On January 15, 2019, the Member States of the European Union (EU) issued several declarations on the legal consequences of the Achmea decision on the regime of investment protection and, in particular, investment arbitration.
Twenty-two Member States (including Belgium, Croatia, France, Germany, Italy, Romania, Slovakia, Spain, The Netherlands and The United Kingdom) signed a joint declaration (the Declaration). The Declaration states that arbitral tribunals have no jurisdiction to decide investor claims based on intra-EU bilateral investment treaties (intra-EU BITs) due to the lack of valid offers to arbitrate by the Member States. Specifically, the Declaration affirmed the following:
"Union law takes precedence over bilateral investment treaties concluded between Member States. As a consequence, all investor-State arbitration clauses contained in bilateral investment treaties concluded between Member States are contrary to Union law and thus inapplicable. They do not produce effects including as regards provisions that provide for extended protection of investments made prior to termination for a further period of time (so called sunset or grandfathering clauses). An arbitral tribunal established on the basis of investor-State arbitration clauses lacks jurisdiction, due to a lack of a valid offer to arbitrate by the Member State party to the underlying bilateral investment Treaty."
Member States signing the Declaration have made several undertakings, including to terminate all intra-EU BITs without undue delay, ideally, by means of a plurilateral treaty.
They have also undertaken to notify tribunals in pending intra-EU investor-state arbitrations of the legal consequences of the Achmea decision -- and specifically the non-arbitrability of the cases before them.
Further to the Declaration, Member States controlling entities that have brought investment arbitrations against other Member States are also obliged to take steps under their national laws so that those entities withdraw their pending arbitrations.
We note that Hungary, which is represented by DLA Piper Hungary, DLA Piper France and DLA Piper US in six pending ICSID arbitrations, adopted a separate version of the Declaration. Hungary's separate declaration does not share the majority's view of the Achmea decision’s effect on the investor-State arbitration clause contained in the Energy Charter Treaty (ECT).
Another declaration, signed jointly by Finland, Luxembourg, Malta, Slovenia and Sweden, also departs from the Declaration, predominantly on the same issue of whether the scope of the Achmea decision extends to the ECT.
This varying approaches by Member States regarding the ECT demonstrates that debate is still open regarding the inapplicability of investor-State arbitration clauses contained in multilateral agreements to which the EU itself and non-Member States are parties (such as the ECT). On the other hand, the lack of jurisdiction of tribunals dealing with intra-EU BIT-based arbitrations is now the subject of a unanimous position among the Member States. Accordingly, the Declaration could lead to a fundamental change in approach to pending arbitrations based on intra-EU BITs.
