<center><span class="news-text_italic-underline">Czech Republic v. Diag Human SE & Josef Stava [2025] EWCA Civ 998</span></center>
The arbitration arose under the Switzerland–Czech Republic BIT and was administered pursuant to the UNCITRAL Rules 2010. The claimants, Diag Human SE (“<span class="news-text_medium">Diag SE</span>”) and Josef Stava, sought damages from the Czech Republic (“<span class="news-text_medium">CZR</span>”) for treaty breaches. In a prior arbitral award, the tribunal awarded approximately USD 350 million in damages to the claimants. CZR challenged the awards before the English courts under sections 67 and 68 of the Arbitration Act 1996. On 7 May 2025, the Court found in CZR’s favour concerning Diag SE, holding that the company did not qualify as an “investor” under the BIT.
The award in Diag’s favour was therefore annulled. However, the Court rejected CZR’s jurisdictional challenge against Stava’s claim, confirming him as a proper investor with standing under the treaty. Unable to agree on implementation of the judgment, CZR argued that Stava’s award was inseparable from Diag’s and must also be set aside.
Following the 7 May 2025 judgment, the arbitral tribunal issued a Remittal Award, reaffirming that the Czech Republic remained liable to pay the full amount originally granted. The tribunal declined to consider submissions on the impact of the Court’s judgment, finding it had not invited post-hearing input.
CZR responded with three actions:
On 11 July 2025, the arbitrators resigned, noting that CZR’s accusations had “tainted” any possibility of continuing proceedings, though they rejected the impartiality claims.
Lord Justice Males, with Lady Justice Andrews and Lord Justice Popplewell concurring, rejected CZR’s argument that Stava’s award was inseparable from Diag’s. The Court held that the arbitral tribunal had independently recognised Stava as an investor who had suffered compensable loss, regardless of Diag’s participation.
Key findings included:
On costs, the Court acknowledged the tribunal’s resignation complicated matters but left the original cost allocations largely intact, requiring CZR to pay 70% of Stava’s costs and arbitration expenses.
The decision underscores the English courts’ commitment to the principle of minimal judicial intervention in arbitral awards. It also clarifies that the annulment of an award against one claimant does not automatically invalidate a co-claimant’s award, provided that each rests on independent jurisdictional grounds.
For states, the ruling highlights the difficulty of using “severability” arguments to nullify valid awards. For claimants, the decision reinforces confidence that English courts will preserve arbitral outcomes whenever possible, even in complex multi-party treaty disputes.
