Two years after the Achmea v Slovak Republic judgement rendered on 6 March 2018 (Case C‑284/16), and following the European Commission announcement of 24 October 2019 concerning the agreement on a plurilateral Investment Treaty for the termination of intra-EU Bilateral Investment Treaties (BITs), there are new updates on the matter.

On 5 May 2020, the majority of the Member States of the European Union (EU) signed a new Treaty. This new Treaty is entitled “Agreement for the Termination of Bilateral Investment Treaties between the Member States of the European Union” (Treaty).

The 23 States that have signed the Treaty are Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, France, Germany, Greece, Hungary, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia and Spain.  The entry into force of the Treaty will terminate more than a hundred of their existing BITs.

For the most part, the Treaty regulates two issues: (1) further details regarding the termination of existing intra-EU BITs and (2) how to deal with new, pending and concluded arbitration proceedings.

Furthermore, the Treaty does not cover intra-EU proceedings based on Article 26 of the Energy Charter Treaty (ECT), which will be dealt with “at a later stage”. This is presumably due to the ongoing modernization process of the ECT and the current high number of intra-EU ECT arbitration cases. Austria, Finland, Ireland, Sweden and the United Kingdom (the latter which exited the EU on 31 January 2020), however, have not signed the Treaty. Therefore, their intra-EU BITs will remain in force. The future will tell whether the European Commission will pursue any infringement proceedings against those States if they fail to terminate their intra-EU BITs.

  1. Termination of Intra-EU BITs and sunset clauses

Annexe A of the Treaty provides a list of BITs that will be terminated once the Treaty enters into force as provided by its Article 2. Sunset clauses of BITs of Annexe A will also be terminated and thereafter will “not produce legal effects”.

Annexe B provides a list of BITs that have already been terminated. Article 3, on its turn,establishes that sunset clauses contained in those BITs will “be left without effect”.

Sunset clauses allow BITs to remain operative for a given period of time after their termination and, therefore, protect investments made prior to the termination of those BITs (often for an additional 10 or 20 years).

  1. New, pending and concluded arbitration proceedings

Article 6 states that the Treaty does not affect Arbitrations Proceedings concluded before the Achmea judgment (i.e. before 6 March 2018) and that those “shall not be reopened”. Therefore, the Treaty does not foresee any retroactive measure against arbitration proceedings that have been concluded with a final award prior to 6 March 2018.

The Treaty also contains provisions dealing with pending arbitrations, meaning arbitration proceedings that were initiated prior to the Achmea judgment, and which have not yet been concluded. In such cases, Article 9 sets up the possibility for either Party, investor or EU Member State, to ask for a “structured dialogue”, but only within six months from the termination of the respective BIT. Article 9 (7) provides that such procedure “shall be overseen by an impartial facilitator with a view to finding between the parties an amicable, lawful and fair out-of-court and out-of-arbitration settlement of the dispute which is the subject of the Arbitration Proceedings”. The settlement procedure is impartial and confidential and the facilitator shall reach a settlement agreement within six months. However, Parties can agree to a longer period if they deem appropriate.

Nonetheless, the Treaty imposes a retroactive effect on some current ongoing arbitration cases defined as “New Arbitration Proceedings”, meaning those “initiated on or after 6 March 2018” (Article 1). Article 5 states that “Arbitration Clauses [in intra-EU BITs] shall not serve as legal basis for New Arbitration Proceedings”. Therefore, between 6 March 2018 and the entry into force of this Treaty, any arbitration proceedings under intra-EU BITs will be qualified as null and void.

The Treaty will enter into force for each Member State Party following the completion of their individual procedures for domestic ratification, approval or acceptance.

This article was written by Andre Gabbard and Helionor De Anzizu