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Is the CJEU further undermining intra-EU investment protections?

On 26 October 2021, the Grand Chamber of the Court of Justice of the European Union (CJEU) handed down its judgment in Republic of Poland v. PL Holdings Sàrl.  

The CJEU ruled that EU Member States are prohibited from entering into ad hoc arbitration agreements with EU-based investors, where such agreements would replicate the content of an arbitration agreement in a bilateral investment treaty (BIT) deemed incompatible with EU law following the CJEU’s 2018 judgment in Slovak Republic v. Achmea.  In Achmea, the CJEU had previously established that provisions in intra-EU BITs providing for arbitration between a Member State and an investor of another Member State are incompatible with the Treaty on the Functioning of the European Union (TFEU). 

The key takeaways from the CJEU’s most recent ruling in PL Holdings are as follows:

  • Ad hoc arbitration agreements between an EU Member State and an investor from another Member State which arise through a provision of national law, and which replicate the content of an otherwise invalid arbitration agreement in a BIT, are incompatible with EU law.
  • National courts of EU Member States will be expected to interpret the TFEU in a way that prevents their national legislation from recognising any such arbitration agreement as valid. The CJEU may therefore effectively overrule basic principles of the domestic arbitration law of EU Member States.
  • EU-based investors who suffer state action adversely affecting the value of their investments in other EU Member States will be expected to seek to vindicate their rights in the local courts of a Member State.
  • To mitigate the risks involved in enforcing their rights, EU-based investors could consider structuring their investments via non-EU Member States (such as the United Kingdom, Switzerland or United States), and ensuring that any subsequent arbitration proceeding are seated in a non-EU Member State.

You can read our full insights into the decision in PL Holdings here, as well as our previous briefings on Antin v. Spain and Komstroy v. Moldova - two other controversial decisions in the EU's post-Achmea approach to investment protections. 

A special thanks to James Elliott for his valuable contribution to this publication.


international arbitration, alex bevan, garreth wong, alastair livesey
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