Summary

Memorandum Opinion and Order

MOL Hungarian Oil and Gas PLC ("MOL") prevailed in arbitration against the Republic of Croatia and now petitions this Court to enforce the arbitration award. Croatia moves to dismiss the petition based on sovereign immunity, personal jurisdiction, forum non conveniens, and failure to state a claim on the merits. Having stayed proceedings pending resolution of Croatia's sovereign immunity argument, the Court now concludes immunity is foreclosed by the D.C. Circuit's recent decision in NextEra Energy Glob. Holdings B.V. v. Kingdom of Spain, 112 F.4th 1088 (D.C. Cir. 2024). Because each of Croatia's remaining bases for dismissal are without merit, the Court denies the motion to dismiss.

I. Background

The Energy Charter Treaty ("ECT") is an investment treaty that the EU, most of its member states, including Croatia and Hungary, and some other countries signed "to promote international cooperation in the energy sector." Id. at 1094; see ECT art. 2, Dec. 17, 1994, 2080 U.N.T.S. 95.

Under the treaty, contracting states agree to afford "fair and equitable treatment" to investments made by investors from the other contracting states and agree to not "impair by unreasonable or discriminatory measures their management, maintenance, use, enjoyment or disposal." ECT art. 10(1). The ECT also provides that each contracting state "gives its unconditional consent to the submission of a dispute to international arbitration" in certain tribunals, including the International Centre for Settlement of Investment Disputes ("ICSID"). ECT art. 26(3)(a) & 4(a)(i).

MOL, a Hungarian oil and gas company with investments in Croatia, brought arbitration against Croatia in ICSID, alleging Croatia "violated [its] obligations under the ECT." Croatia contested ICSID's jurisdiction, but the tribunal rejected its arguments and the parties arbitrated MOL's claims to completion. The tribunal ultimately found Croatia breached its ECT obligations and awarded MOL $183.94 million in damages, plus costs, fees, and interest.

MOL then filed the present petition to enforce the award. After Croatia moved to dismiss the petition based in part on sovereign immunity, the Court granted the parties' joint request to stay proceedings pending the D.C. Circuit's resolution of NextEra, which appeared likely to resolve whether an EU signatory to the ECT is entitled to sovereign immunity against enforcement of an arbitration award in an intra-EU dispute. The Circuit later issued its decision, holding that the ECT operates as an agreement to arbitrate that withdraws sovereign immunity. Id. at 1105. Following that decision, Croatia nonetheless renewed its motion to dismiss "both to preserve its arguments in the event the D.C. Circuit, en banc, or the Supreme Court, reverses or otherwise modifies NextEra and to distinguish certain aspects of the NextEra holding."

This Court stayed merits briefing to consider Croatia's renewed motion to dismiss. See Process & Indus. Devs. Ltd. v. Fed. Republic of Nigeria, 962 F.3d 576, 584 (D.C. Cir. 2020) (recognizing sovereign immunity should generally be resolved as early as possible).

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