The Incompatibility of Intra-EU Investment Treaty Arbitration With European Union Law – Assessing the Scope of the ECJ's Achmea Judgment
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The Incompatibility of Intra-EU Investment Treaty Arbitration With European Union Law – Assessing the Scope of the ECJ's Achmea Judgment
Scheu, Julian | Nikolov, Petyo
German Yearbook of International Law, Vol. 62 (2019), Iss. 1 : pp. 475–504
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Julian Scheu is Junior Professor at the International Investment Law Centre Cologne (IILCC). The IILCC is a research institute at the University of Cologne.
Petyo Nikolov is Research Fellow at the International Investment Law Centre Cologne (IILCC). The IILCC is a research institute at the University of Cologne.
Abstract
In March 2018, the European Court of Justice rendered its Achmea judgment, by which the Court considered the investor-State dispute settlement (ISDS) clause contained in the Dutch-Slovakian investment treaty to be incompatible with EU law. Even though the judgment is considered to be a landmark decision, its potentially far-reaching consequences remain, due to a rather obscure legal reasoning, difficult to assess. The aim of the present contribution is to assess the scope of the Achmea judgment in order to shed light on its relevance for pending and future intra-EU investment arbitrations. In view of the ECJ's Opinion 1/17 rendered in April 2019 and in consideration of recent arbitral practice it is concluded that the scope of the Achmea judgment concerns the incompatibility of intra-EU investment treaty arbitration with EU law. This means on the one hand that the reasoning in Achmea is transferrable not only to ISDS clauses in other intra-EU BITs, but also to Article 26 of the Energy Charter Treaty. On the other hand, the analysis shows that contract-based investment arbitrations are not concerned by the ECJ's findings. Finally, and in view of its clarified scope of application, the relevant factors for analysing the consequences of the Achmea judgement are identified.
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Julian Scheu and Petyo Nikolov\nThe Incompatibility of Intra-EU Investment Treaty Arbitration With European Union Law – Assessing the Scope of the ECJ’s Achmea Judgment | 475 | ||
| I. Introduction | 475 | ||
| II. The Achmea Judgment Is Limited to the Validity of the ISDS Clause | 478 | ||
| III. The Achmea Judgment’s Criteria are Applicable to ISDS Clauses in All Intra-EU-BITs | 479 | ||
| A. The Arbitral Tribunal’s Capacity to Take Account of EU Law (paras. 39–42) | 481 | ||
| B. Exceptional Nature of the Arbitral Tribunal Placing it Outside the Judicial System of the EU (paras. 43–49) | 475 | ||
| C. Insufficient Judicial Review of the Award (paras. 50–55) | 475 | ||
| 1. Finality of the Arbitral Award (para. 51) | 475 | ||
| 2. Power to Determine its Own Procedure and Seat (para. 51) | 475 | ||
| IV. The Achmea Judgment’s Criteria are Applicable to Article 26 ECT | 475 | ||
| A. Transferability of the Achmea Judgment’s Reasoning to Article 26 ECT | 475 | ||
| 1. The Multilateral Nature of the ECT | 475 | ||
| 2. The EU as a Party to the ECT | 476 | ||
| B. Applicability of the Achmea Judgment’s Criteria to Article 26 ECT | 476 | ||
| C. The Achmea Judgment is not Applicable to Contract-Based Investment Arbitrations | 476 | ||
| D. Conclusion and Outlook on Consequences | 476 |