On 6 March 2018, the Court of Justice of the European Union (ECJ) rendered its much-anticipated preliminary reference ruling on the conformity with EU law of arbitration clauses in intra-EU bilateral investment treaties (intra-EU BITs). The ECJ found that the Netherlands and the Slovak Republic – by means of the arbitration clause in their BIT – had established a dispute settlement mechanism that conflicted with the autonomy of the EU’s legal order and its necessary supervision by member state courts. At the same time, the Court held that investment tribunals in intra-EU disputes could not themselves request preliminary rulings from the ECJ under Article 267 TFEU.
The underlying dispute concerns the Final Award in the UNCITRAL case Achmea (formerly known as Eureko) v Slovak Republic. Based on the Dutch-Slovak BIT, the Dutch insurance company Eureko had initiated arbitral proceedings against the Slovak Republic in 2008 with regard to measures enacted in the Slovak health insurance sector. In 2012, a Frankfurt-seated tribunal awarded Eureko, which by then had changed its name into Achmea, an amount of € 22.1 million plus interest and also a reimbursement for legal fees and costs. The Slovak Republic challenged the Final Award and also already a 2010 Award on Jurisdiction, Arbitrability and Suspension before the Higher Regional Court of Frankfurt.
While the Higher Regional Court of Frankfurt found that all questions related to EU law had been sufficiently answered in the jurisprudence of the ECJ and – relying on the acte claire doctrine – refrained from requesting a preliminary ruling by the ECJ, the German Federal Court of Justice decided otherwise in May 2016. In particular, it requested the ECJ’s judgment on the compatibility with Articles 344, 267 and 18 TFEU of the BIT’s arbitration clause. In its decision, the Federal Court of Justice still also expressed sympathy for the Higher Regional Court’s assessment that no incompatibility existed. ECJ Advocate General Wathelet took a similar position in his 2017 opinion on the matter. What is more, the Advocate General also argued that intra-EU investment tribunals should be allowed to request preliminary rulings from the ECJ under Article 267 TFEU. This would have opened the door for a stronger integration of intra-EU investment tribunals into the European judicial system.
The ECJ, however, did not follow Advocate General Wathelet’s suggestion. It rather slammed the door in the face of intra-EU investment tribunal’s on the basis of similar treaties when it decided that Articles 267 and 344 TFEU are to be interpreted as not allowing for a provision in a bilateral treaty between two member states of the kind of the BIT’s arbitration clause. It did not further address the Advocate General’s reasoning.
The practical implications of the ECJ’s decision – also for pending proceedings under other investment agreements – now need to be evaluated intensively. On 19 March 2018, the decision will also be the subject of the inaugural Luther Dispute Resolution Lecture at Hamburg‘s Bucerius Law School. More information and registration details are available here.