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Investment Law

Validity of Arbitration Clauses in Intra-EU BITs – Some Thoughts on AG Wathelet’s Opinion in Achmea (Part 2)

Without further delay, here is the second part of my analysis of Advocate General Wathelet (AG Wathelet*)’s opinion (the Opinion) in the Achmea case (check my previous post for a factual background on this case).

As previously discussed, the issue put before the Court of Justice of the European Union (the CJEU) in this case concerned the compatibility, with respect to EU law, of an arbitration clause contained in an intra-EU bilateral investment treaty (a BIT).

In the first part of my analysis, I have examined AG Wathelet’s answers to:

– the question regarding the alleged discriminatory character (contrary to Article 18 of the Treaty on the Functioning of the European Union (TFEU)) of an arbitration clause contained in an intra-EU BIT; and

– the possibility for arbitral tribunals established in accordance with an intra-EU BIT to refer questions to the CJEU for preliminary rulings.

As promised in my last post, this article now covers the issue of whether an arbitration clause contained in an intra-EU BIT infringes Article 344 TFEU which prohibits EU Member States from submitting a dispute concerning the interpretation or application of EU law to any other method than those provided for in the EU treaties.READ MORE

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Validity of Arbitration Clauses in Intra-EU BITs – Some Thoughts on AG Wathelet’s Opinion in Achmea (Part 1)

On 19 September 2017, Advocate General Wathelet (AG Wathelet)* handed down a long-awaited, surprising and potentially far-reaching opinion (the Opinion) on the compatibility, with respect to EU law, of an arbitration clause contained in an intra-EU bilateral investment treaty.

The dispute at hand concerned a Dutch insurance company, Achmea (Achmea), which had established a subsidiary in Slovakia in order to market private sickness insurance products in this country. In 2008, following a change of legislation in the insurance sector in Slovakia, Achmea initiated investor-State arbitral proceedings against that State on the basis of a bilateral investment treaty (a BIT) entered into in 1991 between the former Czechoslovakia and the Netherlands (the Czechoslovakia-Netherlands BIT). Essentially, Achmea alleged that Slovakia’s legislative amendments violated certain provisions of the BIT.

In 2012, the arbitral tribunal sided with Achmea and issued an award ordering Slovakia to pay Achmea damages of approximately EUR 22 million.

Subsequently, and since the place of arbitration was in Germany, Slovakia brought an action before the German Courts seeking the annulment of the award rendered against it. In those proceedings, Slovakia argued that:

– The arbitration clause contained in the Czechoslovakia-Netherlands BIT infringed the prohibition of discrimination on grounds of nationality contained in Article 18 of the Treaty on the Functioning of the European Union (TFEU). More particularly, Slovakia argued that the arbitration clause contained in the Czechoslovakia-Netherlands BIT was discriminatory since it only offered Dutch investors the possibility to recourse to arbitration to solve their dispute with Slovakia whereas investors of the Member States which had not concluded any BIT with Slovakia were precluded from benefiting from a similar treatment.

– The award rendered against Slovakia was contrary to public policy since the arbitral tribunal established in accordance with the Czechoslovakia-Netherlands BIT – being unable to request the Court of Justice of the European Union (CJEU) to give a preliminary rulings on the interpretation of EU law – failed to take account of fundamental principles of EU law (such as rules on the free movement of capital or the rights of defence). This argument was based on the fact that, pursuant to Article 267 of the TFEU, only courts and tribunals of Member States are entitled to request the CJEU to give a preliminary ruling on a matter pending before them. However, the arbitral tribunal established pursuant to the Czechoslovakia-Netherlands BIT was not a “court or tribunal of a Member State” and it was therefore not entitled to request preliminary rulings from the CJEU.

– The arbitration clause contained in the BIT infringed Article 344 TFEU which prohibits EU Member States from submitting a dispute concerning the interpretation or application of EU law to any other method that those provided for in the EU treaties.

Uncertain as to the answers to those issues, the German court stayed the proceedings and referred the matter to the CJEU for a preliminary ruling. Prior to the judgment of the CJEU (which will be delivered in the coming weeks/months), AG Wathelet handed down his independent Opinion.READ MORE

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Recent Developments in Investment Disputes: ICSID, The Energy Charter Treaty, Solar Industry and FSIA

Arbitration claims for breaches of the Energy Charter Treaty have emerged in the last couple of years, as certain countries have tried to reduce or place restrictions on financially favorable regulatory measures aimed at promoting renewable energy.

Two of those arbitration cases have recently come under the spotlight and I found that it would be interesting to provide you with a general description of those two cases.READ MORE

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