Slowakische Republik v Achmea BV.

• Jurisdiction: European Union
• ECLI: ECLI:EU:C:2017:699
• Date: 19 September 2017
• Celex Number: 62016CC0284
• Court: Court of Justice (European Union)
• Procedure Type: Reference for a preliminary ruling
• Docket Number: C-284/16

OPINION OF ADVOCATE GENERAL

WATHELET

delivered on 19 September 2017 ( 1 )

Case C‑284/16

Slowakische Republik

v

Achmea BV

(Request for a preliminary ruling from the Bundesgerichtshof (Federal Court of Justice, Germany))

(Reference for a preliminary ruling — Principles of EU law — Bilateral investment treaty concluded in 1991 between the Kingdom of the Netherlands and the Czech and Slovak Federal Republic and still applicable between the Kingdom of the Netherlands and the Slovak Republic — Compatibility of investor-State dispute settlement mechanism established by an intra-European Union bilateral investment treaty with Articles 18(1), 267 and 344 TFEU)

Table of contents

I. Introduction

II. Legal context

A. The FEU Treaty

B. The Netherlands-Czechoslovakia BIT

C. German law

III. The dispute in the main proceedings and the questions referred for a preliminary ruling

IV. Procedure before the Court

V. Analysis

A. Preliminary observations

B. The third question referred for a preliminary ruling

1. Admissibility

2. Substance

C. Second question

1. Whether the arbitral tribunals constituted in accordance with Article 8 of the BIT are established by law

2. Whether the arbitral tribunals constituted in accordance with Article 8 of the BIT are permanent

3. Whether the jurisdiction of the arbitral tribunals constituted in accordance with Article 8 of the BIT is compulsory

4. Whether the procedure before the arbitral tribunals constituted in accordance with Article 8 of the BIT is inter partes, whether they apply rules of law in the settlement of the disputes before them and whether the arbitrators are independent and impartial

D. First question

1. Does a dispute between an investor and a Member State, such as that referred to in Article 8 of the BIT, come under Article 344 TFEU?

2. Does the dispute at issue ‘[concern] the interpretation or application of the Treaties’?

(a) The jurisdiction of the arbitral tribunal is confined to ruling on breaches of the BIT

(b) The scope of the BIT and the legal rules which it introduces are not the same as those EU and FEU Treaties

(1) The scope of the BIT is wider than that of the EU and FEU Treaties

(2) The legal rules of the BIT which have no equivalent in EU law and are not compatible with it

(i) The MFN clause

(ii) The clause whereby the Parties undertake to observe their contractual obligations vis-à-vis the investors of the other Party, the ‘umbrella clause’

(iii) The sunset clause

(iv) Recourse to international arbitration as an ISDS mechanism

(3) The overlap between the other provisions of the BIT and certain provisions of the EU and FEU Treaties is only partial

(i) The full protection and security of investments

(ii) The fair and equitable treatment of investments

(iii) The prohibition of illegal expropriations

3. Having regard to its purpose, does the Netherlands-Czechoslovakia BIT have the effect of undermining the allocation of powers fixed by the EU and FEU Treaties and, therefore, the autonomy of the EU legal system?

VI. Conclusion

I. Introduction

1. The present request for a preliminary ruling was submitted in the context of an action brought before the German courts and seeking annulment of the Final Award of 7 December 2012, made by the Arbitral Tribunal composed of Professor V. Lowe QC (President), Albert Jan van den Berg and V.V. Veeder QC (Arbitrators) and constituted in accordance with the Agreement on encouragement and reciprocal protection of investments between the Kingdom of the Netherlands and the Czech and Slovak Federal Republic (‘the Netherlands-Czechoslovakia BIT’) ( 2 ) and the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL), the Permanent Court of Arbitration (PCA) acting as Registry. ( 3 )

2. This request provides the Court with the first opportunity to express its views on the thorny question of the compatibility of BITs ( 4 ) concluded between Member States, ( 5 ) and in particular of the investor-State dispute settlement (‘ISDS’) mechanisms established by those BITs, with Articles 18, 267 and 344 TFEU.

3. The question is of fundamental importance in the light of the 196 intra-EU BITs currently in force ( 6 ) and the numerous arbitral procedures between investors and Member States in which the European Commission has intervened as amicus curiae in order to support its argument that intra-EU BITs are incompatible with the FEU Treaty, an argument which the arbitral tribunals have systematically rejected as unfounded. ( 7 )

II. Legal context

A. The FEU Treaty

4. The first paragraph of Article 18 TFEU provides that ‘within the scope of application of the Treaties, and without prejudice to any special provisions contained, any discrimination on grounds of nationality shall be prohibited’.

5. The first to third paragraphs of Article 267 TFEU provide: ‘The Court of Justice of the European Union shall have jurisdiction to give preliminary rulings concerning: (a) the interpretation of the Treaties; (b) the validity and interpretation of acts of the institutions, bodies, offices or agencies of the Union. Where such a question is raised before any court or tribunal of a Member State, that court or tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request the Court to give a ruling thereon. Where any such question is raised in a case pending before a court or tribunal of a Member State against whose decisions there is no judicial remedy under national law, that court or tribunal shall bring the matter before the Court.’

6. Article 344 TFEU provides that ‘Member States undertake not to submit a dispute concerning the interpretation or application of the Treaties to any method of settlement other than those provided for therein’.

B. The Netherlands-Czechoslovakia BIT

7. The Netherlands-Czechoslovakia BIT was concluded on 29 April 1991 and entered into force on 1 October 1992. ( 8 ) The Slovak Republic, as successor to the Czech and Slovak Federal Republic, succeeded to the latter’s rights and obligations on 1 January 1993 and became a member of the European Union on 1 May 2004.

8. That BIT was concluded in Czech, English and Dutch, the English version being authentic in the event of a difference of interpretation.

9. Article 2 of the BIT provides that ‘each Contracting Party shall in its territory promote investments by investors of the other Contracting Party and shall admit such investments in accordance with its provisions of law’. ( 9 )

10. Article 3 of that BIT provides as follows: ‘(1) Each Contracting Party shall ensure fair and equitable treatment to the investments of investors of the other Contracting Party and shall not impair, by unreasonable or discriminatory measures, the operation, management, maintenance, use, enjoyment or disposal thereof by those investors. [ ( 10 )] (2) More particularly, each Contracting Party shall accord to such investments full security and protection which in any case shall not be less than that accorded either to investments of its own investors or to investments of investors of any third State, whichever is more favourable to the investor concerned. [ ( 11 )] (3) The provisions of this Article shall not be construed so as to oblige either Contracting Party to accord preferences and advantages to investors of the other Contracting Party similar to those accorded to investors of a third State (a) by virtue of membership of the former of any existing or future customs union or economic union, or similar institutions, … [ ( 12 )] (4) Each Contracting Party shall observe any obligation it may have entered into with regard to investment of investors of the other Contracting Party. [ ( 13 )] (5) If the provisions of law of either Contracting Party or obligations under international law existing at present or established hereafter between the Contracting Parties in addition to the present Agreement contain rules, whether general or specific, entitling investments by investors of the other Contracting Party to a treatment more favourable than is provided for by the present Agreement, such rules shall to the extent that they are more favourable prevail over the present Agreement. [ ( 14 )]’

11. Article 4 provides that ‘each Contracting Party shall guarantee that payments related to an investment may be transferred. The transfers shall be made in a freely convertible currency, without undue restriction or delay …’. ( 15 ) The free transfer of payments covers, inter alia, profits, interests and dividends.

12. Article 5 provides that ‘neither Contracting Party shall take any measures depriving, directly or indirectly, investors of the other Contracting Party of their investments’ ( 16 ) unless three conditions are complied with, namely the measures are taken in the public interest and under due process of law, they are not discriminatory and they are accompanied by provision for the payment of just compensation. Under that provision, the compensation must represent the genuine value of the investment.

13. Article 8 states: ‘(1) All disputes between one Contracting Party and an investor of the other Contracting Party concerning an...