French Courts reaffirm strict jurisdictional standards in investment arbitration—lessons from Üstay v. Libya
Arbitration analysis: In Üstay v. Libya, the French Cour de cassation held that the Paris Court of Appeal erred in upholding ICC tribunal jurisdiction under the 2009 Turkey-Libya BIT (the ‘BIT’) by failing to apply the BIT’s temporal and material limits to claims based on a 2013 settlement tied to a decades-old infrastructure project. Although the Court of Appeal characterised the non-performance of the 2013 settlement as a new, autonomous dispute arising after the BIT entered into force, the financial claims could only be covered by the treaty if they remained connected to a qualifying investment. The Cour de cassation held that the settlement dispute could not be treated as both a new dispute for temporal purposes (ratione temporis) and at the same time as directly arising from the investment for material purposes (ratione materiae) without coherently reconciling those conclusions. Since the Court of Appeal failed to address this inconsistency, the Cour de cassation partially quashed the ruling on this point and remitted the matter for reconsideration under the treaty framework. This decision follows the Cour de cassation’s earlier ruling in Etrak v. Libya on nearly identical facts and the same BIT, reflecting consistent judicial scrutiny of claims based on settlements or restructuring of longstanding disputes [Cour de cassation 1re civ-N° 23-14.368]. For practitioners, Üstay is a clear warning that post-dispute settlements will face rigorous, treaty‑text‑driven scrutiny in Paris-seated arbitrations before triggering treaty arbitration rights, underscoring the need for careful evaluation of the substance and timing of claims against BIT thresholds. Written by Clément Fouchard, partner at Reed Smith LLP, and Adam Calloway, jurist at Reed Smith LLP.