Slovak Republic v. Achmea BV: The Death Knell for Intra-EU BITs?

John I. Blanck
June 19, 2018

On March 6, 2018, the Court of Justice of the European Union (CJEU) issued its judgment in Slovak Republic v. Achmea BV,[1] concluding that the Treaty on the Functioning of the European Union (TFEU)[2] precluded a provision in a bilateral investment treaty (BIT) between two member states of the Europe Union (EU) authorizing investor-state arbitration. The BIT under consideration was between the Netherlands and the Slovak Republic (Slovakia),[3] and like most BITs, it authorizes an investor from one BIT party to initiate arbitration proceedings in an investment dispute against the other BIT party before an international tribunal, instead of litigating the dispute in that party's domestic court system.[4] The issue before the Court was one of "fundamental importance" to the EU, because at the time of the judgment there were 196 intra-EU BITs (BITs between two EU member states) amongst the twenty-eight EU member states.[5] The CJEU's judgment calls into question the validity of investor-state arbitration provisions in all these BITs, potentially effecting a sea change to intra-EU investment policy. 


The dispute has its origins in Slovakia's reform of its health system in 2004, which opened the market for private medical insurance services. As a result, Achmea, a Dutch company, established a subsidiary in Slovakia, and began selling such services. However, in 2006 Slovakia partially reversed its 2004 reforms and prohibited the distribution of profits generated by the sale of these services. In 2011 Slovakia's Constitutional Court ruled that this prohibition was contrary to the Slovak Constitution, and the distribution of profits was once again allowed. However, by 2008 Achmea had already initiated arbitration under the BIT, alleging that the prohibition violated the BIT. Slovakia objected to the arbitral tribunal's jurisdiction, arguing that Article 8 of the BIT (authorizing investor-state arbitration) was incompatible with EU law, and thus was invalid as a result of Slovakia having joined the EU in 2004. The tribunal rejected this argument in a 2010 decision, and the case proceeded to a final award on the merits, where the tribunal concluded that Slovakia had violated the BIT and awarded Achmea 22 million Euros in damages in 2012.[6] As Frankfurt was the seat of arbitration, Slovakia challenged the decision in German courts, arguing again that the arbitral award was invalid because the tribunal had lacked jurisdiction due to Article 8's incompatibility with EU law. The first German court dismissed Slovakia's challenge, and Slovakia appealed to a higher German court. That court considered the issue to be one of "considerable importance" given that EU law takes precedence over bilateral agreements between member states, and therefore referred the "compatibility" question to the CJEU in 2016 for a preliminary ruling on this issue.[7]

The CJEU Decision

The CJEU began its analysis by noting that EU law had "primacy" over the law of the member states, and that an international agreement such as the BIT could not affect the allocations of EU powers as set by the TFEU or the Treaty on European Union (TEU) (jointly, the Treaties).[8] It then turned to Articles 267 and 344, analyzing them together.

Article 267 authorizes the CJEU to interpret the Treaties, as well as to interpret and determine the validity of acts of the institutions, bodies, offices or agencies of the EU. Additionally, when such a question is before a "court or tribunal" of an EU member state (such as the German court in Achmea), Article 267 authorizes (but does not require) the court or tribunal to request a ruling on the question from the CJEU. This procedure has been described as the "keystone" of the EU judicial system, as it helps secure uniform interpretation of EU law.[9] Article 344 of the TFEU provides that "Member States undertake not to submit a dispute concerning the interpretation or application of the Treaties to any method of settlement other than those provided for therein."The CJEU and member states' courts are methods provided for in these two treaties, but investor-state arbitral tribunals are not.  

Noting that a BIT tribunal may be called upon to interpret EU law, the CJEU analyzed whether there was any mechanism allowing the CJEU or an EU member state court to review EU law questions that might come before a BIT tribunal. Turning to the referral mechanism in Article 267, the CJEU considered whether the BIT tribunal would qualify as tribunal of a member state, such that it could refer EU law questions to the CJEU, thus providing a method of review set forth in "the Treaties" as required by Article 344. The CJEU concluded that the BIT tribunal was not part of the judicial system of either the Netherlands or Slovakia, stating that this was one of the principal reasons that Article 8 was included in the BIT. Thus, the BIT tribunal was not capable of utilizing Article 267's referral procedure. 

The CJEU then noted that an arbitral tribunal's award might be subject to review by a member state court, as it was by the German court in this case, and it thus considered whether such a review might serve to ensure compliance with EU law. The CJEU noted that review by a member state's court could only occur to the extent authorized under that state's domestic law and that German law only provides for a limited review. It concluded that this limited review "could prevent [BIT] disputes from being resolved in a manner that ensures full effectiveness of EU law." 

Lastly, although not included in the referral questions, the CJEU also considered how Articles 2 and 4(3) of the TEU affected its resolution of the issue. The CJEU stated that the common values of the EU as set forth in Article 2 implied a "mutual trust" between member states, and further stated that the "principle of sincere cooperation" as set forth in Article 4(3) of the TEU required member states "to ensure in their respective territories the application of and respect for EU law." The tribunal concluded that Article 8 of the BIT called into question "mutual trust" between member states, and was incompatible with the "principle of sincere cooperation."[10]

In light of these considerations, and given the primacy of EU law, the CJEU ruled that "Articles 267 and 344 must be interpreted as precluding a provision in an international agreement concluded between two Member States, such as Article 8 of the BIT, under which an investor from one of those Member States may, in the event of a dispute concerning investments in the other Member State, bring proceedings against the latter Member State before an arbitral tribunal whose jurisdiction that member State has undertaken to accept."[11]

The Achmea case garnered considerable attention within the EU, with sixteen member states appearing before the CJEU to take a position on the issue. Germany, France, the Netherlands, Austria, and Finland all contended arbitrations under intra-EU BITs were compatible with EU law, whereas the Czech Republic, Estonia, Greece, Spain, Italy, Cyprus, Latvia, Hungary, Poland, and Romania all agreed with Slovakia that they were not. The European Commission, the executive branch of the EU, also argued that such arbitrations were not compatible with EU law. However, Advocate General Melchior Wathelet came to the opposite conclusion. An Advocate General, when called upon to make a submission, is charged with assisting the CJEU by providing independent legal analysis.[12]

Implications of the Achmea Decision for Investment Arbitration 

The Achmea decision raises significant questions about investment arbitration for EU member states going forward, as well as for arbitrations involving EU and non-EU parties. The language of the operative portion of the judgment was not limited to the BIT in question, or even to BITs at all. Indeed, read literally, the judgment applies to "an international agreement concluded between Member States, such as Article 8." 

At a minimum, the CJEU decision would appear to apply to all 196 intra-EU BITs. Since at least 2015, the European Commission has called on member states to terminate their intra-EU BITs,[13] and as noted by Advocate General Wathelet, the Commission has intervened as amicus curiae in numerous arbitrations to argue that the intra-EU BITs are incompatible with the TFEU, although arbitral tribunals have "systematically rejected" that position.[14] Achmea has provided the European Commission with new authority for its future interventions.

Further, the decision would also seem to apply to the Energy Charter Treaty (ECT), at least as between EU member states. The ECT is a multilateral treaty governing energy matters, and it has over fifty parties from Europe and other parts of the world. Article 26 of the ECT provides for investor-state arbitration, and every EU member state except Italy is a party to the ECT.[15]

More broadly, the issue raised by the CJEU, that an investment arbitration might result in the lack of effectiveness and uniformity of EU law, might occur when an EU member state is a respondent in any BIT arbitration, not just pursuant to intra-EU BIT ones. The United States has nine BITs with EU member states,[16] and if U.S. investors were to bring claims before an arbitral tribunal pursuant to any of these BITs, the potential for EU law to be interpreted or applied also exists. Although the CJEU did not refer to the principles of "mutual trust" and "sincere cooperation" from TEU Articles 2 and 4(3) in the operative portion of its judgment, the fact that these were discussed in its reasoning may be a basis for it to limit the scope of its judgment to intra-EU BITs, should it confront the issue in the future.

Beyond investment arbitration, the CJEU's judgment might be read to encompass any arbitration where EU law might be interpreted or applied. After British Prime Minister Theresa May identified an independent arbitration mechanism as one of the five foundations underpinning the United Kingdom's future relationship with the EU, a U.K. House of Commons Briefing Paper stated that "[a]rbitration, meanwhile, must be very specifically constructed in order meet the CJEU test" in Achmea.[17] Undoubtedly the Achmea judgment will be the source of much debate with respect to arbitration and the EU in the future.

About the Author: John I. Blanck is an Attorney Adviser at the U.S. Department of State. The views expressed here are his own, and do not necessarily reflect those of the U.S. government.

[1] Case C-284/16, Slovak Republic v. Achmea BV (Mar. 6, 2018), [hereinafter Achmea Judgment]

[2] Consolidated Version of the Treaty on the Functioning of the European Union, 2008 O.J. C 115/47, available at [hereinafter TFEU].

[3] The BIT entered into force in 1992, and is available at

[4] Achmea Judgment, supra note 1, ¶¶ 60, 63.

[5] Opinion of Advocate General Wathelet (AG Wathelet Opinion), Case C-284-16, Slovak Republic v. Achmea BV (Sept. 19, 2017), [hereinafter AG Wathelet Opinion]. 

[6] The tribunal's two decisions are available at

[7] Achmea Judgment, supra note 1, ¶¶ 6–14.

[8] "[T]he treaties" are defined as the TFEU and the TEU. TFEU, supra note 2, art. 1(2); Consolidated Version of the Treaty on European Union, 2010 O.J. C 83/01 [hereinafter TEU].

[9] Achmea Judgment, supra note 1, ¶ 37.

[10] Id. ¶¶ 34, 58.

[11] Id. ¶¶ 38–60.

[12] TEU, supra note 8, art. 19; Statute of the CJEU, art. 49, available at

[13] EU Press Release, Commission asks Member States to Terminate Their Intra-EU Bilateral Investment Treaties (June 18, 2015),

[14] AG Wathelet Opinion, supra note 5, at 3.

[15] The text of Energy Charter Treaty (ECT), as well as a list of ECT parties, is available at

[16] The United States has BITs in force with Bulgaria, Croatia, the Czech Republic, Estonia, Latvia, Lithuania, Poland, Romania, and Slovakia:

[17] U.K. House of Commons Briefing Paper, Brexit: New Guidelines on the Framework for Future EU-UK Relations, at 71, 73 (Apr. 19, 2018), available at