On 24 October 2019, the European Commission announced that most European Union (“EU”) Member States had reached an agreement on a plurilateral investment treaty for the termination of intra-EU bilateral investment treaties.
This is a direct consequence of the Achmea v Slovak Republic judgement rendered on 6 March 2018 (Case C‑284/16), in which the Court of Justice of the European Union held that “Articles 267 and 344 [of the Treaty on the Functioning of the European Union] must be interpreted as precluding a provision in an international agreement concluded between Member States, […], under which an investor from one of those Member States may, in the event of a dispute concerning investments in the other Member State, bring proceedings against the latter Member State before an arbitral tribunal whose jurisdiction that Member State has undertaken to accept.”
Following the Achmea judgement, the EU Members States issued a declaration on 15 January 2019 whereby they expressed their views on the consequences of the ruling for intra-EU investor-state dispute settlement and concluded that “all investor-State arbitration clauses contained in bilateral investment treaties concluded between EU Member States are contrary to Union law and thus inapplicable.”
On their declaration, the EU Member States agreed to undertake certain actions such as: (i) to inform all intra-EU investment arbitration tribunals and investors of the legal consequences stemming from the Achmea judgement – e.g. the defending EU Member State in an arbitration will request the State court dealing with proceedings relating to an intra-EU investment arbitration award to set such award aside or not to enforce it –; (ii) to inform the investor community that no new intra-EU investment arbitration proceeding should be initiated and (iii) to terminate all bilateral investment treaties concluded between them by means of a plurilateral treaty.
In its announcement of 24 October 2019, the European Commission revealed that most EU Member States have now agreed on a plurilateral treaty for the coordination of the termination of intra-EU bilateral investment treaties. It further requests the assistance of EU Member States to ensure a smooth and swift ratification process.
However, following the information that the signed treaty text will be published on the Commission website, the European Commission also acknowledges and regrets the views expressed by a small minority of EU Member States towards not endorsing the plurilateral treaty.
When finalizing its statement, the European Commission expresses its ongoing dedication to intensify without undue delay discussions in order to better ensure “complete, strong and effective protection of investments within the European Union.” Those discussions will include the improvements of existing dispute resolution mechanisms or creating new ones and the intra-EU application of the Energy Charter Treaty, as there continues to be wider disagreement with respect to the Achmea judgment’s implications for arbitration under this Treaty.
Hence, until the implementation of this new treaty is clear and the majority of EU Member States accede to it, EU investors wishing to initiate proceedings against an EU Member State should be aware of recent legal developments and seek proper legal advice from specialized lawyers in the field.