Revue - Les Cahiers de l'Arbitrage N°1-2023 - 72

ARTICLES - DEBATES
[I]t must be concluded that [the arbitration provision of the] ECT must be
interpreted as not being applicable to disputes between a Member State and an
investor of another Member State concerning an investment made by the latter
in the first Member State. 47
Shortly thereafter, the CJEU proceeded to abandon the apparent carve-out in
Achmea for international commercial disputes as well. In the case of PL Holdings
v. Poland, 48
the Court was faced with an award in favor of a Luxembourg investor
against Poland. There, Poland appeared in the arbitral proceeding without raising
an intra-EU objection, though it did so belatedly. When it sought annulment of the
award rendered against it, a Swedish court at the seat declined to annul the award
on the ground that Poland had essentially waived the objection by failing to raise
it on a timely basis. The Swedish High Court on appeal asked the CJEU whether
the Achmea ruling nevertheless required that the award be annulled since the
tribunal's jurisdiction arose from an intra-EU BIT. The CJEU adopted an unusual line
of reasoning, finding that, while the BIT was invalid, Poland nevertheless agreed
to arbitrate the dispute. For the CJEU, this fact effectively transformed the BITbased
arbitration into a contract-based one that the Court chose to characterize as
ad hoc. 49
The Court then held that the same principle that invalidated intra-EU BITs
under Achmea also invalidated agreements by which a Member State submitted to
arbitration an investment claim brought by a national of another Member State:
To allow a Member State, which is a party to a dispute which may concern
the application and interpretation of EU law, to submit that dispute to an
arbitral body with the same characteristics as the body referred to in an invalid
arbitration clause contained in an international agreement such as the [BIT in
Achmea], by concluding an ad hoc arbitration agreement with the same content
as that clause, would in fact entail a circumvention of the obligations arising
for that Member State under the Treaties ... as interpreted in ... Achmea. ...
[I]t follows both from ... Achmea ... and from the principles of the primacy
of EU law and of sincere cooperation, not only that the Member States cannot
undertake to remove from the judicial system of the European Union disputes
which may concern the application and interpretation of EU law, but also that,
where such a dispute is brought before an arbitration body on the basis of an
undertaking which is contrary to EU law, they are required to challenge, before
that arbitration body or before the court with jurisdiction, the validity of the
arbitration clause or the ad hoc arbitration agreement on the basis of which the
dispute was brought before that arbitration body. ...
Any attempt by a Member State to remedy the invalidity of an arbitration clause
by means of a contract with an investor from another Member State would
run counter to the first Member State's obligation to challenge the validity
of the arbitration clause and would thus be liable to render the actual legal
47. Case C-741/19, Republic of Moldova v. Komstroy LLC, ECLI:EU:C:2021:655, ¶¶ 64-66
(Sept. 2, 2021) [hereinafter Komstroy].
48. Case C-109/20, Republic of Poland v. PL Holdings Sarl, ECLI:EU:C:2021:875 (Oct. 26, 2021)
[hereinafter PL Holdings].
49. See Id. ¶ 38. The Court did not use the term ad hoc in the usual way, i.e., denoting an
arbitration not administered by an institution, but rather denoting an arbitration that, unlike most
BIT-based arbitrations, was to be treated as not so based.
70
The Paris Journal of International Arbitration 2023‑1

Revue - Les Cahiers de l'Arbitrage N°1-2023

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