Investor protection withers within the EU; but Brexit delivers?

The investor protection regime after the Achmea decision and in light of Brexit.


After the Achmea decision, investors will find it difficult to enforce arbitration awards issued under intra-EU BITs in EU Member States.


Bilateral investment treaties (BITs) are treaties between States granting each other’s investors certain protections. They often contain provisions allowing investors to sue the host State directly in an international arbitral tribunal rather than in the courts of the host State.

For years, the EU has taken the position that BITs between its Member States (intra-EU BITs) are inconsistent with the internal market and should be terminated. It has formally requested certain Member States to terminate their intra-EU BITs. In relation to BITs between Member States and non-Member States, the EU’s aim is to transition to a system under which BITs with non-Member States are negotiated on behalf of all Member States by the European Commission. In the meantime, Member States are permitted to maintain their existing BITs with non-Member States and negotiate new ones subject to certain conditions policed by the European Commission.

The primary purpose of investor-State dispute resolution clauses is that they give the investor an avenue for recourse before an international tribunal and outside of the host State’s courts. Therefore, it is unsurprising that arbitral tribunals have generally ignored the EU’s protestations when determining disputes and issuing awards under intra-EU BITs. Indeed, an ICSID tribunal recently rejected a jurisdiction challenge based on a decision by the European Court of Justice (CJEU) that the arbitration clause in the Netherlands-Slovakia BIT was incompatible with EU law.

However, this is only the beginning of the story because arbitral awards must be recognised by national courts to have a practical effect. State signatories to the New York Convention are required to give effect to arbitral awards as if they are judgments of their national courts except in certain, specified circumstances, including where to do so would offend public policy. Moreover, arbitral awards (apart from ICSID awards - see below) may be set aside by the national court of their seat.

The Achmea decision by the CJEU suggests that Member State courts may refuse to enforce awards issued under intra-EU BITs or set aside non-ICSID awards seated in their jurisdictions on the basis that they are incompatible with mandatory EU law and incompatible with EU public policy.


Achmea, a Dutch investor, had obtained an award from an UNCITRAL tribunal against Slovakia under the Netherlands-Slovakia BIT. The tribunal was seated in Germany, and Slovakia therefore challenged the award in the German courts. Slovakia argued that the UNCITRAL tribunal did not have jurisdiction because the arbitration clause in the Netherlands-Slovakia BIT was incompatible with EU law, an EU law must be given effect under German law.

The German court referred the issue to the CJEU which agreed with Slovakia and held that the investor-State dispute resolution clause of the Netherlands-Slovakia BIT was incompatible with EU law and therefore, the UNCITRAL tribunal had no jurisdiction and the award should be set aside.

The CJEU’s Achmea ruling should be followed in all Member States. It follows that all arbitral awards issued under intra-EU BITs (except for ICSID awards - see below) may be vulnerable to challenge on review at seat or on attempted enforcement in a Member State.


At first sight, the position seems different in relation to ICSID awards. Unlike other arbitral tribunals’ awards, ICSID tribunals are not seated in a national State and awards are subject to review by annulment by a committee constituted by ICSID itself and not review at seat.

However, in the Micula case, the English Court of Appeal held that the English courts cannot enforce an ICSID award which is incompatible with EU law. It seems likely that, in the light of the Achmea decision, ICSID awards issued under intra-EU BITs would not be enforceable in Member States on the same basis, should investors seek to enforce them in Member States.


BITs between the UK and other Member States, which are currently intra-EU BITs affected by Achmea, are likely to lose this status if EU law is no longer directly applicable in the UK. The enforcement issues raised by Achmea may therefore fall away after Brexit as far as British courts and British investors into the EU are concerned. BITs between the UK and Member States will be fully enforceable including the investor-State dispute resolution clauses and British courts will likely enforce awards under intra-EU BITs.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.