The Rule of Law and the Roll of the Dice. The Uncertain Future of Investor-State Arbitration in the EU

Abstract

Investment treaty law and EU law began to develop in the same era and share some important philosophical and axiological foundations. The pressure on the CEE countries to enter into numerous bilateral investment treaties in late 80s and early 90s, in the context of the EU accession aspirations of the former communist countries, was likely to result, eventually, in a conflict between EU law and investment treaty law. The conflict could have been managed in three different ways, yet the CJEU decided in Achmea to declare an undefined volume of intra-EU arbitrations to be incompatible with EU law. This important judgment, which delivered an outcome desired by the European Commission and a number of Member States, is based on questionable legal reasoning that creates high uncertainty in this area of law. The doubts include the scope of application of Achmea, which is now a highly debatable issue. The CJEU itself saw it necessary to limit the scope of Achmea by declaring in Opinion 1/17 (CETA) that the legal reasoning of Achmea did not apply to investment protection treaties with third countries. The Member States of the EU remain politically divided in their views as to whether Achmea applies to the Energy Charter Treaty. And while the problems with the rule of law and independence of the judiciary in certain Member States continue to grow, Achmea has left an important gap for which there is no substitute in the current architecture of the EU legal system.