This edition of the Quarterly Review highlights major developments in the investment arbitration landscape between July and September 2025.
Introduction
The third quarter of 2025 saw the European Commission’s unprecedented referral of Hungary to the Court of Justice of the European Union (CJEU) over intra-EU arbitration, the adoption of a landmark inter-se agreement formalizing the EU’s unified stance on the ECT, and a series of decisions from US and Australian courts reinforcing the enforceability of intra-EU awards abroad.
Alongside these systemic shifts, tribunals and courts issued significant decisions in high-profile disputes, including the South Korea–Samsung merger case, Lupaka Gold’s victory over Peru, and settlements such as Veolia v. Lithuania.
Overall, these developments underscore both the EU’s determination to dismantle intra-EU arbitration under the ECT and the widening divergence between EU and non-EU jurisdictions on enforcement, while also reflecting the continued dynamism of investor–state dispute settlement worldwide.
ECT Modernization & Termination
On 16 July 2025, the European Commission formally referred Hungary to the Court of Justice of the European Union (CJEU), accusing it of acting in contradiction to the EU’s collective position on intra-EU arbitrations under the Energy Charter Treaty (ECT). According to the Commission’s official announcement, Hungary’s decision to continue engaging in arbitral proceedings under the ECT directly undermines the Union’s legal and political strategy to eliminate intra-EU investment arbitration altogether. The referral is framed not as a dispute over a single case, but as a systemic challenge to the EU’s coordinated approach, reflecting the Commission’s determination to enforce uniformity across the bloc.
The Commission’s action stems from longstanding concerns following the Achmea and Komstroy judgments, where the CJEU held that intra-EU arbitration clauses are incompatible with EU law. While most Member States have formally withdrawn from intra-EU bilateral investment treaties and accepted the EU’s strategy to neutralize the arbitration provisions of the ECT in intra-EU contexts, Hungary has consistently deviated from this policy. Reports indicate that Hungary has not only failed to withdraw from ECT-based proceedings but has also actively defended claims, thereby contradicting the Union’s stated objective of phasing out such mechanisms.
This referral is significant for at least two reasons. First, it is the first time the Commission has taken a Member State to the CJEU specifically over non-compliance with the EU’s position on intra-EU arbitration under the ECT. Second, it demonstrates the Commission’s readiness to use infringement proceedings to enforce compliance with EU law, even where Member States seek to pursue their own arbitration strategies.
Overall, the Commission’s case against Hungary represents a new front in the EU’s campaign to eliminate intra-EU investment arbitration under the ECT. It underscores the EU’s determination to enforce legal uniformity across Member States; reinforces the authority of the Achmea and Komstroy line of jurisprudence; and highlights the increasingly divergent enforcement landscape between EU and non-EU jurisdictions. Additionally, by challenging Hungary’s conduct, the Commission is not only reaffirming its commitment to uphold the supremacy of EU law but also seems to be sending a signal to other Member States that resistance may not be tolerated.
The case also forms part of the EU’s broader policy shift toward terminating the ECT itself. With several Member States already withdrawing from the treaty, the Commission has been actively working to prevent what it views as “parallel” legal systems that conflict with the EU’s judicial framework.
The European Parliament and the Council have been playing a primary role in effectuating this policy as well. With Decision (EU) 2025/1904 of 10 September 2025, European Parliament and the Council have adopted the final text of an inter-se agreement between the European Union and its Member States concerning the interpretation and application of the investor-State arbitration provisions of the ECT. The inter-se agreement is intended to remove legal uncertainty within the EU about whether the ISDS clause in the ECT may form a basis for intra-EU arbitration and seeks to prevent investor claims between EU investors and EU host states under the ECT.
On another front of the same tension, on 3 June 2025, Antin challenged the EU Commission’s decision stating that any payment that Spain would make to Antin as part of the enforcement process of the Antin v Spain award would amount to an illegal state aid. Antin argued the EU Commission’s decision equivalates to an anti-suit and anti-enforcement injunction addressed to all courts across EU Member States and this “constitutes a misuse of powers and violation of the principle of sincere cooperation.”
ISDS Reform & Other Legislative Reforms
Between 22-26 September 2026 took place the 52nd session of the UNNCITRAL Working Group III on the Investor-State Dispute Settlement Reform. The 52nd session discussed the draft statute of a standing mechanism for the resolution of investment disputes, and several procedural and cross-cutting issues including bifurcation, interim measures, security for costs, consolidation, third party funding, cost allocation, shareholder claims.
During the session, the European Union and its Member States, jointly represented by the EU Commission, submitted a separate Memorandum on certain aspects concerning the jurisdiction of the Standing Mechanism (“EU Memorandum”). The EU and the Member States proposed to expand the jurisdiction of the Standing Mechanism also to (i) counterclaims brought by States against investors, (ii) claims brought directly by States against investors and (iii) State-to-State disputes, and to expand the Standing Mechanism jurisdiction to claimants and respondents which are not nationals of the Contracting States of the Standing Mechanism. With respect to jurisdiction rationae materiae the EU and the Member States proposed that it should exclusively cover investment treaties rather than include investment contracts, treaties and foreign investment laws.
Intra-EU Disputes Case Law Update
In Europe, June 2025 saw the Brussels Court of First Instance allowing the enforcement of the RREFF v Spain award (allowing Blasket to recover the funds owned by Eurocontrol to the Spanish state-owned airspace company). July was instead a momentous month in Germany, where the Federal Constitutional Court confirmed that the CJEU case law on intra-EU investment arbitration does not have extra-EU effect.
Turning to the U.S., the decisions of the US District Court for the District of Columbia to uphold enforcement of the RREEF and Antin awards in quick succession (12 August and 13 August, 2025) illustrates the court’s continued rejection of intra-EU objections advanced by Member States of the European Union. In doing so, the U.S. Court reaffirmed the principle that ICSID arbitral awards rendered under the ECT, or similar frameworks, deserve full faith and credit in the United States, regardless of arguments based on EU law or the CJEU’s Achmea and Komstroy rulings.
Shortly thereafter, the U.S. District Court for the District of Columbia’s subsequent decisions to uphold enforcement of the Watkins, Infrared, and Cube Infrastructure awards further entrenches the pattern, with the court again dismissing arguments designed to invoke intra-EU law conflicts or sovereign immunity. These decisions, all in ICSID awards granted against Spain, demonstrate a clear judicial policy in Washington, D.C. of favoring enforcement of ICSID intra-EU awards and limiting the scope of defences available to resisting states.
The Federal Court of Australia’s confirmation that four ISDS awards against Spain under the ECT are fully enforceable in Australia represents a similarly significant development. By holding that Spain was not entitled to rely on sovereign immunity or EU law-based defences, the court aligned itself with a broader international trend that isolates intra-EU objections within the EU legal order. The judgment underscores the willingness of courts outside the EU to treat intra-EU arbitral awards as ordinary international awards subject to recognition and enforcement, thereby opening an alternative path for investors to secure compliance when European enforcement avenues remain blocked.
Taken together, these developments illustrate a deepening divergence between EU and non-EU courts on the enforceability of intra-EU arbitral awards. They also highlight the strategic importance of choosing enforcement venues, with US and Australian courts consistently proving receptive to ICSID awards. This evolving jurisprudence is likely to influence enforcement strategies for investors and recalibrate the risks faced by states that continue to resist compliance with ISDS awards.
Finally, the Tel Aviv District Court also denied the enforcement of the ICSID award in the intra-EU ECT case Sun-Flower and others v Spain. The Court found that Israel was not the appropriate forum to enforce the award because (i) the case did not have any link with Israel, and (ii) Spain did not have any assets in Israel against which the award could be enforced. Therefore, while relevant, this development cannot be considered of the same substance as the ones above that deal with a profound tension between EU and non-EU approaches as to the enforceability of intra-EU awards.
Other Relevant Proceedings and Awards
South Korea – Samsung merger dispute
On 17 July 2025, the UK Court of Appeal delivered a pivotal ruling in the South Korea – Samsung merger dispute. The court found that the Permanent Court of Arbitration (PCA) lacked jurisdiction to hear a $770 million claim brought by Elliott Management, sending the matter back to the UK High Court.
At issue was the involvement of South Korea’s National Pension Service, a shareholder in Samsung C&T during its controversial 2015 merger with Cheil Industries. Elliott alleged that political interference led to shareholder value dilution. The Court of Appeal’s decision arguably undermines the role of arbitral tribunals in sovereign-linked corporate disputes and may reshape
Lupaka Gold Corp. v. Republic of Peru (ICSID Case No. ARB/20/46)
On 2 July 2025, Lupaka Gold announced a decisive victory against Peru under the Canada–Peru Free Trade Agreement. The ICSID tribunal awarded the company $40.4 million plus interest (the full amount claimed), along with $4.2 million in legal costs. The dispute concerned Lupaka’s investment in the Invicta gold project in the Andean highlands.
EU v. Algeria
On 16 July 2025, the EU initiated arbitration proceedings against Algeria over alleged trade and investment restrictions. This marks a significant development in the EU’s external dispute settlement activity under trade agreements.
Veolia v. Lithuania (ICSID Case No. ARB/16/3)
On 18 July 2025, Lithuania and French energy group Veolia reached a settlement in their long-running dispute concerning municipal heating contracts. Veolia agreed to pay €35 million in damages to Lithuania, while Lithuania dropped related domestic claims. Although Veolia is expected to withdraw its ICSID claims, as of now, no formal withdrawal has been registered with ICSID.
Conclusion
The third quarter of 2025 has been marked by judicial and arbitral decisions with potentially far-reaching implications for investor-state arbitration and for foreign investment policy within the European Union. The EU’s firm stance against intra-EU arbitration continues to generate friction with Member States, while the UK Court of Appeal’s ruling in the Samsung case raises fundamental questions about arbitral jurisdiction in disputes involving sovereign entities. At the same time, the resolution of long-running cases such as Veolia v. Lithuania and the award in Lupaka v. Peru highlight both the risks and opportunities inherent in the ISDS system. As these developments unfold, they will play an important role in shaping the global investment arbitration landscape in the months ahead.
*** This quarterly review was prepared by Dr. Ioana Maria Bratu, Daniela-Olivia Ghicajanu, and Andra Curutiu ***