In January 2019 EU member states issued statements with wide-ranging effects for intra-EU investment protection. All member states pledged to:

  • terminate intra-EU bilateral investment treaties (BITs) by 6 December 2019, either through a plurilateral treaty or bilateral negotiations;
  • inform sitting tribunals not to accept jurisdiction or issue any awards and instruct investors not to initiate any new intra-EU investment arbitration proceedings under BITs.

This article sheds light on the background of this development and its potential impact on investment protection.


For several years, the European Commission has been propagating an end to intra-EU BITs and intra-EU investment arbitrations. The commission intervened in proceedings as an amicus curiae, urging arbitral tribunals in intra-EU cases to reject jurisdiction. In Micula v Romania, the commission even denied Romania the possibility of paying an award rendered by an arbitral tribunal in favour of the investors. The commission also repeatedly incited EU member states to terminate intra-EU BITs. On 6 March 2018 the European Court of Justice's (ECJ's) decision in Achmea fueled these attempts.

At first glance, the Achmea decision concerned only the dispute resolution clause in the bilateral investment treaty between the Netherlands and Slovakia, which had been brought before an arbitral tribunal seated in Germany. However, the ECJ did not limit itself to the specific wording of the Netherlands-Slovakia BIT when holding that the relevant provisions 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, such as Article 8 of the [Netherlands-Slovakia] BIT, 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.

This statement may need to be interpreted as extending to arbitration clauses in all intra-BITs and possibly even multilateral treaties – most notably, the Energy Charter Treaty (ECT).


Shortly after Achmea, the European Commission published a communication in which it offered its interpretation of the decision, holding that all arbitration clauses in intra-EU BITs violated EU law. The commission added that, to the extent that the the ECT's arbitration clause allowed for intra-EU investment arbitrations, it also violated EU law. This position was surprising, bearing in mind that:

  • the European Union is an ECT signatory; and
  • the wording of the dispute resolution clause clearly allows for arbitrations between an investor from an ECT member state and an ECT member state, irrespective of whether they are both from the European Union.

Nevertheless, the commission's campaign bore fruit. In the months following the communication, many EU member states intensified their efforts to terminate intra-EU BITs. For example, upon a parliamentary request, the German government informed the public that it was in close cooperation with the European Commission and other EU member states with respect to the termination of intra-EU BITs and the intra-EU application of the ECT's dispute resolution clause. The commission's campaign came to a successful conclusion when, less than one year since Achmea, all EU member states declared their intention to terminate all intra-EU BITs by 6 December 2019.

Impact on investors

This response clearly marks the end of intra-EU BITs; however, the full effects of the Achmea decision will remain unclear until intra-EU BITs are terminated – whenever and however that may occur.

Sitting arbitral tribunals have not been convinced by Achmea. With differing explanations depending on the specific BIT and facts of each case, several arbitral tribunals have rejected the jurisdictional objection based on the alleged incompatibility of the respective arbitration clauses with EU law.

Regarding the termination of intra-EU BITs, most treaties contain sunset clauses, which usually bind a state to a BIT for a considerable period (often many years) beyond the termination date. Each question will be decided first and foremost by the arbitrators hearing a case (eg, on the compatibility of the respective dispute resolution clause in intra-EU BITs with EU law and the effect of potentially terminating intra-EU BITs on which investors rely).

EU member states cannot and will not be able to prevent arbitral tribunals from hearing and deciding intra-EU cases based on their own understanding and conviction of the law. This shows that even in intra-EU cases, all is not lost – despite Achmea – as long as intra-EU-BITs remain in place, which they may do for many years beyond the respective termination dates.

Facing greater complication, competent legal advice will be necessary. Investors must overcome two hurdles when enforcing claims against EU member states: arbitral tribunals and state courts. While the latter will prove more difficult due to Achmea, it will be even more difficult once the intra-EU BITs have been terminated.

However, the territorial reach of the ECJ is limited to the European Union. Further, EU member states usually have considerable assets outside the European Union. Courts outside the European Union may be more open to the legal implications of sunset clauses under public international law.

Risk awareness and forward planning

Investors seeking to invest in an EU member state or EU investors seeking to invest in other member states should be aware of Achmea and the upcoming terminations of intra-EU BITs. Their way to justice (eg, in illegal expropriation cases) has become much thornier. Not all EU member states have a judiciary that guarantees swift and neutral proceedings. Overly long proceedings, bias against foreign investors and corruption are still commonly found. These risks and the potential unavailability of an intra-EU BIT should be considered before investing. At this juncture – by structuring the investment accordingly – investors may still fall within the ambit of an effective extra-EU BIT. However, once a dispute arises, it will be too late for a restructuring. In such cases, the intra-EU BIT, while still formally available by virtue of a sunset clause, may prove ineffective.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.