In a judgment handed down on Thursday, 14 March, the Court of Justice of the EU (CJEU) held that European Union law was applicable in the context of a case concerning a dispute between Romania and Swedish investors that was heard by the Supreme Court of the United Kingdom (Case C-516/22).
In February 2020, the Supreme Court of the United Kingdom authorised—pursuant to a bilateral investment treaty between Romania and Sweden (ICSID)—the enforcement of an arbitral award ordering Romania to pay Swedish investors €178 million in compensation for the early repeal of a regional investment aid scheme.
However, a specific case is pending before the EU courts on the European Commission’s decision which considers that aid to be incompatible with the European rules governing State aid (Case C-638/19 P). The European Commission then brought an action for failure to fulfil obligations against the United Kingdom for infringing EU law as a result of the Supreme Court’s ruling.
The CJEU reiterates that, in accordance with the agreement on the United Kingdom’s orderly withdrawal from the EU, it has jurisdiction over this action up to 4 years after the transition period leading up to Brexit—this transition period having ended on 31 December 2020.
According to the Court of Justice, the Supreme Court of the United Kingdom erroneously concluded that EU law governing State aid was not applicable to the United Kingdom’s obligation, under the ICSID Convention, to enforce the arbitral award on the grounds that the date that the United Kingdom became a party to that convention precedes its accession to the EU.
The CJEU also found that the British court had breached its obligation of sincere cooperation: it should have stayed the proceedings in this case while proceedings were pending before the EU courts. In addition, the British Supreme Court should have made a reference to the Court of Justice in this case in order to avoid the risk of incorrectly interpreting the applicable law.
See the judgment: https://aeur.eu/f/bb9 (Original version in French by Mathieu Bion)