We are fast approaching summer holidays and whether you will be relaxing under a beach umbrella or ‘enjoying’ the air conditioning in the office, here is a quick reading to keep you up to speed on the recent developments in international investment law, public policy and ISDS and to suggest for you some readings and films to unwind with this summer.

The Energy Charter Treaty

In April, the European Union and Euratom gave the “final green light” for their withdrawal from the Energy Charter Treaty (ECT). In a similar fashion, at the end of May, the Depositary of the Secretariat of the Energy Charter Treaty has announced the United Kingdom Written notification of withdrawal from the Energy Charter Treaty (the withdrawal shall take effect on 27 April 2025), and Spain Written notification of withdrawal from the ECT (the withdrawal shall take effect on 17 April 2025). While the future of the ECT remains uncertain, we continue to welcome submissions on the topic, such as the recent blog post by Nikos Lavranos in which the author argues that “Saving the Modernized Energy Charter Treaty Helps Save the Climate”.

On June 26, 2024, the representatives of the Member States and the European Union agreed to accompany the exit from the ECT with a Declaration on the legal consequences of the judgment of the Court of Justice in Komstroy and common understanding on the non-applicability of Article 26 of the Energy Charter Treaty as a basis for intra-EU arbitration. As the Declaration of the Representatives of the Governments of the Member States on the Legal Consequences of the Judgment of the Court of Justice in Achmea and on Investment protection in the European Union, signed the Member States’ final step to terminate the intra-EU BITS (right before the execution of the Agreement for the termination of Bilateral Investment Treaties between the Member States of the European Union), the Komstroy Declaration signs the Member States and EU’s final steps to exit the Energy Charter Treaty. Notably, Hungary issued its own Declaration, in which it suggests that intra-EU arbitration under the ECT should only be terminated prospectively, rather than retrospectively.

Intra-EU Awards, Their Enforcement and Related Issues

In May, two arbitral tribunals delivered decisions in the Spanish Renewable Energy Saga cases. First, in Mitsui v. Spain the tribunal issued the decision on jurisdiction and liability finding against Spain, and preceding the case to the damages phase. Similarly, in Canepa v. Spain having set the direction on quantum back in October, the tribunal issued its award on 30 May.

One of the more exciting developments in intra-EU ISDS was the announcement in early June of a new claim brought by Bulgarian investors against Romania. The two States have previously terminated the BIT between them under the Termination Agreement (Agreement for the Termination of Bilateral Investment Treaties between the Member States of the European Union). In the same period, more precisely on 13 June, the arbitral tribunal rendered its award in Nova v. Romania after eight years since the proceedings started. Romania won this case which became another national saga as Micula and Gabriel Resources. The case was under The Netherlands – Romania BIT (currently terminated after the ratification of the Termination Agreement by Romania in March 2022). The award is yet to be published.

While arbitral tribunals continue to issue awards, including in intra-EU disputes, domestic courts continue to grapple with proceedings brought in front of them relating to validity and enforcements of those awards. Thus, Italy has recently won two important battles in front of the Svea Court of Appeal. The Court of Appeal granted two petitions to declare invalid SCC Arbitration Institute awards rendered in favour of Athena Investments and Novenergia, and CEF Energia. A similar judgment was reached by the Svea Court of Appeal in early April in Triodos v. Spain. However, for national courts outside the EU, such as Switzerland, there is no reason to give EU law precedence over the ECT. Spain has once again lost in front of a national court regarding one of its renewable energy cases (EDF v Spain). As discussed by Guofang Xue on our blog, the Swiss Supreme Court weighed in on Achmea and Komstroy, holding that the arbitral tribunal has the jurisdiction over intra-EU disputes based on Article 26 ECT, and that there was no reason to give EU law precedence over the ECT. Similarly, the US Court of Appeal for the District of Columbia Circuit upheld the enforcement of the Award rendered in the case Micula v. Romania, on the grounds that the lower court properly “exercised jurisdiction under the FSIA arbitration exception, and it was obligated by Section 1650a to enforce the Miculas’ valid ICSID award.”

With regards to enforcement of ISDS awards, in June, ICSID published an interesting “background paper” titled Compliance with and Enforcement of ICSID Awards (“Report”). The 104-page report provides a overview of the ICSID Convention’s regime for compliance and enforcement and, by means of empirical data, including summaries and quotes from domestic court decisions, it aims to show how the regime is a “key feature of the ICSID Convention and one of the reasons why users prefer ICSID arbitration over other dispute resolutions option” (Report, p. 62).

Significant Climate-related and Other Cases

The second quarter of 2024 was rather busy for those following the developments in climate-related case law.

The Koch v. Canada award was made public in early April. Therein Canada secured (another) jurisdictional win in a climate-related case brought by US investors and related to emissions trading in secondary market. The tribunal found that emission allowances did not constitute property under Ontario’s law as to satisfy the requirement of ‘investment’ under Chapter XI of NAFTA. Having dismissed the claim on jurisdictional grounds, the tribunal naturally did not address the merits and ultimately ordered the parties to bear their own costs.

On 7 May the eagerly awaited award in Gabriel Resources v. Romania was made public. Romania has succeeded in fending off a claim brought by Canadian/Jersey investors, and was even awarded costs. The tribunal majority dismissed the claim that in failing to issue an environmental permit necessary for the investors’ gold and silver mines, Romania had breached its FET obligations under the applicable BITs (with the UK and Canada). The win for Romania represented a huge success for its people – as we learnt in our lovely “Young EFILA in Conversation with… Stela Negran”, who assisted on the case as a LALIVE trainee.

Climate change and the treatment thereof by courts and tribunals continue to provide ample material for academic and practice-related discussions. In April, we welcomed a hugely helpful contribution from Stephanie Collins and Alexa Romanelli titled “Climate Change Cases Before the European Court of Human Rights: Where Are We Now and Where Might We Be Heading?” We are looking forward to publishing more on the topic in the upcoming months. The climate crisis is ought to affect all fields of economic activity, not least oil & gas investments, about which Stanislava Nedeva talked to us in another installment of “Young EFILA in Conversation with…” Indeed, regarding oil & gas investments, we are looking forward to learning more about a recent award which reportedly saw Uniper secure more than EUR 13 billion in damages from Gazprom, following latter’s breach of gas supply contracts after Russia’s full-scale invasion of Ukraine.

Events and Conferences

The 9th EFILA Annual Conference took place on 25 April 2024 at Clifford Chance in Frankfurt. As always, prior to the main conference Young EFILA has organised its pre-conference discussion, hosted by Luther Frankfurt. This year a stellar Young EFILA panel (of Karolina Latasz, Ridhi Kabra, Rüdiger Morbach and Sebastian Wuschka, and moderated by Tino Schneider) discussed “The Intersection of Geopolitics and Investment Treaty Arbitration”, covering a wide range of topics from legal warfare under the Ukraine-Russia BIT, to investor-State disputes relating to critical minerals.

On the front of ISDS reform, the work of the UNCITRAL Working Group III (Investor State Arbitration) over the reform of ISDS continued in April 2024. The 48th session of UNCITRAL Working Group III took place in New York from 1 to 5 April 2024. We were very glad to have had Cristian Gallorini attend the session and report back to us. While a consensus on the Advisory Centre was reached, significant work remains to be done on the draft statute on a standing mechanism. Disagreements also persist on the draft guidelines on prevention and mitigation of international investment disputes. The revision of the draft statute of a standing mechanism for the resolution of international investment disputes (A/CN.9/WG.III/WP.239) will continue in the next meetings of the WGIII. The next session and intersessional meetings will tentatively be held as follows.

• 23-27 September 2024 (Vienna)
• 24 and 25 October 2024 (Intersessional Meeting in China).
• 20–24 January 2025 (Vienna).
• Early March 2025 (Intersessional Meeting in the Republic of Korea)
• 7–11 April 2025 (New York)

On a Final Note…

We would like to wish you all a pleasant and hopefully, relaxing (and sunny) summer! For those looking to pick up a book or a film to wind down with, our editors have come up with some suggestions. For anyone looking to pick up reading-for-fun after a little bit of a hiatus, Agata Daszko recommends a short but impactful novel Open Water by Caleb Azumah Nelson, a British-Ghanaian writer and photographer. Cristian Gallorini would invite the readers to check out “The Tribunal” a short film directed by Malcolm Rogge and created in partnership with Columbia Center on Sustainable Investment (CCSI). Özge Varış recommends “Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity”, a book by Daron Acemoglu (the co-author of the famous “Why Nations Fail”) and Simon Johnson. Ioana Bratu highly recommends “Breaking Through: My Life in Science” by Katalin Karikó, who won the Nobel Prize in Medicine in 2023. This fascinating memoir details the journey of a woman who devoted her life to studying the mRNA. Her story begins in communist Hungary and leads to groundbreaking advancements in the development of the Covid vaccine. Meanwhile, Mark Konstantinidis recommends “Kinds of Kindness”, the latest film by a fellow Greek, Yorgos Lanthimos. Finally, Anastasia Choromidou selects Trust by Hernan Diaz, a retelling of the same story through multiple narratives and time periods, set against the backdrop of New York City.

We wish all our readers a peaceful and enjoyable summer!

EFILA Blog Editorial Board

***This quarterly review was prepared by Cristian Gallorini and Agata Daszko, with assistance from the rest of the Editorial Board***