[2025] EWCA Civ 998

Mr Lucas Bastin KC for CZR submitted that once the award in favour of Diag SE is set aside, the award in favour of Mr Stava cannot stand. All of the damages awarded were for loss suffered by Diag SE as a result of non-payment of the sum awarded by the 2008 Award. But that was an award in favour of Diag SE in arbitration proceedings to which Mr Stava was not a party. Mr Stava could only recover such loss in his capacity as a shareholder of Diag SE. But our decision as regards Diag SE was based on the fact that Mr Stava had ceased to be a shareholder of Diag SE and so no longer had control of the company or any of the economic attributes of ownership.

Mr Bastin cited cases from Australia and Singapore in which an issue arose whether different parts of an award were severable, in which case severable parts which were not affected by a valid challenge could stand, whereas if the award was not severable, the whole award would have to be set aside (William Hare UAE LLC v Aircraft Support Industries Pty Ltd [2014] NSWSC 1403; GD Midia Air Conditioning Equipment Co Ltd v Tornado Consumer Goods Ltd [2017] SGHC 193; and CBX v CBZ [2021] SGCA(I) 3). He submitted that the award in favour of Mr Stava was tainted by, and inextricably linked with, the award in favour of Diag SE, and therefore could not survive the setting aside of the award in favour of Diag SE.

I would reject this submission. The arbitral tribunal found that CZR is liable in damages to Mr Stava on the basis that he was an investor who had suffered loss in the amount of the 2008 Award as a result of breaches by CZR of the BIT. As explained at para 48 of our judgment, the tribunal found that the BIT breach in relation to the Bojar Letter caused damage in the amount of the 2008 Award; that the BIT breach in relation to the Commercial Arbitration caused no loss as it did not prevent the 2008 Award; that the BIT breach in relation to the Review proceedings and the 2014 Resolution tainted the whole of the Review proceedings, such that the 2008 Award was entitled to recognition in international law; and that the damages there identified would compensate for the loss caused by this breach of the BIT.

The fact that the 2008 Award was in favour of Diag SE did not prevent the tribunal from treating Mr Stava as having suffered loss in the same amount. That is what the tribunal did, describing him as a privy of Diag SE. This was a decision on the merits which is not open to review, all jurisdictional challenges as regards Mr Stava having been dismissed.

The fact that Mr Stava divested himself of his shareholding in Diag SE did not affect the tribunal’s jurisdiction over his claim for loss which, on the tribunal’s findings, he had already suffered. Whether that divestment meant that his claim ought to fail was a point going to the merits of the claim and not the tribunal’s jurisdiction over that claim. It was therefore a matter for the tribunal and not the court.

The fact that, as we have now determined, the tribunal had no jurisdiction to make an award against Diag SE does not undermine the tribunal’s decision as regards Mr Stava. The tribunal would have had jurisdiction to determine Mr Stava’s claim, including to find that he had suffered damage in the same amount as Diag SE, even if Diag SE had never been a party to the BIT arbitration. So there is no logical difficulty in confirming the award in favour of Mr Stava. But even if there were, the fact that an award is illogical is not a ground of challenge under s.67 or s.68 AA 1996.

I would accept that if an award is successfully challenged for lack of substantive jurisdiction or serious irregularity a question may arise whether the whole award must be set aside. That much is apparent from the terms of s.67 and s.68 AA 1996 without needing citation of Antipodean or Far Eastern cases, welcome as authorities from those jurisdictions always are in this field. But in the present case, Mr Stava has a valid award in his favour and I see no good ground on which he should be deprived of it merely because the tribunal had no jurisdiction over the claim by Diag SE. That view accords with the principle of minimal interference with arbitration awards which underlies the 1996 Act.