The Court of Justice of the European Union (CJEU) issued last week a landmark judgement concerning bilateral investment treaties (BITs) concluded between various EU Member States. The verdict concerns a dispute between Slovakia and the Dutch insurance provider Achmea BV whether an award issued by an arbitration tribunal is valid under EU law. The arbitration tribunal issued the award on the basis of an investment treaty concluded in 1991 between the Netherlands and former Czechoslovakia, which contains an arbitration clause for investor-state dispute settlement (ISDS).
In 2012, an arbitration tribunal ordered Slovakia (a successor state to Czechoslovakia) to pay 22.1 million euros to Achmea as damages for violation of the above treaty. The arbitration tribunal found that Achmea suffered financial damage after Slovakia changed its law on private sickness insurance market.
Slovakia then brought legal action against the award in Germany, where it was issued, from where the case was referred to the CJEU to rule on the validity of the arbitration clause. The CJEU clearly stated in its verdict that the ISDS mechanism is against EU law and that it has an adverse effect on the autonomy of EU law. This verdict casts serious doubts on the validity of such arbitration clauses in other BITs concluded between EU Member States.
So what does this mean for Poland, which is a party to 23 different BITs concluded with other EU Member States?
Poland supported Slovakia during the proceedings. The view on the invalidity of the arbitration clauses is also strongly backed-up by the European Commission, which requested termination of intra-EU BITs.
The CJEU’s verdict does not automatically annul the existing BITs, however it will serve as very persuasive authority and as a motivator for the European Commission to urge the Member States to terminate the BITs even stronger.
Poland can also on its own terminate the existing BITs with other EU Member States. The Polish government announced last year that it would review the BITs to which Poland is a party to. Recently, the plan of terminating the intra-EU BITs has been put into action. Recently, Poland has terminated its BITs with Portugal and Denmark. Soon, a BIT with France will be terminated as well.
Poland is following the suit of some other Member States, like the Czech Republic, Ireland or Italy. This trend to terminate the intra-EU BITs surely will increase after this CJEU judgement.
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