Court of Appeal clarifies investor qualification in Czech Republic v Diag Human SE arbitration dispute

The Court of Appeal's recent judgement in the Czech Republic v Diag Human SE case has provided crucial clarification on the independence of arbitral awards and investor qualification under bilateral investment treaties. The 28 July 2025 ruling addressed challenges to arbitration awards totalling approximately $350 million plus interest, stemming from disputes under the Czech Republic-Switzerland bilateral investment treaty.

Divergent outcomes for co-claimants

The Court reached markedly different conclusions regarding the two award recipients. Whilst dismissing the Czech Republic's challenge to Mr Josef Stava's award, recognising his entitlement to damages for treaty breaches, the Court upheld the challenge against Diag Human SE. The critical distinction lay in investor qualification under the bilateral investment treaty, with the Court determining that Diag Human SE failed to meet the requisite criteria.

Lord Justice Males, presiding over the case, addressed the fundamental question of whether the awards were inextricably linked. The Czech Republic contended that Mr Stava's award was dependent upon Diag Human SE's, arguing that jurisdictional deficiencies affecting one party should nullify both awards. This position was firmly rejected.

Independence of arbitral awards

The Court's analysis focused on the distinct nature of each party's claims. Mr Stava's counsel successfully argued that his award arose from separate circumstances of personal loss directly attributable to Czech treaty breaches. This reasoning proved decisive in establishing the independence of individual investor claims from corporate co-claimant awards within the same arbitration proceedings.

The judgement addressed concerns regarding potential double recovery, requiring both parties to provide assurances preventing recovery exceeding the maximum permitted under their respective awards. This mechanism safeguards against unjust enrichment whilst preserving legitimate recovery rights.

Jurisdictional considerations

The Court's treatment of Diag Human SE's claim highlighted the stringent requirements for establishing investor status under bilateral investment treaties. The jurisdictional analysis proved fatal to Diag Human SE's position, with the Court finding insufficient grounds to maintain the original award. This aspect of the judgement reinforces the importance of precise treaty interpretation and the consequences of failing to satisfy definitional requirements.

Implications for international arbitration

The ruling establishes significant precedent regarding the treatment of multiple claimants in investment treaty arbitrations. By affirming the independence of individual claims whilst scrutinising corporate investor qualification, the Court has provided guidance on navigating complex multi-party investment disputes.

The judgement reflects the judicial principle of minimal interference with arbitral awards, balanced against the necessity of proper jurisdictional foundations. This approach preserves arbitral integrity whilst ensuring compliance with treaty requirements and domestic legal standards.

The Court's emphasis on preventing double recovery demonstrates sophisticated understanding of the practical complexities arising in investment arbitration. The assurance mechanism developed provides a template for managing similar concerns in future cases involving multiple related claims.

This judgement contributes to the evolving jurisprudence on investor-state dispute resolution, particularly regarding the interaction between domestic courts and international arbitration frameworks. As cross-border investment continues expanding, such precedents shape the landscape of international investment protection and dispute resolution mechanisms.

The decision's nuanced approach to award independence, combined with rigorous jurisdictional analysis, offers valuable guidance for structuring future investment treaty claims and understanding the boundaries of arbitral award enforcement in domestic courts.