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The recent decision of the European Court of Justice (CJEU) in the case between Slovakia vs. Achmea BV (Case C-284/16) seems to have caused a ripple effect for investment arbitration: In the case against the Swedish investor Vattenfall (ICSID ARB 12/12), the Federal Republic of Germany has now requested the arbitral tribunal to dismiss the case for lack of jurisdiction following the CJEU’s Achmea decision. A decision of the tribunal is expected later this year. It will definitely be the next punch in this highly politicized area of law. But will it be a knock-out punch for the pending arbitration?

Briefly to the background of this recent development in the Vattenfall case: On 6 March 2018, the CJEU decided that full effectiveness of EU law is not guaranteed if an arbitral tribunal decides a dispute between an EU investor and a Member State of the EU. In the case before the CJEU, an arbitral tribunal seated in Germany had awarded the Dutch company Achmea damages in an amount of EUR 22.1 million against Slovakia. The tribunal found that the country had violated the Bilateral Investment Treaty (BIT) between the Netherlands and Slovakia when it closed its sickness insurance market only a few years after it had opened the market to private investors in 2004. Slovakia approached the competent German courts to set aside the award arguing a violation of several provisions of EU law, in particular regarding the Treaty on the Functioning of the European Union (TFEU). The German Federal Court of Justice submitted the question to the CJEU whether the arbitration agreement in the BIT was compatible with the TFEU. The CJEU answered the question loud and clear: “No, they are not!” (see our previous GAN-article on the decision of the CJEU here:

The implications of the Achmea decision are currently the hottest topic in investment arbitration. Over the last two months, countless articles have been written and speeches given debating the consequences of the CJEU’s decision. It is impossible to find a panel discussion without a reference to Achmea. In general, the majority opinion seems to go along the following lines: Arbitrations based on BIT’s between two EU member states are no longer possible because of the negative effects on EU law. However, this does not include arbitrations based on the dispute resolution provision in the Energy Charter Treaty (ECT) to which the EU itself is a party. It does also not effect ICSID arbitrations which are distinguished by their denationalized character. But is this opinion correct?

At least the German government and its legal advisors in the case against Vattenfall seem to take a different position. The Vattenfall case is based on the ECT and conducted under the rules of ICSID. It was reported in German news that in late April 2018 Germany has requested the tribunal to dismiss Vattenfall’s claim as inadmissible based on the reasoning of the Achmea decision by the CJEU (“Deutschland hält Vattenfall-Klage für unzulässig”, FAZ, 8 May 2018). The actual meaning of the Achmea decision – so apparently the argument of the state – is that arbitration proceedings between investors from the EU and a EU member state are per se inadmissible. If the tribunal were to adopt such a reasoning, this could be a knock-out punch for investment arbitration in Europe.

However, it seems unlikely that the arbitral tribunal will dismiss the Vattenfall case for lack of jurisdiction: First, the CJEU itself did not argue such far-reaching consequence in its decision. The CJEU interpreted EU law and answered the questions put before the court. Nowhere did the CJEU state that investment arbitration shall per se and always be inadmissible if a EU investor and a EU member state are involved. Secondly, the CJEU had reviewed a Bilateral Investment Treaty, not a Multilateral Treaty like the Energy Charter. It is kind of hard to argue that the EU itself signed and thus is bound by the Energy Charter Treaty but that now the EU, via EU Law, requests its member states to ignore its contractual undertakings from the Energy Charter Treaty, i.e. to allow investors to initiate arbitration proceedings. Not only principles of equity and good faith advocate against such reasoning. And finally, the independent arbitral tribunal is not required to accept the Achmea decision as binding law. Quite interestingly, the self-executing character of awards in ICSID arbitrations should prevent state courts or the CJEU to “correct” an award in an enforcement stage or to otherwise interfere. So there is hope, that the Vattenfall arbitration survives the Achmea-attack.

While no one can read the minds of the arbitrators currently deliberating the Vattenfall case and predict their decision, one thing is certain: The Vattenfall case has already thrilled the interested public like hardly an investment arbitration before. The case has been heavily politicized and debated in circles far outside the legal establishment. It was the first case in which the oral hearing could be streamed via the internet, answering the public request for more “transparency”. And now, for the grand finale, the CJEU’s Achmea decision might let the entire Vattenfall case explode in its very last phase, despite all the efforts, time and – not least – costs both parties invested in this case. Vattenfall’s investment in this arbitration would turn into a sunk investment and – under normal circumstances – then trigger the question whether a state’s outright non-compliance with contractual obligations under a treaty (the Energy Charter Treaty) does not give rise to the next investment arbitration. But after Achmea, normal circumstances have somewhat ceased to exist. As the Chinese proverb goes: We are living in interesting times…


Prof. Dr. Joerg Risse LL.M. (Berkeley) is a member of the Dispute Resolution Group at Baker McKenzie in Frankfurt. Being double-qualified as an attorney-at-law in Germany and in New York (USA), he represents his clients in international arbitrations before all major arbitral institutions. Since Prof. Risse is frequently appointed to act as an arbitrator or mediator, his clients also benefit from his "judiciary" outlook on a case. Prof. Risse teaches advocacy skills and dispute resolution at the University of Mannheim. Prof. Risse is ranked by Chambers Global 2015 as one of the top two arbitration counsels in Germany and among the most in-demand arbitrators. Handelsblatt/Best Lawyers 2015/2016 honors him as "Lawyer of the Year" in international arbitration. According to Juve (2010 - 2015), he is a "leading name" in arbitration, and Who is Who Legal 2015 declared him one of the top seven commercial mediators in Germany. Prof. Risse advises in post merger and acquisition disputes, in particular in price adjustment disputes, reps and warranty claims and claims raised against transaction advisers. His second main area of practice are disputes related to large infrastructure projects such as power plants, offshore wind farms, electricity networks, public transport projects or airports. Most of his clients are from the “old economy”, including turn-key contractors for large projects and companies from the chemical, automotive, medical and mass transport industry. Prof. Risse has particular experience in ADR-proceedings where he advises his clients in settlement negotiations, mediation and adjudication proceedings. Prof. Risse can be reached at and +49 69 299080.


Dr. Max Oehm, LL.M. is an Associate in the Dispute Resolution team at Baker McKenzie in Frankfurt. Max advises on international arbitration and commercial litigation matters. He represents clients in cases focusing on large industrial projects such as power plant construction and gas storage facilities. Max teaches at the University of Mannheim, Germany. Max can be reached at and +49 69 29908334.