order or, if the order is to be served out of the jurisdiction, within such other period as the court may set – (a) the defendant may apply to set aside the order; and (b) the award must not be enforced until after – (i) the end of that period; or (ii) any application made by the defendant within that period has been finally disposed of. (10)The order must contain a statement of – (a) the right to make an application to set the order aside; and (b) the restrictions on enforcement under rule 62.18(9)(b). […]
In the case in question, GRI had failed to inform the Court that “Venezuela was likely to rely upon state immunity”. Although it was clear from the award presented to the judge, that throughout the arbitration Venezuela had challenged that GRI was an “investor” for the purposes of the BIT (and that therefore had been an arbitration agreement with GRI), and known that Venezuela had continued to rely on State Immunity in proceedings in Paris seeking the annulment of the award, and in proceedings in Luxembourg, the party seeking the enforcement of the award had failed to “summarise the arguments” on State Immunity on which Venezuela continued to rely, “for the benefit of the judge”.17 Teare J stated:
“[…] Mr Miller told the court in unqualified terms that Venezuela was not entitled to state immunity. On an ex parte application, as Bingham J, stated in Siporex Trade v Comdel at p.437, the applicant “must … identify any likely defences”. Consistently with that guidance Mr Miller ought to have identified what Venezuela might say in relation to the proposition that it was not entitled to state immunity.18
He therefore concluded that GRI had failed to give full and frank disclosure. “Had GRI given full and frank disclosure with regard to the state immunity defence. I had no doubt that an ex parte order would not have been made”, Teare J held.19 Likewise it would have been required that the arbitration claim form be served on Venezuela. 20
Despite the “serious failure to give full and frank disclosure”, Teare J maintained the order but marked the claimant’s failure with an appropriate order as to costs, 21 as he concluded, following an inter parte hearing in the context of the application to set the order aside, that GRI was an investor for the purposes of the BIT.
Teare J found that the GRI satisfied the definition of investor under the Venezuela-Canada BIT (to whom Venezuela had made an offer to arbitrate), but it found so on a narrower basis than the arbitral tribunal. In his examination of whether there had been an agreement in writing for the purposes of section 9 of the State Immunity Act 1978 he found that there existed such an agreement.
"SHOULD FAILING TO DISCLOSE THE INTENTION OF THE OPPOSING PARTY TO RAISE SOVEREIGN IMMUNITY ISSUES HAVE FOR SOLE CONSEQUENCE THE PAYING OF COSTS? OR ARE MORE FUNDAMENTAL PRINCIPLES AT STAKE?"
Venezuela submitted that GRI was not an investor under the BIT because it had not made an investment in the territory of Venezuela but only acquired the indirect ownership of shares and mining rights “without taking any active step of its own by way of commitment of money or resources to the economy of Venezuela in connection with that acquisition”.22 The State argued that what had taken place had been a merger and share swap between a US parent company and its own subsidiary, (effectively a corporate restructuring) which did not constitute making an investment required by the BIT. Teare J agreed with Venezuela, that mere passive