The Court of Justice of the European Union finds the arbitration provision in The Netherlands-Slovakia BIT incompatible with EU law

by Allen & Overy LLP

Allen & Overy LLP

On 6 March 2018, the Court of Justice of the European Union (the Court) delivered its judgment in Case C-284/16, Slovakia Republic v Achmea B.V., declaring that the investor-State arbitration provision in the bilateral investment treaty between The Netherlands and Slovakia (the BIT) is incompatible with EU law.  The Court did not follow the Advocate General’s Opinion issued on 19 September 2017, which reached the opposite conclusion. This was previously reported on here.


The case considered by the Court relates to Slovakia’s application before the German courts to set aside a EUR 22.1 million award rendered in December 2012, in an arbitration under the BIT, in favour of the Dutch insurance investor, Achmea B.V.  The seat or legal place of the arbitration was Frankfurt-am-Main and the proceedings were conducted under the UNCITRAL Arbitration Rules.  Slovakia unsuccessfully challenged the jurisdiction of the arbitral tribunal arguing that the basis for the tribunal’s jurisdiction (the arbitration provisions in Art. 8 of the BIT) was incompatible with EU law.  Once the award was rendered, Slovakia sought to challenge the award before the German courts.  The Higher Regional Court of Frankfurt-am-Main dismissed the challenge and Slovakia appealed to the German Federal Court of Justice, the Bundesgerichtshof (BGH).

In May 2016, the BGH suspended the proceedings and made a request for a preliminary ruling to the Court as to the compatibility of the arbitration provision of the BIT with EU law.  In the BGH’s view, however, none of the provisions of the Treaty on the Functioning of the European Union (the TFEU) represented an obstacle to arbitrations between an EU investor and an EU Member State.

Questions referred to the Court

The BGH referred three questions to the Court, concerning whether Art. 8 of the BIT was compatible with certain provisions of the TFEU:

  1. Whether Art. 344 TFEU precludes the application of an investor-State arbitration provision in a BIT between Member States of the EU, where the BIT was concluded before one of the Contracting States (Slovakia) acceded to the EU, but arbitral proceedings are not commenced until after that date. 

    Art. 344 provides that “Member States undertake not to submit a dispute concerning the interpretation or application of the [EU] Treaties to any method of settlement other than those provided for therein”.

  2. If the first question is to be answered in the negative, whether Art. 267 TFEU precludes the application of the same provision. 

    Art. 267 regulates referrals by “any court or tribunal of a Member State” to the Court to give a ruling on questions regarding “the interpretation of the Treaties; or the validity and interpretation of acts of the institutions, bodies, offices or agencies of the Union”.

  3. If both the first and second questions are answered in the negative, whether Art. 18 precludes the application of the investor-State provision in the BIT in the circumstances set out in (1).

    Art. 18 prohibits “any discrimination on grounds of nationality”.

The Court finds the arbitration provision under the BIT incompatible with EU law

The Court found that Arts. 344 and 267 TFEU must be interpreted as precluding a provision in an international agreement concluded between Member States, such as Art. 8 of the BIT (Case C-284/16, Slovakia Republic v Achmea B.V., para. 60).  The crux of the Court’s analysis was that investor-State arbitration is a mechanism that cannot ensure that disputes in which the interpretation or application of EU law is engaged will be decided by, or will be able to be reviewed by, a competent court within the EU judicial system.  The Court’s reasoning is summarised below.

The arbitration provision in the BIT is contrary to the autonomy of the EU legal system

The Court considered Arts. 344 and 267 together and found that, pursuant to Art. 344, an international agreement cannot affect the allocation of powers fixed by the EU Treaties or, therefore, the “autonomy of the EU legal system” (Ibid., para. 32).  Art. 344 provides that Member States must not submit a dispute concerning the interpretation or application of EU Treaties to any method of settlement other than those provided therein.  With respect to Art. 267 TFEU, the Court noted that this provision establishes the preliminary ruling procedure – a mechanism described by the Court as a “keystone” of the EU judicial system (Ibid., para. 37).  This mechanism, in the Court’s view, enables a “dialogue” between EU Member State courts and, more specifically, between the courts and tribunals of the Member States and the Court (Ibid.).  The Court observed that this system serves to ensure the consistency and autonomy of EU law.

Investor-State tribunals cannot make requests for a preliminary ruling to the Court

The Court then analysed the wording in Art. 8(6) of the BIT, which provides that an arbitral tribunal is called on to apply, amongst others, the law of the “Contracting Party Concerned” and which may therefore require an arbitral tribunal to apply or interpret EU law.  Yet such an arbitral tribunal could not “be classified as a court of tribunal ‘of a Member State’ within the meaning of [Art.] 267 TFEU” (Ibid., para. 56) as it is not part of the judicial system of either The Netherlands or Slovakia.  The Court concluded that an arbitral tribunal did not have the power to make a reference to the Court for a preliminary ruling on issues of interpretation or application of EU law that might arise.

Limited scope of judicial review

The Court then analysed the procedure governing judicial review of the validity of awards made under intra-EU BITs.  In short, such review can only be exercised by the national court of the seat, to the extent that the national law permits.  In the present case, German law provided only for a limited scope of review concerning the validity of the arbitration agreement under the applicable law and the consistency with public policy of the recognition or enforcement of the award.  The Court was concerned that the lack of possibility for judicial review, in instances where issues of EU law might be engaged, in turn prevents the “full effectiveness of EU law” (Ibid., para. 56).  At the same time, the Court considered that there was a distinction to be made between commercial and investment-treaty arbitration, as commercial arbitrations “originate in the freely expressed wishes of the parties” while the latter “derive from a treaty by which Member States agree to remove from the jurisdiction of their own courts disputes which may concern the application or interpretation of EU law” (Ibid., para. 55).  The Court did not cite any authority in support of this proposition, nor did it consider a situation where a Member State is a party to a commercial contract containing an arbitration clause. 

In light of its findings on Arts. 344 and 267, the Court did not consider it necessary to explore whether intra-EU BITs are compatible with the principle of anti-discrimination in Art. 18.

The Court distinguishes the BIT from other treaties to which the EU is a party

The Court also stated in its judgment that “according to settled case-law of the Court, an international agreement providing for the establishment of a court responsible for the interpretation of its provisions and whose decisions are binding on the institutions, including the Court of Justice, is not in principle incompatible with EU law.  The competence of the EU in the field of international relations and its capacity to conclude international agreements necessarily entail the power to submit to the decisions of a court which is created or designated by such agreements as regards the interpretation and application of their provisions, provided that the autonomy of the EU and its legal order is respected” (Ibid., para. 57). 

The Court therefore distinguished the BIT from other agreements that provide for “the possibility of submitting those disputes to a body which is not part of the judicial system of the EU” (Ibid., para. 58), provided the EU was party to them.  The Energy Charter Treaty, to which the EU itself is a Contracting Party, would be an example of such an agreement.


The implication that this judgment might have for the investor-State arbitration mechanisms present in almost 200 intra-EU BITs or the arbitrations currently pending under such BITs remains to be seen.  This is because the Court did not draw any consequences from its findings; it only established that the TFEU must be interpreted as precluding a provision in an intra-EU BIT such as Art. 8 of the BIT under consideration, but it did not offer any guidance as to the consequences of that finding. 

In particular, the Court did not engage in any analysis of the Vienna Convention on the Law of Treaties (VCLT) and whether the TFEU and the BIT in fact cover the same subject matter.  Art. 30(3) of the VCLT states that when all parties to the earlier treaty (the BIT) are parties also to the later treaty (the TFEU) but the earlier treaty is not terminated or suspended, the earlier treaty applies to the extent that its provisions are compatible with those of the later treaty.  Arguably, given that there is no provision in the TFEU providing for investor-State arbitration, no incompatibility arises, and Art. 8 may be considered effective.

The public international law implications of the Court’s judgment will thus have to be considered and determined by the BGH and potentially other national courts, as well as the many arbitral tribunals sitting on or called upon to decide disputes under intra-EU BITs.  However, the BGH already indicated in its request for a preliminary ruling that should the Court find that Art. 8 violates EU law, this would be a ground for setting aside the award rendered in favour of Achmea B.V., and is therefore likely to set aside the award.  Further, many of the arbitrations under intra-EU BITs are conducted under the autonomous system established by the ICSID Convention (Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1966)), which adds further complexity to the analysis.

In the meantime, respondent EU States will inevitably seek to rely on the Court judgment in on-going and future arbitrations of intra-EU investment treaty disputes to challenge the jurisdiction of tribunals hearing such disputes and to resist the enforcement, or to challenge the validity, of awards. 

The Court’s judgment will also add further pressure on Member States to terminate intra-EU BITs (or at least replace the arbitration provisions contained in them) and lend further support to the European Commission in the pending infringement proceedings against certain Member States refusing to terminate their intra-EU BITs (previously reported on here).

Investors investing in the EU, on the other hand, will likely be advised and seek to structure and restructure their investments through a vehicle incorporated outside of the EU and thus be protected by a BIT between a Member State (or the EU) and a third State not affected by the Court’s judgment.  This may be one of the more perverse consequences of the Achmea judgment. 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Allen & Overy LLP | Attorney Advertising

Written by:

Allen & Overy LLP

Allen & Overy LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at:

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit
  • New Relic - For more information on New Relic cookies, please visit
  • Google Analytics - For more information on Google Analytics cookies, visit To opt-out of being tracked by Google Analytics across all websites visit This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at:

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.