Does Achmea Invalidates All Intra-EU BITs? Not necessarily!
On 19 July 2018, the European Commission published a communication on the protection of intra-EU investments (the Communication).
One important take-away from this Communication is the implication that the European Commission draws from the judgment handed down by the Court of the Justice of the European Union (the CJEU) in Achmea.
According to the Commission:
“In the Achmea judgment the Court of Justice ruled that the investor-to-State arbitration clauses laid down in intra-EU BITs undermine the system of legal remedies provided for in the EU Treaties and thus jeopardise the autonomy, effectiveness, primacy and direct effect of Union law and the principle of mutual trust between the Member States. Recourse to such clauses undermines the preliminary ruling procedure provided for in Article 267 TFEU, and is not compatible with the principle of sincere cooperation. This implies that all investor-State arbitration clauses in intra-EU BITS are inapplicable and that any arbitration tribunal established on the basis of such clauses lacks jurisdiction due to the absence of a valid arbitration agreement. As a consequence, national courts are under the obligation to annul any arbitral award rendered on that basis and to refuse to enforce it. Member States that are parties to pending cases, in whatever capacity, must also draw all necessary consequences from the Achmea judgment. Moreover, pursuant to the principle of legal certainty, they are bound to formally terminate their intra-EU BITs.
The Achmea judgment is also relevant for the investor-State arbitration mechanism established in Article 26 of the Energy Charter Treaty as regards intra-EU relations. This provision, if interpreted correctly, does not provide for an investor-State arbitration clause applicable between investors from a Member States of the EU and another Member States of the EU. Given the primacy of Union law, that clause, if interpreted as applying intra-EU, is incompatible with EU primary law and thus inapplicable. Indeed, the reasoning of the Court in Achmea applies equally to the intra-EU application of such a clause which, just like the clauses of intra-EU BITs, opens the possibility of submitting those disputes to a body which is not part of the judicial system of the EU. The fact that the EU is also a party to the Energy Charter Treaty does not affect this conclusion: the participation of the EU in that Treaty has only created rights and obligations between the EU and third countries and has not affected the relations between the EU Member States.” (emphasis added)
In the Q&A that accompanied the Communication, the European Commission also emphasised that the Achmea judgment does not have consequences for agreements with third countries. According to the Commission, Achmea “only concerns intra-EU disputes” and “different legal considerations apply to external EU investment policies“.
Shortly after the publication of the judgment in Achmea, my colleague Isabelle Van Damme and I published a first article in which we analysed the potential consequences of this judgment for CETA, for the proposed Multilateral Investment Court and for future EU trade and investment agreements (including the future agreement between the European Union and the United Kingdom).
Today, I (provocatively) develop that analysis further by arguing that, contrary to the position expressed by the European Commission in its Communication and in the Q&A, the findings of the CJEU in Achmea might not necessarily mark the end of (arbitration clauses in) all intra-EU bilateral investment treaties (intra-EU BITs)*. In addition, I also argue that, in some aspects, Achmea might also affect other types of international agreements concluded by the EU or other BITs concluded by EU Member States with one or more non-EU countries (extra-EU BITs).READ MORE