International investment arbitration after the Achmea saga: a critical analysis

In the Achmea judgment of 6 March 2018, the ECJ ruled that investor-State arbitration clauses such as Art. 8 of the Netherlands-Slovakia intra-EU BIT are incompatible with the autonomy of EU law. The vast majority of EU Member States implemented the Achmea decision through the Termination Agreement which entered into force on 29 August 2020. This paper examines the scope of application and the main provisions of the Termination Agreement and discusses the issues arising thereof, with particular regard to the termination of the intra-EU BITs listed in Annex A, the removal of sunset clauses, the inapplicability of ISDS provisions and the retroactive withdrawal of consent for arbitration proceedings initiated on or after the Achmea judgment date. It is argued that the termination of intra-EU BITs and of their sunset clauses is in line with Art. 54(b) of the Vienna Convention on the Law of Treaties on the termination of treaties by consent of all parties but not with the Achmea judgment and that the retroactive withdrawal of consent is incompatible with Arts. 25(1) and 54(1) of the ICSID Convention. This incompatibility would lead to an infringement of erga omnes partes obligations and to the international responsibility of EU Member States towards non-EU States Parties to the ICSID Convention. This paper also considers that the first-stage test concerning the interpretation and/or application of EU law by the arbitral tribunal, established in Achmea and later confirmed in Opinion 1/17, is applicable by analogy in order to assess whether ISDS clauses of extra-EU BITs and free trade agreements concluded between the EU and third States may adversely affect the autonomy principle of EU law.