Case Digest: Czech Republic v Diag Human SE [2025] EWCA Civ 588

<center><span class="news-text_italic-underline">Judgment Date: 7 May 2025</span></center>

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Summary

The Court of Appeal considered appeals against the Czech Republic’s challenge to an arbitral award made under a Bilateral Investment Treaty (“<span class="news-text_medium">BIT</span>”) with Switzerland. The Court examined the timeliness of jurisdictional objections under Sections 31 and 73 of the <span class="news-text_italic-underline">Arbitration Act 1996</span>, as well as the meaning of "investor" and "control" within the treaty, ultimately ruling on the scope of the tribunal's jurisdiction over claims arising from the BIT.

Legal Issues

1. Whether the challenge to jurisdiction raised by the Czech Republic was timely under Sections 31 and 73 of the <span class="news-text_italic-underline">Arbitration Act 1996</span>.
2. Whether the claimant’s disposal of shares in the company after the dispute began affected the tribunal's jurisdiction.
3. The meaning of "investor" and "control" under the BIT between Switzerland and Czechoslovakia.

Court’s Decision

1. <span class="news-text_medium">First and Second Appeals:</span> Dismissed. The Court ruled that the Czech Republic’s jurisdictional objections were properly raised late but had been "admitted" by the tribunal. This allowed the objections to proceed despite their delay, in accordance with Section 31(3) of the <span class="news-text_italic-underline">Arbitration Act 1996</span>.
2. <span class="news-text_medium">Third Appeal:</span> Allowed. The Court of Appeal determined that S did not retain "de facto control" over the company in a manner that would qualify as an investor under the BIT. As a result, the arbitral award in favour of the appellant was set aside due to the lack of sufficient control by the claimant over the company.

Practical Implications

This decision underscores the importance of understanding the specific scope of jurisdictional objections under the <span class="news-text_italic-underline">Arbitration Act 1996</span> and the interpretation of terms like "investor" and "control" in international arbitration contexts. It highlights the potential complexities in interpreting and enforcing BITs and arbitration agreements, particularly when issues of control and ownership arise. Arbitration practitioners must be aware of the court’s discretion in dealing with timeliness and jurisdictional challenges, as well as the legal nuances in investor-state arbitration disputes.