On 22 April 2021, Advocate General Kokott issued her opinion on the preliminary reference referred by the Swedish Supreme Court in Poland v PL Holdings SARL (Case C‑109/20).
The case concerns the compatibility of intra-EU investment arbitration, but with a twist. The Swedish Supreme Court (SSC) did not ask whether the investor-state dispute resolution (ISDS) provision in the 1987 BLEU – Luxembourg (intra-EU) BIT as such, is compatible with EU law. Instead, the question is whether, despite the assumed incompatibility of that treaty provision, a Member State can (still) enter into an ‘individual’ arbitration agreement with an investor, for instance by concluding a contract, or by omitting to challenge the jurisdiction of the arbitral tribunal in time.
Essentially, the CJEU is asked to clarify its reasoning in para. 55 of the Achmea judgment on the (criticised and confounding) distinction between investment arbitration and commercial arbitration and on the consequence of a Member States’ lack of objection to jurisdiction under treaty arbitration. The importance of this question is obvious as regards the many contract-based investment arbitrations, but it is equally important and arguably more controversial as regard Member States’ ability to engage in (either commercial or investment) arbitration.
It has often been said that Achmea is not really about investment arbitration. Following AG Kokott’s opinion, it seems that neither is Poland v. PL Holdings. Her opinion adopts a constitutionally expansive reasoning and proposes a standard of review that is hardly in line with international arbitral practice. However, the reasoning does appear consistent with the CJEU’s construction of the constitutional EU judicial system. If the CJEU follows the AG’s opinion, Poland v. PL Holdings might well become even more (in)famous than Achmea and define the co-existence of the EU legal order with arbitration.
After a brief summary of the factual background, this post addresses the key points of the Advocate-General’s reasoning against the backdrop of the Achmea judgment, followed by a brief appraisal of the potential importance and consequences if the CJEU were to follow the reasoning of AG Kokott.