intra-EU BITs Research Articles

Article: When human rights and investment protection intertwined: the role of the European Court of Human Rights in the enforcement of intra-EU BITs within the EU

Since the judgment of the Court of Justice of the European Union (CJEU) in Achmea, a veil of uncertainty has surrounded the destiny of intra-EU investment agreements and their awards thereto. This paper aims to contribute to the debate about the consequences of Achmea focusing on the non-enforcement of intra-EU awards within the EU. Specifically, it examines whether the European Court of Human Rights (ECtHR) may play a role in case of non-enforcement of those awards. It essentially argues that, in some circumstances, the refusal to enforce intra-EU arbitral awards may be considered as contrary to the European Convention on Human Rights (ECHR) by the Court, particularly Article 1 Protocol No. 1 (right to property) and Article 6 (right to a fair trial). In this regard, the central argument of this paper is that a refusal to enforce an award based on the Achmea objection can raise concrete issues of proportionality, especially if one considers the enforcement of ICSID awards. Specifically, the lack of an effective mechanism of effective redress for investors in EU law may lead to a breach of both the right to property and the right to a fair trial that cannot be justified either under the ECHR and the famous Bosphorus presumption.

Does Brexit Mean Brexit? The Enforcement of Intra-EU Investment Awards in the Post-Brexit Era

This article uses an analytical approach in order to dissect the major legal issues concerning the enforcement of intra-EU awards post-Brexit. The outcomes of the enforcement cases will depend on the country where enforcement is sought (EU Member States, the UK, and other third countries), the applicable legal regime pursuant to which enforcement is sought (the New York Convention or the ICSID Convention), various temporal factors (whether certain key moments in the arbitral proceedings occurred before or after the end of the Brexit transition period), and whether the intra-EU cases are based on intra-EU BITs or the ECT, or both. Due to this complexity, there is no easy answer as to how the various issues arising from the post-Brexit enforcement of intra-EU awards should be solved. This is most unfortunate as it creates uncertainty for investors, host States, and national courts of enforcement alike.

Legal Issues within EU and Member States concerning Bilateral Investments Treaties

The article’s aim is to analyse the legal issues concerning the compatibility with the EU law of Bilateral Investments Treaties concluded between Member States themselves (intra-EU BITs), on the one hand, and Member State and Third State on the other hand (extra-EU BITs). The questions arise as a consequence of the shift of competence for Foreign Direct Investments from the Member States to the EU, so it is approached as a problem of compatibility between sources of law that belong to different legal systems: international law and European Union law. The author’s conclusion is that the EU has, despite several difficulties, succeeded in preserving the autonomy and the primacy of its legal order.

Arbitrability of Intra-EU BITs Disputes: ECJ Decisions, Implications, and Recommendations.

Arbitrability of Intra-EU BITs Disputes: ECJ Decisions, Implications, and Recommendations.

The Higher Regional Court of Frankfurt am Main Is the First European Court to Declare the Achmea Case a Landmark Decision with Significance for All Intra-EU BITS

In February 2021, the Higher Regional Court of Frankfurt am Main (Oberlandesgericht – “olg”), rendered a decision in the case between the Republic of Croatia (“Croatia”) as the applicant, and an Austrian bank incorporated as a joint stock company under Austrian law and a Croatian bank incorporated as a joint stock company under the laws of Croatia having the Austrian bank as its sole shareholder as the Respondents (“Respondents”). This decision concerns the incompatibility of an arbitration clause contained in the Agreement between the Republic of Austria and Croatia on the Promotion and Protection of Investments (“Austria-Croatia bit”)2 with EU law. Croatia successfully challenged the admissibility of an uncitral arbitration based on Article 9(2)(b) of the Austria- Croatia bit, initiated by the Respondents, by virtue of an application under Section 1032(2) of the German Code of Civil Procedure (Zivilprozessordnung – “zpo”). Croatia argued that Article 9(2)(b) of the Austria- Croatia bit was incompatible with EU law.

„Микула срещу Румъния между международното инвестиционно право и правото на ЕС“ – решението на Върховния съд на Обединеното кралство – последното или поредното парче от пъзела?

The Judgement of the United Kingdom’s Supreme Court in the long Micula v. Romania investment treaty dispute confirmed that the arbitral awards of the International Centre for Settlement of Investment Disputes (ICSID), rendered by tribunals established under intra-EU BITs, could be enforced in the UK. The Micula case concerns the interplay between the obligations under the ICSID Convention and EU law. In particular, it addresses the question of whether the award obtained by the Micula brothers against Romania constitutes state aid prohibited by EU law, as well as the enforcement obligations under the ICSID Convention in view of the EU duty of sincere cooperation.

Achmea versus the Rule of Law: CJEU’s Dogmatic Dismissal of Investors’ Rights in Backsliding Member States of the European Union

We demonstrate that the CJEU’s Achmea judgment has resulted in significantly more damage beyond the termination of intra-EU BITs. It made the application of EU law difficult, if not impossible. Indeed, it has opened the floodgate to deficient judicial protection in the face of structural backsliding of the rule of law in some EU Member States. While the motives of the CJEU and by extension the European Commission to safeguard their ultimate control over the internal market by exclusively relying on the preliminary ruling system of integrated European judiciary may be understandable, they cannot serve as a credible justification for the long-term consequences of disempowering investors in the name of an ideological stance regarding EU judiciary, which cannot work in the backsliding Member States, where the ‘integration of the EU’s judiciary’ could stand for the absence of independent adjudication. Consequently, the Achmea judgment and post-Achmea developments such as the recently signed Termination Agreement to terminate the intra-EU BITs have been leading to significant—possibly irreparable in the short- to medium-term—lowering of the procedural and substantive protection standards for European investors in times when they are in need of more rather than less protection.

Rule of Law and the Fatal Mistake of Achmea: Could the Intra-EU BIT’s Have Been the Last Hope for Justice in Captured Illiberal Member States?

We demonstrate that the CJEU’s Achmea judgment has resulted in significantly more damage beyond the termination of intra-EU BITs. It made the application of EU law impossible. Indeed, it has opened the floodgate to deficient judicial protection in the face of structural backsliding of the rule of law in some EU Member States. While the motives of the CJEU and by extension the European Commission to safeguard their ultimate control over the internal market by exclusively relying on the preliminary ruling system of integrated European judiciary may be understandable, they cannot serve as a credible justification for the long-term consequences of disempowering investors in the name of an ideological stance regarding EU judiciary, which cannot work in the backsliding Member States, where the integration of the EU’s judiciary stands for the complete absence of independent adjudication. Consequently, the Achmea judgment and post-Achmea developments such as the recently signed Termination Agreement to terminate the intra-EU BITs have been leading to significant – possibly irreparable in the short- to medium-term – lowering of the procedural and substantive protection standards for European investors in times when they are in need of more rather than less protection.

The Higher Regional Court of Frankfurt am Main Is the First European Court to Declare the Achmea Case a Landmark Decision with Significance for All intra-EU BITs

In February 2021, the Higher Regional Court of Frankfurt am Main (Oberlandesgericht– ‘OLG’), rendered a decision in the case between the Republic of Croatia (‘Croatia’) as the applicant, and an Austrian bank incorporated as a joint stock company under Austrian law and a Croatian bank incorporated as a joint stock company under the laws of Croatia having the Austrian bank as its sole shareholder as the Respondents (‘Respondents’). This decision concerns the incompatibility of an arbitration clause contained in the Agreement between the Republic of Austria and Croatia on the Promotion and Protection of Investments (‘Austria-Croatia BIT’) with EU law. Croatia successfully challenged the admissibility of an UNCITRAL arbitration based on Article 9(2)(b) of the Austria-Croatia BIT, initiated by the Respondents, by virtue of an application under Section 1032(2) of the German Code of Civil Procedure (Zivilprozessordnung – ‘ZPO’). Croatia argued that Article 9(2)(b) of the Austria-Croatia BIT was incompatible with EU law.

The Termination Agreement of Intra-EU Bilateral Investment Treaties: A Spaghetti-Bowl with Fewer Ingredients and More Questions

This article deals with the issue of the implementation of the Achmea judgment of the Court of Justice of the European Union (CJEU) through the Termination Agreement of Bilateral Investment Treaties (‘Termination Agreement’, TA) between some Member States of the European Union (EU). The article focuses on the analysis of the TA provisions that terminate Bilateral Investment Treaties (‘intra-EU BITs’) and investor-State dispute settlement (ISDS) among EU Members. It also describes TA provisions regulating concluded, new, and pending arbitration proceedings having as a reference the date the CJEU issued the Achmea judgment. Also, it examines how the TA regulates pending arbitration proceedings and discusses how TA Members are allowed to resort to transitional measures to resolve their dispute, throughout an amicable resolution proceeding, if they fulfil some conditions. Further, the article analyses some systemic issues of the TA, some related to the EU investment protection regime, others regarding the legal implications for intra-EU BIT provisions for EU Member States which did not sign the TA. Further, the article examines some possible issues related to the legal nature of the TA under international law and EU law.

RECONCILING INTERNATIONAL INVESTMENT LAW AND EUROPEAN UNION LAW IN THE WAKE OF ACHMEA

AbstractThe decision of the Court of Justice of the European Union in Slovak Republic v Achmea dealt a major blow to the predictability of the legal regime for the protection of foreign investments, whilst failing to offer a realistic, clear and sustainable solution for the protection of investments within the European single market. Commentators have mainly considered its implications from the perspective of the European Union or International Investment Law, and the potential conflict of regimes. This article offers a different approach, arguing that a reading of Achmea based on a moderate version of legal pluralism could adequately respond to the legitimate concerns about the case from both international and European legal perspectives. It is argued that the imprecision of the decision is in fact constructive ambiguity, allowing a sufficient margin of appreciation for all stakeholders and avoiding direct confrontation between the European and international legal orders. Recent developments, such as the innovative EU agreement for the termination of intra-EU BITs, point to new opportunities for ordering pluralism in the Achmea saga.

CJEU Achmea Judgment and What Comes Next. Some Reflections on the Potential Implications of the CJEU Judgment (C-284/16)

In the judgment of 6.03.2018 (Achmea case, C-284/16), CJEU ruled that treaty clauses that allow investor from one of the Member States to bring proceedings against another Member State before an arbitraltribunal outside the EU judicial system are irreconcilable with Articles 267 and 344 TFEU when such tribunal may be called on to interpret or apply EU law. This principle is applicable to EU trade or investment agreements (FTAs and IIAs), since they are part of EU law, and to BITs, FTAs and IIAs, since they contain explicit or implicit referrals to municipal (EU) law. In intra-EU relations, such a conflict of norms must be solved according to customary international law codified in the VCLT. According to this law, TFEU would prevail as lex superior and, in the case of Poland and many other Member States, as lex posterior. In intra-EU relations, TFEU prevails ex proprio vigore, i.e. without the need to terminate intra-EU BITs. However, such termination is highly desirable, not only for reasons of clarity, but also because arbitral tribunals and extra-EU courts are not bounded by the ECJ’s ruling. In the case of agreements with non-Member States, the incompatibilities referred to in the Achmea judgment must be eliminated by renegotiation or formal termination (Article 307 (2) TFEU). In the case of the BITs, the latter seems to be the only practical solution.

Disagreement on intra-EU BITs continues: Infringement actions over intra-EU BITs

Disagreement on intra-EU BITs continues: Infringement actions over intra-EU BITs

The Intra-EU Investment Dispute Settlement After Achmea: Towards an Integrated Model of Justice

The Achmea judgment marks the culmination of the systemic conflict between international legal system and EU legal system on international investment arbitration. The Court referred to the fundamental principles of autonomy, effectiveness, prevalence and direct effect of EU law, as well as the principle of fair cooperation between Member States and ruled that arbitration clause laid down in intra-EU BITs is incompatible with EU law. As a result, the primaute of European law seems to reserve to the CJEU the role of last authoritative institution for the interpretation and application of all EU law and totally exclude the potestas iudicandi of arbitral tribunals in investment disputes. The paper discusses Achmea’s consequences on the relationship between international and European legal order in intra-EU investment dispute settlement. After a general overview of the substantial and procedural framework of investors’ protection, the paper deals with jurisdictional issues in ISDS system before and after Achmea. It reviews all possible scenarios on arbitration proceedings by analyzing the past and the future of arbitrators’ jurisdiction in the European legal order. It considers the most recent developments in EU legal order, specifically the agreement between Member States on a plurilateral treaty for the termination of all intra-EU BITs. The focus is on the ubi consistam of EU law in international legal order and on how courts could cooperate for an integrated model of justice. The analysis of the current status quo of the ISDS will show that the lack of judicial communication between international courts affects the efficiency of investment arbitration, and specifically, about intra-EU issues, the absence of a mechanism which would allow to settle investment dispute in accordance with EU judicial order. The final part of the paper explores the attempts to reconcile the dispute resolution mechanism provided by investment treaties with the European jurisdictional framework, despite it was defined by the ECJ as “a complete system of legal remedies and procedures designed to ensure review of the legality of acts of the institutions”. Proposals for reforms of investor-State dispute settlement system could follow three different approaches (systemic, based on cross-fertilization communication techniques and integralist) in order to restate the relationship between private and public justice: which future for investment dispute settlement system after Achmea?

The changing ecosystem of Dutch BITs

Abstract This article reviews the recent changes of the Dutch model BIT text. It provides a background of the political changes at the domestic as well as the European Union (EU) level, which have been driving these changes. The consequences of the Achmea judgment are of particular importance for the intra-EU BITs and potentially for the Energy Charter Treaty. Subsequently, the article highlights the most dramatic changes compared to the previous Dutch model BIT text and Dutch BIT practice. The author concludes that these changes will ultimately result in a lowering of the level of investor and investment protection.

The Incompatibility of Intra-EU Investment Treaty Arbitration With European Union Law – Assessing the Scope of the ECJ’S Achmea Judgment

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 judgement 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 judgement concerns the incompatibility of intra-EU investment treaty arbitration with EU law. This means on the one hand that the reasoning in Achmea is transferable not only to ISDS clauses in other intra-EU BITs, but also to Art. 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 analyzing the consequences of the Achmea judgement are identified.

The World after the Termination of Intra-EU BITs

This article examines the potential consequences of the termination agreement recently signed by 23 EU Member States, which will soon terminate the existing intra-EU BITs of the signatory Member States. The author concludes that the retroactive application of the termination agreement to disputes that have been initiated before this termination agreement enters into force is a serious violation of the Rule of Law. He also finds that the Facilitator procedure offered by the termination agreement is not a suitable tool to settle any ongoing intra-EU BIT disputes. In light of the significant shortcomings in the judicial legal systems of many EU Member States, the author calls for the adoption of an EU Investment Protection Regulation as well as the creation of a European Investment Court. Finally, despite the fact that the termination agreement is not intended to apply to intra-EU ECT disputes, the author expects that the fallout of the Achmea judgment will lead to substantial ‘reforms’ of the ECT in due course. All these developments will inevitably lead to a lower standard of investment and investor protection within the EU.

The European Commission: Ami Fidèle or Faux Ami? Exploring the Commission’s Role as Amicus Curiae in ICSID Proceedings

ICSID’s Rule 37(2) introduced into the ICSID system a process by which a non-disputing party may make submissions as an amicus curiae. While amicus submissions have existed in the ICSID system for nearly 20 years, the majority of Rule 37(2) applications have been filed only recently by one party – the EU Commission – on one issue – the applicability of the arbitration agreements in intra-EU BITs. In this article, we explore how tribunals and ad hoc committees have addressed these applications, which do not seek to provide insight on a particular issue in relation to the merits (as past amicus have), but to strip the ICSID process of jurisdiction over all intra-EU BIT disputes.

ICSID Trumps State Aid in the UK but Uncertainty Remains Regarding Enforcement of New York Convention Awards in post-Brexit UK

On 19 February 2020, the UK Supreme Court unanimously held that by virtue of Article 351 TFEU UK’s obligations under the ICSID Convention trump its duty of sincere co-operation under Article 4(3) TFEU to give effect to a State aid decision of the European Commission. In doing so, the UK Supreme Court also made clear that ICSID arbitral awards rendered by arbitral tribunals established pursuant to intra-EU BITs and ECT will be enforced in the UK. Whether in post-Brexit UK enforcement of intra-EU BITs and ECT arbitral awards will be refused on the grounds of being contrary to EU State aid law if sought pursuant to the terms of the New York Convention remains unclear given that State aid currently forms part of the on-going negotiations between the UK and EU regarding their future relations. Keywords: Micula, State aid, ISDS, Achmea, duty of sincere cooperation, public policy

Resolving Perceived Norm Conflict through Principles of Treaty Interpretation: The January 2019 EU Member States’ Declarations

In January 2019, EU Member States issued three declarations concerning the ‘consequences of Achmea’ which stated that all claims under intra-EU BITs were contrary to the EU legal order, and that tribunals presiding over such claims have no jurisdiction as there is no valid consent to arbitrate. The declaration signed by a majority of EU Member States (‘Majority Declaration’) extended this proposition to intra-EU claims under the Energy Charter Treaty. Following this, a number of EU Member States have sought to argue that the Majority Declaration is a subsequent agreement between the States Parties to intra-EU investment treaties – or evidence of a subsequent practice establishing their agreement – that the dispute resolution provisions in those treaties must be interpreted to exclude intra-EU disputes from their scope and thus from the jurisdiction of tribunals constituted thereunder, relying on Article 31(3)(a) and (b) of the Vienna Convention on the Law of Treaties (‘VCLT’). This paper considers: (i) the key cases in which the Majority Declaration has been invoked to contest jurisdiction in, or seek the termination of, intra-EU arbitration proceedings; (ii) the application of Article 31(3)(a) and (b) of the VCLT; and (iii) other fundamental tenets and rules of international law discussed in relation to those cases.