Opinion of Advocate General Kokott delivered on 22 April 2021.

• Jurisdiction: European Union
• ECLI: ECLI:EU:C:2021:321
• Date: 22 April 2021
• Celex Number: 62020CC0109
• Court: Court of Justice (European Union)

Provisional text

OPINION OF ADVOCATE GENERAL

KOKOTT

delivered on 22 April 2021 (1)

Case C‑109/20

Republic of Poland

v

PL Holdings Sàrl

(Request for a preliminary ruling from the Högsta domstol (Supreme Court, Sweden))

(Request for a preliminary ruling – Investment Treaty of 1987 between Poland, Luxembourg and Belgium – Provision enabling an investor from one contracting party to bring proceedings before an arbitration tribunal in the event of a dispute with the other contracting party – Inapplicability of that arbitration clause – Arbitration agreement – Entering of an appearance without raising an objection – Applicability – Compatibility with Articles 267 and 344 TFEU – Autonomy of EU law)

I. Introduction

1. In the judgment in Achmea, (2) the Court ruled that arbitration clauses in favour of investors in investment treaties between Member States are incompatible with Articles 267 and 344 TFEU and must therefore be disapplied. What are the consequences, however, if a Member State does not invoke the invalidity of the arbitration clause before the award is made? A Swedish court concluded from this, in the context of examining the validity of an arbitration award, that the Member State concerned had entered into an arbitration agreement for the dispute in question on an ad hoc basis by entering an appearance in the arbitration proceedings without raising an objection. However, the Högsta domstol (Supreme Court, Sweden) has doubts as to whether this approach is compatible with the abovementioned judgment and has therefore referred the matter to the Court.

II. Legal background

A. Investment treaty between Poland, Luxembourg and Belgium

2. On 19 May 1987, Poland, of the one part, and Luxembourg and Belgium, of the other, entered into an investment treaty (‘the investment treaty’). The contract entered into force on 2 August 1991. In order to ensure that investors from those States are protected, it provides for the possibility to refer investment-related disputes with the other State to an arbitration tribunal, including the Stockholms Handelskammares Skiljedomsinstitut (Arbitration Institute of the Stockholm Chamber of Commerce, Sweden). In such cases, the arbitration tribunal is to apply, inter alia, the law of the State which is party to the dispute and in which the investment was made. Its decisions are to be final.

B. Swedish Law on arbitration proceedings

3. The request for a preliminary ruling sets out the relevant provisions of the lagen (1999:116) om skiljeförfarande (Law No 116 of 1999 on arbitration proceedings; ‘the Law on arbitration proceedings’) as follows.

4. Under Paragraph 1 of the Law on arbitration proceedings, disputes which the parties may be able to settle may be submitted by agreement to the decision of one or more arbitrators.

5. Arbitration proceedings are to be based on the arbitration agreement. The latter is based on the parties’ entitlement to reach a settlement concerning the subject matter of the dispute. Paragraph 1 of the Law on arbitration proceedings provides that disputes in which public interest is more marked are to be excluded from arbitration. It may also follow from specific legislative provisions that a dispute on a particular issue may not be submitted to arbitration.

6. Under point 1 of the first subparagraph of Paragraph 34 of the Law on arbitration proceedings, an arbitration award on appeal by a party is to be annulled, in whole or in part, if it is not covered by a valid arbitration agreement between the parties.

7. In accordance with the second subparagraph of Paragraph 34 of the Law on arbitration proceedings, however, it follows that a party is not entitled to rely on a fact which he or she, by participating in the proceedings without objection, or by any other conduct, may be regarded as having refrained from raising.

8. In accordance with point 1 of the first subparagraph of Paragraph 33 of the Law on arbitration proceedings, an arbitration award is to be void if it involves the examination of a question which, under Swedish law, may not be decided by arbitrators. Under point 2 of the first subparagraph of Paragraph 33, an arbitration award is also to be void if it, or the manner in which it was arrived at, is manifestly incompatible with the Swedish legal order. The court must raise the grounds of invalidity of its own motion.

9. Under Swedish law, the conclusion of an arbitration agreement is not subject to any condition as to form. The question of whether or not a valid arbitration agreement has been concluded must be assessed in the light of the general rules of contract law. A valid arbitration agreement may result, for example, from the collusive conduct of the parties or the inertia of one of the parties.

III. The facts and the request for a preliminary ruling

A. The investment dispute

10. PL Holdings Sàrl is a limited company registered in Luxembourg and subject to Luxembourg law.

11. Between 2010 and 2013, PL Holdings acquired shares in two Polish banks which merged in 2013. PL Holdings eventually held more than 99% of the shares in the new bank.

12. In July 2013, the Komisja Nadzoru Finansowego (Financial Market Commission, Poland), an authority under Polish law which is responsible for supervising banks and credit institutions in Poland, decided to revoke PL Holdings’ voting rights in that bank and ordered it to divest its shares in that bank. It took the view that PL Holdings exerted an adverse impact on the bank’s sound and prudent management. (3)

B. The arbitration proceedings

13. PL Holdings subsequently brought arbitration proceedings against Poland before the Stockholms Handelskammares Skiljedomsinstitut (Arbitration Institute of the Stockholm Chamber of Commerce) on the basis of the investment treaty. Poland set out its position by written observations of 30 November 2014.

14. On 7 August 2015, PL Holdings filed an action. In its defence, which it lodged on 13 November 2015, Poland claimed that PL Holdings could not be regarded as an investor within the meaning of the investment treaty and that, consequently, the arbitration tribunal did not have jurisdiction to hear the case. By a submission of 27 May 2016, Poland also challenged the validity of the arbitration clause on the ground that the investment treaty did not comply with EU law.

15. In a separate arbitration award of 28 June 2017, that is to say, before the judgment in Achmea was delivered on 8 March 2018, the arbitration tribunal rejected, inter alia, the objection that the arbitration clause was invalid. It stated that that objection, although raised belatedly, is of fundamental importance for the arbitration proceedings. However, Poland’s accession to the EU did not have the effect of rendering the investment treaty invalid under international law. (4)

16. Moreover, in the separate arbitration award, the arbitration tribunal had already found that Poland had breached the investment treaty by ordering the sale of the shares held by PL Holdings in the Polish bank. According to those findings, the supervisory authorities had behaved inconsistently (5) and prevented effective legal protection against the supervisory measures. (6) PL Holdings was therefore entitled to damages. (7)

17. On 28 September 2017, the arbitration tribunal made a final award. The arbitration award ordered Poland to pay the sum of 653 639 384 zlotys (PLN) (approximately EUR 150 million), together with an amount of interest, to PL Holdings and to pay the company’s costs of the arbitration proceedings. (8)

C. The judicial proceedings

18. Poland subsequently brought an action against PL Holdings before the Swedish courts in which it sought to have both the separate and final award annulled. Poland continued to claim, in particular, that the arbitration clause of the investment treaty was invalid owing to an infringement of EU law.

19. The Svea Hovrätt (Court of Appeal, Stockholm, Sweden) dismissed Poland’s action. According to that court, although the arbitration clause of the investment treaty is invalid in accordance with the judgment in Achmea, that invalidity does not prevent a Member State and an investor from concluding an arbitration agreement in respect of the same dispute at a later stage. In such a case, that arbitration agreement is one which is based on the common intention of the parties and concluded in accordance with the same principles as commercial arbitration proceedings. The judgment in Achmea did not specifically preclude the permissibility of such agreements, however. In the present case, the agreement came about because Poland appeared in the proceedings without raising the objection that the arbitration clause was invalid in due time.

D. The request for a preliminary ruling

20. Poland’s appeal has now been brought before the Högsta domstol (Supreme Court), which puts the following question to the Court of Justice:

‘Do Articles 267 and 344 TFEU, as interpreted in [the judgment in] Achmea, (9) mean that – where an investment agreement contains an arbitration clause that is invalid as a result of the fact that the contract was concluded between two Member States – an arbitration agreement is invalid if it has been concluded between a Member State and an investor by virtue of the fact that the Member State, after arbitration proceedings were commenced by the investor, refrains, by the free will of the State, from raising objections as to jurisdiction?’

21. PL Holdings and the Republic of Poland, as parties to the main proceedings, and the Czech Republic, the Federal Republic of Germany, the Kingdom of Spain, the French Republic, the Italian Republic, the Grand Duchy of Luxembourg, Hungary, the Kingdom of the Netherlands, Poland, as a Member State, the Slovak Republic, the Republic of Finland, the Kingdom of Sweden and the European Commission submitted observations in the present proceedings, first in writing and then at the hearing on 15 March...