OPINION OF ADVOCATE GENERAL

WATHELET

delivered on 19 September 2017 ( 1 ) ( 2 )

Case C‑284/16

Slowakische Republik

v

Achmea BV

(Request for a preliminary ruling from the Bundesgerichtshof (Federal Court of Justice, Germany))

(Reference for a preliminary ruling — Principles of EU law — Bilateral investment treaty concluded in 1991 between the Kingdom of the Netherlands and the Czech and Slovak Federal Republic and still applicable between the Kingdom of the Netherlands and the Slovak Republic — Compatibility of investor-State dispute settlement mechanism established by an intra-European Union bilateral investment treaty with Articles 18(1), 267 and 344 TFEU)

Table of contents

I. Introduction II. Legal context A. The FEU Treaty B. The Netherlands-Czechoslovakia BIT C. German law III. The dispute in the main proceedings and the questions referred for a preliminary ruling IV. Procedure before the Court V. Analysis A. Preliminary observations B. The third question referred for a preliminary ruling 1. Admissibility 2. Substance C. Second question 1. Whether the arbitral tribunals constituted in accordance with Article 8 of the BIT are established by law 2. Whether the arbitral tribunals constituted in accordance with Article 8 of the BIT are permanent 3. Whether the jurisdiction of the arbitral tribunals constituted in accordance with Article 8 of the BIT is compulsory 4. Whether the procedure before the arbitral tribunals constituted in accordance with Article 8 of the BIT is inter partes, whether they apply rules of law in the settlement of the disputes before them and whether the arbitrators are independent and impartial D. First question 1. Does a dispute between an investor and a Member State, such as that referred to in Article 8 of the BIT, come under Article 344 TFEU? 2. Does the dispute at issue ‘[concern] the interpretation or application of the Treaties’? (a) The jurisdiction of the arbitral tribunal is confined to ruling on breaches of the BIT (b) The scope of the BIT and the legal rules which it introduces are not the same as those EU and FEU Treaties (1) The scope of the BIT is wider than that of the EU and FEU Treaties (2) The legal rules of the BIT which have no equivalent in EU law and are not compatible with it (i) The MFN clause (ii) The clause whereby the Parties undertake to observe their contractual obligations vis-à-vis the investors of the other Party, the ‘umbrella clause’ (iii) The sunset clause (iv) Recourse to international arbitration as an ISDS mechanism (3) The overlap between the other provisions of the BIT and certain provisions of the EU and FEU Treaties is only partial (i) The full protection and security of investments (ii) The fair and equitable treatment of investments (iii) The prohibition of illegal expropriations 3. Having regard to its purpose, does the Netherlands-Czechoslovakia BIT have the effect of undermining the allocation of powers fixed by the EU and FEU Treaties and, therefore, the autonomy of the EU legal system? VI. Conclusion

I. Introduction

1. The present request for a preliminary ruling was submitted in the context of an action brought before the German courts and seeking annulment of the Final Award of 7 December 2012, made by the Arbitral Tribunal composed of Professor V. Lowe QC (President), Albert Jan van den Berg and V.V. Veeder QC (Arbitrators) and constituted in accordance with the Agreement on encouragement and reciprocal protection of investments between the Kingdom of the Netherlands and the Czech and Slovak Federal Republic (‘the Netherlands-Czechoslovakia BIT’) ( 3 ) and the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL), the Permanent Court of Arbitration (PCA) acting as Registry. ( 4 )

2. This request provides the Court with the first opportunity to express its views on the thorny question of the compatibility of BITs ( 5 ) concluded between Member States, ( 6 ) and in particular of the investor-State dispute settlement (‘ISDS’) mechanisms established by those BITs, with Articles 18, 267 and 344 TFEU.

3. The question is of fundamental importance in the light of the 196 intra-EU BITs currently in force ( 7 ) and the numerous arbitral procedures between investors and Member States in which the European Commission has intervened as amicus curiae in order to support its argument that intra-EU BITs are incompatible with the FEU Treaty, an argument which the arbitral tribunals have systematically rejected as unfounded. ( 8 )

II. Legal context

A. The FEU Treaty

4. The first paragraph of Article 18 TFEU provides that ‘within the scope of application of the Treaties, and without prejudice to any special provisions contained, any discrimination on grounds of nationality shall be prohibited’.

5. The first to third paragraphs of Article 267 TFEU provide: ‘The Court of Justice of the European Union shall have jurisdiction to give preliminary rulings concerning: (a) the interpretation of the Treaties; (b) the validity and interpretation of acts of the institutions, bodies, offices or agencies of the Union. Where such a question is raised before any court or tribunal of a Member State, that court or tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request the Court to give a ruling thereon. Where any such question is raised in a case pending before a court or tribunal of a Member State against whose decisions there is no judicial remedy under national law, that court or tribunal shall bring the matter before the Court.’

6. Article 344 TFEU provides that ‘Member States undertake not to submit a dispute concerning the interpretation or application of the Treaties to any method of settlement other than those provided for therein’.

B. The Netherlands-Czechoslovakia BIT

7. The Netherlands-Czechoslovakia BIT was concluded on 29 April 1991 and entered into force on 1 October 1992. ( 9 ) The Slovak Republic, as successor to the Czech and Slovak Federal Republic, succeeded to the latter’s rights and obligations on 1 January 1993 and became a member of the European Union on 1 May 2004.

8. That BIT was concluded in Czech, English and Dutch, the English version being authentic in the event of a difference of interpretation.

9. Article 2 of the BIT provides that ‘each Contracting Party shall in its territory promote investments by investors of the other Contracting Party and shall admit such investments in accordance with its provisions of law’. ( 10 )

10. Article 3 of that BIT provides as follows: ‘(1) Each Contracting Party shall ensure fair and equitable treatment to the investments of investors of the other Contracting Party and shall not impair, by unreasonable or discriminatory measures, the operation, management, maintenance, use, enjoyment or disposal thereof by those investors. [ ( 11 )] (2) More particularly, each Contracting Party shall accord to such investments full security and protection which in any case shall not be less than that accorded either to investments of its own investors or to investments of investors of any third State, whichever is more favourable to the investor concerned. [ ( 12 )] (3) The provisions of this Article shall not be construed so as to oblige either Contracting Party to accord preferences and advantages to investors of the other Contracting Party similar to those accorded to investors of a third State (a) by virtue of membership of the former of any existing or future customs union or economic union, or similar institutions, … [ ( 13 )] (4) Each Contracting Party shall observe any obligation it may have entered into with regard to investment of investors of the other Contracting Party. [ ( 14 )] (5) If the provisions of law of either Contracting Party or obligations under international law existing at present or established hereafter between the Contracting Parties in addition to the present Agreement contain rules, whether general or specific, entitling investments by investors of the other Contracting Party to a treatment more favourable than is provided for by the present Agreement, such rules shall to the extent that they are more favourable prevail over the present Agreement. [ ( 15 )]’

11. Article 4 provides that ‘each Contracting Party shall guarantee that payments related to an investment may be transferred. The transfers shall be made in a freely convertible currency, without undue restriction or delay …’. ( 16 ) The free transfer of payments covers, inter alia, profits, interests and dividends.

12. Article 5 provides that ‘neither Contracting Party shall take any measures depriving, directly or indirectly, investors of the other Contracting Party of their investments’ ( 17 ) unless three conditions are complied with, namely the measures are taken in the public interest and under due process of law, they are not discriminatory and they are accompanied by provision for the payment of just compensation. Under that provision, the compensation must represent the genuine value of the investment.

13. Article 8 states: ‘(1) All disputes between one Contracting Party and an investor of the other Contracting Party concerning an investment of the latter shall if possible, be settled amicably. [ ( 18 )] (2) Each Contracting Party hereby consents to submit a dispute referred to in paragraph (1) of this Article, to an arbitral tribunal, if the dispute has not been settled amicably within a period of six months from the date either party to the dispute requested amicable settlement. [ ( 19 )] (3) The arbitral tribunal referred to in paragraph (2) of this Article will be constituted for each individual case in the following way: each party to the dispute appoints one member of the tribunal and the two members thus appointed shall select a national of a third State as Chairman of the tribunal. Each party to the dispute shall appoint its member of the tribunal within two months, and the Chairman shall be appointed within three months from the date on which the investor has notified the other Contracting Party of his decision to submit the dispute to the arbitral tribunal. [ ( 20 )] (4) If the appointments have not been made in the abovementioned periods, either party to the dispute may invite the President of the Arbitration Institute of the Chamber of Commerce of Stockholm to make the necessary appointments. If the President is a national of either Contracting Party or if he is otherwise prevented from discharging the said function, the Vice-President shall be invited to make the necessary appointments. If the Vice-President is a national of either Contracting Party or if he too is prevented from discharging the said function, the most senior member of the Arbitration Institute who is not a national of either Contracting Party shall be invited to make the necessary appointments. [ ( 21 )] (5) The arbitration tribunal shall determine its own procedure applying the [UNCITRAL] arbitration rules … [ ( 22 )] (6) The arbitral tribunal shall decide on the basis of the law, taking into account in particular though not exclusively: – the law in force of the Contracting Party concerned; – the provisions of this Agreement, and other relevant Agreements between the Contracting Parties; – the provisions of special agreements relating to the investment; – the general principles of international law. [ ( 23 )] (7) The tribunal takes its decision by majority of votes; such decision shall be final and binding upon the parties to the dispute. [ ( 24 )]’.

14. Article 13 provides: ‘(1) The present Agreement … shall remain in force for a period of ten years. [ ( 25 )] (2) Unless notice of termination has been given by either Contracting Party at least six months before the date of the expiry of its validity, the present Agreement shall be extended tacitly for periods of ten years, each Contracting Party reserving the right to terminate the Agreement upon notice of at least six months before the date of expiry of the current period of validity. [ ( 26 )] (3) In respect of investments made before the date of the termination of the present Agreement the foregoing Articles thereof shall continue to be effective for a further period of fifteen years from that date. [ ( 27 )] …’

C. German law

15. Article 1040 of the Zivilprozessordnung (Code of Civil Procedure), entitled ‘Authority of the arbitral tribunal to decide on its own competence’, provides: ‘(1) The arbitral tribunal may decide on its own competence, and in this context also regarding the existence or the validity of the arbitration agreement. … (2) The objection as to a lack of competence of the arbitral tribunal is to be submitted by no later than the time at which the reply to the request for arbitration is made. … (3) Where the arbitral tribunal believes it has competence, it shall rule on an objection raised pursuant to paragraph 2 in an interim decision as a matter of principle. …’

16. Article 1059 of the Code of Civil Procedure, entitled ‘Petition for reversal of an arbitral award’, states: ‘(1) Only a petition for reversal of an arbitral award by a court pursuant to paragraphs 2 and 3 may be filed against an arbitral award. (2) An arbitral award may be reversed only if 1. the petitioner asserts, and provides reasons for his assertion, that (a) … the arbitration agreement is invalid under the laws to which the parties have subjected it or, if the parties have not made any determinations in this regard, that it is invalid under German law, or … 2. the competent national court determines that … (b) the recognition or enforcement of the arbitral award will lead to a result contrary to public order. …’

III. The dispute in the main proceedings and the questions referred for a preliminary ruling

17. Achmea B.V. (formerly known as Eureko B.V.) is an undertaking belonging to a Netherlands insurance group.

18. In the context of a reform of its health system, the Slovak Republic opened the Slovak market in 2004 to national and foreign operators offering private sickness insurance services. After being approved as a health sickness body, Achmea established a subsidiary (Union Healthcare) in Slovakia, to which it supplied capital (around EUR 72 million) and through which it offered private sickness insurance.

19. Following a change of government in 2006, the Slovak Republic partly revoked the liberalisation of the sickness insurance market. It first of all prohibited the intervention of insurance brokers, then the distribution of the profits from sickness insurance activities and finally the sale of insurance portfolios. By judgment of 26 January 2011, the Ústavný súd Slovenskej republiky (Constitutional Court of the Slovak Republic) held that the legal ban on the distribution of profits was contrary to the Constitution. By a law reforming sickness insurance, which entered into force on 1 August 2011, the Slovak Republic again authorised the distribution of profits.

20. Being of the view that the legislative measures adopted by the Slovak Republic amounted to breach of Article 3(1) and (2), Article 4 and Article 5 of the Netherlands-Czechoslovakia BIT, Achmea initiated an arbitral procedure against that State in October 2008, in application of Article 8 of the Netherlands-Czechoslovakia BIT, and claimed damages of EUR 65 million.

21. The arbitral tribunal and the parties agreed that the PCA should act as Registry and that the language of the case should be English. By Procedural Order No 1, the arbitral tribunal fixed the place of the arbitration at Frankfurt am Main (Germany).

22. In the context of the arbitral proceedings, the Slovak Republic raised an objection to the jurisdiction of the arbitral tribunal. It claimed that the FEU Treaty governed the same matter as Netherlands-Czechoslovakia BIT and that that BIT should be considered inapplicable or to have terminated in accordance with Articles 30 and 59 of the Vienna Convention on the Law of Treaties of 23 May 1969 (‘the Vienna Convention’). ( 28 ) The Slovak Republic also maintained that, consequently, the arbitration clause in Article 8(2) of that BIT could not be applied, as it was incompatible with the FEU Treaty. In that regard, it adds that the Court of Justice has exclusive jurisdiction over Achmea’s claims and that certain provisions of that BIT, such as Article 4, concerning the free transfer of payments, have been held by the Court to be incompatible with the FEU Treaty. ( 29 )

23. By its Award of 26 October 2010 on Jurisdiction, Arbitrability and Suspension, the arbitral tribunal rejected that objection to jurisdiction and declared that it had jurisdiction. ( 30 ) The Slovak Republic’s action before the German courts seeking reversal of that award did not succeed.

24. By a Final Award of 7 December 2012, the arbitral tribunal held that a part of the measures adopted by the Slovak Republic, namely the ban on the distribution of profits ( 31 ) and the ban on transfers, ( 32 ) breached Article 3 (fair and equitable treatment) and Article 4 (free transfer of payments) of the BIT and ordered the Slovak Republic to pay Achmea damages of EUR 22.1 million plus interest and the costs of the arbitration and the legal costs incurred by Achmea. ( 33 )

25. As the place of arbitration was Frankfurt am Main, the Slovak Republic brought an action to have the Final Award reversed before the Oberlandesgericht Frankfurt am Main (Higher Regional Court, Frankfurt am Main, Germany). As that court decided to dismiss the action, the Slovak Republic lodged an appeal on a point of law against that decision before the Bundesgerichtshof (Federal Court of Justice, Germany).

26. In that context, the Slovak Republic maintains that the Final Award should be reversed because it is contrary to public policy and the arbitration agreement that gave rise to the award is also null and void and contrary to public policy. ( 34 )

27. In support of its assertion that the Final Award is contrary to public policy, the Slovak Republic maintains that the arbitral tribunal, being unable to request the Court to give a preliminary ruling under Article 267 TFEU, failed to take account of higher-ranking provisions of EU law on the free movement of capital and breached its rights of defence when it quantified damages.

28. As regards the assertion that the arbitration clause established by Article 8 of the Netherlands-Czechoslovakia BIT is null and void, the Slovak Republic maintains that that agreement is contrary to Articles 267 and 344 TFEU and to the principle of non-discrimination set forth in Article 18 TFEU.

29. Although the Bundesgerichtshof (Federal Court of Justice) does not share the doubts expressed by the Slovak Republic as to the compatibility of Article 8 of the Netherlands-Czechoslovakia BIT with Articles 18, 267 and 344 TFEU, it established that the Court had not yet given a ruling on those issues and that it would be impossible to infer the answer with sufficient certainty from the existing case-law, especially having regard to the position of the Commission, which has intervened in support of the Slovak Republic both during the arbitration at issue and in the annulment proceedings before the German courts.

30. For those reasons, the Bundesgerichtshof (Federal Court of Justice) decided to stay proceedings and to refer the following questions to the Court for a preliminary ruling: ‘(1) Does Article 344 TFEU preclude the application of a provision in a bilateral investment protection agreement between Member States of the European Union (a so-called intra-EU BIT) under which an investor of a Contracting State, in the event of a dispute concerning investments in the other Contracting State, may bring proceedings against the latter State before an arbitral tribunal where the investment protection agreement was concluded before one of the Contracting States acceded to the European Union but the arbitral proceedings are not to be brought until after that date? If Question 1 is to be answered in the negative: (2) Does Article 267 TFEU preclude the application of such a provision? If Questions 1 and 2 are to be answered in the negative: (3) Does the first paragraph of Article 18 TFEU preclude the application of such a provision under the circumstances described in Question 1?’

IV. Procedure before the Court

31. The present request for a preliminary ruling was lodged at the Court on 23 May 2016. The Slovak Republic, Achmea, the Czech, Estonian, Greek, Spanish, Cypriot, Hungarian, Netherlands, Austrian, Polish, Romanian and Finnish Governments and the Commission have lodged written observations.

32. A hearing took place on 19 June 2016, at which the Slovak Republic, Achmea, the Czech, German, Estonian, Greek, Spanish, French, Italian, Cypriot, Latvian, Hungarian, Netherlands, Austrian, Polish, Romanian and Finnish Governments and the Commission presented their oral observations.

V. Analysis

A. Preliminary observations

33. Before addressing the three questions for a preliminary ruling submitted by the referring court, I should like to make some preliminary observations.

34. The Member States which have intervened in the present case are divided into two groups. The first group consists of the Federal Republic of Germany, the French Republic, the Kingdom of the Netherlands, the Republic of Austria and the Republic of Finland, which are essentially countries of origin of the investors and therefore never or rarely respondents in arbitral proceedings launched by investors: the Kingdom of the Netherlands and the Republic of Finland have never been respondents, ( 35 ) the Federal Republic of Germany has been a respondent in three cases ( 36 ) and the French Republic ( 37 ) and the Republic of Austria have each been a respondent in only a single case. ( 38 )

35. The second group is made up of the Czech Republic, the Republic of Estonia, the Hellenic Republic, the Kingdom of Spain, the Italian Republic, the Republic of Cyprus, the Republic of Latvia, Hungary, the Republic of Poland, Romania and the Slovak Republic. Those States have all been respondents in a number of arbitral proceedings relating to intra-EU investments, the Czech Republic 26 times, the Republic of Estonia three times, the Hellenic Republic three times, the Kingdom of Spain 33 times, the Italian Republic nine times, the Republic of Cyprus three times, the Republic of Latvia twice, Hungary 11 times, the Republic of Poland 11 times, Romania four times and the Slovak Republic nine times. ( 39 )

36. Faced with such economic reality, it is hardly surprising that the Member States in the second group have intervened in support of the argument put forward by the Slovak Republic, which is itself the respondent to the investment arbitration at issue in the present case.

37. It is surprising, on the other hand, that, in the second group, which maintains that intra-EU BITs are incompatible with the EU and FEU Treaties, only the Italian Republic has terminated its intra-EU BITs, with the exception of the Italy-Malta BIT, whereas the other Member States in that group maintain them in force, in whole or in part, thus allowing their own investors to benefit from them. In effect, a large number of investment arbitrations have been launched by investors from those Member States and are often brought against another Member State in the same group. ( 40 )

38. When asked at the hearing why it did not denounce at least the BITs signed with the Member States which, in the present case, maintained, as it did, that those BITs were incompatible with EU law, ( 41 ) the Slovak Republic stated that its objective was to ensure that its own investors would not be the victims of discrimination by comparison with investors from other Member States in the Member States with which it would no longer have BITs. However, that intention did not prevent it from terminating its BIT with the Italian Republic. At the same time, its own investors continue to benefit from the BITs concluded with Member States of the same group, as shown, for example, by the arbitral proceedings Poštová banka, a.s. and Istrokapital SE v Hellenic Republic (ICSID Case No ARB/13/8).

39. The Commission’s argument is also striking.

40. For a very long time, the argument of the EU institutions, including the Commission, was that, far from being incompatible with EU law, BITs were instruments necessary to prepare for the accession to the Union of the countries of Central and Eastern Europe. The Association Agreements between the Union and candidate countries also contained provisions for the conclusion of BITs between Member States and candidate countries. ( 42 )

41. At the hearing, the Commission attempted to explain that change in its position on the incompatibility of BITs with the EU and FEU Treaties, maintaining that the agreements in question were necessary in order to prepare for the accession of the candidate countries. However, if those BITs were justified only during the association period and each party was aware that they would become incompatible with the EU and FEU Treaties as soon as the third State concerned had become a member of the Union, why did the accession treaties not provide for the termination of those agreements, thus leaving them in uncertainty which has lasted more than 30 years in the case of some Member States and 13 years in the case of many others?

42. In addition, in the European Union, there are no investment treaties solely between market-economy countries and countries which previously had controlled economies ( 43 ) or between Member States and candidate countries for accession, ( 44 ) as the Commission has suggested.

43. Furthermore, all the Member States and the Union have ratified the Energy Charter Treaty, signed at Lisbon on 19 December 1994. ( 45 ) That multilateral treaty on investment in the field of energy operates even between Member States, since it was concluded not as an agreement between the Union and its Member States, of the one part, ( 46 ) and third countries, of the other part, but as an ordinary multilateral treaty in which all the Contracting Parties participate on an equal footing. In that sense, the material provisions for the protection of investments provided for in that Treaty and the ISDS mechanism also operate between Member States. I note that if no EU institution and no Member State sought an opinion from the Court on the compatibility of that treaty with the EU and FEU Treaties, that is because none of them had the slightest suspicion that it might be incompatible.

44. I would add that the systemic risk which, according to the Commission, intra-EU BITs represent to the uniformity and effectiveness of EU law is greatly exaggerated. UNCTAD’s statistics ( 47 ) show that out of 62 intra-EU arbitral proceedings which, over a period of several decades, have been closed, the investors have been successful in only 10 cases, ( 48 ) representing 16.1% of those 62 cases, a rate significantly below the 26.9% of ‘victories’ for investors at the global level. ( 49 )

45. The arbitral tribunals have to a large extent allowed the Commission to intervene in arbitrations and to my knowledge in none of those 10 cases was the arbitral tribunal required to review the validity of acts of the Union or the compatibility of acts of the Member States with EU law. In their written observations, several Member States and the Commission have mentioned only a single example, namely the arbitration Ioan Micula and Others v Romania (ICSID Case No ARB/05/20), which resulted in an arbitral award that was allegedly incompatible with EU law. Even though that example is in my view not relevant in the present case, ( 50 ) the fact that there is only a single example reinforces my opinion that the fear expressed by certain Member States and the Commission of a systemic risk created by intra-EU BITs is greatly exaggerated.

46. Last, it should be pointed out that since the accession of the Slovak Republic to the EU, the Netherlands-Czechoslovakia BIT no longer falls within the scope of Article 351 TFEU. ( 51 )

47. However, that does not mean that that BIT has automatically become void or incompatible with the EU and FEU Treaties. As the Court has held, ‘the provisions of a convention between two Member States cannot apply in the relations between those States if they are found to be contrary to the rules of the [FEU] Treaty’. ( 52 ) In other words, the provisions of such a convention between Member States are applicable in so far as they are compatible with the EU and FEU Treaties.

48. It is therefore appropriate to consider whether Article 8 of the Netherlands-Czechoslovakia BIT is incompatible with the FEU Treaty and in particular with Articles 18, 267 and 344 TFEU.

B. The third question referred for a preliminary ruling

49. I propose to address the three questions in the opposite order from that adopted by the referring court, since there will be no need to answer the first and second questions if Article 8 of the Netherlands-Czechoslovakia BIT constitutes discrimination on the ground of nationality prohibited by Article 18 TFEU.

50. By its third question, the referring court asks, in essence, whether Article 18 TFEU must be interpreted as meaning that it precludes an ISDS mechanism such as that established by Article 8 of the Netherlands-Czechoslovakia BIT which confers on Netherlands investors the right to have recourse to international arbitration against the Slovak Republic, a right not enjoyed by investors from other Member States.

1. Admissibility

51. Achmea and the Netherlands, Austrian and Finnish Governments challenge the admissibility of this question, on the ground that it is not relevant to the outcome of the main proceedings, in so far as Achmea does not claim to be the victim of discrimination. On the contrary, if Article 8 of the Netherlands-Czechoslovakia BIT constituted discrimination, Achmea would have benefited from it.

52. To my mind, that plea of inadmissibility must be rejected, since the answer to the third question is necessary in order to assess whether Article 8 of that BIT is compatible with the EU and FEU Treaties.

53. The referring court has before it an action to set aside the Final Award of 7 December 2012 delivered in the arbitral proceedings Achmea BV (formerly known as Eureko BV) v Slovak Republic (UNCITRAL) (PCA Case No 2008-13) on the ground, inter alia, of invalidity of the arbitration clause on which the arbitral tribunal based its jurisdiction. In that sense, it is irrelevant whether Achmea is or is not the victim of discrimination.

2. Substance

54. As a preliminary point, I note that a number of interveners and the Commission observe that by its third question the referring court should aim not at Article 18 TFEU but at Articles 49 and 63 TFEU, which constitute special rules by reference to Article 18 TFEU.

55. In fact, it is well established that ‘Article 18 TFEU is intended to apply independently only to situations governed by EU law for which the Treaty lays down no specific prohibition of discrimination’. ( 53 )

56. However, the ISDS mechanism established by Article 8 of the BIT does not come within the scope ratione materiae of either freedom of establishment, or free movement of capital, or any other provision of the FEU Treaty, since EU law does not create remedies that allow individuals to take proceedings against the Member States before the Court. ( 54 )

57. In addition, as I shall explain in points 183 to 198 and 210 to 228 of this Opinion, the scope ratione materiae of the BIT goes much further than the limits of freedom of establishment enshrined in Article 49 TFEU and of free movement of capital enshrined in Article 63 TFEU.

58. That is illustrated in the present case where the arbitral tribunal held in its Final Award that by banning the transfer and distribution of profits, ( 55 ) the Slovak Republic had breached Articles 3 (fair and equitable treatment) and 4 (free transfer of payments) of the BIT. Whereas Article 4 of the BIT corresponds in essence to Article 63 TFEU, Article 3 of the BIT does not have an equivalent provision in EU law, although it overlaps in part with a number of provisions of EU law. ( 56 )

59. It is therefore necessary to examine the compatibility of Article 8 of the BIT with the general principle of EU law, expressed in Article 18 TFEU, that prohibits discrimination on the ground of nationality.

60. In that regard, the Slovak Republic, the Estonian, Greek, Spanish, Italian, Cypriot, Hungarian, Polish and Romanian Governments and the Commission maintain that the substantive provisions of the BIT, including Article 8, are discriminatory in that they afford, in the present case, preferential treatment to investors from the Kingdom of the Netherlands who have invested in the Slovak Republic, whereas the investors of the Member States which have not concluded a BIT with the Slovak Republic ( 57 ) do not benefit from that treatment. ( 58 )

61. A preliminary observation must be made on the extent of the alleged discrimination. The Slovak Republic has entered into a BIT with most Member States, namely the Kingdom of Belgium, the Republic of Bulgaria, the Kingdom of Denmark, the Federal Republic of Germany, the Hellenic Republic, the Kingdom of Spain, the French Republic, the Republic of Croatia, the Republic of Latvia, the Grand Duchy of Luxembourg, Hungary, the Republic of Malta, the Kingdom of the Netherlands, the Republic of Austria, the Republic of Poland, the Portuguese Republic, Romania, the Republic of Slovenia, the Republic of Finland, the Kingdom of Sweden and the Kingdom of Great Britain and Northern Ireland. Those BITs are currently in force.

62. Admittedly, investors from those Member States do not come under Article 8 of the Netherlands-Czechoslovakia BIT. However, the BITs which their Member States of origin have concluded with the Slovak Republic all make provision for international arbitration as a method of ISDS. There is therefore no difference in treatment so far as they are concerned.

63. The Slovak Republic also concluded BITs with the Czech Republic and the Italian Republic, but the parties have terminated them. ( 59 ) If there is thus a difference in treatment of Czech and Italian investors, that is because their Member States decided to withdraw from them the benefit which the BITs specifically conferred on them.

64. Nonetheless, Estonian, Irish, Cypriot and Lithuanian investors do not benefit from a provision equivalent to Article 8 of that BIT vis-à-vis the Slovak Republic, except for investments in the field of energy, where the Energy Charter Treaty affords them such an opportunity.

65. In my view, even in the case of those investors there is no discrimination prohibited by EU law.

66. The Court has already addressed the question whether discrimination may exist vis-à-vis a national of a Member State engaged in cross-border investment where the host Member State of the investment does not afford him a (fiscal) benefit which it affords to nationals of another Member State on the basis of a bilateral agreement concluded with the latter State.

67. The case that gave rise to the judgment of 5 July 2005, D. (C‑376/03, EU:C:2005:424) ( 60 ) concerned the Netherlands authorities’ refusal to grant a wealth tax allowance to a German national who had invested in real property in the Netherlands. Mr D. claimed that there was discrimination in that that benefit was granted to Belgian nationals who had made similar investments in the Netherlands, in application of Articles 24 and 25 of the Convention signed on 19 October 1970 between the Government of the Kingdom of Belgium and the Government of the Kingdom of the Netherlands for the avoidance of double taxation of income and property and for the regulation of certain other taxation matters (‘the Netherlands-Belgium DTC’).

68. The Court first of all observed that ‘the … question asked by the national court is based on the premiss that a non-resident such as Mr D. is not in a situation comparable to that of a resident of the Netherlands. The question is designed to ascertain whether Mr D.’s situation can be compared to that of another non-resident who receives special treatment under a double taxation convention’. ( 61 )

69. In that regard, the Court held that ‘the fact that [the] rights and obligations [created by the Netherlands-Belgium DTC] apply only to persons resident in one of the two Contracting Member States is an inherent consequence of bilateral double taxation conventions. It follows that a taxable person resident in Belgium is not in the same situation as a taxable person resident outside Belgium so far as concerns wealth tax on real property situated in the Netherlands.’ ( 62 )

70. The Court then further observed that ‘a rule such as that laid down in Article 25(3) of the Belgium-Netherlands Convention cannot be regarded as a benefit separable from the remainder of the Convention, but is an integral part thereof and contributes to its overall balance’. ( 63 )

71. It is clear from that judgment not only that the FEU Treaty does not contain a most favoured nation (MFN) clause like the one contained in that BIT in Article 3(2), ( 64 ) but also that there is no discrimination where a Member State does not afford the nationals of another Member State the treatment which it affords, by convention, to the nationals of a third Member State.

72. The fact that the FEU Treaty does not contain an MFN clause is confirmed by the Court’s case-law on Article 18 TFEU, according to which ‘[Article 18 TFEU] requires that persons in a situation governed by [EU] law be placed on a completely equal footing with nationals of the Member State’. ( 65 )

73. To my mind, the analogy between the present case and the case that gave rise to the judgment of 5 July 2005, D. (C‑376/03, EU:C:2005:424) is perfect, since the comparison which the Slovak Republic and the Commission draw also concerns two non-Slovak investors, one of whom (in this instance a Netherlands investor) benefits from the material protection afforded by the BIT while the other does not.

74. In fact, like the Netherlands-Belgium DTC, the BIT is an international treaty, ‘the scope [of which] is limited to the natural or legal persons referred to in it’, ( 66 ) namely natural persons having the nationality of one of the Contracting Parties and legal persons constituted under the law of one of those Contracting Parties. ( 67 )

75. In that sense, the fact that the reciprocal rights and obligations created by the BIT apply only to investors from one of the two Contracting Member States is a consequence inherent in the bilateral nature of BITs. It follows that a non-Netherlands investor is not in the same situation as a Netherlands investor so far as an investment made in Slovakia is concerned.

76. Furthermore, like Article 25(3) of the Netherlands-Belgium DTC to which the Court refers in paragraph 62 of its judgment of 5 July 2005, D. (C‑376/03, EU:C:2005:424), Article 8 of the BIT is not a benefit separable from the remainder of the BIT, but is an integral part thereof to such an extent that a BIT without an ISDS mechanism would be pointless since it would not achieve its aim, which is to encourage and attract foreign investment.

77. In fact, as the Court held in paragraph 292 of Opinion 2/15 (Free Trade Agreement with Singapore), of 16 May 2017 (EU:C:2017:376), the provision of the Free Trade Agreement with the Republic of Singapore which establishes international arbitration as the ISDS mechanism ‘cannot be of a purely ancillary nature’. According to consistent arbitral case-law, the right of investors to have recourse to international arbitration is the most essential element of the BITs, since, in spite of its procedural content, it is in itself an indispensable guarantee that encourages and protects investments. ( 68 ) It is hardly surprising, therefore, that the ‘old’ BITS ( 69 ) which do not contain an ISDS mechanism equivalent to Article 8 of that BIT were not particularly useful to investors.

78. The Commission claims, however, that the present case can be distinguished from the case that gave rise to the judgment of 5 July 2005, D. (C‑376/03, EU:C:2005:424) because of the fiscal subject matter of the latter case. ( 70 )

79. To my mind, that distinction lacks conviction. I observe, first of all, that BITs closely resemble conventions for the avoidance of double taxation in that they are aimed at the same economic activities, both the entry and the exit of capital. A State may attract the entry of foreign capital to its territory by affording a high level of legal protection to the investment in the context of a BIT and also by granting tax advantages. ( 71 ) As in conventions for the avoidance of double taxation, which have never been deemed to be incompatible in principle with the EU and FEU Treaties, the reciprocity of the commitments given by the Member States is an essential ingredient of BITs. ( 72 )

80. Contrary to the Commission’s contention, moreover, conventions for the avoidance of double taxation between Member States do not have the second indent of Article 293 EC as their legal basis. If that were the case, on what article would they have to base the conventions which they negotiate today, given that Article 293 EC is not to be found in the Treaty of Lisbon?

81. That said, there is nothing to prevent intra-EU BITs being replaced by a single multilateral BIT or an act of the Union, according to the allocation of powers between the Union and its Member States, which would be applicable to investors from all Member States, as the Federal Republic of Germany, the French Republic, the Kingdom of the Netherlands, the Republic of Austria and the Republic of Finland proposed in their ‘non-paper’ of 7 April 2016. ( 73 )

82. For those reasons, I propose that the Court’s answer to the third question should be that an ISDS mechanism such as that established by Article 8 of the BIT, which confers on Netherlands investors the right to have recourse to international arbitration against the Slovak Republic, does not constitute discrimination on the ground of nationality, prohibited by Article 18 TFEU.

83. Only if the Court agrees with that proposal will it have to examine the first and second questions.

C. Second question

84. By its second question, the referring court seeks to ascertain whether Article 267 TFEU, as the keystone of the EU judicial system which guarantees the allocation of powers fixed by the EU and FEU Treaties and the autonomy of the EU legal system, precludes the application of a provision such as Article 8 of the Netherlands-Czechoslovakia BIT.

85. I am examining this question before the first question, because I consider that an arbitral tribunal constituted in accordance with Article 8 of the BIT is a court or tribunal within the meaning of Article 267 TFEU, common to two Member States, namely the Kingdom of the Netherlands and the Slovak Republic, and is therefore permitted to request the Court to give a preliminary ruling. That automatically means that there is no incompatibility with Article 344 TFEU, which forms the subject matter of the first question.

86. According to settled case-law, in order for a judicial body to be a ‘court or tribunal’ for the purposes of Article 267 TFEU, it is necessary to take a number of factors into account, such as ‘whether the body is established by law, whether it is permanent, whether its jurisdiction is compulsory, whether its procedure is inter partes, whether it applies rules of law and whether it is independent’. ( 74 ) In addition, a ‘case [must be] pending before it and … it [must be] called upon to give judgment in proceedings intended to lead to a decision of a judicial nature’. ( 75 )

87. On the basis of those criteria, arbitral tribunals are not automatically excluded from the concept of ‘court or tribunal of a Member State’ within the meaning of Article 267 TFEU. Although the Court has on a number of occasions refused to answer a question for a preliminary ruling referred by arbitrators, ( 76 ) it has also declared admissible, on the basis of a case-by-case examination, the questions for a preliminary ruling referred by the arbitral tribunals in the cases that gave rise to the judgments of 17 October 1989, Handels- og Kontorfunktionærernes Forbund i Danmark (109/88, EU:C:1989:383) and of 12 June 2014, Ascendi Beiras Litoral e Alta, Auto Estradas das Beiras Litoral e Alta (C‑377/13, EU:C:2014:1754) and to the order of 13 February 2014, Merck Canada (C‑555/13, EU:C:2014:92).

88. The last two cases show signs that the admissibility criteria are being opened up to include arbitration between the individual and the State (judgment of 12 June 2014, Ascendi Beiras Litoral e Alta, Auto Estradas das Beiras Litoral e Alta, C‑377/13, EU:C:2014:1754) ( 77 ) and international arbitration (order of 13 February 2014, Merck Canada, C‑555/13, EU:C:2014:92). ( 78 )

89. I shall therefore examine the characteristics of the arbitral tribunals constituted in accordance with Article 8 of the BIT in the light of the criteria set out in point 86 of this Opinion. In my view, all of those criteria are satisfied in this case. ( 79 )

1. Whether the arbitral tribunals constituted in accordance with Article 8 of the BIT are established by law

90. Most of the arbitration cases which have been referred to the Court concerned only a particular type of arbitration, namely what is known in the Court’s case-law as ‘contractual’ arbitration, since its legal basis is an arbitration clause in a contract governed by private law. ( 80 )

91. There are other types of arbitration. Apart from the arbitration provided for in Article 272 TFEU, there is arbitration between States on the basis of an international convention ( 81 ) or arbitration between private individuals and States, both of these types of arbitration being very different, in terms of whether they are established by law, from arbitration between individuals.

92. In the latter case, the arbitral tribunal derives its jurisdiction not from a law but from an arbitration clause in a contract.

93. That was the case, in particular, of the arbitration that gave rise to the judgment of 23 March 1982, Nordsee (102/81, EU:C:1982:107), which concerned a ‘pool’ contract concluded between a number of private undertakings who agreed, in the context of a joint project for the construction of 13 factory ships for fishing, to share among them all the financial aid which they received from the European Guidance and Guarantee Fund (EAGGF). The arbitral tribunal seised in accordance with that contract had expressed doubts as to the compatibility of the contract with EU law and had requested the Court to give a preliminary ruling on the matter.

94. The Court considered that it had ‘no jurisdiction’, ( 82 ) being of the view that that arbitral tribunal was not a court or tribunal of one of the Member States for the purposes of Article 267 TFEU, for two reasons. In the first place, ‘the parties were under no obligation, whether in law or in fact, to refer their disputes to arbitration’, ( 83 ) since they had opted for that choice when they entered into the contract. In the second place, ‘the German public authorities are not involved in the decision to opt for arbitration nor are they called upon to intervene automatically in the proceedings before the arbitrator’. ( 84 )

95. The fact that the arbitration panel derived its jurisdiction from an arbitration clause in a contract between a consumer and a travel agency was sufficient, in the case that gave rise to the judgment of 27 January 2005, Denuit and Cordenier (C‑125/04, EU:C:2005:69), to exclude that panel from the concept of ‘court or tribunal’ within the meaning of Article 267 TFEU, even though the arbitration clause was part of the general conditions imposed by the travel agency and was not negotiable by the consumer.

96. Conversely, it cannot be disputed that an arbitral tribunal constituted and seised in accordance with Article 8 of the BIT is established by law cannot be disputed. It derives its jurisdiction not only from an international treaty but also from the Netherlands and Czechoslovakian statutes ratifying the BIT by virtue of which the BIT became part of the legal orders of those Member States. Unlike in the case that gave rise to the judgment of 23 March 1982, Nordsee (102/81, EU:C:1982:107), the involvement of the public authorities in the choice of arbitration and in the arbitral proceedings themselves (since, in this case, the Slovak Republic was the respondent) is obvious.

97. That assessment finds support in the judgment of 12 June 2014, Ascendi Beiras Litoral e Alta, Auto Estradas das Beiras Litoral e Alta (C‑377/13, EU:C:2014:1754), and the order of 13 February 2014, Merck Canada (C‑555/13, EU:C:2014:92).

98. The arbitral tribunal that requested the Court to give a preliminary ruling in the case that gave rise to the judgment of 12 June 2014, Ascendi Beiras Litoral e Alta, Auto Estradas das Beiras Litoral e Alta (C‑377/13, EU:C:2014:1754) satisfied the ‘established by law’ criterion, since a Portuguese law prescribed arbitration as a means of judicial resolution of tax disputes and conferred general jurisdiction on arbitral tribunals dealing with taxation for assessing the legality of the payment of any tax. ( 85 )

99. Likewise, the Court held that the arbitral tribunal in the case that gave rise to the order of 13 February 2014, Merck Canada (C‑555/13, EU:C:2014:92) satisfied the ‘established by law’ criterion, since ‘[its] jurisdiction … [did] not stem from the will of the parties, but from [Portuguese] Law No 62/2011’, ( 86 ) which established arbitration as the mechanism for settling disputes involving industrial property rights pertaining to generic and reference medicinal products.

2. Whether the arbitral tribunals constituted in accordance with Article 8 of the BIT are permanent

100. International arbitration may be institutional arbitration, in which the proceedings take place before and are administered by an arbitral institution ( 87 ) according to its Rules of Procedure and in return for payment, or an ad hoc arbitration in which the parties themselves administer the proceedings without the support of an arbitral institution.

101. It is apparent from paragraphs 25 and 26 of the judgment of 12 June 2014, Ascendi Beiras Litoral e Alta, Auto Estradas das Beiras Litoral e Alta (C‑377/13, EU:C:2014:1754) and from paragraph 24 of the order of 13 February 2014, Merck Canada (C‑555/13, EU:C:2014:92) that the ‘permanence’ criterion does not relate to the composition of the arbitral tribunal as such but to the institutionalisation of arbitration as a dispute settlement method. In other words, it is by reference to the arbitral institution which administers the arbitral proceedings, and not to the arbitral tribunal, the composition of which is ephemeral, that the ‘permanence’ criterion must be assessed.

102. In that sense, the Court held in paragraph 26 of the judgment of 12 June 2014, Ascendi Beiras Litoral e Alta, Auto Estradas das Beiras Litoral e Alta (C‑377/13, EU:C:2014:1754) that ‘even though the composition of the trial formations of the Tribunal Arbitral Tributário [(arbitration tribunal dealing with taxation, Portugal)] is ephemeral and their activity ends once they have made their ruling, the fact remains that, as a whole, the Tribunal Arbitral Tributário [(arbitration tribunal dealing with taxation)], as an element of the system referred to, is permanent in nature’. The system to which the Court is referring is the arbitral institution ‘Centro de Arbitragem Administrativa’ (CAAD) (Centre for Administrative Arbitration, Portugal).

103. Likewise, in paragraph 24 of the order 13 February 2014, Merck Canada (C‑555/13, EU:C:2014:92), the Court held that the criterion of permanence was satisfied because the arbitral tribunal ‘was established on a legislative basis, … it [had] permanent compulsory jurisdiction and, in addition, … national legislation define[d] and frame[d] the applicable procedural rules’, even though it might vary in form, composition and rules of procedure, according to the choice of the parties, and even though it was dissolved after making its decision.

104. In that case, it was clear that the arbitral tribunal was an ad hoc tribunal and that there was no arbitral institution that would ensure its permanence, but the Court inferred permanence from Article 2 of Portuguese Law No 62/2011, which established arbitration as the only means of settling disputes involving industrial property rights pertaining to generic and reference medicinal products.

105. The same conclusion may be drawn as regards the arbitral tribunals constituted and seised in accordance with Article 8 of the BIT, since, as in the cases that gave rise to the judgment of 12 June 2014, Ascendi Beiras Litoral e Alta, Auto Estradas das Beiras Litoral e Alta (C‑377/13, EU:C:2014:1754) and the order of 13 February 2014, Merck Canada (C‑555/13, EU:C:2014:92), the Kingdom of the Netherlands and the Slovak Republic established arbitration as the means of settling disputes between one of them and an investor from the other State.

106. Other aspects of the institutionalisation of arbitration may also be identified in the BIT.

107. In fact, Article 8 of the BIT confers power to appoint arbitrators on the Stockholm Chamber of Commerce (SCC), which is a permanent arbitral institution, and Article 8(5) makes the UNCITRAL rules applicable to the arbitral proceedings.

108. In addition, the proceedings before the arbitral tribunal involved in the present case took place under the aegis of a permanent arbitral institution. The PCA, established in The Hague and created by the Conventions for the Pacific Settlement of International Disputes concluded at The Hague 1899 and 1907, ( 88 ) was designated as the institution acting as Registry by the terms of appointment signed by the PCA and the parties to the main proceedings.

109. Consequently, the ‘permanence’ criterion also seem to me to be satisfied.

3. Whether the jurisdiction of the arbitral tribunals constituted in accordance with Article 8 of the BIT is compulsory

110. According to a consistent line of decisions, ‘[the compulsory nature of the jurisdiction] is lacking in contractual arbitration, since the contracting parties are under no obligation, in law or in fact, to refer their disputes to arbitration and the public authorities of the Member State concerned are neither involved in the decision to opt for arbitration nor required to intervene of their own accord in the proceedings before the arbitrator’. ( 89 )

111. It is clearly unsurprising that the Court held that the arbitral tribunals in the cases that gave rise to the judgment of 17 October 1989, Handels- og Kontorfunktionærernes Forbund i Danmark (109/88, EU:C:1989:383) and the order of 13 February 2014, Merck Canada (C‑555/13, EU:C:2014:92) satisfied the ‘compulsory jurisdiction’ condition, since under Danish law and Portuguese law arbitration was compulsory.

112. In the case that gave rise to the judgment of 12 June 2014, Ascendi Beiras Litoral e Alta, Auto Estradas das Beiras Litoral e Alta (C‑377/13, EU:C:2014:1754), however, the fact that recourse to arbitration was optional and that the taxpayer had opted for arbitration against the Portuguese Republic when he could have brought proceedings directly before the ordinary courts did not preclude the arbitral tribunal from the concept of a ‘court or tribunal of a Member State’ within the meaning of Article 267 TFEU.

113. In fact, according to the Court, ‘[its] decisions [were] binding on parties under Article 24(1) of Decree-Law No 10/2011 [and] its jurisdiction stem[med] directly from the provisions of Decree-Law No 10/2011 and [was] not, as a result, subject to the prior expression of the parties’ will to submit their dispute to arbitration … Thus, where the taxpayer applicant submits its dispute to tax arbitration, the [arbitral tribunal] has … compulsory jurisdiction as regards taxation and customs matters’. ( 90 )

114. The same applies to the arbitral tribunals constituted in accordance with Article 8 of the BIT.

115. Article 8(7) of the BIT provides that the decision of an arbitral tribunal constituted in accordance with Article 8 is to be ‘final and binding upon the parties to the dispute’. ( 91 ) There is no doubt that the award made by such an arbitral tribunal is binding on the parties within the meaning of the Court’s case-law.

116. In addition, Article 8(2) of the BIT provides that ‘each Contracting Party hereby consents to submit a dispute [between an investor and the State] to an arbitral tribunal, if the dispute has not been settled amicably within a period of six months from the date either party to the dispute requested amicable settlement’. ( 92 )

117. The fact that the investor may choose to bring proceedings, either before the courts of the Member State concerned or before the arbitral tribunal, ( 93 ) does not affect the compulsory nature of the jurisdiction of the arbitral tribunal, since that choice was also available to the taxpayer in the case that gave rise to the judgment of 12 June 2014, Ascendi Beiras Litoral e Alta, Auto Estradas das Beiras Litoral e Alta (C‑377/13, EU:C:2014:1754).

118. As the Slovak Republic gave its prior consent to arbitration, as the Portuguese Republic had done in the case that gave rise to the judgment of 12 June 2014, Ascendi Beiras Litoral e Alta, Auto Estradas das Beiras Litoral e Alta (C‑377/13, EU:C:2014:1754), the jurisdiction of the arbitral tribunal established is, in accordance with Article 8(2) of the BIT, binding on that Member State and on the investor.

119. Consequently, the arbitral tribunals constituted in accordance with Article 8 of the BIT also satisfy the ‘compulsory jurisdiction’ criterion.

4. Whether the procedure before the arbitral tribunals constituted in accordance with Article 8 of the BIT is inter partes, whether they apply rules of law in the settlement of the disputes before them and whether the arbitrators are independent and impartial

120. As to whether the procedure before the arbitral tribunals constituted in accordance with Article 8 of the BIT is inter partes, it should be noted that, according to Article 8(5), ‘the arbitration tribunal shall determine its own procedure applying the arbitration rules of [UNCITRAL]’. ( 94 )

121. Article 15(1) of those rules, in the 1976 version applicable at the time of conclusion of the BIT, stated that ‘subject to these Rules, the arbitral tribunal may conduct the arbitration in such manner as it considers appropriate, provided that the parties are treated with equality and that at any stage of the proceedings each party is given a full opportunity of presenting his case. ( 95 ) That guarantee is reiterated in Article 17(1) of those rules in the 2010 and 2013 versions.

122. Respect for the inter partes principle is also ensured by a number of provisions of those rules which relate to the exchange of pleadings, an oral hearing and the closure of hearings, namely Articles 18 to 20, 22, 24, 25 and 29 of the 1976 rules and Articles 20 to 22, 24, 28 and 31 of the rules as amended in 2010 and 2013.

123. As regards the criterion that the arbitral tribunals must apply rules of law, Article 8(6) of the BIT provides that ‘the arbitral tribunal shall decide on the basis of the law’ and sets out a number of rules of law that the tribunal must take into account. The possibility of adjudicating ex aequo et bono is therefore precluded.

124. As regards, last, the ‘independence and impartiality’ criterion, it has consistently been held that ‘the guarantees of independence require rules, particularly as regards the composition of the body and the appointment, length of service and grounds for abstention, rejection and dismissal of its members, in order to dismiss any reasonable doubt in the minds of individuals as to the imperviousness of that body to external facts and its neutrality with respect to the interests before it … in order to consider that the condition regarding the independence of the body making the reference has been met, the case-law requires, inter alia, that dismissals of members of that body should be determined by express legislative provisions’. ( 96 )

125. I note, first of all, that the Court has not questioned the independence and impartiality of the arbitrators in any of the cases before it and, next, that the UNCITRAL Arbitration Rules guarantee the independence and impartiality of the arbitrators by imposing a clear obligation on them to disclose any circumstances likely to give rise to justifiable doubts as to their impartiality or independence ( 97 ) and also by laying down a procedure for challenging arbitrators where such circumstances exist. ( 98 )

126. In the light of the foregoing, the arbitral tribunals established by Article 8 of the BIT are ‘courts or tribunals’ within the meaning of Article 267 TFEU, but are they also courts or tribunals ‘of one of the Member States’ within the meaning of that provision?

127. In my view they are.

128. The question of the quality of an international jurisdiction established in the context of an international organisation created by an international treaty between Member States was examined with respect to the Benelux Court in the case that gave rise to the judgment of 4 November 1997, Parfums Christian Dior (C‑337/95, EU:C:1997:517).

129. In that judgment, the Court held that ‘there is no good reason why such a court, common to a number of Member States, should not be able to submit questions to this Court, in the same way as courts or tribunals of any of those Member States’. ( 99 )

130. That is also the case of the arbitral tribunals constituted in accordance with Article 8 of the BIT, since they are established as a dispute settlement mechanism by the Kingdom of the Netherlands and the Slovak Republic.

131. For those reasons, I propose that the Court’s answer to the second question should be that Article 267 TFEU must be interpreted as not precluding a provision such as Article 8 of the BIT which allows disputes between investors and States to be settled by an arbitral tribunal which must be regarded as ‘a court or tribunal of one of the Member States’ within the meaning of Article 267 TFEU.

D. First question

132. By its first question, the referring court seeks to ascertain whether Article 344 TFEU must be interpreted as meaning that it precludes the application of provisions of intra-EU BITs, such as Article 8 of the Netherlands-Czechoslovakia BIT, which permit the settlement by an arbitral tribunal of disputes between investors and States.

133. It should be noted at the outset that if the Court decides, as I propose, that the arbitral tribunals constituted in accordance with Article 8 of the BIT are courts or tribunals of the Member States within the meaning of Article 267 TFEU, they then participate in the dialogue between courts referred to in paragraph 176 of Opinion 2/13 (Accession of the Union to the ECHR) of 18 December 2014 (EU:C:2014:2454) and are required to apply EU law. Consequently, recourse to international arbitration in the conditions prescribed in Article 8 of the Netherlands-Czechoslovakia BIT cannot undermine either Article 344 TFEU or the allocation of powers determined by the EU and FEU Treaties and, accordingly, the autonomy of the EU legal system.

134. In that case, the arbitral tribunals are required — and if they failed to do so their awards would be null and void on the ground that they would be contrary to public policy — to respect the principles set out by the Court in paragraphs 65 to 70 of Opinion 1/09 (Agreement on the creation of a unified patent litigation system) of 8 March 2011 (EU:C:2011:123) and in paragraphs 157 to 176 of Opinion 2/13 (Accession of the Union to the ECHR) of 18 December 2014 (EU:C:2014:2454), including, in particular, the primacy of EU law ( 100 ) over the laws of the Member States and over every international commitment given between Member States, the direct effect of a whole range of provisions applicable to their nationals and themselves, mutual trust between them in the recognition of common values on which the Union is based and the full application of and respect for EU law.

135. Furthermore, the non-application or the incorrect application of EU law by the arbitral tribunals created by the Member States would not only render the Member States concerned liable, in accordance with the judgment of 30 September 2003, Köbler (C‑224/01, EU:C:2003:513) since it was those Member States that created them, but might, as the case may be, lead to a finding of failure to fulfil obligations on the part of the Member States concerned, in accordance with Articles 258 and 259 TFEU. ( 101 )

136. If, however, the Court should find that the arbitral tribunals constituted in accordance with Article 8 of the BIT are not courts or tribunals of the Member States within the meaning of Article 267 TFEU, it would still be necessary to consider whether Article 344 TFEU precludes the application of Article 8 of the BIT and, if appropriate, whether the latter provision is incompatible with the allocation of powers fixed by the EU and FEU Treaties and the autonomy of the EU legal system.

137. In that context, three analyses must be carried out, the second being necessary only if the first is answered in the affirmative and the third being necessary only if the first or second question is answered in the negative: – Does a dispute between an investor and a Member State, such as that referred to in Article 8 of the BIT, come under Article 344 TFEU? – Does the subject matter of such a dispute allow it to be characterised as a dispute ‘concerning the interpretation [and] the application of the Treaties’ within the meaning of Article 344 TFEU? – Does the BIT, having regard to its purpose, have the effect of undermining the allocation of powers determined by the EU and FEU Treaties and, accordingly, the autonomy of the EU legal system?

1. Does a dispute between an investor and a Member State, such as that referred to in Article 8 of the BIT, come under Article 344 TFEU?

138. In my view, the answer must be in the negative, for the following reasons.

139. According to Article 344 TFEU, ‘Member States undertake not to submit a dispute concerning the interpretation or application of the Treaties to any method of settlement other than those provided for therein’.

140. The Court has often had the opportunity to interpret Article 344 TFEU and to rule on the compatibility of international agreements with that article even in the case of international agreements concluded by the Union and its Member States with third States. ( 102 )

141. According to a consistent line of decisions, ‘an international agreement cannot affect the allocation of powers fixed by the Treaties or, consequently, the autonomy of the EU legal system, observance of which is ensured by the Court. That principle is notably enshrined in Article 344 TFEU, according to which Member States undertake not to submit a dispute concerning the interpretation or application of the Treaties to any method of settlement other than those provided for therein’. ( 103 )

142. According to the Court, Article 344 TFEU provides for ‘the obligation devolving on Member States to have recourse to the [EU] judicial system and to respect the Court’s exclusive jurisdiction, which is a fundamental feature of that system, [an obligation which] must be understood as a specific expression of Member States’ more general duty of loyalty resulting from Article [4(3) TEU]’. ( 104 )

143. It should be noted at the outset that the arbitral tribunal that made the award at issue in the main proceedings carried out a thorough examination of the arguments put forward by the Slovak Republic and the Commission in reliance on Article 344 TFEU. In that regard, it held on the basis of the judgment of 30 May 2006, Commission v Ireland (C‑459/03, EU:C:2006:345) that disputes between investors and States Parties to the BIT did not come under Article 344 TFEU. ( 105 )

144. The Slovak Republic, supported by several Member States and the Commission, disputes that finding of the arbitral tribunal. In its contention, Article 344 TFEU must be given a broad interpretation which means that it is applicable to disputes between an individual and a Member State, especially in the light of its wording, which, unlike Article 273 TFEU, does not expressly limit its scope to disputes ‘between Member States’.

145. I do not agree with that argument.

146. It is clear from the Court’s case-law that disputes between Member States ( 106 ) and between Member States and the Union ( 107 ) come under Article 344 TFEU. On the other hand, disputes between individuals do not, even if the court called upon to settle them is led to take EU law into account or to apply it.

147. As the Court held with respect to the draft Agreement on the European and Community Patents Court, ‘nor can the creation of the [European and Community Patents Court] be in conflict with Article 344 TFEU, given that that article merely prohibits Member States from submitting a dispute concerning the interpretation or application of the Treaties to any method of settlement other than those provided for in the Treaties. The jurisdiction which the draft agreement intends to grant to the [European and Community Patents Court] relates only to disputes between individuals in the field of patents’. ( 108 )

148. As regards disputes between individuals and Member States, the Commission observes that the judicial system referred to in Opinion 1/91 (EEA Agreement — I), of 14 December 1991 (EU:C:1991:490), also included actions brought by private persons against the European Free Trade Association (EFTA) Surveillance Authority in the field of competition. ( 109 )

149. However, those actions would not have been brought against a Member State and, in any event, there is no suggestion in any passage in the Opinion of the Court that it found that that particular aspect of the proposed Agreement on the European Economic Area (EEA) was problematic.

150. It should further be emphasised that the Union was to become a party to the agreement referred to in that Opinion and that, consequently, that agreement was to form part of EU law, which is clearly not the case of the BIT in question. Furthermore, as is clear from paragraphs 13 to 29 of that Opinion, the Court was concerned by the existence of a systemic risk created by Article 6 of the draft agreement for homogeneity in the interpretation and application of the law in the EEA ( 110 ) and not by the fact that actions brought in the field of competition by individuals against the EFTA Surveillance Authority would have been within the jurisdiction of a court outside the judicial architecture of the European Union.

151. Opinion 2/13 (Accession of the Union to the ECHR), of 18 December 2014 (EU:C:2014:2454), is of particular importance in that respect, since even though Article 6(2) TEU provides for the accession of the European Union to the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950 (‘the ECHR’) that accession would be incompatible with Article 344 TFEU if disputes between individuals and the Member States, which are the most typical disputes brought before the European Court of Human Rights, came under that provision.

152. It was for that reason that, in paragraphs 201 to 214 of that Opinion, the Court examined, from the aspect of Article 344 TFEU, only disputes between Member States and disputes between Member States and the Union, ( 111 ) although it was aware that, by acceding to the ECHR, the Union would be bound by the first sentence of Article 34 of the ECHR, which provides that the European Court of Human Rights ‘may receive an application from any person, nongovernmental organisation or group of individuals claiming to be the victim of a violation by one of the [Contracting Parties] of the rights set forth in the Convention or the Protocols thereto’. ( 112 )

153. For those reasons, I believe that a dispute between an investor and a Member State, such as that referred to in Article 8 of the BIT, does not come under Article 344 TFEU.

154. That conclusion cannot be affected by the Commission’s argument that disputes between investors and Member States are actually disputes between Member States, since by initiating an arbitration procedure against a Member State on the basis of a provision such as Article 8 of the Netherlands-Czechoslovakia BIT, the investor is not exercising a right of his own but a right which that BIT confers on his State of origin.

155. The Commission relies in that respect on two arbitral awards cited in paragraph 81 of its written observations. ( 113 ) However, its argument is contradicted by the same arbitral case-law ( 114 ) and, in any event, is by no means universally approved. ( 115 )

156. In fact, it is firmly established in international law that the provisions of an international treaty may, on certain conditions, confer rights on individuals. ( 116 ) In that sense, a number of arbitral bodies ( 117 ) and national courts ( 118 ) have held that BITs confer rights directly on investors. ( 119 )

157. That certainly applies to Article 3 of the BIT, which the arbitral tribunal found in the arbitral award at issue in the main proceedings to have been breached, since it expressly mentions investors of the Contracting Parties as being entitled to fair and equitable treatment and to most favoured nation treatment.

158. Furthermore, the law applicable to the disputes referred to in Article 8(6) of the BIT ( 120 ) is different from the law applicable to disputes between the two States Parties to the BIT, in accordance with Article 10(7) of the BIT. ( 121 )

159. I conclude from the foregoing that a dispute between an investor and a Member State, such as that referred to in Article 8 of the BIT, does not come under Article 344 TFEU, which means that there is no need to ask whether such a dispute ‘concern[s] the interpretation or application of the [EU and FEU] Treaties’. In case the Court does not agree with my conclusion on the first point, I shall also analyse that question.

2. Does the dispute at issue ‘[concern] the interpretation or application of the Treaties’?

160. Referring to paragraphs 140, 149 and 151 to 153 of the judgment of 30 May 2006, Commission v Ireland (C‑459/03, EU:C:2006:345), the referring court considers that the infringement of Article 344 TFEU can be made out only if the objective of the arbitral award at issue is the interpretation and application of the provisions of EU law themselves, which in its view is not the case of the arbitral award at issue in the main proceedings.

161. The Slovak Republic, supported by several Member States, and the Commission disputes the referring court’s assessment. It contends that Article 344 TFEU is applicable to a dispute such as the one between Achmea and the Slovak Republic, in that the dispute does indeed concern the interpretation and application of the EU and FEU Treaties, including in the sense of the judgment of 30 May 2006, Commission v Ireland (C‑459/03, EU:C:2006:345).

162. I do not take that view.

163. Admittedly, in its judgment of 30 May 2006, Commission v Ireland (C‑459/03, EU:C:2006:345) and in Opinion 2/13 (Accession of the Union to the ECHR), of 18 December 2014 (EU:C:2014:2454), the Court held that disputes concerned the interpretation and application of the EU and FEU Treaties even if they related to international treaties (namely the United Nations Convention on the Law of the Sea, concluded at Montego Bay on 10 December 1982, and the ECHR, respectively).

164. However, that was the case only because the Union was a party to the agreement in question (the United Nations Convention on the Law of the Sea), which was therefore part of EU law, or because it was envisaged that the Union would accede to the agreement in question (ECHR), which would therefore become part of EU law.

165. In fact, as the Court held in paragraphs 126 and 127 of the judgment of 30 May 2006, Commission v Ireland (C‑459/03, EU:C:2006:345): ‘It has been established that the provisions of the [United Nations] Convention [on the Law of the Sea] in issue in the dispute concerning the MOX plant come within the scope of Community competence which the [EU] exercised by acceding to the Convention, with the result that those provisions form an integral part of the [EU] legal order. Consequently, the dispute in this case is indeed a dispute concerning the interpretation or application of the [TFEU] Treaty, within the terms of Article 344 [TFEU].’

166. Likewise, in Opinion 2/13 (Accession of the Union to the ECHR), of 18 December 2014 (EU:C:2014:2454) the Court held that ‘the ECHR would form an integral part of EU law. Consequently, where EU law is at issue, the Court of Justice has exclusive jurisdiction in any dispute between the Member States and between those Member States and the EU regarding compliance with the ECHR’. On that basis, the Court held that the Accession of the Union to the ECHR was liable to affect Article 344 TFEU. ( 122 )

167. However, unlike the agreements at issue in the case that gave rise to the judgment of 30 May 2006, Commission v Ireland (C‑459/03, EU:C:2006:345) and in Opinion 2/13 (Accession of the Union to the ECHR), of 18 December 2014 (EU:C:2014:2454), the EU is not a party to the BIT, which is therefore not part of EU law, which is the criterion defined in those two decisions of the Court.

168. Consequently, the exclusive jurisdiction of the Court guaranteed by Article 344 TFEU is not affected.

169. That assertion is not affected by the Commission’s argument that EU law is part of the law applicable to disputes between investors and the States Parties to the BIT and that in the present case Achmea had claimed that there had been an infringement of EU law in the arbitral proceedings.

170. In that regard, the arbitral tribunal involved in the present case held that ‘far from being precluded from considering and applying EU law the Tribunal [wa]s bound to apply it to the extent that it [wa]s part of the applicable law(s), whether under BIT Article 8, German law or otherwise’. ( 123 ) It added that the Court had ‘a monopoly on the final and authoritative interpretation of EU law’. ( 124 )

171. I would add that an arbitral tribunal constituted in accordance with Article 8 of the BIT may also find it appropriate to apply EU law, in accordance with Article 3(5) of the BIT, which provides, inter alia, that if a Treaty established in future between the Parties ( 125 ) contained rules, whether general or specific, entitling investments by investors of the other Contracting Party to a treatment more favourable than that provided for by the BIT, such rules should to the extent that they were more favourable prevail over the BIT. ( 126 )

172. In addition, the EU and FEU Treaties would in any event be part of the rules which the arbitral tribunal should take into account, even in the absence of a provision such as Article 8(6) of the BIT, because that obligation results by default from Article 31(3)(a) and (c) of the Vienna Convention. ( 127 )

173. However, the fact that EU law is part of the law applicable to disputes between investors and States in accordance with Article 8(6) of the BIT does not mean that those disputes concern the interpretation and application of the EU and FEU Treaties, for two reasons: in the first place, the jurisdiction of the arbitral tribunal is confined to ruling on breaches of the BIT and, in the second place, the scope of that BIT and the legal rules which it introduces are not the same as those of the EU and FEU Treaties.

(a) The jurisdiction of the arbitral tribunal is confined to ruling on breaches of the BIT

174. As the arbitral tribunal in the present case observed, ‘its jurisdiction is confined to ruling upon alleged breaches of the BIT. The Tribunal does not have jurisdiction to rule on alleged breaches of EU law as such’. ( 128 )

175. The tribunal’s role is not to establish whether, by its conduct which is challenged by the investor, the Member State failed to fulfil its obligations under the EU and FEU Treaties or, more generally, EU law. On the contrary, its role is to establish breaches of the BIT by the host State of the investment, EU law being one of the relevant factors to be taken into account when the tribunal assesses the conduct of the State in the light of the BIT. ( 129 )

176. It is in that sense that ‘EU law may have a bearing upon the scope of rights and obligations under the BIT in the present case, by virtue of its role as part of the applicable law under BIT Article 8(6) and German law as the lex loci arbitri’. ( 130 )

177. Nevertheless, EU law has no impact on the substance of the dispute between Achmea and the Slovak Republic. There is no indication in the two arbitral awards made in the main proceedings that Achmea relied before the arbitral tribunal on acts of EU law with a view to their interpretation and application in the context of proceedings in which it sought to establish that there had been a breach of the provisions of those acts by the Slovak Republic. ( 131 ) On the contrary, Achmea claims that the legislative measures adopted by the Slovak Republic in the sickness insurance sector, ( 132 ) which do not have their origin or their basis in EU law, breached Articles 3 to 5 of the BIT.

178. Furthermore, as the arbitral tribunal held, neither Achmea nor the Slovak Republic relied on provisions of EU law that might have had an impact on the reasoning or the decision of the tribunal on the substance of their dispute. Its award could not therefore have any impact on questions of EU law. ( 133 )

(b) The scope of the BIT and the legal rules which it introduces are not the same as those EU and FEU Treaties

179. The Commission’s argument, as expressed in its written observations ( 134 ) and at the hearing, is based on the premiss that EU law offers investors, in particular through fundamental freedoms and the Charter of Fundamental Rights of the European Union (‘the Charter’), full protection in the field of investments.

180. I do not know what the Commission means by ‘full protection’, but a comparison between the BIT and the EU and FEU Treaties shows that the protection afforded to investments by those Treaties is still a long way from being ‘full’. In my view, intra-EU BITS, and more particularly the BIT at issue in the main proceedings, establish rights and obligations which neither reproduce nor contradict the guarantees of the protection of cross-border investments afforded by EU law. ( 135 )

181. The BIT at issue in the main proceedings may be analysed from three aspects. In the first place, its scope is wider than that of the EU and FEU Treaties (1). In the second place, some of the legal rules introduced by the BIT have no equivalent in EU law (2). In the third place, some of its rules overlap in part with EU law without achieving results that are incompatible with the EU and FEU Treaties (3).

182. Before carrying out that analysis, I shall identify the main legal rules contained in the BIT: – the principle of legality of investment ( 136 ) (Article 2); – fair and equitable treatment (Article 3(1)); – full security and protection (Article 3(2)); – the MFN clause (Articles 3(2) and (3)); – the clause whereby the Parties undertake to observe their contractual obligations vis-à-vis the investors of the other Party, known as the ‘umbrella clause’ ( 137 ) (Article 3(4)); – free transfer of payments (Article 4); – prohibition of illegal expropriations (Article 5); – compensation in the event of war, armed conflict, a state of national emergency or other exceptional situations (Article 6); – subrogation of the insurer to the rights of the investor where the investments are insured against non-commercial risks (Article 7); – the ISDS mechanism (Article 8); – the mechanism for the settlement of intra-State disputes (Article 10); and – the ‘sunset’ clause ( 138 ) (Article 13(3)).

(1) The scope of the BIT is wider than that of the EU and FEU Treaties

183. In the absence of express limitation, BITs cover every act or omission of the State which has an impact on a foreign investor and his investment. In that sense, they apply to situations which do not come under the EU and FEU Treaties.

184. The best examples are the mechanism which guarantees the stability of the euro area, criminal law and direct taxation.

185. I thus refer to the arbitral proceedings launched on the basis of the intra-EU BITS, to which the Hellenic Republic and the Republic of Cyprus referred at the hearing, concerning measures which they have adopted in accordance with the conditionality terms defining their ability to provide financial assistance that were fixed in the memoranda of understanding and other instruments negotiated either in the context of the Treaty establishing the European Stability Mechanism (ESM) or the regime that preceded the ESM (namely the European Financial Stability Facility (EFSF)). Those measures come under either the ESM or the competence of the Member States, but not the EU and FEU Treaties, ( 139 ) and they cannot therefore be challenged by individuals on the basis of those Treaties on the ground that they are incompatible with EU law.

186. In that sense, the measures adopted by the Greek Government, known by the English title ‘Private Sector Involvement’ (‘PSI’) and consisting in essence in the unilateral and retroactive reduction in the value of Government bonds against the will of some bondholders, gave rise to the arbitral proceedings between a Slovak investor and a Cypriot investor, of the one part, and the Hellenic Republic, of the other part. ( 140 ) According to those investors, their ‘forced’ participation in the reduction in value of the bonds provided for in the PSI constituted an indirect expropriation and unjust and inequitable treatment, contrary to the Greece-Czechoslovakia and Greece-Cyprus Bits.

187. The PSI had been negotiated between the Greek Government and the ‘troika’ (the Commission, the ECB and the International Monetary Fund (IMF)) and then approved by the Eurogroup. ( 141 ) As the Court held, the participation of the Commission and the ECB in the Troika takes place outside the EU and FEU Treaties and the Eurogroup is not a body or office of the Union. ( 142 ) There is no such restriction on BITs. They apply to any action taken by the State.

188. The same applies to capital control measures imposed by the Republic de Cyprus during the banking crisis, which form the subject matter of the arbitral proceedings Theodoros Adamakopoulos and Others v Republic of Cyprus (ICSID Case No ARB/15/49). At the hearing, the Cypriot Government acknowledged having itself adopted those measures on the basis of Article 65(1) TFEU, which allows — and therefore does not require — Member States to introduce restrictions on the free movement of capital.

189. As the President of the ECB observed, although those measures may be tolerated as a restriction on the free movement of capital by Article 65(1) TFEU, the fact nonetheless remains that they are ‘unilateral and sovereign [national] measures … taken by the Cypriot Parliament, the Cypriot Government and/or the Central Bank of Cyprus’. ( 143 ) Although the Member States must exercise their powers in a manner that does not infringe EU law, the BIT may offer helpful protection to investors where the measures coming within the exclusive jurisdiction of the Member States cause them damage without infringing EU law.

190. At the same time, the measures for the stabilisation of the Cypriot banking sector agreed within the framework of the ESM and approved by the Eurogroup entailed breaking up the Laiki Bank, splitting it into a bad bank and a good bank and integrating the good bank into the Trapeza Kyprou Bank. ( 144 ) The Laiki Bank was also subject to the measures adopted by the Cypriot Government which, according to its shareholder Marfin Investment Group, entailed increasing the Republic of Cyprus’s shareholding in the capital of the Laiki Bank, to its detriment. Criminal proceedings were commenced against officers of the Laiki Bank appointed by Marfin Investment Group and goods belonging to Marfin Investment Group and to its officers were provisionally seized. Taking the view that the measures constituted an indirect expropriation of its investment in the Laiki Bank and arbitrary and discriminatory treatment contrary to the Greece-Cyprus BIT, Marfin Investment Group brought arbitration proceedings against the Republic of Cyprus. ( 145 )

191. It is clear that the dispute at issue in that arbitration does not come within the scope of the EU and FEU Treaties either, both in its criminal part and in its stabilisation part. At the hearing, the Cypriot Government took issue with the arbitral tribunal for having ordered it ‘not to issue and not to enforce certain European arrest warrants’ against certain Greek nationals, even though the purpose of those warrants was to enable those individuals to participate as witnesses at the hearings before the arbitral tribunal.

192. However, as is apparent from the press release issued by the Legal Service of the Republic of Cyprus, the decision whether or not to issue such arrest warrants comes within the exclusive jurisdiction of the Member States. I therefore fail to see how the decision of the arbitral tribunal would have prevented the Republic of Cyprus from discharging its obligations under the Council Framework Decision 2002/584/JHA of 13 June 2002 on the European arrest warrant and the surrender procedures between Member States, ( 146 ) which is aimed in essence at the enforcement in other Member States of the warrants issued by a Member State (in this instance the Republic of Cyprus) and the procedures for surrendering the persons concerned. As for the stay of enforcement of the warrants, that framework decision contains no provisions relating to the enforcement of warrants in the country in which they were issued. In that sense, that question also comes within the exclusive jurisdiction of the Member States. In any event, it is apparent that, at the request of the Attorney General of Cyprus, the arbitral tribunal in question withdrew its decision, thus requiring the Greek nationals concerned to appear before the Cypriot courts, which was the purpose of the European arrest warrants concerned. ( 147 )

193. As regards the field of direct taxation, the BIT is fully applicable. That is not the case of the EU and FEU Treaties, since direct taxation comes within the competence of the Member States, even though when exercising that competence they must comply with EU law. ( 148 ) The protection afforded by fundamental freedoms in direct tax matters ( 149 ) only includes the prohibition of different treatment of taxpayers in objectively comparable situations or the same treatment of taxpayers in different situations. ( 150 )

194. At the hearing, the Commission referred to the judgment of 5 February 2014, Hervis Sport- és Divatkereskedelmi (C‑385/12, EU:C:2014:47), although that judgment shows that, contrary to the Commission’s argument, EU law does not afford ‘comprehensive’ protection in investment matters. ( 151 ) In fact, it is clear from paragraphs 23 and 30 of that judgment that EU law affords protection only against discrimination in the field to which that judgment relates, namely direct taxation.

195. Furthermore, in accordance with Article 51(1) of the Charter, its provisions are to apply to Member States only when they are implementing EU law. As the Court has held, in so far as the direct taxation measures at issue do not fall within the provisions of the FEU Treaty or the directives relating to taxation, the provisions of the Charter do not apply to them. ( 152 )

196. Conversely, the protection afforded to investors by BITs in the field of direct taxation is wider than in EU law in that it covers not only discriminatory tax treatment but also any taxation that would constitute a breach of the guarantees of fair and equitable treatment, MFN treatment, full protection and security and any indirect expropriation in the guise of taxation. ( 153 )

197. For example, a minority shareholder in a company established in another Member State who is expropriated there ( 154 ) by means of direct taxation is not protected by the fundamental freedoms guaranteed by the FEU Treaty, since his shareholding does not give him control of the company targeted by the expropriation measures and for that reason is not covered by freedom of establishment. Furthermore, as the tax measures are addressed solely to the company, they would apply to a purely internal situation, which would render the provisions of the FEU Treaty on free movement of capital inapplicable. As the provisions of EU law would not be applicable, the Charter and Article 17 thereof would not apply either.

198. By contrast, as a minority shareholding is a direct investment for the purposes of the BIT, a minority shareholder could benefit in full from Article 5, which prohibits illegal expropriations. ( 155 )

(2) The legal rules of the BIT which have no equivalent in EU law and are not compatible with it

199. A number of legal rules of the BIT have no equivalent in EU law. These are the MFN clause, the clause whereby the Parties undertake to observe their contractual obligations, the sunset clause and the ISDS mechanism.

(i) The MFN clause

200. Article 3(2) of the BIT establishes the principle that each Contracting Party is to accord to the investments of investors of the other Contracting Party full security and protection which in any case is not to be less than that accorded either to investments of its own investors or to investments of investors of any third State, whichever is more favourable to the investor concerned.

201. Although EU law recognises the principle of national treatment, ( 156 ) it does not contain an MFN clause that would allow the nationals of one Member State to benefit in another Member State from treatment which the latter State grants to nationals of a third Member State on the basis of a bilateral agreement. ( 157 )

(ii) The clause whereby the Parties undertake to observe their contractual obligations vis-à-vis the investors of the other Party, the ‘umbrella clause’

202. The ‘umbrella clause’ contained in Article 3(5) of the BIT has the effect that a breach by the State of a contractual obligation which it has assumed vis-à-vis an investor becomes a breach of the BIT. There is no equivalent in EU law whereby a breach of a contractual obligation would become an infringement of the EU and FEU Treaties.

(iii) The sunset clause

203. Unlike Article 13(3) of the BIT, the EU and FEU Treaties do not contain a sunset clause. On the contrary, Article 50(3) TEU provides that ‘the Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2’, unless that period is extended. Consequently, EU nationals will immediately cease to benefit from the protection which EU law affords to their economic activities in the Member State which decides to withdraw from the Union, even if their investments were made during the period when the Treaties were in force in that Member State, and vice versa.

(iv) Recourse to international arbitration as an ISDS mechanism

204. Article 8 of the BIT contains the ‘standing offer’ of the Kingdom of the Netherlands and the Slovak Republic to investors of the other Contracting Party to submit any dispute relating to their investment to international arbitration, in accordance with the UNCITRAL Arbitration Rules, the SCC Arbitration Institute acting as appointing authority.

205. According to the arbitral tribunal dealing with the arbitration at issue in the main proceedings, the right of recourse to international arbitration cannot be equated simply with recourse to the ordinary courts of the State, ( 158 ) bearing in mind that the EU and FEU Treaties (like the laws of the Member States) do not establish a remedy equivalent to the ISDS mechanism. Although under the second subparagraph of Article 19(1) TEU Member States are required to provide remedies sufficient to ensure effective legal protection in the fields covered by EU law, the EU and FEU Treaties do not create remedies that would allow individuals to take direct action against Member States before the Court. ( 159 ) In addition, the scope of the BIT is wider than that of the EU and FEU Treaties and the BIT therefore also applies where the obligations arising under the second subparagraph of Article 19(1) TEU do not apply.

206. Furthermore, the arbitral tribunals are the most appropriate fora for the settlement of disputes between investors and States on the basis of the BIT, since the national courts often impose conditions on investors that subject reliance on international law to conditions which in reality are impossible to meet, ( 160 ) and time limits which are difficult to reconcile with the timely treatment of cases and the amounts at stake.

207. Consequently, if it did not provide for recourse to international arbitration as the ISDS mechanism, the entire BIT would be devoid of all practical effect. In that regard, the Member States intervening in these proceedings, and the Commission, have not provided a single example of an investor who brought proceedings before the national courts on the basis of the old BITS, which like the Germany-Greece and the Germany-Portugal BITs contain no ISDS mechanisms.

208. It is therefore hardly surprising that the right of investors to have recourse to international arbitration has been recognised in international law on investments as the most essential provision of the BITs, since, beyond its procedural content, it is also in itself a guarantee that encourages and protects investments. ( 161 )

209. The Court confirmed that assessment when it held in paragraph 292 of Opinion 2/15 (Free Trade Agreement with Singapore), of 16 May 2017 (EU:C:2017:376) that the ISDS mechanisms ‘cannot be of a purely ancillary nature’.

(3) The overlap between the other provisions of the BIT and certain provisions of the EU and FEU Treaties is only partial

210. As regards the other rules providing material protection of investments, namely full protection and security, fair and equitable treatment of investments and the prohibition of illegal expropriations, it should be emphasised that any overlap with EU law is only partial and does not render them incompatible with EU law. On the contrary, like the fundamental freedoms, those rules also encourage the movement of capital between Member States. They are a priori compatible with the internal market.

(i) The full protection and security of investments

211. This rule places the State under a positive obligation to take measures to protect investments, which includes the physical protection of the investor and his investment against violent acts on the part of individuals ( 162 ) or bodies of the State ( 163 ) and the legal protection ( 164 ) of the investor and his investment. ( 165 )

212. There is no directly equivalent rule in EU law. ( 166 ) Admittedly, the fundamental freed