Home > News > Liedekerke successfully represented the Republic of Poland before the Belgian Courts and obtained the annulment of an investment treaty award issued against the State.
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Liedekerke successfully represented the Republic of Poland before the Belgian Courts and obtained the annulment of an investment treaty award issued against the State.

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03/03/2022

Liedekerke represented the Republic of Poland before the Belgian Courts in proceedings for the setting aside (annulment) of an UNCITRAL arbitral award, in proceedings administered by the Permanent Court of Arbitration, in favor of Manchester Securities Corporation (“MSC”), an affiliate of US hedge fund manager Elliott Management, on the basis of an alleged violation of the US – Poland Bilateral Investment Treaty. Manchester Securities Corporation obtained the award in 2018 from a Brussels-seated tribunal.
The breach of the treaty found by the arbitral tribunal consisted of an alleged denial of justice in civil proceedings before the Polish Supreme Court.

 
The dispute relates to loans made by Manchester to a real estate developer called Leopard, which was overseeing the construction of an apartment complex in Krakow before it entered bankruptcy proceedings.
After Leopard’s creditors sought to recover their debts against the value of the complex, the Polish Supreme Court ruled in 2012 that the mortgage on the complex in favour of Manchester was invalid, and that Manchester consequently did not have priority over the would-be apartment owners.
Manchester filed for arbitration in 2015 under the US-Poland bilateral investment treaty, claiming US$15 million. The tribunal ruled unanimously three years later that Manchester had suffered a denial of justice in the Polish courts and should receive US$9.5 million plus interest.
The tribunal also ordered Manchester to reduce its claims in the bankruptcy proceedings by the amount awarded by the tribunal and actually paid by Poland.

 
The Brussels Court of First Instance granted the Republic of Poland's request for interim measure by prohibiting MSC from pursuing the enforcement of the award before a substantive judgment has been handed down. Poland applied to set-aside the award in 2019.
 

A 4-day hearing on the merits took place before the Brussels Court of First Instance in January 2022.

 
By a judgment dated 17 February 2022, the Brussels Court sided with Poland and decided to annul in full the arbitral award. The Court found that there was no reasonable basis to conclude that the Polish Supreme Court had discriminated against US investor MSC, and that the arbitral tribunal misconstrued the concept of denial of justice in international law and applied it in a manner that was in flagrant contradiction with public international law.
Moreover, the alleged breaches of procedural rules that supposedly occurred in the proceedings before the Polish Supreme Court, even if they did occur, would not be sufficient to establish a denial of justice.

 
According to Liedekerke partner Arnaud Nuyts, counsel for Poland in the Belgian proceedings: “The setting aside of arbitral awards by the Belgian courts is a rare occurrence, and to the best of our knowledge, this is the first-ever investment award annulled by the Belgian Courts.”

 
This is a fantastic victory for Poland whose rights have prevailed and a milestone achievement for the international arbitration team made of Arnaud Nuyts, Partner, Bruno Hardy and Esther Lanotte, both Senior Associates, and Associate Louis Hollanders, who assisted the Republic of Poland.

 
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