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The Achmea decision and its aftermath are still a hot topic in the international arbitration community. In the Achmea decision, the European Court of Justice (“ECJ”) ruled that EU law precluded resolution of intra-EU disputes through investment arbitration (see and The question of whether this decision could interfere with ISDS under the Energy Charter Treaty (“ECT”) as well, was first and in the negative answered by the Tribunal in the ICSID case Vattenfall against Germany in 2018 (see The Vattenfall tribunal held that the ECT signatories never intended to carve out intra-EU disputes from the ambit of the ECT’s dispute resolution mechanism and that EU law cannot take superiority over other international law.

Now, this result seems to become increasingly manifested case law. With the ICSID Tribunal in the arbitration proceedings of the Landesbank Baden-Württemberg and others (“LBBW”) against the Kingdom of Spain, another Tribunal rejected the intra-EU jurisdictional objection.[1] This Tribunal was chaired by Sir Christopher Greenwood QC. The decision was recently published and is part of a notable series of comparable decisions rejecting intra-EU jurisdictional objections with respect to the ECT (e.g. SolEs Badajoz GmbH v. Kingdom of Spain, Masdar v. Kingdom of Spain and Greentech v. The Italian Republic).[2]

Background of the Case

The dispute with LBBW lines up alongside with more than 30 investment arbitration proceedings against Spain due to the country’s reforms of the renewable energy sector. In the late 1990s, Spain implemented extensive legislation which established a special regime for renewable energy production. This legislation led companies to finance various renewable energy plants in Spain. Spain, however, subsequently enacted substantial changes to the special regime, culminating in its abolition in 2014, as a result of which there were negative impacts on the investments. LBBW argues that it was granted guarantees by Spain to sell electricity to the Spanish electricity grid for the entire operating lifetime of the energy plants, i.e. approximately 25 years. According to LBBW, the abolishment of the special regime violates Articles 10(1), 13 ECT entitling LBBW to damages.

LBBW initiated arbitration proceeding against Spain in 2015. In light of the Achmea decision in 2018, the Parties agreed to bifurcate the arbitration proceedings and to address Spain’s intra-EU jurisdictional objection separately.

The Decision of the Tribunal

The Arbitral Tribunal decided in favour of LBBW and rejected Spain’s intra-EU jurisdictional objection.

The only legal question for the Tribunal to decide at this point was whether the Tribunal was competent to decide the case under Article 25 ICSID Convention and Article 26 ECT. In order to decide this question, the Tribunal needed to evaluate whether Article 26 ECT constituted a valid offer to arbitrate by one EU Member State to an investor of another EU Member State.

The Tribunal’s reasoning in its decision of 25 February 2019 is in line with that of the tribunal in the Vattenfall case. First, the Tribunal held that Article 26 ECT could not be interpreted as to exclude intra-EU disputes. There is no “disconnection clause” in the ECT to the effect that some of its provisions do not apply in an intra-EU context. Further, the “absence of such a clause is telling, particularly since the EU had already included such clauses in other treaties“.

Second, the Tribunal decided that the Achmea decision of the ECJ does not require a different interpretation. The reason here being that the differences between the ICSID Tribunal in the LBBW against Spain case and the Achmea proceedings (UNCITRAL) were “more significant than the similarities.” The ECT is a multilateral and mixed agreement, to which the EU itself is a member. In contrast, bilateral investment treaties are typically concluded directly between two states without the involvement of the EU. Additionally, contrary to bilateral treaties, Article 26 ECT is not limited to intra-EU disputes but applies to claims brought by non-EU investors as well, e.g. from Japan or Australia. In such cases, EU law clearly does not foster a jurisdictional objection – which was not even contested by Spain, as the Tribunal expressly noted. Yet, issues of EU law – as part of the law of the sued state – would be just as likely to arise in cases filed by non-EU investors and yet could not be referred to the ECJ for a preliminary ruling. Thus, the mere application of EU law by a tribunal does not require an interpretation that excludes intra-EU disputes from the ambit of the ECT.

Therefore, the Tribunal concluded that there is no conflict between EU law and the offer to arbitration under Article 26 ECT.

Declaration by 22 Member States legally irrelevant

The Tribunal did not stop there. Even under the assumption that Article 26 ECT were to conflict with EU law, the Tribunal held that the “prohibition could not prevail over the ordinary meaning of the text of Article 26“.

On 15 January 2019, 22 EU Member States, including Germany and Spain, had signed a declaration dealing with the legal consequences of the Achmea decision on investment protection in the EU.[3] The 22 Member States voiced their opinion that intra-EU disputes over the ECT would be incompatible with EU law rendering Article 26 ECT inapplicable in such cases.

Disagreeing with this opinion, five Member States refused to agree on the question of whether the Achmea decision would have implications for the ECT at all.[4] Finland, Luxembourg, Malta, Slovenia and Sweden argued “that it would be inappropriate, in the absence of a specific judgment on this matter, to express views as regards the compatibility with Union law of the intra-EU application of the Energy Charter Treaty.” Going even further, Hungary explicitly disagreed with the assumption that the Achmea decision could have any effects on the ECT: “The Achmea Judgment is silent on the investor-State arbitration clause in the Energy Charter Treaty (hereinafter: ‘ECT’) and it does not concern any pending or prospective arbitration proceedings initiated under the ECT.[5]

The position of Spain now in the ICSID proceedings against LBBW was that the declaration by the 22 Member States constituted a subsequent agreement under Article 31(3)(b) Vienna Convention on the Law of Treaties (“VCLT”) to exclude intra-EU disputes from Article 26 ECT. Article 31(3)(b) VCLT refers to the interpretation of treaties and requires an interpretation to take into account “any relevant rules of international law applicable in the relations between the parties“.

The Tribunal rejected Spain’s argument. The Tribunal held that the declaration of the 22 Member States would not establish a subsequent agreement in the sense of Article 31 (3)(b) VCLT. According to the Tribunal, the declaration was too “fragile a foundation on which to construct an agreement between the ECT Contracting States that Article 26 means something radically different from what it appears to say“. The Tribunal found that the declaration was neither unanimous within the EU, nor did it say anything about the practice and standing of the several non-EU Members to the ECT. Such a declaration could not alter or set aside obligations under a treaty many of whose parties are not EU States and are not bound by the declaration. Similarly, the declaration could not by itself alter the obligations of those states under the ECT inter se. To hold otherwise would mean to ignore the effects of Article 16 ECT and the clear intention of the parties that the same text should apply to all of them. This intention was derived from the special conflict rule contained in Article 16 ECT, according to which prior or subsequent investment treaties cannot undermine the rights guaranteed to investors by the ECT if they are more favorable to the investor.


To date, not a single arbitral tribunal has accepted the intra-EU objection raised by states in aftermath of the ECJ’s Achmea decision. On the contrary, several tribunals have declined implications of the Achmea decision for ISDS under the ECT. The decision in the proceedings of LBBW against Spain shows that the political level must be distinguished from the legal level. The political declaration to abandon ISDS under the ECT has no immediate legal effect and thus cannot be used to evade obligations under the ECT.

For Investors and all those who want to keep ISDS alive under the ECT, this is another step forward. However, although deviating decisions seem to be unlikely at this point, it must to be noted that the Tribunal’s decision has no binding or res judicata effect. Most interestingly, it remains to be seen whether the objecting 22 EU Member States will find a way to enhance their political declaration to a legally binding act that could indeed interfere with the current system. The debate is not over yet.

[1] Landesbank Baden-Württemberg (LBBW) et al. v. Kingdom of Spain, ICSID Case No ARB/15/45, award of 25 February 2019.

[2] SolEs Badajoz GmbH v Kingdom of Spain, ICSID Case No ARB 15/38, award of 31 July 2019; Masdar Solar & Wind Cooperatief U.A. v. Kingdom of Spain, ICSID Case No ARB/14/1, award of 16 May 2018; Greentech Energy Systems A/S, NovEnergia II Energy & Environment (SCA) SICAR, and NovEnergia II Italian Portfolio SA v. The Italian Republic, SCC Arbitration V (2015/095), award of 23 December 2018.

[3] Declaration of the Representatives of the Governments of the Member States on the Legal Consequences of the Judgment of the Court of Justice in Achmea and on Investment Protection in the European Union, 15 January 2019 (“Declaration of Twenty-Two Member States“).

[4] Declaration of the Representatives of the Governments of the Member States on the Enforcement of the Judgment of the Court of Justice in Achmea and on Investment Protection in the European Union, 16 January 2019, signed by Finland, Luxembourg, Malta, Slovenia and Sweden (“Declaration of Five Member States“).

[5] Declaration of the Representative of the Government of Hungary on the Legal Consequences of the Judgment of the Court of Justice in Achmea and on Investment Protection in the European Union, 16 January 2019 (“Hungarian Declaration“).


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 [email protected] and +49 69 29908334.


David Weiss is a member of the Dispute Resolution team at Baker McKenzie in Frankfurt. David advises on (international) arbitration and commercial litigation matters. He represents clients in cases focusing on pharmaceutical disputes, advisor liability and IT litigation. David can be reached at [email protected] and +49 69 299080.