After Komstroy. Resolving the Conflict between the Court of Justice and ICSID Tribunals on the basis of the Lisbon Treaty and the Vienna Convention on the Law of Treaties

Abstract

With its judgment of 2 September 2021 in Moldova v Komstroy, the EU Court of Justice has confirmed, in respect of investment arbitration between investors from one EU Member State and another Member State under Article 26 of the Energy Charter Treaty of 1994 (ECT intra-EU investment arbitration), its previous 2018 ruling in Achmea v Slovak Republic in respect of BITs, that intra-EU investment arbitration conflicts with the fundamental principles of autonomy and primacy of the EU legal order, and is thus invalid under EU law. The Court of Justice has reached this conclusion also by interpreting Article 26 ECT in accordance with EU law since the EU is a party to the ECT.

ICSID tribunals, which operate outside EU law, have consistently rejected this jurisprudence. They have held that Article 26 ECT, interpreted in accordance with international law principles, is valid also in respect of intra-EU arbitration in the absence of any provision in the ECT to the contrary. This paper agrees that the Court of Justice jurisprudence on the issue, based as it is on principles of EU law, is irrelevant for ICSID tribunals. The author reasons that, this notwithstanding, ECT intra-EU investment arbitration has ceased to be available since the Lisbon Treaty of 2007, because, by codifying therein the primacy of EU law, EU Member States have lost their competence to go on agreeing to investment arbitration when conflicting with the principle of autonomy of EU law, as the Court found it is the case.

As a consequence, the Lisbon Treaty operates as a subsequent treaty modifying the ECT between EU Member States in conformity with Article 41 of the Vienna Convention on the Law of Treaties (VCLT), making Article 26 ECT inoperative between them as to intra-EU arbitration since the Lisbon Treaty's entry into force in 2009.

This paper analyzes and rejects possible objections to this conclusion in light of the VCLT itself. The author concludes that from 2009 EU Member States' arbitration offer to investors of ECT parties has ceased to cover disputes brought against them by investors of other Member States because they have ceased to be bound by Article 26 ECT in their mutual relations. As a consequence, ICSID tribunals lack jurisdiction on intra-EU disputes initiated by EU investors after that date, due to the lack of consent of EU respondent States under the ECT and the ICSID Convention. This conclusion is confirmed by the Declaration of the EU and Member States of 26 June 2024 that declare Article 26 ECT inapplicable to intra-EU investment arbitration, referring in support to Declaration n. 17 annexed to the Lisbon Treaty.

Keywords: International Investment Law, ICSID, International Dispute Settlement, competence, Lisbon Treaty