The European Court of Justice (award C-284/16 of March 6, 2018) established that the arbitration clauses set in Bilateral Investment Treaties (BITs) are incompatible with EU law because of their adverse effect on the autonomy of EU law.

The case under scrutiny involved the BIT between the Kingdom of the Netherlands and the Czech and Slovak Federative Republic of 1991 (succeeded by the Slovak Republic in 1993). The BIT provided for certain standards of treatment of the investments and the right for the investor to resort directly against the State (The Netherlands / Slovak Republic) in case of violation of the standards, before an international investment arbitration tribunal.

The Court stated that the submission of a dispute arising from the BIT to an arbitration tribunal undermines EU law and it has an adverse effect on the autonomy of the EU legal order. According to the Court, in fact, the arbitration tribunal is not only called to decide on the basis of the BIT, but also to interpret EU law. The arbitration tribunal, however, cannot resort to the preliminary ruling procedure in case of doubt, with the consequence that the European Court of Justice could not preside over the interpretation of EU law and granting its autonomy and primacy.


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dott.ssa Sophie Charlotte Monachini