: the protection provided for by this BIT is strictly limited to investments made on or after 1 January 1992. From a procedural point of view, this decision reminds us that the procedural protections that the arbitration agreement provides can only be implemented if the BIT applies to the investments in dispute. On the contrary, a claimant will be barred from invoking the arbitration agreement contained in the BIT if its investment falls out of scope. Further, an arbitral tribunal that accepts jurisdiction over a dispute concerning an investment that is not covered by the BIT could see its award set aside. However, the question of whether the applicability ratione temporis is a matter of jurisdiction of the arbitral tribunal or the admissibility of the claim remains a complex issue on which the Paris Court of Appeal and the Court of Cassation views differ. This decision is also relevant on the merits for what it does not address. Indeed, the Court of Appeal missed an opportunity to take a position on the applicability ratione loci of the Russia-Ukraine BIT (i.e., the precise territory to which it applies) in particular to investments made in Crimea both pre and post-annexation to the Russian Federation. Nevertheless, it is certain that while several disputes related to the attachment of Crimea to the Russian Federation are in preparation or pending before several arbitral tribunals, this issue with both political and legal stakes will return to the front stage in the future.
B.3 Extension of the arbitration clause to a non-signatory mother company
On 15 October 2018, Kuwaiti company Kuwait Gulf Link Ports International (KGL) and Damietta International Port Company SAE (DIPCO), a company incorporated under Egyptian law, applied to set aside an arbitral award rendered on 15 January 2018 under the aegis of the ICC, in a dispute against Korean company Doosan Heavy Industries & Construction Co Ltd (“Doosan”). In 2006, KGL concluded a concession agreement for the construction and operation of a new terminal at the Egyptian port of Damietta, and created an Egyptian subsidiary, DIPCO, for that purpose. On 13 April 2007, DIPCO and Doosan entered into a contract for the supply of gantry cranes from the latter to DIPCO, which contained an ICC arbitration clause. However, the construction project failed and the Egyptian state terminated the concession agreement. Doosan sustained that DIPCO breached the supply contract and by a letter dated 4 March 2016, it notified DIPCO of its intention to terminate the contract and request damages. On 18 April 2016, Doosan filed a request for arbitration before the ICC against DIPCO and KGL pursuant to the arbitration clause included in the supply contract. The arbitral tribunal rendered its award on 15 January 2018, upholding its jurisdiction over the dispute including over KGL and DIPCO, and sentenced them to pay, as joint and several debtors, the amounts of approximately USD 74.5 million and EUR 2.05 million (approximately USD 2.3 million) in damages and arbitration costs. KGL and DIPCO alleged that the award should be set aside because the arbitral tribunal wrongly upheld its jurisdiction over KGL, which was not a signatory of the supply contract. The Paris Court of Appeal issued a decision on 23 November 2021 stating that:
the arbitration clause contained in an international contract has a validity and effectiveness of its own which require its extension to all parties directly involved in the performance of the contract and in the disputes to which they may give rise, once it has been established that their contractual situation and their activities allow to presume that they accepted the arbitration clause, of which they were aware of the existence and scope, even if they did not sign the contract containing it.
The Court of Appeal conducted a thorough review of the circumstances of facts and law on which the ground for annulment was based. First of all, the Court underlined that KGL obtained itself the concession for the construction of the containers’ terminal at Damietta port and that it created a local subsidiary, DIPCO, to carry out its investment locally. The Court stressed that it was KGL who organized the call for tenders and prepared the draft call for tenders, to which the draft supply contract containing the arbitration clause was attached. Furthermore, the Court referred to the ruling of the arbitral tribunal which pointed out that “KGL was initially amongst the parties to the agreement which was sent to the participants to the call for tenders and [appeared] as a beneficiary of the performance guarantee provided in the contract” and concluded that KGL cannot ignore the existence of the arbitration clause contained in the contract. Similarly, the annulment judge highlighted that KGL led the negotiations with Doosan and played a key role in the conclusion of the contract. The Court further held that KGL’s designation as “employer’s representative” in the call for tenders’ file meant that KGL had better control over its subsidiary’s activities and investment in the construction project, of which KGL was the beneficiary. According to the Court of Appeal, the evidence showed that KGL enjoyed a large power over the project, which it closely monitored, and was in charge of the project’s entire development; it could even enter into contracts with suppliers. The Court also found that KGL played a major role during meetings and participated without DIPCO in negotiations and conclusion of technical modifications related to the contract. In particular, the Court stressed that KGL not only acted as a representative of DIPCO, which was not the sole decision-maker, but that it corresponded on key points of the performance of the contract without DIPCO. Finally, the Parisian court noted that there is no evidence that Doosan and DIPCO wanted to exclude KGL from the scope of the arbitration clause included in the supply contract. In light of all these elements, the Paris Court of Appeal found that KGL was significantly involved in the negotiation and performance of the contract; therefore, according to French case law, the arbitration agreement must be extended to KGL although it was not a signatory of the contract containing the arbitration agreement. The Court thus dismissed KGL and DIPCO’s set aside application. In this decision, the international commercial chamber of the Paris Court of Appeal reasserts the consistent position adopted by French courts on the matter of the extension of an arbitration agreement to non-signatories. It not only refers to landmarks decisions rendered on this matter but also proceeds to a thorough examination of the role and behavior of KGL, which pretended to be a simple “representative” of its subsidiary DIPCO.
This contribution was prepared with the assistance of Stéphane Sonigo-Gregori, Jurist/PhD Candidate at Baker McKenzie’s Paris office.
 ECJ (Grand Chamber) Slowakische Republik v. Achmea BV, 6 March 2018, C-284/16.
 Paris Court of Appeal, 24 September 2019, No. 18/14721, Republic of Moldova v. Komstroy LLC; Baker McKenzie International Arbitration Yearbook 2019/2020 — France: https://globalarbitrationnews.com/baker-mckenzie-international-arbitration-yearbook-2019-2020-france/.
 ECJ (Grand Chamber) Republic of Moldova v. Komstroy LLC, Successor in law of the Ukrainian company Energoalians, 2 September 2021, C-741/19.
 ECJ (Grand Chamber), Republic of Poland v. PL Holding Sàrl, 26 October 2021, C-109/20.
 Paris Court of Appeal, 26 January 2011, No. 19/0666, Vidatel Ltd v. PT Ventures SGPS SA, Mercury Servicios de Telecomunicacoes SA and Geni A.
 This clause provided that “16.1 Any claim, dispute or other matter in question between the Parties with respect to or arising under this Agreement or the breach thereof, shall be decided by arbitration, by a panel of five  arbitrators, one to be designated by each Party, and the fifth one to be designated by the other four arbitrators, provided, however, that if no agreement between the arbitrators designated by the Parties is reached, the independent arbitrator shall be designated by the President for the time being of the International Chamber of Commerce. Such arbitration shall be in accordance with [the] Rules of the International Chamber of Commerce. Any such arbitration shall be conducted in English in Paris.”
 French Court of Cassation, 1st Civil Chamber, 7 January 1992, No. 89-18708 and No. 89-18726, Dutco construction c. BKMI et Siemens.
 J-B. RACINE, Droit de l’arbitrage, PUF, p. 325, §470.
 Russian Minister of Justice Mikhail Galperin declared that the arbitral tribunals have no jurisdiction to rule — and should not rule — on disputes that would imply that they rule on issues of national or international politics. Regarding the disputes related to Crimea, he said the following: “Since Russia and Ukraine are not in consensus regarding the status of the territory, an investment tribunal cannot resolve such dispute either. This is clearly a diplomatic political question between Russia and Ukraine Moscow GAR Live, 8 and 9 October 2020, Full text is available here.