Ares 2021 5792228 redacted.pdf

Ref. Ares(2022)3198783 - 25/04/2022

3.  The legal basis for seeking such a declaration are the judgments of the Court of Justice
in  Slowakei  v Achmea1 and in République de Moldavie v  Komstroy2. There is a
precedent for such a declaration in a judgment of the Higher Regional Court of
Frankfurt.3
4.  With the exception of proceedings concerning competition law and State aid law,
which are governed by specific texts of secondary Union law, the Commission does
not intervene as amicus curiae before the courts and tribunals of the EU Member
States. That is because courts and tribunals of the EU Member States are, pursuant to
Article 19(1) TEU, the ordinary judges of Union law, and have the possibility and,
under certain circumstances, the obligation to refer questions of interpretation and
application of Union law to the Court of Justice for a preliminary ruling, pursuant to
Article 267 TFEU.
5.  The situation is different for courts and tribunals of third countries, as well as
arbitration tribunals. Those cannot make a preliminary reference to the Court of
Justice. Therefore, the Commission may appear before those instances on behalf of
the Union as amicus curiae, in the exercise of its powers of external representation of
the Union pursuant to Article 17(1) TEU.
6.  Concerning the litigation pending before the Higher Regional Court of Cologne, the
Commission draws your attention to the following elements, which may be of
relevance for those proceedings.
7.  In République de Moldavie v Komstroy, the Court of Justice has given a final and
binding interpretation of Article 26 ECT. It is competent to do so, because the ECT,
as an international agreement to which the Union is a party, is part of EU law.4 It held
that that Article 26(2)(c) ECT must be interpreted as not applying to disputes between
a Member State and an investor of another Member State.5

1   Case C-284/16, 6 March 2018, EU:C:2018:158.
2   Case C-741/19, 2 September 2021, EU:C:2021:655.
3
Judgment of the OLG Frankfurt of 11.02.2021, reference 26 SchH 2/20,
ECLI:DE:OLGHE:2021:0211.26SCHH2.20.00.
4   Case C-741/19, 2 September 2021, EU:C:2021:655, para 23, with further references.
5   Ibidem, para 66.
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8.  That conclusion flowed from the unique nature of the EU legal order, and the need to
ensure the integrity of the EU judicial system and consistency and uniformity in the
interpretation and application of EU law. It is based on the premise, set out by the
Court of Justice in its earlier judgment in Slowakei v. Achmea, that intra-EU
arbitration would violate core elements of EU law, in particular the principles of
autonomy of EU law and of mutual trust between the EU Member States, as well as
the fundamental tenets of the EU judicial system.6 Therefore, it is impermissible.
9.  Under Article 344 TFEU, the EU Member States, i.e. including the Federal Republic
of Germany and the Kingdom of the Netherlands, have entrusted the Court of Justice
with the task of rendering final and binding interpretations of EU law. Crucially, that
includes the interpretation of international agreements to which the EU and its
Member States are a party, insofar as their application between two EU Member
States is concerned.7 As a result of the direct application of EU law in the legal orders
of the EU Member States, that interpretation by the Court of Justice is also binding
on companies incorporated in the EU, such as RWE AG.8
10.  If a company attempts nevertheless to initiate intra-EU investor-State arbitration
pursuant to Article 26 ECT, it acts in violation of that provision, and in violation of
fundamental rules of Union law. Those rules also form part of the ordre public of
each EU Member State and must be upheld by national courts when dealing with
arbitration proceedings.9
11.  In  Matteucci, concerning precisely bilateral international obligations between EU
Member States, the Court of Justice recalled that it follows from the principle of loyal
cooperation (enshrined today in Article 4(3) TEU) that “if the application of a
provision of Union law is liable to be impeded by a measure adopted pursuant to the
implementation of an international agreement, even where the agreement falls outside
the field of application of the Treaty, every Member State is under a duty to facilitate

6   Ibidem, paras 40-65.
7   Case C-459/03, Commission v Ireland (“Mox Plant”), 30 May 2006, EU:C:2006:345, paras 121-133.
8   See, for an illustration of the principle that the EU treaties and general principles of EU law apply
directly between private parties and can create obligations for private parties, Case C-415/93, Bosman,
15 December 1995, EU:C:1995:463, paras 82-87.
9   See, to that effect, Case C-284/16, Slowakei v Achmea, 6 March 2018, EU:C:2018:158, para 54, with
further references.
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the application of the provision and, to that end, to assist every other Member State
which is under an obligation under Community law.” If no other solution can be
found, that may include disapplying the provision of such an international agreement,
based on the principle of precedence of Union law.10 That duty of loyal cooperation
extends to the all organs of the State, including the judiciary.
12.  By bringing the action under § 1032(2) of the German Code of Civil Procedure, the
Kingdom of the Netherlands seeks the assistance of the German courts in order to
comply with its obligations under Articles 19(1) TEU, 267 and 344 TFEU and the
principles of mutual trust and autonomy of Union law. Those obligations preclude
any investor-State arbitration proceedings between an investor from one EU Member
State and another EU Member State.
13.  It follows from your letter that in that context, a question has arisen concerning the
relationship between the ICSID Convention and Union law. In particular, it would
seem that it has been argued that the fact that RWE AG has launched investor-State
arbitration relying on the procedural rules of the ICSID Convention, rather than on
UNCITRAL rules11, deprives the German courts of jurisdiction under § 1032(2) of
the German Code of Civil Procedure.
14.  As a preliminary point, it is important to stress that the ICSID Convention is not part
of Union law, for the following reason: The Union is not a contracting party to the
ICSID Convention. The ICSID Convention therefore could only be part of Union law
if two cumulative conditions were met: if all EU Member States were parties to it,
and if there had been a full transfer of the powers previously exercised by the EU
Member States to the Union.12 Poland is not a contracting party to the ICSID
Convention, so that the first of those two cumulative conditions is manifestly not met.
The ICSID Convention hence is not part of Union law.
15.  Rather, the ICSID Convention is an international convention to which 26 of the 27
Member States are party.

10   Case 235/87, EU:C:1988:460, paras 19 and 22.
11   As was the case in the case decided by the Higher Regional Court of Frankfurt, quoted in footnote 3.
12   See  judgments  in  Intertanko, C-308/06, EU:C:2008:312, para 49; and in Commune de Mesquer, C-
188/07, EU:C:2008:359, para 85.
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16.  Just like for the ECT, the ICSID Convention creates a bundle of bilateral international
obligations between the home State of the investor and the responding State.
Therefore, just like for all other multilateral treaties which create international
obligations that can be “bilateralised”, rights of third countries are not at stake where
a situation is a purely intra-EU situation.13 The CJEU has confirmed such
“bilateralisation” for numerous multilateral treaties;14 there is no reason to exempt
the ICSID Convention from this rule.15
17.  As a result, possible international obligations created by the ICSID Convention
between the Kingdom of the Netherlands and the Federal Republic of Germany have
to be treated in the same manner as the bilateral international obligations between the
Kingdom of Belgium and Germany at stake in Matteucci: First, they have to be
interpreted, as much as possible, in conformity with Union law. Second, if such
interpretation in conformity is not possible, the national judge has to disapply them,
based on the principle of primacy of Union law.
18.  Interpretation in conformity of the relevant provisions of the ICSID Convention
seems possible. In particular, according to its Article 25, the ICSID Convention only
applies where the Contracting Party has given consent to arbitration in a separate
instrument, be that in a commercial contract or in an investment treaty. It is precisely
the existence of such consent that is contested in the proceedings brought on the basis
of § 1032(2) of the German Code of Civil Procedure. Should those proceedings
conclude that there is no consent to arbitration, the ICSID Convention would not be
engaged.

13   See, for a detailed analysis, Klabbers, Treaty Conflict and the European Union, CUP 2009, pp. 115-149.
14   Judgments in Ministère Public v Deserbais, 286/86, EU:C:1988:434 (Stresa Convention on Cheeses);
in RTE and ITP v Commission, C-241/91 P and C-242/91 P, EU:C:1995:98 (Berne Convention for the
Protection of Literary and Artistic Works); in Commission  v Austria, C-147/03, EU:C:2005:427
(Council of Europe Convention on the Equivalence of Diplomas); in Bogiatzi v Deutscher Luftpool et
al., C-301/08, [2009] EU:C:2005:427 (Warsaw Convention on International Carriage by Air); and in
République de Moldavie v Komstroy, concerning the Energy Charter Treaty. Indeed, in a context closely
analogous to that of the ICSID Convention, the Court has ruled that while Article 351(1) TFEU “allows
Member States to honour obligations owed to non-Member States under international agreements
preceding the Treaty, it does not authorize them to exercise rights under such agreements in intra-
Community relations” Judgment in Commission  v  Luxembourg, C-473/93, EU:C:1996:263, para 40,
concerning the Council of Europe Convention entitled “European Convention on Establishment” of
1955, which has been ratified by a certain number of EU Member States as well as non-Member States.
In particular, Norway ratified it in 1957.
15   See for a detailed analysis McGarry et Ostransky, Modifying the ICSID Convention under the Law of
Treaties, ejiltalk.org/modifying-the-icsid-convention-under-the-law-of-treaties.
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Electronically signed on 25/04/2022 11:52 (UTC+02) in accordance with Article 11 of Commission Decision (EU) 2021/2121