Achmea (2018): Investor–State Arbitration and the EU Legal Order in Conflict
“Can investment disputes between EU Member States be resolved by international arbitration?” The Achmea judgment vividly shows the tension between investor protection and the coherence of the EU legal order.
Hello! Today we look at the Achmea (2018) case. It began when the Dutch insurer Achmea brought an investor–State arbitration (ISDS) against Slovakia. The question was whether bilateral investment treaties (BITs) concluded between EU Member States are compatible with the EU legal order. When I first read this case, I was struck by how a traditional tool of international investment protection—arbitration—could come into conflict with the autonomy of EU law. Let’s walk through the facts and the meaning of the judgment step by step.
Contents
Background and Facts
The Dutch insurer Achmea claimed losses caused by Slovakia’s health insurance market reform and initiated arbitration under the 1991 Netherlands–Slovakia BIT. The arbitral tribunal partly upheld Achmea’s claims and ordered Slovakia to pay compensation. Slovakia argued that the BIT clause was incompatible with the EU legal order, and the matter was referred to the CJEU. The case developed into a textbook clash between the autonomy of EU law and international arbitration.
Core Issue: Investor Protection vs. the EU Legal Order
The question was whether the arbitration clause in a BIT concluded between EU Member States is compatible with the EU legal order. In other words, does international arbitration for investor protection undermine the primacy and consistency of EU law and its judicial system?
| Issue | Investor Protection | EU Legal Order |
|---|---|---|
| Legal basis | BIT arbitration clause (ISDS) | TEU, TFEU, and the CJEU’s ultimate jurisdiction |
| Main claim | Investors need independent arbitration to secure fair protection from States | If arbitral tribunals interpret EU law, coherence may break down |
| Problem | Potentially weaker guarantees for investors’ rights | Infringement of the autonomy and supremacy of the EU judicial system |
The Judgment and Reasoning
The CJEU held that arbitration clauses in intra-EU BITs are incompatible with EU law because they undermine the autonomy and consistency of that legal order. The core reasoning:
- Only the CJEU has the final authority to interpret and apply EU law.
- Arbitral tribunals cannot request preliminary rulings from the CJEU, risking inconsistency.
- Investment disputes within the EU must be resolved through judicial remedies within the EU legal system.
Impact on the EU Legal System
Achmea shook the basic framework for resolving investment disputes within the EU. The CJEU essentially rejected arbitration clauses in Member-State BITs to safeguard the EU’s legal autonomy. Following the judgment, most Member States concluded an agreement to terminate intra-EU BITs. The decision also signaled to the international community that the EU prioritizes the coherence of its legal order over investor–State arbitration mechanisms.
Criticism and Academic Debate
The ruling drew criticism for harming legitimate expectations and legal certainty for investors, while others praised it for preserving the EU’s fundamental legal order and judicial unity.
| Perspective | Main Argument |
|---|---|
| Critical | Weakens protection of investors’ rights and reduces predictability of the EU investment climate |
| Supportive | Safeguards the autonomy and consistency of the EU legal order and reinforces the CJEU’s interpretive prerogative |
Contemporary Significance and Takeaways
Today, Achmea sends a strong signal not only within the EU but across international investment law more broadly. The EU has made clear that judicial remedies within the EU system take precedence over investor–State arbitration. Key takeaways:
- Termination of intra-EU BITs and strengthening of a single EU legal order
- The EU clearly prioritizes legal autonomy over investor–State arbitration in intra-EU settings
- A leading precedent illustrating the tension between international arbitration and the EU judiciary
Frequently Asked Questions (FAQ)
A dispute initiated by Dutch insurer Achmea against Slovakia through investor–State arbitration, which raised the validity of intra-EU BIT arbitration clauses.
Whether arbitration clauses in BITs between EU Member States are compatible with the EU legal order.
The CJEU held that arbitration clauses in intra-EU BITs are incompatible with EU law and cannot be relied upon.
Because arbitral tribunals may need to interpret EU law but cannot seek preliminary rulings from the CJEU, thereby undermining the autonomy and consistency of EU law.
Member States agreed to terminate intra-EU BITs, and investment disputes within the EU are to be addressed by the EU judicial system.
Yes. Achmea shows the EU’s move to limit investor–State arbitration and to protect the autonomy of its legal order.
In Closing
Achmea (2018) shows what happens when the familiar instrument of investment arbitration meets the autonomy of the EU legal order. For exams and practice, I always check: ① Are both parties situated within the EU? ② Can the arbitral tribunal avoid interpreting EU law? ③ Is the preliminary-ruling procedure accessible? When all three align, the Achmea line is strong. For deeper study, see follow-ups like Komstroy, PL Holdings, and Micula to solidify your analysis. If you have a specific fact pattern, toss it my way—let’s navigate the boundary between ISDS and the EU judiciary together. 🙂
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