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ICCA-ACIL Colloquium on the Impact of Achmea explores uncharted territory 

On Tuesday 26 June 2018, ICCA and the Amsterdam Center for International Law (ACIL) hosted a full-day colloquium on the Impact of Achmea on Pending Arbitrations under Member States' BITs and the Energy Charter Treaty. The second speaker, Prof. Stefan Talmon (20 Essex Street, University of Bonn), began his presentation with a quote from Henry Wadsworth Longfellow’s Tales of a Wayside Inn: “Ships that pass in the night, and speak each other in passing, only a signal shown, and a distant voice in the darkness; So on the ocean of life, we pass and speak one another, only a look and a voice, then darkness again and a silence.”

Could these famous words be applicable to the relationship between EU law and international law on the sea of intra-EU BIT arbitration? Or has the CJEU’s decision that the investor-state arbitration mechanism under the Netherlands-Slovakia BIT is incompatible with EU law ensured a head-on collision between these legal ships? Whatever the case, Longfellow’s words set the tone for a riveting discussion about the most significant decision for international arbitration in decades.

The event began with an introduction by ICCA President Prof. Gabrielle Kaufmann-Kohler. Prof. Kaufmann-Kohler emphasised that the presentations given by the speakers would be shared with the public online (video footage of the event will be made available in the coming month), but that all discussions after the presentations would be subject to the Chatham House Rule. Moderator Prof. Stephan Schill (University of Amsterdam, ACIL) then gave an overview of the topic and provided a brief summary of the decision. Prof. Schill then handed the floor to the speakers. Dr. Angelos Dimopoulos (Queen Mary University of London) spoke first, followed by Prof. Stefan Talmon (20 Essex Street, University of Bonn), Prof. Jan Kleinheisterkamp (London School of Economics), Prof. George Bermann (Columbia Law School) and finally, Prof. Catherine Kessedjian (University Panthéon-Assas Paris II).

The speakers expressed diverse views on the landmark judgment and provided vastly different suggestions on its likely impact on pending and future arbitrations under Member States’ BITs and the Energy Charter Treaty. Dr. Dimopoulos gave a perspective based on CJEU jurisprudence, focusing on the principle of autonomy of EU law and its effects οn intra-EU ISDS. “Achmea implies that all intra-EU BITs are incompatible with EU law. Such incompatibility creates an obligation for Member States to take all appropriate measures to eradicate it, while national courts in EU Member States are under an obligation to disapply the incompatible provisions,” explained Dr. Dimopoulos.

By contrast, Prof. Talmon took a treaty law perspective, analysing the relationship between the constituent treaties of the EU and Member State BITs through the lens of the Vienna Convention on the Law of Treaties, and concluding that the CJEU’s judgment would have little to no effect on the jurisdiction of arbitral tribunals under existing intra-EU BITs or the ECT. “While awards rendered by these tribunals may not be enforceable inside the EU, there is no international law obstacle to their enforcement outside the EU. In this sense the realm of international law is wider than that of EU law. While there is much hype about the Achmea judgment at the moment arbitrators should stick to the trusted principle ‘keep calm and carry on’ rendering enforceable arbitral awards.”

Prof. Kleinheisterkamp expressed the view that the CJEU was likely to reach similar conclusions on the compatibility of the Energy Charter Treaty (ECT) with European law as it had reached in Achmea on the Netherlands-Slovakia BIT. A referral to the ECJ on this question from the Svea Court of Appeal in the case Novenergia v. Spain is likely and should bring some clarification from the EU law perspective, although not immediately. Prof. Kleinheisterkamp emphasized that the Achmea decision should be treated as a call for rethinking investment treaty law for it to integrate, and not clash, with national and EU law, both procedurally and in substance. “It is probably not for arbitral tribunals to clean up the mess created by the EU with the ECT. Yet ignoring the Achmea decision or treating it too lightly is not doing a service to the parties or, indeed, any stakeholders. More confrontation will merely accelerate the end of the ECT – and maybe even of investment arbitration for Europe.”

Prof. Bermann considered the practical question of how tribunals hearing intra-EU BIT or ECT cases might take into consideration what is commonly referred to as the duty to issue an enforceable award.

Finally, Prof. Kessedjian called for respect between different legal orders and among international courts and tribunals. On jurisdiction, she argued that all arbitral tribunals seized before the decision in Achmea was rendered have jurisdiction if, under international law, their jurisdiction is certain. This conclusion is both a matter of legal certainty and based on the general principle that jurisdictional elements are crystallized at the time the tribunal is seized. On substance, she urged arbitral tribunals to take EU law seriously, engage with it and better explain why it is not applicable or, if it is applicable, to fully take it into consideration for the decision not to affect EU law and its public policy. Finally, national courts when seized of the enforcement or vacatur of awards should apply these same principles in conformity with the CJEU in Eco Swiss.

The views presented at Tuesday’s colloquium were at once enlightening and a heavy reminder of the potential challenges that lie ahead. Prof. Schill commented on the need for dialogue going forward. “There will be no easy answers, not for domestic courts called upon to decide requests for annulment or on enforcement protection, and not for arbitral tribunals when deciding on jurisdiction. The key to resolving the inevitable tensions most likely lies in dialogue and cooperation, not only between judicial and arbitral institutions, but also between the individuals involved as judges and arbitrators.”

Full video coverage of the speakers’ presentations and Dr. Dimopoulos and Prof. Talmon’s presentations are available at the links below.