Slovakia v. Eureko: German Federal Supreme Court Refers Question of Validity of BIT Arbitration Amongst Member States to the ECJ

von Peter Bert

Whether BIT arbitration between EU member states is permitted, as a matter of EU law, is heavily debated. The EU Commission strongly takes the view that there is no room for investment treaty arbitration amongst member states. As previously discussed here, the Commission has intervened in arbitrations in support of the position that the arbitral tribunal lacked jurisdiction to hear the dispute. Eureko v. Slovakia apparently is the first case where this issue has reached state courts, namely the courts in Germany. Earlier this week, in its second decision on the matter, the German Federal Supreme Court (Bundesgerichtshof), published its decision to refer the matter to the European Court of Justice (as I had expected it would). The Court clearly felt obliged to refer the matter to the European Court of Justice, but at the same time was very clear that in its opinion, investment treaty arbitration amongst member states is compatible with EU law.Here are the key facts and the procedural history in a nutshell: Eureko, a Dutch insurer, provided private health insurance in Slovakia. It alleged that changes in Slovakia’s regulatory regime for the private health insurance sector violated the BIT between the Netherlands and Slovakia. On that basis, Eureko commenced arbitration proceedings in October 2008. The arbitral tribunal was seated in Frankfurt am Main, Germany. In October 2010, the tribunal issued an interim award on jurisdiction (available on italaw.com). It found that Slovakia’s objections to the applicability of the arbitration clause were unfounded. Slovakia challenged the award on jurisdiction of the tribunal in the Frankfurt Court of Appeals (Oberlandesgericht). The Frankfurt court in May 2012 upheld the award (see here for comments). While the challenge to the award on jurisdiction was pending in the German courts, the arbitral proceedings progressed. In December 2012, an award on the merits was issued ...

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