On 2 September 2021, the Grand Chamber of the Court of Justice of the European Union (the “CJEU”) issued a judgment in Case C-741/19, finding that the acquisition of a claim arising from a contract for the supply of electricity does not constitute an investment within the meaning of the Energy Charter Treaty (the “ECT”).
Although this was not an intra-EU dispute, as not concerning EU Member States, the Court took the opportunity to provide complementary clarifications on the famous Achmea decision. It ruled that the investor-State arbitration clause contained in the ECT does not cover intra-EU disputes.
Background on the case
The facts leading to this judgment relate to the claim raised by Komstroy, a Ukrainian company, against a Moldovan public entity which refused to pay its debts to the company in full. Following unsuccessful proceedings before courts in the Ukraine and Moldova, Komstroy initiated an arbitration procedure under the ECT.
The constituted ad hoc arbitral tribunal, seated in Paris, approved the application of the ECT and ruled in favor of Komstroy, ordering the Republic of Moldova to pay the amounts owed.
However, the latter succeeded in setting aside the award before the Paris Court of Appeal after raising that the disputed claim was not an “investment” within the meaning of the ECT and that arbitrators therefore lacked jurisdiction. 
The decision of the Paris Court of Appeal to set aside the award was subsequently overturned by the French Supreme Court.
A second Court of Appeal, to which the case was transferred afterwards, requested a preliminary ruling from the CJEU.
The Paris Court of Appeal’s request for preliminary ruling
Initially, the purpose of the request for preliminary ruling was to determine whether Article 1(6) and Article 26(1) of the ECT should be interpreted as meaning that a claim arising from a contract for the sale of electricity can constitute an “investment” within the meaning of the ECT. Yet, the CJEU used this opportunity to deal with a broader issue: the applicability of the arbitration clause contained in the ECT to intra-EU disputes.
The jurisdiction of the CJEU
The particularity of the case is that it involved two States that were not EU Member States (Moldova and Ukraine). This raised a question on the CJEU’s jurisdiction to provide answers to the referred questions.
To establish its jurisdiction, the CJEU first invoked its jurisdiction to interpret the acts of institutions, bodies, offices or agencies of the EU, such as international agreements approved by the EU Council which, as soon as they enter into force, form an integral part of the EU legal order. This was the case of the ECT, concluded by the EU Council pursuant to Articles 217 and 218 TFEU, therefore constituting an act of an institution. The CJEU also added that, as required, the subject of investments falls within the competence of the EU ratione materiae (§26).
The CJEU then underlined that, even if its jurisdiction did not extend to the disputes not falling within the scope of EU law (such as an action concerning a dispute between an investor of a non-member State and another non-member State) an exception is made:
(i) where the consistent interpretation of EU law is at stake; and
(ii) when the seat of arbitration is located within the EU territory (§34).
The CJEU’s answer to the question referred
In the wake of the Achmea ruling on 6 March 2018, the Court then recalled the autonomous nature of the EU legal system, the preservation of which would be jeopardized if arbitral tribunals applied and interpreted EU law while not being a component of the EU judicial system. The Court added that the control exercised by State courts over arbitral awards – which are final and binding – was far too limited by national laws, and could not guarantee the full effectiveness of EU law.
Based on these findings, the Court concluded that an arbitration clause in a multilateral treaty, such as the ECT, could not be applied to intra-European investment disputes.
The CJEU made an analogy with the Achmea judgment in which it prohibited intra-European investment arbitration in the framework of bilateral investment agreements, explaining that, despite the multilateral nature of the ECT, the dispute resolution clause contained in it is intended to govern bilateral relations between two of the contracting parties.
Reception of the judgment
Following publication of this judgment, the French Treasury Department drew the attention of national investors operating in the EU to the impact that this judgment may have and urged them not to initiate arbitrations against EU Member States under the arbitration clause contained in the ECT.
Some commentators also concluded that, as fewer claims will henceforth be brought against the EU member States by investors engaged in the fossil fuels industry, “the implementation of the ambitious European climate policies” will finally be “made easier“.
Implications for intra-EU investors
EU-based investors are urged to review their investments to ensure the possibility of obtaining and/or enforcing any future arbitral award.
- EU-based investors should provide for arbitration agreements based outside the EU;
- If possible, EU-based investors should structure their investment through non-EU vehicles and covered by extra-EU Bilateral Investment Treaties;
In any event, and for enforcement purposes, intra-EU investors should identify assets belonging to the Member State in which they are investing that are not covered by immunity and are located outside the EU.
 Article 1520 of the French Code de procédure civile (Code of Civil Procedure) lays down the conditions for bringing an action for annulment against an arbitral award handed down in France. Article 1520(1) of the same Code provides that an action for annulment is available where the arbitral tribunal wrongly declared itself to have or not to have jurisdiction.
 Article defining the notion of “investment” pursuant to the ECT.
 Article related to the Settlement of Disputes between an Investor and a Contracting Party.
 Treaty on the Functioning of the European Union
 The CJEU stated that, since the Treaty of Lisbon came into effect, the EU has had exclusive competence on foreign direct investment pursuant to Article 207 TFEU, and shared competence on indirect investment (Opinion 2/15 (EU-Singapore Free Trade Agreement) of 16 May 2017).
 The CJEU reminds that the State courts of the seat of the arbitration, having jurisdiction to set aside the award, are obliged to apply EU law pursuant to Art. 19 TEU.
 The second part of the CJEU’s judgment, which relates to the concept of an investment under the ECT, is not dealt with in this article.
 CJEU, judgment of 6 March 2018, case C-284/16