Queritius’ Post

Read our article “EU Member States’ Diverging Declarations on the Intra-EU Applicability of the ECT” which reveals the reality behind the curtains on the modernization of the Energy Charter Treaty, and deep dive into the mysteries of the ECT regulating relations between EU Member States. This case is particularly important to me, always interested in the relationship between international law and EU law. The “strict observance and the development of international law” is a foundation laid down in the EU Treaties. If we accept that international law is binding on the Union, we also have to acknowledge that it cannot endanger the legal system formed by the treaties and the constitutional principles of EU law. Therefore to the extent that these international agreements are incompatible with the Treaties, the Member States concerned shall take the appropriate steps to eliminate the established incompatibility. However, these steps must also be in line with the basic principles of international and EU law, such as pacta sunt servanda or the rule of law. The purpose of the unilateral declaration of Hungary is to preserve legal certainty and the rule of law, even if it is against serious headwinds. I am grateful to Veronika Korom for her support and counsel during the whole process. #ruleoflaw #pactasuntservanda #Komstroy #Hungary #ECT https://lnkd.in/dkcUYji8

Bulletin May 2024 – In a landmark decision published on May 2, 2024, the Swiss Supreme Court confirmed for the first time that arbitral tribunals seated in Switzerland have jurisdiction to hear intra-EU disputes based on the 1994 Energy Charter Treaty. It is therefore now clear that investors wishing to bring an intra-EU dispute before an arbitral tribunal – whether under the said treaty or under an intra-EU BIT – are well advised to opt for the seat of the arbitral tribunal to be in Switzerland. Should investors nevertheless choose to bring such dispute before an arbitral tribunal seated in an EU Member State, they will most likely face a jurisdictional objection on the grounds that the arbitration clause contained therein is void as incompatible with EU law. In this bulletin, after a brief summary of facts, we analyse the legal considerations that enabled the Swiss Supreme Court to reach this groundbreaking conclusion.

🚨✍️ #Investment #arbitration: a bulletin I co-authored on a decision published a few days ago (Spain v EDF Energies Nouvelles), in which the Swiss Supreme Court confirmed that arbitral tribunals seated in Switzerland have jurisdiction to hear intra-EU disputes based on the 1994 Energy Charter Treaty.   It is therefore now clear that investors wishing to bring an intra-EU dispute before an arbitral tribunal – whether under the said treaty or under an intra-EU BIT – are well advised to opt for the seat of the arbitral tribunal to be in #Switzerland, otherwise they will face a jurisdictional objection on the grounds that the arbitration clause contained therein is void as incompatible with EU law. Download link: https://lnkd.in/ehKspyz4

Bulletin May 2024 – In a landmark decision published on May 2, 2024, the Swiss Supreme Court confirmed for the first time that arbitral tribunals seated in Switzerland have jurisdiction to hear intra-EU disputes based on the 1994 Energy Charter Treaty.   It is therefore now clear that investors wishing to bring an intra-EU dispute before an arbitral tribunal – whether under the said treaty or under an intra-EU BIT – are well advised to opt for the seat of the arbitral tribunal to be in Switzerland. Should investors nevertheless choose to bring such dispute before an arbitral tribunal seated in an EU Member State, they will most likely face a jurisdictional objection on the grounds that the arbitration clause contained therein is void as incompatible with EU law.   In this bulletin, after a brief summary of facts, we analyse the legal considerations that enabled the Swiss Supreme Court to reach this groundbreaking conclusion. #Investment #Arbitration #ActualitésJuridiques #law #droit #suisse #switzerland https://lnkd.in/e6FeYt5V

Read the first reactions to the declaration of Hungary on the intra-EU application of the Energy Charter Treaty to gain a better understanding why it is often worthwhile to persist even against the strongest tide and choose to respect international and EU law. #ruleoflaw #Komstroy #Hungary #ECT

Please see our analysis co-authored with Szabolcs Nagy on the EU Member States' diverging declarations regarding the intra-EU applicability of the Energy Charter Treaty. While the #Komstroy decision is effective within the framework of EU law, its implementation in the realm of public international law—under which intra-EU ECT tribunals operate pursuant to the ICSID Rules—is only feasible if it complies with the #VCLT. We believe that the Majority ECT Declaration does not comply with the VCLT and is therefore unsuitable for achieving the intra-EU disapplication of the ECT for both pending and future intra-EU ECT arbitrations, and will likely remain without legal effect. In contrast, #Hungary’s separate declaration provides a potential pathway for reconciling EU law with international law, effectively disconnecting the ECT for future disputes. The adoption of the #modernizedECT would represent the most legally robust solution to this issue. With the Energy Charter Conference scheduled for the end of 2024, the adoption of the modernized ECT may become a reality, not least because it offers a solution to the disapplication problem. We are grateful to Maria Fanou and Giovanni Dall'Agnola for the opportunity to publish our analysis on the #KluwerArbitrationBlog and for their valuable advice and support throughout the process. https://lnkd.in/evSxugpb

Controversies surrounding the ECT are still ongoing Recently, the EU Council adopted a controversial position that the Treaty does not apply to intra-EU disputes. Prof Lavanos gives an in-depth legal analysis arguing that only Hungary (paradoxically though) provides a balanced position on the topic. A visible trend where interpretation of laws and Treaties is refined to a political purpose isn't a sign of progress. First, is a reminder about non-liberal practice applied mainly by communist regimes (where all freedoms for example were conditioned to a purpose, 'building communism'). Second, it will give ways to current illiberal forces to criticise the EU stance.

My take on the EU Member States' inter-se declaration withdrawing from the ECT and Hungary's more balanced approached in GAR: Nikos Lavranos, founder of Dutch consultancy NL-Investmentconsulting, says Hungary’s declaration is a “laudable attempt to do justice to the obligations stemming from public international as well as EU law”.  He tells GAR the EU inter se declaration appears to be “fairly beyond reality” since it asserts that the ECT has never applied as a basis for intra-EU disputes, while there are “dozens” of such disputes that have concluded or are pending. He says the public international law perspective is “completely lacking” in that declaration.  Lavranos says Hungary’s declaration “provides a more balanced and reasonable approach by limiting the non-application of the ECT for intra-EU disputes for the future and by requiring a proper amendment of the ECT on the basis of an international law instrument”. “In this way, arguably, the existing interests of investors and the effect of the Komstroy judgment are both duly respected – at least in a more balanced fashion compared to the 26 member states’ declaration.” https://lnkd.in/euPD3c_a

The #EuropeanCommission decided to open an #infringement procedure by sending a letter of formal notice to #Hungary (INFR(2024)2206) for undermining the Union's position on the international stage with regard to the prohibition of intra-EU investor-State arbitrations related to the Energy Charter Treaty (#ECT), and for contradicting the case law of the Court of Justice of the European Union. #CJEU On 26 June 2024, the Union and 26 Member States signed a Declaration on the legal consequences of the #Komstroy #judgment, in which the Court of Justice held that the arbitration clause of the ECT is not applicable to #disputes between a Member State and an investor from another Member State concerning an #investment made by the latter in the first Member State. Hungary adopted a unilateral declaration claiming that the Komstroy judgment only applies for future intra-EU investor-State arbitration proceedings. Its unilateral declaration further claims that this effect for the future will only start once the Energy Charter Treaty has been amended. The Commission finds that Hungary's unilateral declaration contradicts the decision of the Court of Justice, as well as the Union's position vis-à-vis #arbitration tribunals and courts of third countries. In addition, the Commission finds that by openly expressing a unilateral, different position, Hungary is in breach of the duty of sincere cooperation enshrined in Article 4(3) of the Treaty of the European Union, which requires Member States to abstain from undermining the Union position on the international stage. Furthermore, by contradicting an interpretation given by the Court, Hungary seems to disrespect the final, authoritative and binding nature of judgments of the Court of Justice. These principles are enshrined in Article 19 of the Treaty of the European Union and Article 267 and 344 of the Treaty on the Functioning of the European Union, as well as the general principles of autonomy, primacy, effectiveness, and uniform application of Union law. #TFEU #ISDS

In their piece, Gerard J. Meijer, Piotr Wilinski, and Thomas de Boer have provided an overview of the ongoing legal battle involving Spain and intra-EU investment awards enforcement. The authors delve into a case before the District Court of Amsterdam where Spain, in its strategic legal maneuvers, argued that its obligations under an investment treaty award constitute unlawful state aid under EU law. This argument is pivotal as it challenges the #enforcement of the award within the EU, pushing the boundaries of the New York Convention and the Brussels I bis Regulation. The Amsterdam Court's interim judgment sided with Spain, granting itself jurisdiction and setting the stage for a complex interaction between EU state aid rules and international arbitration norms. This case exemplifies the intricate dance between national courts and international obligations, particularly in the realm of intra-EU investment disputes post-#Achmea. The outcome could significantly influence the enforcement landscape of #internationalarbitration awards within the EU, highlighting the tension between EU law and international treaty obligations. #investmentlaw #investmentarbitration #disputeresolution