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Scheu, JNikolov, P (2019). The Incompatibility of Intra-EU Investment Treaty Arbitration With European Union Law – Assessing the Scope of the ECJ's Achmea Judgment. German Yearbook of International Law, 62(1), 475-504. https://doi.org/10.3790/gyil.62.1.475
Scheu, Julian Nikolov, PetyoScheu, Julian Nikolov, Petyo (2019). "The Incompatibility of Intra-EU Investment Treaty Arbitration With European Union Law – Assessing the Scope of the ECJ's Achmea Judgment" German Yearbook of International Law, vol. 62no. 1, 2019 pp. 475-504. https://doi.org/10.3790/gyil.62.1.475
Scheu, JNikolov, P (2019). The Incompatibility of Intra-EU Investment Treaty Arbitration With European Union Law – Assessing the Scope of the ECJ's Achmea Judgment. German Yearbook of International Law, Vol. 62 (Issue 1), pp 475-504. https://doi.org/10.3790/gyil.62.1.475

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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