In a potentially significant development for European companies investing elsewhere in the EU, an opinion issued last week by Advocate General Wathelet in a case pending before the European Court of Justice (ECJ) has supported the continued existence of bilateral investment treaties (BITs) made between EU Member States.

European BITs

BITs are treaties made between two states, which provide guarantees as to the standard of treatment investors of each state will enjoy when making investments in the other state. Significantly, they provide a direct way for investors to protect their rights through arbitration against the state in which they have invested, should those standards of treatment be breached — often known as Investor-State Dispute Settlement or ISDS. There are almost 3,000 BITs across the globe, with 196 made between current EU Member States.

The European Commission has long held the view that since the conclusion of the Treaty on the Functioning of the European Union (the Lisbon Treaty), BITs made between EU Member States, in particular their ISDS provisions, are incompatible with EU law and that such disputes should be governed instead by the legal framework of the EU. Indeed, the Commission has intervened in a number of arbitrations to argue this point, an argument arbitral tribunals have systematically rejected.

Reference to the ECJ

In Achmea B.V. v Slovak Republic, an arbitral tribunal upheld Achmea’s complaints under the BIT between the Netherlands and the Slovak Republic, rejecting an argument that the BIT was incompatible with EU law. The Slovak Republic challenged the award in the German courts, which referred the question of compatibility to the ECJ. This case marks the first time the ECJ has considered this “thorny question.”

In a result that may cause surprise in some quarters, the Advocate General disagreed with the Commission’s position, and took the view that BITs are not incompatible with EU law. The Advocate General’s opinion is not binding on the ECJ, but such opinions are often followed by the ECJ in its rulings; it remains to be seen whether the ECJ will do so in this case.


Whilst the Advocate General’s opinion raises a number of interesting issues for investment arbitration practitioners, and for the future of ISDS in the European context, the key take-away for investors is that the current network of European BITs may well remain enforceable for longer than might have been expected.

That said, it is clear that broader EU policy continues to take the view that intra-EU BITs should be terminated, with the Commission just two weeks ago receiving authorisation to begin negotiations for the creation of a permanent multilateral investment court to replace ISDS mechanisms as the forum to hear disputes between investors and EU Member States. The position within the EU is therefore in flux, a situation which is mirrored on the other side of the Atlantic with negotiations over the future of the North America Free Trade Agreement, and its ISDS provisions, proceeding at a slow pace.