The End of Intra-EU Investor-State Arbitration
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The End of Intra-EU Investor-State Arbitration
German Yearbook of International Law, Vol. 64 (2021), Iss. 1 : pp. 285–317
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Dr. Julien Berger, M. Jur. (Oxon), Maître en Droit (Paris 2) is a research assistant at the Chair of Prof. Dr. Mattias Wendel, Maître en Droit (Paris 1) at the Universität Leipzig and a Post-Doctoral Research Fellow in the Berlin Potsdam Research Group ‘International Rule of Law – Rise or Decline?’.
Abstract
Western Europe can be considered the birthplace of the current international investment protection regime. It was originally developed to protect Western European investors and economic interests in non-EU countries. Since the 1990s, however, international investment law and its dispute settlement mechanism of investor-State arbitration have increasingly extended to intra-European investor-State relations, eventually bringing it into conflict with the principles of European Union law. Two landmark decisions of the ECJ have now sealed the fate of intra-EU investor-State arbitration based both on bilateral investment treaties as well as the multilateral Energy Charter Treaty. The article traces this development and analyses the ECJ’s Komstroy judgment in which the Court found intra-EU ECT arbitration to be incompatible with EU law. It then discusses the implications of this jurisprudence for the international investment protection regime within the EU before arguing that domestic courts of the EU member States might emerge as a fully-fledged substitute for arbitral tribunals.
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Julien Berger\nThe End of Intra-EU Investor-State Arbitration | 285 | ||
| I. Introduction | 285 | ||
| II. International Investment Protection in Europe | 287 | ||
| III. The Komstroy Ruling | 291 | ||
| A. Jurisdiction of the European Court of Justice | 293 | ||
| B. Incompatibility of Article 26 ECT and the EU Treaties | 294 | ||
| 1. Arbitral Tribunals’ Application and Interpretation of EU law | 295 | ||
| 2. Arbitral Tribunals – Neither Courts Nor Tribunals of EU Member States | 296 | ||
| 3. Insufficient Review of Awards to Protect the EU’s Autonomy | 296 | ||
| IV. Effects of the Komstroy Judgment | 298 | ||
| A. Effects on Arbitral Proceedings | 299 | ||
| 1. The Green Power Partners Award Rejecting the Tribunal’s Jurisdiction | 299 | ||
| 2. Pending and Future Intra-EU Investor-State Arbitration Proceedings | 301 | ||
| B. Effects on the Energy Charter Treaty | 304 | ||
| 1. ECT Reform Introducing a Disconnection Clause | 305 | ||
| 2. Withdrawal from or Termination of the ECT | 306 | ||
| 3. New Treaty | 307 | ||
| C. Effect on Domestic Courts in the EU | 311 | ||
| 1. Enforcement and Recognition of Awards | 311 | ||
| 2. Domestic Courts as Substitutes for Investor-State Arbitration | 315 | ||
| D. Conclusion and Outlook | 317 |