On March 6, 2018, the European Court of Justice (ECJ) handed down its landmark ruling in Achmea. The ECJ found an arbitration clause in an international investment agreement between two European Union (EU) Member States incompatible with EU law.
According to a joint analysis by the Center for International Environmental Law (CIEL) and ClientEarth, the Achmea ruling reveals that the ECJ understands ISDS as sidelining and undermining the powers of the courts of the Member States. This ruling is likely to have profound consequences for investment arbitration clauses in current and future investment treaties and chapters between the EU or EU Member States. Although the case’s ruling only applies explicitly to bilateral investment agreements between EU member countries, the implications of the case may well extend much further to investment agreements between the EU or EU Member States and non-EU countries.