CYIL 2015

359

DIAG HUMAN: A CASE STUDY ON MULTIǧJURISDICTIONAL ENFORCEMENT…

for abuse of participation in economic competition and unfair competition and

sought compensation for the frustrated blood plasma deal. The parties then agreed

to submit their dispute to an

ad hoc

arbitration conducted in the Czech Republic,

and, to this effect, on 18 September 1996, they entered into a written arbitration

agreement in accordance with the Czech Arbitration Act 1994.

On 19 March 1997 an interim award on liability and causation was issued in

favour of Diag Human. In line with the agreed “two-tier” arbitration proceedings,

as described in more detail below in this paper, the interim award was subject to a

review process and was approved by a review tribunal in an review interim award

dated 27 May 1998. On 25 June 2002 the arbitral tribunal rendered a partial award

ordering the Czech Republic to an interim payment of CZK 326,608,334. The

partial award was again reviewed by a second arbitral tribunal and was confirmed in a

review partial award of 16 December 2002. The final award (“Award”) followed on 4

August 2008 awarding Diag Human S.E.

CZK 4,089,716,666.00 in damages plus

interest (which continues to accrue). At the time of the publication of the Award, the

compensation amounted to more than eight billion Czech crowns.

The arbitration agreement provided for a mechanism to allow the parties to invoke

a review of the issued arbitral award by a newly formed second arbitral tribunal.

The review tribunal would be constituted in the same manner as the original one.

The Czech Arbitration Act 1994 in Section 27 expressly stipulated a possibility for

the parties to agree to such review in the framework of the arbitration proceedings.

In accordance with Article V of the arbitration agreement the review process had

to be initiated within 30 days from the date of receipt of the award. If the review

mechanism were invoked, the award would not become binding upon the parties

until the termination of the review process.

Following the publication of the Award both parties served their applications for

the review process. Diag Human later withdrew its request. The review process relating

to the Award was accompanied by a series of disputes challenging the constitution

of the arbitral review tribunal, the effect of Diag Human’s withdrawal and the

validity of the Czech Republic’s application for review being allegedly submitted by

an unauthorized person. The review process ended on 23 July 2014 with an award

somewhat surprisingly discontinuing the arbitration proceedings for a

res iudicata

reason (“Review Award”). The Review Award did not expressly quash the Award,

which was subject to the review, and the parties appear to disagree on the meaning of

the Review Award. It remains to be seen whether the dispute will continue and will,

thus, belong to the category of cases that are seemingly never-ending.

The proceedings were started by a Czech joint-stock company, Diag Human, a.s. (former business

name Conneco, a.s.) that later merged with Diag Human SE, a European company seated in the

Principality of Liechtenstein, being its legal successor.