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Trade | 13 December 2021

The Future of Arbitration under the Energy Charter Treaty

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The Future of Arbitration under the Energy Charter Treaty

This legal briefing explains how the implications of the Komstroy ruling, alongside other recent CJEU decisions, on pending and future intra-EU ISDS claims.

While the Komstroy decision may not, on its own, stop pending proceedings or prevent future investor-State disputes from arising in the EU, it does increase the barriers to recognition and enforcement of awards issued in intra-EU arbitration.

The briefing examines how these awards may be challenged following Komstroy, the potential obstacles to their enforcement in the EU, including the obligation of national courts to abide by EU law as set forth by the CJEU, and the possibility that EU state aid rules prevent payment of awards.

It considers how investment arbitrators, ad hoc panels in charge of annulment proceedings before ICSID, or domestic courts in set aside or enforcement proceedings may react to recent EU case law.

It also discusses what the Komstroy ruling leaves open - namely, the risk that intra-EU ECT awards could be enforced outside the EU - as well as the possibility that investor-State disputes continue to arise under the ECT regardless of recent CJEU jurisprudence.