Intra-EU Investment Dispute Settlement under the Energy Charter Treaty in Light of Achmea and Vattenfall: A Matter of Priority

Abstract

In 2012 a Swedish energy company, Vattenfall, challenged Germany's decision to phase out nuclear power in reaction to the 2011 Fukushima nuclear incident. The challenge was initiated as an investment arbitration under the Energy Charter Treaty (Vattenfall 11) before an ICSJD Tribunal in Washington. In a separate legal action, the constitutionality of the decision was questioned before the German Federal Constitutional Court, which decided the matter in December 2016. Based on recent developments in the field of international investment law and the judgment of the Court of Justice of the European Union in the case of Slowakische Republik v. Achmea BV, the dispute proves more complex than it seems prima facie. The Achmea judgment confirms that in intra-EU disputes, EU law overrides intra-EU BITs. Even further, such disputes should not be subject to the jurisdiction of international investment tribunals, with considerable ramifications for international investment arbitration under the Energy Charter Treaty. Vattenfall and Achmea serve as case studies to explain controversial issues of applicable law and jurisdiction in intra-EU investment disputes under the Energy Charter Treaty. Arguably, applying German law and EU law rather than international investment law leads to prioritizing public interest over legitimate expectations ofprivate investors, with significant implications in terms of compensation.