Mishcon de Reya has secured a decisive victory for our clients, Diag Human SE and its owner Mr Josef Stava – with the English court comprehensively dismissing the Czech Republic’s attempt to challenge an investment treaty award in favour of our clients.
The Commercial Court of England and Wales has comprehensively rejected the Czech Republic’s attempt to challenge the 2022 bilateral investment treaty award in favour of Diag Human SE and Josef Stava.
The dispute arises from wrongdoing by the Czech Health Minister dating as far back as the early 1990s and involving interference in and corruption of a commercial arbitration by the Czech State, including in the arbitral review process. In 2022, a Tribunal, constituted under the Swiss-Czech bilateral investment treaty and comprised of three of the most eminent international arbitrators, unanimously found that the Czech Republic had abused its sovereign powers and breached its treaty obligations, including as a result of its egregious interference in the arbitral review process. The Tribunal’s award of damages is for ca. US$750 million.
The Czech Republic sought to challenge the Tribunal’s award before the English courts, as England was the seat of the arbitration. Following a two week hearing in January-February 2024, the Commercial Court found that the majority of challenges which the Czech Republic sought to pursue were barred.
Three jurisdictional challenges remained to be decided, i.e. that: a) the investments did not qualify for protection under the Treaty; b) the dispute pre-dated the entry into force of the Treaty; and c) one of the claimants, Diag Human SE, was not controlled by a Swiss national after June 2011 and could not therefore benefit from the protection of the Treaty.
These remaining challenges were heard by the Commercial Court in London over a period of two weeks in June 2024. In a thorough and well-reasoned judgment, the Commercial Court has dismissed all these challenges and supported of the Tribunal’s findings.
This decision is yet another blow to the Czech Government’s strategy of seeking to evade its obligation to compensate Diag Human SE and Mr Stava by resorting to endless proceedings and delays. There can now be little doubt that Diag Human SE’s and Mr Stava’s c. US$750 million award will be successfully enforced. The Czech Government’s failing strategy is proving costlier with every day that passes as interest and costs continue to accrue – sums that will eventually have to be paid by the Czech Government to Diag Human SE and Mr Stava.
Shaistah Akhtar led the Mishcon de Reya team, supported by Managing Associate Lydia Allaby and Associates Himaansu Servansingh and Connor Morrison.
Instructed by Mishcon de Reya, the Counsel team was led by Lord Verdirame KC and Philip Riches KC (Twenty Essex Chambers), supported by Kate Parlett, Sam Goodman and Jonathan Ketcheson (Twenty Essex Chambers).
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