The first quarter of 2025 has been marked by sustained activity and significant developments in the field of investment law and arbitration. The ongoing dynamics surrounding the modernization of the Energy Charter Treaty (ECT) and the progressive withdrawal of EU Member States (and the EU itself) from the ECT have continued to shape the legal and political landscape at the beginning of the year. Meanwhile, several decisions have reaffirmed the impact of Achmea and Komstroy in intra-EU disputes, once again showing that Achmea is leaving little to no room for arbitral tribunals’ exercise of their Kompetenz-Kompetenz. Equally significant, the first three months have seen progress in UNCITRAL Working Group III, reforms to arbitration rules in Spain and England, and an evolving debate on the compatibility of sports arbitration with EU law.
The Modernization of the Energy Charter Treaty
The parallel developments of the modernization of the ECT and the withdrawal from the ECT by the EU Member States (and the EU itself) continued to draw attention in the first quarter of 2025.
The adoption by non-EU contracting States of the modernized ECT at the end of December 2024, caused Estonia, Finland, Lichtenstein, Belgium, and Lithuania to inform the Energy Charter Secretariat of their intention not to be bound by the modernized ECT text on a provisional basis. Meanwhile, on 10 January 2025, the termination of the provisional application of the ECT took effect for Norway, 60 days after its official notification to the ECT Secretariat in November 2024. As recently noted by Lavranos the consequences of the coexistence of two ECT texts would inevitably lead to “legal uncertainty and fragmentation.”
Intra-EU Disputes Case Law Update
On 12 February 2025, European Solar Farms A/S (ESF) filed an application for annulment of the ICSID award rendered in its dispute against Spain (ICSID Case No. ARB/18/45). The annulment request is currently pending before an ad hoc committee constituted under Article 53 of the ICSID Convention. In the original arbitration proceeding, the tribunal declined jurisdiction over ESF’s claims, accepting Spain’s intra-EU objection. The decision on jurisdiction aligned with the Court of Justice of the European Union’s (CJEU) judgments in Achmea, Komstroy, and PL Holdings, which held that intra-EU investor-state arbitration under the ECT is incompatible with EU law. Yet, the specific grounds on which ESF has filed for annulment have not been made public.
On 24 March 2025 the European Commission found that the arbitration award in Antin v Spain (which ordered Spain to pay compensation in favour of Antin) is illegal and incompatible State aid. The decision marked the next step in the invalidity of intra-EU disputes under the ECT initiated in 2021 by the CJEU’s judgment in Komstroy. The argument is not new nonetheless. Rather, it retraces the reasoning adopted by the Commission in the Micula decision. Indeed, as in those intra-EU disputes based in intra-EU BITs, the Commission has been playing a central role in the enforceability of intra-EU disputes under the ECT: although ICSID tribunals remain skeptical in granting intra-EU objections under Achmea or Komstroy, the Commission keeps negating implementation, payment, or execution of an intra-EU award by a EU Member State, ruling that those measures would breach Articles 107 and 108 Treaty on the Functioning of the European Union (TFEU).
On 27 March 2025, the Bundesgerichtshof (German Federal Court of Justice) refused to enforce an intra-EU costs award in favor of the Czech Republic and against German investors (Order No I ZB 64/24). The BGH based its decision on the holding in Achmea according to which arbitration agreements in intra EU-BITs are incompatible with EU law. Although it acknowledged that states generally act in bad faith if they challenge arbitration only after losing, the BGH held that the primacy of EU law bars the application of such a principle in this case. It thus concluded that no part of an arbitral award based on an invalid intra-EU arbitration agreement can be enforced, even if it benefits the Member State. The BGH reached its conclusion on a three-step analysis. First, it reasoned that the arbitration clauses were invalid for intra-EU disputes because they conflict with EU legal principles, particularly the autonomy of EU law and loyal cooperation among Member States. It then suggested that the costs award depended on the tribunal’s jurisdiction, which was itself based on invalid ISDS clause, and thus could not be separated from the unenforceable merits decision. The BGH lastly affirmed that allowing enforcement of the costs award would undermine the primacy of EU law, even if the tribunal ruled in favor of the state. In sum, the Order adds another chapter to the “Achmea fallout”.
The UNCITRAL Working Group III
On 7–11 April 2025, during its 51st session (second part) held in New York, UNCITRAL Working Group III continued its discussions on the establishment of a Multilateral Investment Court (MIC) and addressed various procedural and cross-cutting issues.
Other Significant Developments in the Field of International Arbitration
On 1 January 2025 entered into force the Madrid Court of Arbitration/Corte de Arbitraje de Madrid (CAM) new arbitration rules. The CAM rules, unveiled at the end of last year, aim to enhance efficiency, transparency, and flexibility in arbitral proceedings. These reforms reflect CAM’s commitment to increase Madrid’s attractiveness as an arbitral seat (especially disputes connected with Latin American countries), aligning with international best practices and responding to the evolving needs of arbitration users.
In an opinion delivered on 16 January 2025 in the Case C‑600/23 Advocate General Tamara Ćapeta addressed the compatibility of sports arbitration awards with EU law. The case involved Royal Football Club Seraing, which faced disciplinary measures from FIFA for violating rules prohibiting third-party ownership of players’ economic rights. The club challenged the enforceability of a Court of Arbitration for Sport (CAS) award, arguing it breached EU law. Advocate General Ćapeta opined that the principle of effective judicial protection requires that national courts have full jurisdiction to review such arbitration awards to ensure compliance with EU law. She distinguished sports arbitration from commercial arbitration, noting that the mandatory nature of sports arbitration clauses necessitates broader judicial oversight to protect the rights of EU sport actors. FIFA, as many other sport federations, provides for a mandatory, and to certain extent self enforcing, dispute resolution systems. Moreover the CAS is seated in Lousanne, outside of the EU, excluding from the review of the award under Article V(b)(2) New York Convention, EU public policy. While the opinion emphasizes the need for accessible judicial remedies within the EU legal framework, even when arbitration awards have been confirmed by courts outside the EU, the enforcement of CAS awards within the EU internal market also raises the different question: would the EU logic in Achmea, that led to the termination of intra-EU ISDS disputes in the EU, be extended to sport arbitration, leading to its termination?
On 24 February 2025, the updated English Arbitration Act received Royal Assent. The 2025 English Arbitration Act, amending 1996 Arbitration Act, introduces a few target reforms in the fields of governing law of the arbitration agreement, challenges of arbitral tribunal’s decision on jurisdiction, and summary awards. These developments will enter into effect on a future date yet to be determined.
What’s New @ EFILA
2025 marks the 10th anniversary of EFILA. In the context of this celebration, on 29 April 2025, Herbert Smith Freehills, London hosted the 2025 Conference of the European Federation for Investment Law and Arbitration. The conference focused on the Next 10 Years of Investment Treaty Arbitration.
Here at the EFILA Blog, during the past quarter, we had the pleasure to post the interview of Mihaela Apostol, independent counsel and arbitrator, and co-founder of and moderator at ArbTech. We also engaged in the discussion on the increasingly relevant topic of EU Economic Security, with a report of the EFILA conference during Paris Arbitration Week 2025 written by Kubra Bayramova and Ana Cheminot.
We will keep you posted with the new developments in three months. In the meantime, if you would like to know more of what has happened at the end of 2024 and the first quarter of 2025 we recommend reading Chronicle 2025-1 on European Law and Arbitration Developments published in the European Investment Law and Arbitration Review 10, no. 1 (2025).
Lastly, we would like to draw our readers attention to the upcoming events:
- On 11 June 2025, the presentation of the book International Arbitration and EU Law (edited by Nikos Lavranos and Domenico Castagna) will take place in the classic Academy building of Leiden University. Some of the authors will speak about their chapters and Prof. Freya Baetens will share her views on the impact of EU law on arbitration in a keynote.
- Young EFILA is also pleased to announce its upcoming sponsorship of GAR ISDS & GAR Energy in the following months: further information will follow.
And remember that you are always welcome to contribute to the Blog yourself.
*** This quarterly review was prepared by Cristian Gallorini and Ioana Bratu with the editorial assistance of Daniela-Olivia Ghicajanu and Guofang Xue ***