Author: Melissa Balıkçı Sezen
It is well known that following a decision of the Court of Justice of the European Union (“CJEU”), problems arose related to arbitration of intra-EU disputes, and particularly arbitration under the Energy Charter Treaty (“ECT”).
The ECT, which entered into force in 1998, provides a multilateral framework for energy cooperation with an aim to protect foreign investments.[1] It also sets out a dispute resolution mechanism dealing with disputes between participating states, as well as disputes between investors and host states.
The source of the problems are the Achmea judgment and the Komstroy decision, both of which have been addressed in previous newsletters.[2]
Put briefly, in Achmea in 2018, the CJEU ruled that the investor-state arbitration clause in the Netherlands-Slovakia Bilateral Investment Treaty was incompatible with EU law. The importance of this decision is that it dealt with the compatibility with EU law of the arbitration provision in a bilateral investment treaty between two EU member states.
Following this decision, uncertainties arose in terms of the scope of the decision – more particularly whether the decision applied only to intra-EU bilateral investment treaties, or extended to multilateral investment treaties where EU member states are also a party. An important example of the latter is the ECT.
