In the widely discussed judgment in Slowakische Republik v. Achmea BV (’Achmea’) dated 6 March , 2018, the Court of Justice of the European Union (CJEU) held that arbitration clauses in intra-European Union (EU) bilateral investment treaties (’BITs’) are incompatible with EU law. Since then, there has been much discussion within the EU about the termination of intra-EU BITs. Nevertheless, in arbitral proceedings following Achmea, tribunals have consistently rejected intra-EU jurisdictional challenges.
On May 5, 2020, nearly all EU Member States signed The Agreement for the Termination of Bilateral Investment Treaties Between the Member States of the European Union (’Agreement’) to formally end intra-EU BITs. Austria, Finland, Ireland, and Sweden abstained. Per Article 16, the Agreement will come into force « […] 30 calendar days after the date on which the Depositary receives the second instrument of ratification, approval or acceptance, » though signatory States may apply the Agreement provisionally.
The Agreement does not apply to:
- intra-EU disputes under the Energy Charter Treaty;
- any agreements to settle a dispute that was subject to arbitral proceedings commenced before March 6, 2018 (the date of the Achmea judgment); and
- « concluded arbitration proceedings », being those that were concluded before March 6, 2018, by
- a signed settlement agreement, or
- a final award that was
- executed before March 6, 2018, where no annulment, enforcement or other similar proceedings are pending as of that date; or
- annulled or set aside before the Agreement comes into force.
Instead, it terminates:
- roughly 130 intra-EU BITs, including their sunset clauses (which are meant to protect investments made before the termination of a BIT for a certain period) (Annex A).
- sunset clauses in treaties that were previously terminated (Annex B);
- « pending arbitration proceedings », being those that were initiated before March 6, 2018, and which cannot be categorized as concluded proceedings; and
- « new arbitration proceedings », being those initiated on or after March 6, 2018.
For pending and new proceedings, signatory States must advise tribunals on the legal consequences of Achmea. If an award has been rendered, they are also required to request the competent national court to annul or set aside the award, or to resist enforcement. The Agreement further sets out transitional dispute resolution measures for pending proceedings, including engaging in settlement negotiations or seeking judicial remedies in national courts.
Despite its suggestive title, the Agreement has not yet ended all intra-EU BITs as it is not yet in force nor signed by all EU Member States. Moreover, it is unclear how tribunals and courts will address the Agreement (particularly the termination of sunset clauses) in pending and new arbitration proceedings, as tribunals have, to date, rejected Achmea-based jurisdictional objections.
