Isolated court determinations on the admissibility of arbitration: a case study of the German Federal Court of Justice’s recent decision on intra-EU ICSID proceedings

Abstract

Abstract The German Federal Court of Justice recently confirmed that German courts can issue declarations—with binding effect for the German legal order—finding intra-EU ICSID arbitration inadmissible. While this further step in the post-Achmea dismantling of the EU investment protection system is an important, if unsurprising, development for investment protection lawyers, the procedural mechanism used, section 1032(2) of the German Civil Procedural Code (Zivilprozessordnung—ZPO), is relevant to all forms of arbitration and is available as soon as one party is seated or even just has assets in Germany. This article provides an overview of the German mechanism for isolated determination of the admissibility of arbitration. It uses the recent Federal Court of Justice decision as a model example where such an early determination allows for significant costs savings, explores the functioning of the relevant statutory provision, and highlights situations in which this may be an appropriate means of determining the admissibility of arbitration while limiting costs exposure.