European Union: A Shift From Arbitration To Multilateral Investment Court System At EU


The establishment of an international investment court system has been one of the major objectives of the European Commission since 20151, as the investor-to-state dispute settlement via arbitration is argued to become obsolete.

In this article, the shift from arbitration into a permanent court system will be covered.

The Reasons Behind an Investment Court System

As per the Fact Sheet2 of the Commission of 2017:

  • Case-by-case establishment of ad hoc tribunals with diverging approaches on investment rules avoid predictability in investment disputes;
  • The current system is not transparent enough, since it lacks systematic publication of arbitral awards or decisions;
  • Due to the party appointed nature of the arbitrators, partiality concerns are on the rise; and
  • The limitations on grounds for rights of appeal in the current ad-hoc mechanism reduce comprehensiveness.

According to these grounds, termination of intra-EU bilateral investment treaties ("BITs") and the establishment of a multilateral investment court has been promoted. This system is claimed to avoid the above-stated shortcomings through its permanency, transparency and cost-efficiency by avoiding duplicate work for each BIT3.

Achmea Judgment

In line with this notion, the Court of Justice of the European Union ("CJEU") rendered its Achmea judgment on 6 March 20184, by concluding on the incompatibility of the arbitration clause in the Netherlands-Slovakia BIT5 with the primacy of the EU law, which was analysed in our previous article6.

This judgment has been widely criticized within the arbitration community and has become major support for the Commission in its intensified invitation to the MSs on the termination of the intra-EU BITs7.

Termination of intra-EU BITs

In its Communication8 dated 19 July 2018, the Commission qualified the intra-EU BITs as "a parallel treaty system overlapping with single market rules, preventing the full application of EU law"9and even added that it may activate infringement procedures against the MSs during its monitor on the termination phase of the BITs10.

As a complement to this statement, the MSs committed to terminate all intra-EU BITs no later than 6 December 2019 in a declaration published on 17 January 201911 and acknowledged that:

  • The EU law takes precedence over intra-EU BITs;
  • The arbitration clauses contained in these BITs are contrary to EU law and are, hence, inapplicable;
  • The arbitral tribunals established as per these arbitration clauses lack jurisdiction;
  • No new intra-EU investment arbitration proceeding may be initiated; and
  • The MS courts shall either set aside, or not enforce, the intra-EU investment arbitration awards.

It should be noted that the MSs did not provide a common position on the effect of the Achmea judgment on the investor-state arbitration clause of the Energy Charter Treaty and adopted separate versions of the declaration12.

A Hybrid Investment Court System

In line with the above-stated developments, the EU has been establishing a hybrid system to hear the investor-state disputes during the transition process from BIT mechanisms to a multilateral investment court. This system will be governed by investment courts to be established according to the terms agreed to under free trade agreements.

As per the Investment Protection Agreement concluded between the EU and Singapore13, investor-state disputes will be heard before a Tribunal of First Instance14. The decisions of this tribunal will be appealed before the Appeal Tribunal15. The Secretariat of the ICSID will provide administrative service, and act as the secretariat of both tribunals16.

Likewise, according to the EU-Canada Comprehensive Economic and Trade Agreement17 ("CETA") and EU-Vietnam trade and investment agreements18, permanent courts will deal with investment disputes brought against the states19. These agreements, as well, regulate the appeal procedure against the decisions of the Tribunals20.

The cases will be heard by three-member divisions of the Tribunal in each of these permanent courts, which have diverging numbers of Tribunal members from 6 to 1521.

Opinion of an Advocate General of the CJEU

Throughout this period of transformation, the compliance of the tribunals to be established as per the free trade agreements with the EU law and the exclusive jurisdiction of the CJEU has been debated among the MSs. Following the notable effect of the Achmea judgment, these matters were brought before the Advocate General of the CJEU by the Kingdom of Belgium.

Accordingly, in a recent opinion issued by Advocate General Bot of the CJEU dated 29 January 201922, the investment dispute resolution mechanism created under the CETA was assessed. According to the Advocate General;

  • The dispute settlement mechanism established by the CETA does not adversely affect the judicial system of the EU23, as it is not intended to review the legality of the acts of the EU24;
  • It is bound by the exclusive jurisdiction of the CJEU over the interpretation of EU law,
  • The Achmea reasons cannot be transposed to this examination, since the CETA cannot adversely affect the principle of mutual trust or sincere cooperation25.

Therefore, the investment dispute resolution mechanism created under the CETA was found to be compatible with EU law26.


The Commission has accelerated its work towards the establishment of a permanent court system, while the MSs has committed to terminate intra-EU BITs before the end of 2019.

In line with the MSs' declaration to either set aside or not enforce the intra-EU investment arbitration awards, settlement of intra-EU investment disputes by arbitration is likely to be prevented.

Within the period of transformation into multilateral court system, some disputes are to be resolved before hybrid-permanent courts, which will function as per the free trade agreements that the EU has concluded.


[1] "Trade for All - New EU Trade and Investment Strategy", 14.10.2015, (Access date: February 2019).

[2] The Fact Sheet on the European Commission Proposal for a Multilateral Investment Court, (Access date: February 2019).

[3] Shilpa, Singh J., "A New and Improved Investment Protection Regime: Truth Or Myth!" date: February 2019).

[4] The Judgment of the Grand Chamber of the CJEU: Slovak Republic v. Achmea B.V., Case C-284/16, (Access date: February 2019).

[5] The Agreement on Encouragement and Reciprocal Protection of Investments between the Kingdom of the Netherlands and the Czech and Slovak Federal Republics, signed on 29 April 1991, entered into force on 1 October 1992, (Access date: February 2019).

[6] Birengel, Tilbe: "Impact of the Achmea Judgement on Investment Arbitration," Erdem&Erdem Newsletter, October 2018, (Access date: February 2019).

[7] Fouchard, Clément; Krestin, Marc: "The Judgment of the CJEU in Slovak Republic v. Achmea – A Loud Clap of Thunder on the Intra-EU BIT Sky!"; Risse, Joerg; Oehm, Max: "European Court of Justice Stops Investment Arbitration in Intra-EU Disputes," ; Pinsolle, Philippe; Michou, Isabelle: "Arbitration: The Achmea v Slovakia Judgment of the CJEU, is it really the end of Intra-EU Investment Treaties?" (Access date: February 2019).

[8] Communication from the Commission to the European Parliament and the Council: "Protection of Intra-EU Investment", 19.07.2018, (Access date: February 2019).

[9] Communication from the Commission to the European Parliament and the Council: "Protection of Intra-EU Investment", 19.07.2018, p. 2, (Access date: February 2019).

[10] Global Arbitration Review, "Brussels Pours Cold Water on Intra-EU Treaty Arbitration", (Access date: February 2019).

[11] European Commission announcement on "Declaration of the Member States of 15 January 2019 on the Legal Consequences of the Achmea Judgment and on Investment Protection", 17 January 2019, (Access date: February 2019).

[12] Tomáa Matejovský, Monika Mareková, Malgorzata Surdek, Sarah Grenfell, "EU Member States Adopt Declaration on the Termination of All Bilateral Investment Treaties," (Access date: February 2019).

[13] The EU-Singapore Investment Protection Agreement, (Access date: February 2019).

[14] Jack Ballantyne, "European Parliament Approves EU-Singapore Trade Deal", (Access date: February 2019).

[15] Article 3.9 and 3.19 of the EU-Singapore Investment Protection Agreement, (Access date: February 2019).

[16] §16 of Article 3.9 and §14 of Article 3.10 of the EU-Singapore Investment Protection Agreement,

[17] Comprehensive Economic and Trade Agreement entered into force provisionally on 21 September 2017, (Access date: February 2019) (Access date: February 2019).

[18] EU-Vietnam trade and investment agreements, (Access date: February 2019).

[19] Erica Stein, Dániel Dózsa, "Advocate General of EU's Highest Court Weighs in Favor of an Investment Court System," for access: (Access date: February 2019).

[20] Mark Mangan, "The EU succeeds in Establishing a Permanent Investment Court in Its Trade Treaties with Canada and Vietnam," (Access date: February 2019).

[21] Shilpa Singh J., "A New and Improved Investment Protection Regime: Truth Or Myth!", (Access date: February 2019).

[22] Opinion of Advocate General Bot, Opinion 1/17 upon the request for an opinion by the Kingdom of Belgium,∂=1&text=&doclang=EN&cid=9289968 (Access date: February 2019).

[23] Erica Stein, Dániel Dózsa, "Advocate General of EU's Highest Court Weighs in Favor of an Investment Court System", (Access date: February 2019).

[24] §124 of the Opinion of Advocate General Bot, Opinion 1/17, upon the request for an opinion by the Kingdom of Belgium,∂=1&text=&doclang=EN&cid=9289968 (Access date: February 2019).

[25] §106-108 of the Opinion of Advocate General Bot, Opinion 1/17, upon the request for an opinion by the Kingdom of Belgium,∂=1&text=&doclang=EN&cid=9289968 (Access date: February 2019).

[26] Sebastian Perry, "EU Court Adviser Endorses ISDS in CETA", (Access date: February 2019).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions