On 6 March 2018, the Grand Chamber of the Court of Justice of the European Union (“CJEU”) issued a judgement on the request submitted by the German Federal Court of Justice. The request for a preliminary ruling concerned the annulment proceedings over an award in the Slovak Republic v. Achmea case.
The dispute arose from legislative changes during the liberalization of the sickness insurance services. The Slovak government initiated the process of privatization of the sickness insurance market in 2004. Achmea, a Netherland based company, set therefore up a subsidiary in Slovakia and started its activities. However, in 2006, Respondent reversed some aspects of the privatization by restricting the distribution of generated profits.
As result, the Claimant filed a request for arbitration against the Respondent alleging multiple violations of the Netherlands-Slovakia bilateral investment treaty (“BIT”). The Respondent objected to the ratione voluntatis jurisdiction of the arbitral tribunal. It argued that after the State’s accession to the European Union, the BIT arbitration offer was no longer compatible with EU law. The arbitral tribunal rejected this argument in its award on jurisdiction, arbitrability and suspension in 2010 and ruled in favour of the Claimant on the merits in 2012. The Respondent started the set-aside proceedings under the German Code of Civil Procedure, namely on jurisdictional grounds, since the place of arbitration was Frankfurt, Germany. The German Federal Court of Justice decided to refer three questions to the CJEU. The questions concerned whether Article 344, 267 and 18 TFEU precludes respectively the application of an arbitration agreement of a BIT concluded before the State’s accession to the EU with relation to the dispute originating after such an accession.
In this judgement, the Grand Chamber answers positively on the two first questions and does not, therefore, consider the third. As a starting point of its reasoning, the CJEU recalls the importance of the common values of the EU, such as the principle of sincere cooperation, and the autonomy of the EU legal order. Then, the Grand Chamber underlines the importance of the dialogue of judges in preserving uniform interpretation of EU law. Turning specifically to the first and the second questions, the Grand Chamber emphasizes that the arbitration agreement based on the BIT requires interpretation and application of EU law. However, arbitral tribunals are not national judges and thus, they are unable to submit preliminary requests to the CJUE. The Court highlights that in this particular case the request was submitted only because the arbitral tribunal seated in Germany, EU Member State. It concludes that such an arbitration agreement is not compatible with the principle of sincere cooperation and, therefore, affects the autonomy of the EU legal order.