ARBITRATION BETWEEN EU MEMBER STATE AND INVESTOR FROM ANOTHER MEMBER STATE

What arbitration options are available in disputes between a European Union Member State and an investor established in another Member State in the light of a recent decision by the Court of Justice of the European Union? This topic is discussed by Andrea Erbenová, PhD., LL.M and Mgr. Barbora Ivanová.

The Court of Justice’s decision in Slovak Republic vs. Achmea BV (C-284/16) declared arbitration clauses in investment protection agreements concluded between Member States to conflict with primary legislation. The ruling concerned an agreement on reciprocal promotion and protection of investments concluded between the legal predecessor of the Slovak Republic (Czech and Slovak Federative Republic) and the Kingdom of the Netherlands before the Slovak Republic acceded to the European Union. In case of disputes, the agreement allowed  an investor from a Member State (in this case the Kingdom of the Netherlands) to initiate proceedings against another Member State before an arbitration board whose jurisdiction the Member State was bound to accept. The Court of Justice affirmed the primacy of European Union law and declared the agreement to be incompatible with the provisions of the Treaty on the Functioning of the European Union.

The full article about the reasons that led the Court of Justice of the European Union to such conclusion and the consequences of its decision for the future can be found in the 2018-19 Investment Advisory Guide published by The Slovak Spectator.