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CIArb News

Micula v Romania – Appeal Allowed

3 July 2017 Features
By Sabina Adascalitei MCIArb, CIArb Research and Academic Affairs Coordinator

Following an ICSID Tribunal’s decision to award the Micula brothers substantial damages against Romania, the Micula brothers began enforcement proceedings and the award was registered ex parte in the High Court.

 In response, Romania applied to set aside the Registration Order, which was refused by the High Court and proceedings were stayed. In mid-June, the High Court allowed the Micula investors to appeal the decision to stay enforcement.

The High Court noted that the appeal would raise complex legal issues, which could be of relevance to the wider legal community. The court declined Micula’s request for security for costs, noting that even though, for the time being, the court would not order Romania to pay £150 million in security pending stay of enforcement, this did not represent a definite ruling. In deciding on Micula’s request to order security for costs, the court acknowledged that there were discretionary arguments both in favour and against Micula’s application. Furthermore, the court considered that Micula had advanced persuasive arguments in favour of ordering security for costs. However, before coming to a final conclusion, the court required to be satisfied that there was legal power to make an order for scrutiny and to be assured that the making of an order for security and such steps as may be consequent on any compliance would not themselves be treated as a violation of EU law.

The Micula brothers made note of the Court having mentioned that they had advanced a persuasive case and tried to build a further argument from that point. In short, Micula submitted that the court’s concerns regarding non-compliance would only be substantiated if Romania stated expressly that it would not comply with a particular order.  On this point, Micula argued that Romania was employing delay tactics, which allegedly resulted in Micula having to operate their business “six hundred miles from Bucharest” with no possibility to benefit from the regional aid incentives. In response, Romania denied any delay tactics and argued that there was no evidence to support Micula’s submissions.

Based on the arguments raised before the court, it seems that the Micula brothers have a strong case for being awarded security for costs. However, it is still not entirely clear what the consequences of non-compliance are and how this should be assessed by the court before reaching a decision.

The EU Commission sheds some light on this aspect through its submissions. It noted that any sums sought as security would form part of the final award and would trigger Romania’s obligation to recover them. On this note, the Commission insisted that the English High Court should not be persuaded to order security for costs, as this would lead to an “absurd result”.