This note looks into the reality of intra-EU investment arbitration after the judgment of the Court of Justice of the European Union in Achmea. Achmea was initially referred to as a groundbreaking decision, which caused further steps to be taken to prevent intra-EU investment arbitration. However, recent decisions and judgments may call into question the effectiveness of this reform.
In 2018, the Court of Justice of the European Union (CJEU) rendered a long-awaited judgment, holding that “Articles 267 and 344 TFEU [Treaty on the Functioning of the European Union] must be interpreted as precluding a provision in an international agreement concluded between Member States, such as Article 8 of the Agreement on encouragement and reciprocal protection of investments between the Kingdom of the Netherlands and the Czech and Slovak Federative Republic.” This judgment was groundbreaking. This judgment also set the path for the termination of BITs between EU Member States.
The change started by the Achmea judgment was cemented on 5 May 2020, when 23 Member States signed an agreement to terminate intra-EU bilateral investment treaties (the Agreement). The Agreement provided that although intra-EU BITs shall not serve as a legal basis for new arbitrations, concluded arbitrations should not be affected. Austria, Sweden, Finland, and the Republic of Ireland did not sign this Agreement.
The Judgment in LC Corp v Poland
As reflected in the Agreement, the reality of intra-EU investment arbitration after Achmea has changed. This reform might lead one to think that the EU is on the path towards entirely abolishing intra-EU investment arbitration. However, reality is not so simple.
LC Corp is a Dutch company which initiated an UNCITRAL arbitration against the Republic of Poland under the Netherlands-Poland BIT (1992), seated in London. Poland requested the Amsterdam Court of Appeal to order an interim measure enjoining LC Corp from further pursuing its claim. Despite the termination of the Netherlands-Poland BIT by consent on 2 February 2019, and the subsequent Agreement that BITs would not serve as a jurisdictional ground for new investment disputes, the Amsterdam Court of Appeal did not grant Poland’s request.
Before the judgment of the Amsterdam Court of Appeal, the case was heard by the Amsterdam District Court, which, in a decision on merits, held that although EU law would preclude intra-EU investment arbitration proceedings, there is no legal basis to rule on jurisdiction of a tribunal seated in London in light of the Kompetenz-kompetenz principle enshrined in the English Arbitration Act 1996.
English Decisions Following Achmea
The Dutch courts’ decisions in Poland v LC Corp are not isolated. A London-seated ICSID tribunal in Adria Group BV v Croatia took a similar approach. In that arbitration, based on the Croatia-Netherlands BIT (1998), the tribunal dismissed Croatia’s objection to jurisdiction based on the Achmea judgment, referring to the CJEU’s judgments as non-binding on ICSID tribunals:
There is no concept of binding precedent in EU law and, more importantly, the Tribunal is not an institution of the EU or one of its Member States. Neither of the arbitral decisions relied upon by the Commission supports its suggestion that judgments of the CJEU are binding upon an ICSID arbitration tribunal.
Moreover, concerning the Agreement, the tribunal held that “investor[s] cannot be retrospectively deprived of the right to rely upon an unconditional consent to arbitration given by each state in […] the BIT.”
English courts have repeatedly taken an approach disregarding the Achmea judgment and the Agreement. In proceedings for the recognition of an arbitral award concerning Infrastructure Services Luxembourg v Spain the court held that EU law does not have primacy over the Energy Charter Treaty, emphasising the pre-existing treaty obligations, and recognised the award:
The EU law question does not qualify as [an exceptional circumstance]; and in any event, the primacy of the law of this jurisdiction and the adherence of the United Kingdom to its own international treaty obligations under the ICSID Convention (as set out in the 1966 Act) would in any event be given priority by the High Court.
However, in my judgment that is simply a different way of Spain maintaining that both the ECT and the ICSID Convention […] should be interpreted by ignoring their clear terms regarding dispute resolution, in preference to granting the decisions of the CJEU complete primacy over those pre-existing treaty obligations of all states. I do not accept that is the correct approach.
Unsuccessful Restriction of Intra-EU Investment Arbitration?
The recent decisions of courts and tribunals might make one wonder how the reality of intra-EU investment arbitration changed after Achmea and whether this CJEU judgment was as groundbreaking as once thought. Indeed, although most EU Member States have agreed to terminate internal BITs, a significant portion of these treaties have sunset clauses (15 years in the case of the Netherlands-Poland BIT). Depending on the seat of arbitration, both the Achmea judgment and the Agreement might have different consequences.
As shown above, London-seated tribunals open the doors to intra-EU investment arbitration. In contrast, it would be much more difficult for EU-seated tribunals to overcome jurisdictional hurdles. Therefore, the consequences of the Achmea judgment and the Agreement are much less severe in non-EU jurisdictions. However, it is essential to remember that an award based on an intra-EU BIT would face further challenges if it were to be enforced in an EU Member State.
The CJEU’s judgment in Achmea started a domino effect, which led to the Agreement between a majority of EU Member States to terminate intra-EU BITs. Some considered this shift as groundbreaking. However, time has shown that the reality of intra-EU investment arbitration after Achmea is less stark. Courts and tribunals seated outside the EU enforce intra-EU BITs, and courts within the EU cannot intervene in such situations. Therefore, despite Achmea and the Agreement, intra-EU investment arbitration, although greatly limited, is still possible.
 N. Lavranos, T. Singla, Achmea: Groundbreaking or Overrated (2018) SchiedsVZ, German Arbitration Journal 348, 349-350.
 Id. Articles 5-6.
 The kompetenz-kompetenz principle provides that an arbitral tribunal has the right to decide on its jurisdiction.
 https://globalarbitrationreview.com/article/dutch-court-again-refuses-restrain-intra-eu-bit-claim (last accessed 16 November 2023).
 Id. para. 242.
 Id. paras. 108, 87; see also paras. 88-89, 162.