Investment arbitration in EU: could choosing London as the seat of arbitration revive a defunct intra-EU BIT?

In a judgment dated 8 March 2023, the Amsterdam District Court opened the door to the question of whether choosing London as the seat of arbitration could revive an intra-EU BIT now prohibited by the Commission, the Member States and the ECJ.

The Netherlands and Poland terminated, effective 2 February 2019, the BIT that had bound them. However, on 2 December 2020, a Dutch investor filed a request for arbitration against Poland before the Permanent Court of Arbitration under the UNCITRAL Arbitration Rules. The seat of arbitration was fixed in London, United Kingdom.

Armed with EU law, Poland requested that the Amsterdam District Court order the Dutch investor to terminate the arbitration proceedings within two weeks. Poland argued that (i) the continuation of the arbitration would be an abuse of suit; (ii) the arbitration would be devoid of any chance of success as it is contrary to EU law and (iii) the award will not be enforceable because it is contrary to EU law.

The Amsterdam District Court rejected Poland’s request, for the following reasons: “The fact that the arbitration proceedings conflict with the law of the Union from the point of view of European law does not mean that seizing an arbitral tribunal outside the European Union constitutes an abuse of rights”.

According to the reasoning of the Amsterdam District Court, the termination of a BIT by its contracting parties does not prevent one of them from initiating an investment arbitration against the other, provided that the seat of arbitration is outside the EU.

The Amsterdam District Court asserted that “the pursuit of arbitration proceedings under the BIT before an arbitral tribunal located outside the European Union does not constitute an abuse of procedural rights“.

Adding to the confusion, German Courts made the exact opposite finding last year.

Source: Judgment of the Amsterdam District Court dated 8 March 2023, LC Corp. BV c. Pologne (C/13/721410 / HA ZA 22-614).




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