Slovenia v Croatia

JurisdictionEuropean Union
JudgeLenaerts,Silva de Lapuerta,Bonichot,Arabadjiev,Prechal,Rodin,Rossi,Jarukaitis,Ilešič,Malenovský,Šváby,Vajda,Biltgen,Pikamäe
Judgment Date31 January 2020
Docket Number(Case C-457/18)
CourtCourt of Justice of the European Union
Republic of Slovenia
and
Republic of Croatia 1

(Lenaerts, President; Silva de Lapuerta, Vice-President; Bonichot, Arabadjiev, Prechal, Rodin, Rossi and Jarukaitis, Presidents of Chambers; Ilešič, Malenovský, Šváby, Vajda(Rapporteur) and Biltgen, Judges; Pikamäe, Advocate General)

(Case C-457/18)

Court of Justice of the European Union (Grand Chamber).

Arbitration — Arbitration between two Member States of European Union — Delimitation of maritime and land borders — Arbitration agreement breached — Arbitration agreement unilaterally terminated — Final arbitration award — Validity of arbitration award contested — Arbitration award not implemented — Relationship between arbitration agreement and European Union law — European Union not a party to arbitration agreement between Member States

Jurisdiction — Treaties — European Union — Jurisdiction of the Court of Justice of the European Union — Treaty on the Functioning of the European Union, 2007 — Article 259 — Alleged failure of Member State to fulfil obligations — Competence of the European Union in border dispute — Alleged infringements of EU law ancillary to alleged infringement of arbitration agreement — Relationship between European Union law and arbitration agreement and award

International tribunals — Arbitration agreement — International law governing arbitration agreement — Arbitration award — Relationship between arbitration agreement and arbitration award and European Union law — Obligations of Member States of the European Union — Accession to European Union — Arbitration agreement referred to in accession agreement — Validity of arbitration award contested — Competence of European Union in border dispute — Ratione materiae of European Union law with respect to international legal instruments

International organizations — European Union — Member States — Obligations of Member States of the European Union — Accession to European Union — Arbitration agreement referred to in accession agreement — Where validity of arbitration award contested — Arbitration award not implemented — European Union not party to arbitration agreement between Member States — Relationship between arbitration agreement and arbitration award and European Union law — Scope ratione materiae of EU law in relation to international legal instruments — Competence of European Union in border dispute

Territory — Sea — Slovenia — Croatia — Delimitation of land and sea borders — Power to determine territory retained by European Union Member States — Delimitation of borders contested — Arbitration award delimiting borders contested — Action would require determination of borders between two European Union Member States — The law of the European Union

Summary:2The facts:—The Republic of Slovenia (“Slovenia”) initiated proceedings against the Republic of Croatia (“Croatia”) in the Court of Justice of the European Union (“CJEU”) in accordance with Article 259 of the Treaty on the Functioning of the European Union, 20073 (“TFEU”). Slovenia claimed that Croatia had failed to fulfil its obligations under the relevant treaties of the European Union (“EU”) on grounds related to the implementation of an arbitration agreement and arbitration award4 that sought to delimit the maritime and land borders between the two States.

The arbitration agreement was entered into bilaterally between Slovenia and Croatia prior to Croatia's accession to the EU. The arbitration award was not implemented or recognized by Croatia after a dispute arose during the proceedings that led Croatia to withdraw unilaterally from the arbitration agreement. Slovenia claimed that Croatia's failure to implement the arbitration award violated its obligations under EU law to respect the rule of law, the principle of sincere cooperation, and res judicata. Slovenia also argued that it had been prevented from complying with its obligation to implement EU law fully throughout its territory, and that Croatia had violated its obligations under a number of secondary EU laws, including the Common Fisheries Policy and the framework for maritime spatial planning.

Croatia objected to the proceedings and claimed that they were inadmissible. Croatia had withdrawn from the arbitration agreement after communications were sent between Slovenia's agent and an arbitrator during the deliberations of the arbitral tribunal. The tribunal held that Slovenia had acted in breach of the arbitration agreement, but that Croatia was not entitled to a unilateral termination. The tribunal had taken remedial action and it considered that the breach did not affect its ability to make a final award. Croatia disagreed and refused to recognize or implement the award.

Opinion of the Advocate General

Held:—The CJEU lacked jurisdiction. The claim was inadmissible.

(1) In accordance with Article 259 of the TFEU, the jurisdiction of the CJEU to declare that there had been an infringement by an EU Member State was conditional on there being a failure to fulfil an obligation under a relevant EU treaty. The Court's jurisdiction was dependent on the scope of EU law. As Slovenia's claim concerned an arbitration agreement and arbitration award governed by international law, the scope ratione materiae of EU law in relation to international legal instruments had to be examined (paras. 99–101).

(2) The situations in which the EU was bound by international law were limited and fell into three categories. First, the EU was bound by international agreements concluded by it and which were an integral part of the EU legal order. Secondly, the EU was bound by an international convention where it had assumed powers previously exercised by Member States in the field to which the convention applied. Thirdly, the EU was required to respect customary international law in the exercise of its powers. It followed that international agreements that did not fall within one of these categories were not acts of the EU and did not bind it. As they were not a matter of EU law, the CJEU had no jurisdiction to examine their validity or to interpret them (para. 104).

(3) The CJEU did not have the jurisdiction to rule on alleged infringements of obligations under EU law that were merely ancillary to those under an instrument of international law. Although Slovenia's claim formally referred to infringements of EU law, the allegation itself related to the purported infringement of international law which resulted from Croatia's failure to implement the arbitration award. The EU was not bound by the arbitration agreement or the award at issue as those legal instruments were not within the scope ratione materiae of EU law. Any infringements of EU law were therefore ancillary to the question of the delimitation of the land and maritime boundaries between the two Member States concerned (paras. 108, 127–30).

(4) The EU did not have either “territorial jurisdiction” under international law or any “EU territory” comparable to a “federal territory”. The territorial scope of the EU could not be determined by the EU but was an objective fact that it had to accept. The delimitation of the territory of a Member State did not fall within the sphere of competence of the EU (para. 110).

(5) Where an action was initiated under Article 259 of the TFEU that alleged a Member State was impeding the implementation of EU law on the territory of another Member State, the CJEU must look to public international law to define the extent of that territory (para. 111).

(6) The commitments made by Croatia during the accession process were not legal obligations under EU law and could not be relied upon as a basis for Slovenia's claim under Article 259 of the TFEU (para. 131).

(7) The EU did not have the power to determine the boundary of the respective territories belonging to two neighbouring States. Determining the limits of territory concerned the sovereignty of each Member State and was to be done in accordance with the rules of public international law. The EU could only act within the limits of the competences conferred upon it by Member States and any competence not conferred upon the EU remained with the Member States. Slovenia's claim concerned a competence reserved to the Member States (paras. 143–4).

(8) The arbitration award had not been implemented between the parties. Article 7(3) of the arbitration agreement obliged the parties to take necessary steps to implement the award and was thus not self-executing. The arbitration award was therefore not directly applicable. As determining the boundaries between Member States was not a competence conferred on the EU, and did not fall within the scope ratione materiae of EU law, the matters at issue could not form the subject matter of an action under Article 259 of the TFEU (paras. 148–9).

(9) Any finding that Croatia had committed the infringements alleged would be based on the premise that the boundary between Croatia and Slovenia had been determined. Determining that boundary was a matter falling within public international law and fell outside the jurisdictional competence of the CJEU (paras. 162–4).

Judgment of the Court of Justice

Held:—The CJEU lacked jurisdiction. The claim was inadmissible.

(1) The CJEU lacked the jurisdiction to rule on the interpretation of an international agreement concluded by Member States where the subject matter of the agreement fell outside an area of EU competence. It also lacked the jurisdiction to rule on an action alleging the failure of a Member State to fulfil its obligations where the infringement of provisions of EU law were ancillary to the alleged failure to comply with the obligations arising from the international agreement (paras. 91–2).

(2) Although Slovenia had alleged that Croatia had violated EU law, the alleged infringements outlined in Slovenia's first and second complaints arose from the alleged failure by Croatia to comply with the obligations arising from the arbitration agreement and arbitration award...

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1 practice notes
  • République de Slovénie contre République de Croatie.
    • European Union
    • Court of Justice (European Union)
    • 31 January 2020
    ...– Principio di leale cooperazione – Domanda di stralcio di un documento dal fascicolo – Tutela della consulenza legale» Nella causa C‑457/18, avente ad oggetto il ricorso per inadempimento, ai sensi dell’articolo 259 TFUE, proposto il 13 luglio Repubblica di Slovenia, rappresentata da M. Me......
1 cases
  • République de Slovénie contre République de Croatie.
    • European Union
    • Court of Justice (European Union)
    • 31 January 2020
    ...– Principio di leale cooperazione – Domanda di stralcio di un documento dal fascicolo – Tutela della consulenza legale» Nella causa C‑457/18, avente ad oggetto il ricorso per inadempimento, ai sensi dell’articolo 259 TFUE, proposto il 13 luglio Repubblica di Slovenia, rappresentata da M. Me......

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