According to Advocate General Wathelet in conclusions delivered on Tuesday 19 September (C- 284/16), the arbitration clause in the investment protection agreement concluded between the Netherlands and Slovakia is compatible with EU law.
Since 1993, a bilateral treaty (BIT) concluded between the Netherlands and Slovakia provides that disputes between one contracting state and an investor of the other are to be settled amicably, or failing that, before an arbitral tribunal. In 2006, Slovakia partly revoked the liberalisation of the sickness insurance market and prohibited, inter alia, the distribution of the profits from sickness insurance activities and the sale of insurance portfolios.
In 2008, the insurance company, Achmea (with a subsidiary based on Slovakian territory) initiated an arbitral procedure against Slovakia, on the grounds that the abovementioned prohibitions were contrary to the BIT. Based in Germany, the arbitral tribunal found that Slovakia had indeed infringed the BIT and ordered it to pay Achmea damages of approximately €22.1 million. Subsequently, Slovakia brought an action before the German courts to have the arbitral tribunal’s award reversed. Slovakia contended that the arbitration clause in the BIT was contrary to several provisions of the TFEU (articles 18, 267 and 344).
During the procedure, ten member states: Czech Republic, Estonia, Greece, Spain, Italy, Cyprus, Latvia, Hungary, Poland, Romania and the European Commission submitted observations in support of Slovakia’s arguments, whereas Germany, France, the Netherlands, Austria and Finland state that the disputed clause and, more generally, the similar clauses commonly used in the 196 BITs currently in force between the EU member states are valid.
In concluding, Advocate General Melchior Wathelet observes that the disputed clause does not constitute discrimination on grounds of nationality prohibited by EU law and does not infringe TFEU Article 18. The investors from most of the other member states benefit from an equivalent protection on the basis of the BIT, which their respective member states of origin have concluded with Slovakia. According to the Advocate General, the investors from a member state other than Slovakia, on Slovak territory in a situation governed by EU law and subject to European case law, are treated in the same manner as Slovak investors.
According to the Advocate General the court of arbitration included in the bilateral treaty on investments between the Netherlands and Slovakia can, through its operations and independence, approach the Court of Justice for a preliminary ruling to request a preliminary ruling procedure be set up under TFEU Article 267. It must be emphasised that, if the court considers that the system of arbitration does not fall under the scope of article 267 of the treaty, a dispute between an investor and a state is not covered by article 344, which only focuses on disputes between states.
Finally, Mr Wathelet dismisses the Commission argument that Union law offers investors, particularly through the fundamental freedoms and the Charter of fundamental rights, comprehensive investment protection. According to the Court the scope of the BIT is broader than that of the EU and TFEU treaties. The guarantees of investment protection introduced by this agreement are also different to those granted by EU law, without, however, being incompatible with this law.
For these reasons, the Advocate General is of the view that the disputed clause does not undermine the allocation of powers fixed by the Treaties and, thus, the autonomy of the EU legal system. (Original version in French by Mathieu Bion)