REUTERS | Ana Carolina Fernandes

Achmea: how far does it reach?

No doubt, the European Court of Justice (ECJ) ruling in Slovak Republic v Achmea BV of earlier this year has caused reasoned concern amongst the international investment arbitration community that its reach may be much wider than intra-EU bi-lateral investment treaties (BITs). The proposition is, and the ruling in Achmea most certainly will extend to BITs concluded between an EU member state and a third country from outside the EU. This is because the reasoning developed by the ECJ to conclude that arbitration clauses in intra-EU BITs are unenforceable within an EU context applies with equal force to a situation where an investor brings a claim under a BIT between an EU member state and a third country. To the extent that a dispute arising from an EU-third country BIT is seated in an EU member state, or a resultant award requires enforcement before an EU member state court, it is more likely than not that the Achmea ruling would unfold its full legal effect. Similar considerations may also apply to corresponding situations within the context of disputes arising from multilateral investment treaties (MITs) to which an EU member state is a party, such as the Energy Charter Treaty (ECT).

Unsurprisingly, given Achmea’s unsettling consequences and their potential reach, there has more recently been much debate about the proper limits of the application of Achmea and whether it may reach beyond the limits of investment arbitration into the realms of international commercial arbitration. More specifically, the argument is that, on the basis of the ECJ’s ruling in Achmea, there may be grounds for saying that arbitration clauses that are invoked to resolve disputes that raise EU law issues in an ordinary international commercial arbitration context are equally unenforceable and that such disputes must instead be dealt with by the competent courts. This proposition (I do not hesitate to say) is extreme and in the light of the existing aquis communautaire on the subject, fanciful. The most instructive example to demonstrate that Achmea is unlikely to extend beyond its investment arbitration origin into the world of international commercial arbitration is EU competition arbitration.

EU competition arbitration has a long history within the EU. It deals with the private enforcement of EU competition law claims through arbitration and as such operates at the crossroads of the EU public interest and the pursuit of private EU law claims. The arbitrability of EU competition law goes back to the legendary ECJ ruling in Eco Swiss, where the ECJ qualified the EU competition law rules as a matter of public policy within the meaning of Article V(2)(b) of the New York Convention. In essence, it imposed an obligation on EU member state courts in their capacity as supervisory courts to perform a full substantive review of international commercial arbitral awards to ensure their compliance with EU competition law (see G. Blanke, “The ‘Minimalist’ and ‘Maximalist’ Approach to Reviewing Competition Law Awards: A Never-Ending Saga Revisited or the Middle Way at Last?” in D. Bray & H. Bray (eds), Post-Hearing Issues in International Arbitration, Juris Publishing, 2013, pages 169-227). In doing so, even though leaving the question of arbitrability unaddressed, the ECJ endorsed arbitration of the EU competition law rules.

Eco Swiss followed in the wake of the US Supreme Court’s ruling in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., which laid the foundations for antitrust arbitration in the US, recognising as arbitrable claims under the Sherman Antitrust Act 1890 at a time when the public interest at stake in the enforcement of US antitrust law militated against the submission of antitrust claims to arbitration. No doubt, one of the (albeit unpronounced) reasons for the ECJ’s ruling in Eco Swiss was to stay abreast of the pro-arbitration developments across the Atlantic and ensure the continued attractiveness of arbitration to an EU-based business community. In addition, Eco Swiss signalled that reservations (primarily driven by considerations of public policy) to the effect that arbitration was not a competent forum for the consideration of EU competition issues or EU law more generally, had finally been overcome. As a result, since Eco Swiss, there has been an impressive body of competition law claims heard by arbitrators, in particular within the forum of the International Chamber of Commerce (ICC) International Court of Arbitration (see G. Blanke, “Antitrust Arbitration under the ICC Rules” in G. Blanke and P. Landolt (eds), EU and US Antitrust Arbitration: A Handbook for Practitioners, Kluwer Law International, 2011, pages 1763-1898).

Similarly, the EU Commission, the competition regulator of the EU, has lent its full support to the use of arbitration as a means for private enforcement, even within the context of EU merger control. Following a practice commenced in 1992 (Elf Aquitaine-Thyssen/Minol), the EU Commission has consistently made use of arbitration as a monitoring tool to ensure the proper enforcement or implementation of behavioural commitments offered by a merging entity under the EU Merger Regulation (see G. Blanke, “International Arbitration and ADR in Conditional EU Merger Clearance Decisions” in Blanke and Landolt, op. cit., pages. 1605-1724). In order to make sure that EU competition requirements are complied with in this process, the Commission has established a particular regime, which allows it to intervene as amicus curiae, for the conduct of arbitrations arising in relation to the proper implementation of those commitments. Importantly, the use of arbitration in this context is expressly referenced in the Commission’s policy guidance on the subject (see revised Notice on Remedies, Commission notice on remedies acceptable under Council Regulation (EC) No 139/2004 and under Commission Regulation (EC) No 802/2004).

Following the success of arbitration under the EU Merger Regulation, the use of arbitration has since been sanctioned in other, similar contexts, such as the use of behavioural commitments within the context of Article 9 infringement decisions under the EU Modernisation Regulation (see G. Blanke, “The Use of International Arbitration under Article 81(3) of the EC Treaty and Article 9 of Regulation 1/2003”, SchiedsVZ (2008), pages 243 et seq.).

It has even been suggested that the specific use of arbitration to facilitate the enforcement of EU competition law claims has given rise to the formation of a novel type of arbitration, that of supranational arbitration (see G. Blanke, “The Case for Supranational Arbitration: Ideas and Prospects” in G. Blanke (ed.), Arbitrating Competition Law Issues: A European and a US Perspective, EBLR special edition, 19(1) EBLR (2008), pages 17-41). Quite frankly, it is unthinkable that the established status quo could revert to a situation before Eco Swiss. Any such development would be counter-productive, given in particular the significant number of international commercial arbitrations that may potentially be affected. In any event, there is an argument for saying that investment arbitrations that involve EU law issues are conceptually different from international commercial arbitrations involving questions of EU law: in actual fact, the ECJ itself comes to that conclusion in Achmea, drawing a distinction between intra-EU investment arbitration on the one hand and international commercial arbitration on the other (see Achmea, paragraphs 54-55), and making express reference to Eco Swiss as a safeguard of EU law compliance in the case of the latter. Why the EU supervisory court safeguards that apply at the enforcement stage of, for example, an EU competition law award should not also bite within the context of an intra-EU investment arbitration award (except where that award were to receive privileged treatment under the ICSID regime) remains unexplained. In any event, the most important distinguishing factor is probably the presence of an EU member state as one of the parties to the arbitration in the former case, begging the question of the most efficient protection of the correct or consistent interpretation of EU law.

It is to be hoped that in the given circumstances, the limits of Achmea will be defined as narrowly as possible and set in stone as such on the next occasion that the ECJ will have to do so!

DWF LLP Dr Gordon Blanke

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