Solar Wars Part V: Achmea – A Phantom Menace?

In our previous four Solar Wars articles, we considered arbitral awards in respect of investors' claims under the Energy Charter Treaty (ECT) arising out of the curtailment of renewable incentive schemes across Europe and the European Commission's (EC) statements that those claims breached EU law.

In an article published on 5 April 2018, we commented on the decision of the Court of Justice of the European Union (CJEU) in Slovak Republic v Achmea (Case C-284/16), which held that an arbitration clause in bilateral investment treaty (BIT) between two EU states contravened EU law. In that article, we considered whether Achmea applies to intra-EU arbitrations under the ECT. A recent award has shed some light on that issue.

Achmea: a reminder of the issues

Briefly, the CJEU in Achmea reasoned:

The BIT's arbitration clause required the arbitral tribunal to take account of the law of the contracting State as well as international law principles. This would include EU law, which is supreme within the EU. Consequently, the tribunal would have to interpret and apply EU law. The EU's founding treaties provide that it is for EU Member State courts and the CJEU to determine the interpretation and application of EU law, to ensure uniformity and consistency. The treaties also prohibit Member States from agreeing to submit a dispute concerning the interpretation or application of the treaties (which establish EU law) to a method of resolution other than those provided for in the treaties i.e. Member State courts and the CJEU. An arbitral tribunal constituted under the BIT is not a 'court or tribunal' of a Member State. Therefore Member States could not have agreed to submit disputes which could involve the application and interpretation of EU law to that tribunal. The judgment implied that (a) arbitral tribunals constituted under an intra-EU BIT would not have jurisdiction and (b) any award rendered by such a tribunal would not be enforced by Member State courts.

However, the judgment was silent on whether it applied to multilateral treaties such as the ECT, to which EU member states and the EU itself are signatories. As summarised in our article ECJ's Achmea judgment leaves legal questions for Energy Charter Treaty claims, there are arguments both ways.

Masdar Solar & Wind Cooperatief U.A. v Kingdom of Spain ICSID Case No. ARB/14/1

Masdar was the first ECT claim against Spain decided after Achmea, and it specifically addressed the question of whether, in...