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CJEU judgment changes landscape for arbitration in the EU

06 March 2018

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Vanessa Montero

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+44 20 7296 5070

London, 6 March, 2018: In a judgment issued today, the Court of Justice of the European Union ("CJEU") ruled that investor-State arbitration clauses in investment treaties concluded between EU Member States ("intra-EU investment treaties") are incompatible with EU law.

The case of Achmea v Slovak Republic tested the compatibility of investor-State arbitration clauses in intra-EU investment treaties with EU law. Before today's judgment by the CJEU, international arbitral tribunals and courts considered such clauses to be compatible with EU law. 

In 2012, Achmea BV, a Dutch Insurer, won a €22 million arbitration award over measures taken by the Slovak Republic that in part reversed the 2004 liberalisation of the Slovak health insurance market. The seat of the arbitral tribunal was in Frankfurt, Germany. The Slovak Republic challenged the award before the German courts. Ultimately, the German Supreme Court requested a preliminary ruling from the CJEU. In particular, it asked the CJEU whether investor-State arbitration clauses in intra-EU investment treaties were compatible with EU law.

In the proceedings before the German courts and the CJEU the Slovak Republic was represented by Hogan Lovells led by London international arbitration partner Markus Burgstaller who commented:

"The CJEU's judgment is a landmark decision. The Court followed the Slovak Republic's argument in full.  The Court was clear in saying that investor-State arbitration clauses in intra-EU investment treaties are incompatible with EU law. As many arbitrations under such treaties are currently pending, the Court's judgment is likely to have far-reaching consequences. Arbitral tribunals will have to analyse very carefully the impact of this landmark decision on cases before them. The same is true for any investors and Governments of EU Member States facing such claims."

The press release by the CJEU can be found here, and the full judgment can be found here.


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