Ban on intra EU bilateral investment arbitrations might still produce unforeseen complications

In the Achmea case, the Court found that investor-state arbitration clauses in intra-EU BITs are not compatible with the EU Treaties and therefore cannot be applied after the date on which the last of the parties to the intra-EU BIT became an EU Member State. Following this CJEU line of thought the Lithuanian Government decided to suspend its participation in the proceedings in case Veolia Environnement S.A. and Others v. the Republic of Lithuania. The complication came with the need to submit a counterclaim to the investor in dispute twice the size of the initial claim of the investor. National courts refused to open a parallel dispute before the termination of the proceedings under BIT. In the light of the recent annulments of awards, the case provides additional argument for the investor to hold onto the arbitral tribunal.

The CJEU is treating its right to interpret international law, which forms part of EU law, as absolute, including possibility of limiting the application of any rule of international law if it is found to be contrary to primary law of the Union. The court cannot disregard the general principles of law, however. The shortcomings of the rejection of the monistic hierarchy of legal norms might be multiple. More in ReLex managing partner Rytis Satkauskas’ overview recently published in European Investment Law and Arbitration Review.

Veolia v Republic of Lithuania: A Case on the Legality of the Suspended Intra-EU Investment Arbitration and the Question of Lis Pendens




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