The Achmea case and its consequences for investment arbitration

March 2018

On 6 March 2018, the ECJ rendered a decision in the Achmea vs. Slovakia matter, concerning an attempt at getting an arbitral award annulled and through which it answered a question which had been referred to it by the German Federal Court on the question of the compatibility of the Netherlands – Czechoslovakia BIT with articles 18, 267 and 344 of the TFUE. The key issue turned around the potential obligation for an EU Member State to acknowledge an arbitral tribunal’s jurisdiction for cases in which it would be opposed to an investor from another EU Member State on the basis of a bilateral treaty signed by both of these States.

As the Court took note of the fact that the disputes that can be adjudicated by an arbitral tribunal pursuant to the BIT might concern the interpretation or the enforcement of EU law, the ECJ considered that such a mechanism could impact the fully efficiency of EU law. Such an arbitration clause, as it jeopardizes the mutual trust between Member States, prevents the preservation of EU law’s independence and is incompatible with the principle of loyal cooperation between Member States. The ECJ’s Grand Chamber therefore concluded that said BIT provision was incompatible with the TFEU.

Following this decision, Spain asked that several ICSID cases that had already been closed be reopened in order for the Achmea ruling be taken into account as a piece of evidence. Meanwhile, thanks to a vote which took place on 20 March, the European Council authorized the EU Commission to negotiate a convention that would set up a multilateral tribunal that would administrate and adjudicate international investment disputes.