Source: http://oxia.ouplaw.com/page/704
Timestamp: 2019-04-19 10:56:34+00:00

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Image credit: Karsten Würth (@inf1783) via Unsplash.
In March 2018, the Court of Justice of the EU (“CJEU” or “the Court”) ruled on the interpretation of Articles 18, 267, and 344 of the Treaty on the Functioning of the EU (“TFEU”) in Slovak Republic v. Achmea BV.10 Attempting to set aside an arbitral award against it, the Slovak Republic had applied to the Higher Regional Court in Frankfurt (the place of the seat of the arbitration) and, subsequently, to the German Federal Court of Justice. The latter ultimately referred the question of compatibility of the Netherlands-Slovakia BIT with the TFEU to the CJEU. The Court’s judgment shook the world of investment arbitration as it stated that intra-EU BITs were incompatible with EU law, causing many to doubt the future of intra-EU disputes. The CJEU unambiguously held that “Articles 267 and 344 TFEU must be interpreted as precluding a provision in an international agreement concluded between Member States, such as Article 8” of the Netherlands-Slovakia BIT. The CJEU, however, did not discuss multilateral treaties such as the ECT. This omission left many wondering about the possible impact, if any, of the Achmea judgment on the ECT.
A recent award in Masdar v. Spain, decided in the investor’s favor, shed some light on this issue. The Tribunal held that “… the Achmea Judgment has no bearing upon the present case”11 and “cannot be applied to multilateral treaties, such as the ECT, to which the EU itself is a party.”12 “Had the CJEU seen it necessary to address [in Achmea] the distinction … between the ISDS provisions of the ECT and the investment protection mechanisms to be found in bilateral investment treaties made between Member States”, in the Tribunal’s view, it would have done so.13 On the merits, the Tribunal found that Spain had failed to accord FET to the investor, ordering it to pay EUR 64.5 million in damages and interest.
Whether other arbitral tribunals and national courts will follow the reasoning in Masdar remains to be seen. Relying on Achmea, respondent states in other ECT (and non-ECT) investment cases have started to seek to set aside awards rendered in intra-EU disputes, including in the Novenergia mentioned above. With this in mind, investors might well think twice before bringing such cases in the future. These latest developments show the complex relationship between ECT and EU law,14 and the ever changing aspects of international arbitration in the energy sector.
1. The ICSID Caseload – Statistics, Issue 2016-1, 24; The ICSID Caseload – Statistics, Issue 2016-2, 24.
2. Graham Coop and Isabella Seif, “Chapter 10: ECT and States’ Right to Regulate” in Maxi Scherer (ed.), International Arbitration in the Energy Sector (Oxford University Press, 2018), 222-223; Norah Gallagher, “Chapter 11: ECT and Renewable Energy Disputes” in Maxi Scherer (ed.), International Arbitration in the Energy Sector (Oxford University Press, 2018), 259.
3. The ICSID Caseload – Statistics, Issue 2018-1, 28, https://icsid.worldbank.org/en/Documents/resources/ICSID%20Web%20Stats%202018-1(English).pdf (13% for oil, gas, and mining, and 11% for electric power and other energy). On the importance of international arbitration in the energy sector see Maxi Scherer, “Chapter 1: Introduction” in Maxi Scherer (ed.), International Arbitration in the Energy Sector (Oxford University Press, 2018).
4. Norah Gallagher, “Chapter 11: ECT and Renewable Energy Disputes” in Maxi Scherer (ed.), International Arbitration in the Energy Sector (Oxford University Press, 2018), 265-272.
5. Isolux Infrastructure Netherlands, BV v. Reino de España, Laudo, Arbitraje SCC V2013/153, 12 July 2016, para. 868 (d).
6. Novenergia II – Energy & Environment (SCA) v. The Kingdom of Spain, Final Award, SCC Arbitration (2015/063), 15 February 2018, para. 860 (c).
7. Isolux Infrastructure Netherlands, BV v. Reino de España, Laudo, Arbitraje SCC V2013/153, 12 July 2016, para. 656.
8. Novenergia II – Energy & Environment (SCA) v. The Kingdom of Spain, Final Award, SCC Arbitration (2015/063), 15 February 2018, para. 454.
9. Mr. Jürgen Wirtgen et al. v. The Czech Republic, Final Award, PCA Case No. 2014-03, 11 October 2017, para. 266.
10. Slovak Republic v. Achmea BV, Judgment of the Court (Grand Chamber), Case C-284/16, dated 6 March 2018, available online at: < http://curia.europa.eu/juris/document/document.jsf?text=&docid=199968&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=404057>.
11. Masdar Solar & Wind Cooperatif U.A. v. Kingdom of Spain, Award, ICSID Case No. ARB/14/1, 16 May 2018, para. 678.
12. Masdar Solar & Wind Cooperatif U.A. v. Kingdom of Spain, Award, ICSID Case No. ARB/14/1, 16 May 2018, para. 679.
13. Masdar Solar & Wind Cooperatif U.A. v. Kingdom of Spain, Award, ICSID Case No. ARB/14/1, 16 May 2018, para. 682.
14. George A. Bermann, “Chapter 9: ECT and European Union Law” in Maxi Scherer (ed.), International Arbitration in the Energy Sector (Oxford University Press, 2018).
Maxi Scherer is the editor of International Arbitration in the Energy Sector (OUP, 2018).

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