The End of Intra-EU Investor-State Arbitration

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.