The era of modern Bilateral Investment Treaties (BITs) originated in Europe, when Germany and Pakistan adopted a bilateral agreement for protection of foreign investments of their nationals.1See RUDOLF DOLZER, URSULA KRIEBAUM & CHRISTOPH SCHREUER, PRINCIPLES OF INTERNATIONAL INVESTMENT LAW 9 (3d ed. 2022).X1  Soon after Germany, other European States followed suit:  Switzerland concluded its first BIT in 1961,2Traité entre la Confédération Suisse et la République Tunisienne relatif à la protection et à l’encouragement des investissements de capitaux [Treaty Between the Swiss Confederation and the Republic of Tunisia on the Protection and Encouragement of Capital Investments], Switz.-Tunis., Dec. 2, 1961, UN Conference on Trade and Development, Investment Policy Hub, https://investmentpolicy.unctad.org/international-investment-agreements/treaty-files/2982/download.X2 and France soon thereafter in 1972.3Convention between the Government of the French Republic and the Government of the Republic of Tunisia on the protection of investments , Fr.-Tunis., June 30,1972, 848 U.N.T.S. 141.X3  Since then, EU Member States have been the most prolific negotiators of such treaties.4See Carrie E. Anderer, Bilateral Investment Treaties and the EU Legal Order: Implications of the Lisbon Treaty, 35 BROOK. J. INT'L L. 851, 853 (2010).X4  The most significant facet of these modern BITs was the provision for investor-state dispute settlement (ISDS) whereby a foreign investor could directly submit a dispute concerning a violation of the BIT by a host state to international arbitration.5See Jarrod Wong, Umbrella Clauses in Bilateral Investment Treaties: Of Breaches of Contract, Treaty Violations, and the Divide Between Developing and Developed Countries in Foreign Investment Disputes, 14 GEO. MASON L. REV. 137, 144 (2006); see also STANIMIR ALEXANDROV, MARINN CARLSON & JOSHUA ROBBINS, The Future of Investment Treaty Protection in Eastern Europe, in THE EUROPEAN & MIDDLE EASTERN ARBITRATION REVIEW 2009, at 2 (2009), https://www.sidley.com/-/media/files/publications/2008/12/the-future-of-investment-treaty-protection-in-ea__/files/view-article/fileattachment/gareurope--middle east. pdf?la=en.X5  This process of dispute resolution found favor with investors and sovereigns alike.  Foreign investors who were keen on preventing the host state from enjoying a ‘home court advantage’ found a neutral forum whereas foreign sovereigns relished the fact that they would no longer be required to involve themselves in claims by their nationals against another state.6See George M. von Mehren, Claudia T. Salomon & Aspasia A. Paroutsas, Navigating Through Investor-State Arbitrations—An Overview of Bilateral Investment Treaty Claims, 59 DISP. RESOL. J. 69, 70 (2004); see also Wong, supra note 5, at 142.X6

The Court of Justice for the European Union (CJEU), however, shook the ground of the investment law framework in the EU with its landmark decision in Slovak Republic v. Achmea in March 2018.7Case No. C-284/16, Slovak Republic v. Achmea B.V., ECLI:EU:C:2018:158 (Mar. 6, 2018).X7  The CJEU ruled that the ISDS provisions contained in the BIT between the Netherlands and Slovakia were incompatible with EU law.  While the international arbitration community was still grappling with the implications of Achmea, the CJEU in its decision in Moldova v. Komstroy held that the ISDS provisions in the Energy Charter Treaty (ECT) were not applicable to intra-EU disputes (disputes between EU Member States and investors from other EU Member States).8Case No. C-741/19, Republic of Moldova v. Komstroy LLC, ECLI:EU:C:2021:655 (Sept. 2, 2021).X8  Finally, the CJEU in Poland v. PL Holdings barred Member States also from entering into intra-EU ISDS agreements on an ad hoc basis.9Case No. C-109/20, Republic of Poland v. PL Holdings Sàrl, ECLI:EU:C:2021:875 (Oct. 26, 2021).X9  These three decisions effectively preclude intra-EU ISDS and have further cast aspersions on the legality of ISDS provisions contained in BITs between EU Member States and other (non-EU) States.

This drastic change in the law by the CJEU formed the basis of the discussion in the ITA-IBA EU Investment Law Virtual Conference on ‘The Future of Investment Law in the EU after Komstroy and PL Holdings,’ held on December 1, 2021.  Building on the discussion in the Conference, the objective of this article is to brief the current framework of investment protection in the EU and, thereafter, to take a peek at the future of investment protection in EU, especially in the context of ISDS.

The Treaty Establishing the European Community ("EC Treaty"), the Treaty on the European Union ("EU Treaty") and the Treaty on the Functioning of the European Union (TFEU) comprise the major governing instruments of the EU.  These treaties attribute certain areas to power of the EU, beyond which the EU cannot act.  While the EC Treaty contained investment-related provisions, it did not confer exclusive competence over foreign investment upon the EU nor did it confer upon the EU the power to conclude international investment agreements with non-EU countries, leaving these areas within the competence of the various EU Member States.1Carrie, supra note 4, at 864.X1  Member States2xyzX2  largely implemented this power through the negotiation and conclusion of BITs.3See Jan Ceyssens, Towards a Common Investment Policy? – Foreign Investment in the European Constitution, 32 LEGAL ISSUES OF ECON. INTEGRATION 259, 268 (2005).X3  This position changed when on December 1, 2009, the Treaty on Lisbon amending the Treaty on European Union and the Treaty establishing the European Community (“Lisbon Treaty”) entered into effect.  The Lisbon Treaty extended the competence of the EU to the field of “foreign direct investment.”4See Stephen Woolcock, The Potential Impact of the Lisbon Treaty on European Union External Trade Policy, EUR. POL'Y ANALYSIS, June 2008, at 3, https://www.sieps.se/en/publications/2008/the-potential-impact-of-the-lisbon-treaty-on-european-union-external-trade-policy20088epa/Sieps-2008_8epa.pdf?.X4  The Lisbon Treaty reflected a new governance arrangement and a new legal order which was not contemplated in the pre-Lisbon investment system.5See L. Yves Fortier, Investment Protection and the Rule of Law: Change or Decline?, Address at the British Institute of International and Comparative Law 50th Anniversary Event Series, at 23 (Mar. 17, 2009), https://cdn.arbitration-icca.org/s3fs-public/document/media_document/media0123927854601400732_001.pdf.X5  As a result, the EU now had the power to conclude investment treaties on behalf of its Member States, bringing into question the validity of the numerous BITs that Member States had entered into with other States, both Member and non-Member.

A. Slovak Republic v. Achmea B.V.

The biggest change in the EU policy concerning ISDS came about through the decision of the CJEU in the Achmea case.  The CJEU ruled that that the ISDS provisions contained in the BIT between the Netherlands and Slovakia were incompatible with EU law.  The reasoning of the CJEU was premised on two specific principles:  (i) the autonomy of the EU legal order, and (ii) the principle of mutual trust between EU Member States.6See Pierre Collet, The Current European Union Investor State Dispute Resolution Reform: A Desirable Outcome for Investment Arbitration?, 53 N.Y.U. J. INT'L L. & POL. 689, 694 (2021).X6  In regard to the first principle, the court noted that an arbitral tribunal which is required to interpret or apply EU law would not be subject to the control of the CJEU as it would not be a ‘court of a Member State’ within the meaning of Article 267 of the TFEU and thus not having access to the preliminary ruling procedure, which would violate the autonomy of the EU legal order.7Case No. C-284/16, Slovak Republic v. Achmea B.V., ECLI:EU:C:2018:158, ¶¶ 42-50, 59 (Mar. 6, 2018); see also Collet, supra note 14, at 695 (citing Emmanuel Gaillard, L’Affaire Achmea ou les Conflicts de Logiques, 3 REVUE CRITIQUE DE DROIT INTERNATIONAL PRIVE 616, 625 (2018)).X7  As regards the second principle the court determined that the EU Member States enjoy an equal legal level of protection which cannot be selectively altered through a BIT.

The CJEU also considered whether the award made by the Tribunal would be subject to review by a court of the Member State, especially considering that the Netherlands-Slovakia BIT contemplated an ad hoc arbitral tribunal under the UNCITRAL Arbitration Rules.  The court held that there was a sufficiently narrow scope of judicial review which was not sufficient to ensure compliance with EU law.8Achmea, ¶¶ 50-55.X8  This conclusion appears to be hurried and contrary to the jurisprudence previously espoused by the CJEU itself in Eco Swiss v. Benetton.9Case C-126/97, Eco Swiss China Time Ltd. v. Benetton Int'l NV, 1999 E.C.R. I-3055.X9  The European Court of Justice (as the CJEU was known then) in Eco Swiss had ruled that arbitration in matters governed by EU law was permissible.  The CJEU specifically noted that judicial review of an arbitral award by national courts of Member States was sufficient for the purpose of ensuring compliance with EU law.10See id. ¶ 48.X10  Paradoxically, although the CJEU’s judgment in Achmea is premised on the need for ensuring consistency in interpretation of EU law, the CJEU seems to have failed to abide by its own pronouncement in Eco Swiss.

B. Republic of Moldova v. Komstroy LLC

One could confidently argue that the impact and fallout of Achmea remained limited to intra-EU BIT situations.  However, in Komstroy it was confirmed that the fallout of Achmea also applies to Energy Charter Treaty (ECT) disputes having a connection in the EU.11See Nikos Lavranos, Regime Interaction in Investment Arbitration: EU Law; From Peaceful Co-Existence to Permanent Conflict, KLUWER ARBITRATION BLOG (Jan. 13, 2022), https://arbitrationblog.kluwerarbitration.com/2022/01/13/regime-interaction-in-investment-arbitration-eu-law-from-peaceful-co-existence-to-permanent-conflict/.X11  Komstroy concerned a dispute between the Republic of Moldova and an Ukrainian investor under the ECT.  It is interesting to note that neither was the respondent state an EU Member State nor was the investor from an EU Member State.  The CJEU nonetheless assumed jurisdiction on the ground that the ECT is an integral part of EU law and thus the CJEU can interpret ECT under its power to issue preliminary rulings.12Case No. C-741/19, Republic of Moldova v. Komstroy LLC, ECLI:EU:C:2021:655, ¶ 27 (Sept. 2, 2021).X12  The CJEU also ruled that the seat of arbitration being within a Member State, implied application of EU law as lex fori.13Id. ¶¶ 33-34.X13  The CJEU then found that the ISDS provisions in the ECT ought to be interpreted as not being applicable to disputes between a Member State and an investor of another Member State.14Id. ¶ 66.X14

The CJEU’s ruling stands as a strong reaffirmation of its strict position regarding intra-EU ISDS.  Although the CJEU upheld its jurisdiction, the case at hand was arguably not best suited to rule on the validity of intra-EU arbitrations based on the ECT, as:  (i) the dispute was not intra-EU and EU law was not directly applicable, (ii) no EU public policy concerns were raised, and (iii) this was not even the question referred to the CJEU for decision.15See Peter Rosher et al., Moldova v. Komstroy (Case C-741/19): Key lessons and takeaways, REED SMITH: IN-DEPTH (Sept. 16, 2021), https://www.reedsmith.com/en/perspectives/2021/09/moldova-v-komstroy-key-lessons-and-takeaways.X15  Nonetheless, the CJEU clarified the application of Achmea vis-à-vis the ECT rendering moot all prior academic discussions regarding the same.16See, e.g., Kim Talus & Katariina Särkänne, Achmea, the ECT and the Impact on Energy Investments in the EU, in THE FUTURE OF INVESTMENT TREATY ARBITRATION IN THE EU: INTRA-EU BITS, THE ENERGY CHARTER TREATY, AND THE MULTILATERAL INVESTMENT COURT 9 (Ana Stanič & Crina Baltag eds., 2020); Crina Baltag & Stefan Dudas, Achmea, Arbitral Tribunals and the ECT: Modernisation or Regression? in THE FUTURE OF INVESTMENT TREATY ARBITRATION IN THE EU: INTRA-EU BITS, THE ENERGY CHARTER TREATY, AND THE MULTILATERAL INVESTMENT COURT 23 (Ana Stanič & Crina Baltag eds., 2020).X16

C. Republic of Poland v. PL Holdings Sàrl

After Achmea and Komstroy, the CJEU in PL Holdings came to round out the trilogy by barring Member States from entering into intra-EU ISDS agreements that are identical to BIT arbitration clauses on an ad hoc basis.17See Amina Ben Ayed, Poland v PL Holdings: Another Twist in the Intra-EU Investor-state Arbitration, SQUIRE PATTON BOGGS: LA REVUE (Dec. 14, 2021) https://larevue.squirepattonboggs.com/poland-v-pl-holdings-another-twist-in-the-intra-eu-investor-state-arbitration.html.X17  The CJEU held that allowing a Member State to enter into such an ad hoc arbitration with an EU-based investor with “the same content as that clause [in a BIT]” would result in “a circumvention of the obligations arising for that Member State under the Treaties [of the European Union].”18Case No. C-109/20, Republic of Poland v. PL Holdings Sàrl, ECLI:EU:C:2021:875, ¶ 47 (Oct. 26, 2021).X18  The CJEU further held that national legislation permitting a Member State to enter into an ad hoc arbitration agreement, which would make it possible to continue arbitration on the basis of an agreement which is contrary to EU law, would also be contrary to EU law.19Id. ¶ 56.X19

D. Micula v. Romania

In its last blow to ISDS in the EU, the CJEU in Micula overturned a decision of the General Court quashing a Commission State aid ruling from 2015.20Case No. C-638/19 P, Comm'n v. Eur. Food SA et al., ECLI:EU:C:2022:50 (Jan. 25, 2022).X20  The Commission had held that payment of compensation to claimants as per their ICSID award was unlawful State aid and ordered them to recover amounts paid to Micula,21Commission Decision (EU) 2015/1470 of 30 March 2015 on State aid SA.38517 (2014/C) (ex 2014/NN) implemented by Romania — Arbitral award Micula v Romania of 11 December 2013, 2015 O.J. (L 232) 43.X21  which decision was subsequently quashed by the General Court of the EU.22Cases No. T-624/15, T-694/15 & T-704/15, Eur. Food SA, et al. v. Comm'n, ECLI:EU:T:2019:423 (June 18, 2019).X22  While reversing the decision of the General Court, the CJEU also held (inter alia) that any consent that may have been given by a Member State to arbitration pre-accession lacks any force, to the effect that the system of judicial remedies provided for by the EU and the TFEU replace the arbitration procedures upon accession to the EU.23Cyrus Benson et al., The latest chapter of The Intra-EU Investment Arbitration Saga: What it entails for the protection of Intra-EU investments and enforcement of Intra-EU Arbitral Awards, GIBSON DUNN (Feb. 4, 2022), https://www.gibsondunn.com/the-latest-chapter-of-the-intra-eu-investment-arbitration-saga-what-it-entails-for-the-protection-of-intra-eu-investments-and-enforcement-of-intra-eu-arbitral-awards/.X23

E. Effect of CJEU Rulings

Achmea prompted EU Member States to sign the Agreement for Termination of all intra-EU Bilateral Investment Treaties ("Termination Agreement").24See generally Agreement for the Termination of Bilateral Investment Treaties between the Member States of the European Union, May 29, 2020, 2020 O.J. (L 169) 1.X24  The Termination Agreement seeks to terminate some 130 intra-EU BITs along with their sunset clauses and declares that they cannot serve as legal bases for arbitral proceedings.  The Termination Agreement also provides for the treatment of past, pending, and future arbitral proceedings under the various BITs.  The European Commission in December 2021 initiated infringement proceedings against seven EU Member States, in addition to those previously initiated in 2020 against Finland and the UK, for failure to remove intra-EU BITs from their respective legal orders.25See Alessandra Scotto Di Santolo, EU in battle with its own states as it threatens countries with court over bilateral deals, EXPRESS (Dec. 4, 2021), https://www.express.co.uk/news/politics/1531240/eu-news-eu-commission-bilateral-investment-treaties-bits-ecj-infringement-proceedings.X25  Through the judgments summarized above and actions of the European Commission, the EU (or at least the European Commission and the CJEU) has made it clear that ISDS in its current form is incompatible with EU law.  The questions which now arise are what consequences will this policy have and what is in store for the future.

Since Komstroy, several tribunals have been called upon to revisit their past decisions upholding jurisdiction and, although some accepted to undertake the analysis as a matter of principle, none of the tribunals acceded to the request.1See Erica Stein & Quentin Muron, Komstroy, PL Holdings, Micula: closing the door to intra-EU investment arbitration – again? 2022 B-ARBITRA – BELGIAN REVIEW OF ARBITRATION 7, 37 (2022) (citing Infracapital F1 S.à.r.l. & Infracapital Solar B.V. v. Kingdom of Spain, ICSID Case No. ARB/16/18, Decision on Respondent's Request for Reconsideration Regarding the Intra-EU Objection and the Merits, ¶ 117 (Feb. 1, 2022); Rockhopper Italia S.p.A., Rockhopper Mediterranean Ltd & Rockhopper Exploration Plc v. Italian Republic, ICSID Case No. ARB/17/14, Decision on the Italian Republic's Request for Reconsideration (Dec. 20, 2021) (dismissing in an as yet unpublished decision Italy's request for reconsideration of the tribunal's decision on the intra-EU jurisdiction objection); Landesbank Baden-Württemberg, HSH Nordbank AG, Landesbank Hessen-Thüringen Girozentrale and Norddeutsche Landesbank-Girozentrale v. Kingdom of Spain, ICSID Case No. ARB/15/45, Decision on the Respondent's Application for Reconsideration of the Tribunal's Decision of 25 February 2019 Regarding the X1  Others, taking up the objection for the first time, similarly rejected the intra-EU jurisdictional objection.3See Stein & Muron, supra note 34, at 37 (citing Sevilla Beheer B.V. et al. v. Kingdom of Spain, ICSID Case No. ARB/16/27, Decision on Jurisdiction, Liability and the Principles of Quantum, ¶ 678 (Feb. 11, 2022)).X3  Ad hoc committees, sitting in intra-EU ECT cases, have also declined to annul ICSID awards in the aftermath of the Komstroy judgment.4See Stein & Muron, supra note 34, at 37 (citing SolEs Badajoz GmbH v. Kingdom of Spain, ICSID Case No. ARB/15/38, Decision on Annulment (Mar. 16, 2022); NextEra Energy Global Holdings B.V. & NextEra Energy Spain Holdings B.V. v. Kingdom of Spain, Decision on Annulment (Mar. 18, 2022)); see also Catherine Amirfar et al., The Future of Investment Law in the EU: A Practical Perspective, DEBEVOISE & PLIMPTON: DEBEVOISE UPDATE (Dec. 8, 2021), https://www.debevoise.com/insights/publications/2021/12/the-future-of-investment-law-in-the-eu.X4  On the other hand, courts across EU are either annulling or refusing to enforce intra-EU awards.  This peculiar situation is likely to continue to exist until the CJEU or European Commission take specific measures to bridge the gap between its policy, on the one hand, and principles of customary international law (especially the Vienna Convention on the Law of Treaties) on the other.

However, the CJEU's judgments have necessitated the evolution of a dispute resolution system to fill the void created by the CJEU.  As a consequence, the EU has taken upon itself the burden to expedite the process of reform of ISDS and the establishment of a purportedly better system for resolution of investment disputes.  In parallel, the EU has embarked on the propagation of a new policy for foreign investment which is premised on respect for Sustainable Development Goals (SDGs).

A. Multilateral Investment Court

The idea for a Multilateral Investment Court (MIC) was mentioned in the Transatlantic Trade and Investment Partnership (TTIP) Concept Paper and the Trade for all Communication.5See Arman Melikyan, The Legacy of Opinion 1/17: To What Extent Is the Autonomous EU Legal Order Open to New Generation ISDS?, 6 EUROPEAN PAPERS 645, 650 (2021); Commission, Trade for All: Towards a more responsible trade and investment policy, at 21-22, COM (2015) 497 final (Oct. 14, 2015).X5  Following an influx of criticism against the traditional ISDS mechanisms, the European Commission launched an ambitious global ISDS reform agenda in 2018, promising to address all concerns of the existing ISDS system with the MIC.6See Melikyan, supra note 37, at 646.X6  Primary among those concerns were (i) the lack of consistency in case-law and, (ii) lack of legitimacy and transparency.7EESC backs criticism of investor-State dispute settlement (ISDS), and calls for a more holistic approach, EUR. ECON. & SOC. COMM. (Nov. 7, 2022), https://www.eesc.europa.eu/en/news-media/news/eesc-backs-criticism-investor-state-dispute-settlement-isds-and-calls-more-holistic-approach#:~:text=The%20most%20frequently%20 identified%20problems,to%20legal%20uncertainty%20and%20potential.X7  The European Commission commenced work on an impact assessment on the MIC in 2016.  In September 2017, it made the impact assessment public and issued a Recommendation to the European Council to open negotiations on the establishment of the MIC.8See Recommendation for a Council Decision authorising the opening of negotiations for a Convention establishing a multilateral court for the settlement of investment disputes, COM (2017) 493 final (Sept. 13, 2017); Multilateral reform of investment dispute resolution, SWD (2017) 302 final (Sept. 13, 2017).X8  The authorization and negotiating directives were adopted by the Council and the EU Member States in March 2018.9See Council Decision authorizing the European Commission to negotiate, on behalf of the European Union, a convention establishing a multilateral court for the settlement of investment disputes to the extent this falls within the Union's competence, at 3 (Mar. 2, 2018), https://data.consilium.europa.eu/doc/document/ST-12981-2017-INIT/en/pdf.X9  The negotiating directives contemplate a court-like structure with an appellate mechanism, staffed by full-time and highly qualified adjudicators.10See Negotiating directives for a Convention establishing a multilateral court for the settlement of investment disputes, at 4-5 (Mar. 1, 2018), https://data.consilium.europa.eu/doc/document/ST-12981-2017-ADD-1-DCL-1/en/pdf.X10  The goal is to address the concerns of the present system in relation to legitimacy and ethics of adjudicators.

As a stepping stone to the Multilateral Investment Court the EU has included Investment Court System (ICS) clauses in negotiations on a number of free trade agreements,11See Melikyan, supra note 37, at 646.X11 including the Comprehensive Economic and Trade Agreement with Canada (CETA) (provisionally in force),12See Comprehensive and Economic Trade Agreement (CETA), Can.-EU, arts. 8.27-8.28, Jan. 14, 2017, 2017 O.J. (L 11) 23, 66-69.X12 the Investment Protection Agreement with Vietnam (signed but not yet in force),13See Proposal for a COUNCIL DECISION on the conclusion of the Investment Protection Agreement between the European Union and its Member States, of the one part, and the Socialist Republic of Viet Nam, of the other part, Annex 1, arts. 3.38-3.39, at 72-81, COM (2018) 693 final (Oct. 17, 2018), https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CONSIL:ST_5932_2019_INIT&qid=1677074713378&from=EN.X13 the EU-Mexico Free Trade Agreement (agreement in principle),14See European Commission, Investment dispute resolution, EU-MEXICO AGREEMENT: THE AGREEMENT IN PRINCIPLE, arts. 11-12, https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/mexico/eu-mexico-agreement/agreement-principle_en.X14 and the EU-Singapore Investment Protection Agreement (signed but not yet in force).15See Proposal for a Council Decision on the conclusion of the Investment Protection Agreement between the European Union and its Member States of the one part, and the Republic of Singapore, of the other part, Annex 1, arts. 3.9-3.10, at 41-47, COM (2018) 194 final (Apr. 18, 2018).X15  These agreements contemplate a first-instance tribunal and an appellate tribunal.  In Opinion 1/17, the CJEU  opined that the dispute resolution provisions contained in CETA are compliant with EU law.16Opinion 1/17, ECLI:EU:C:2019:341 (Apr. 30, 2019).X16  The CJEU in its opinion made the following observations:

1. Jurisdiction of tribunals under CETA is limited to interpretation of CETA in light of principles of international law. Therefore, the question of interpretation of EU law does not arise and there is no requirement for availing the preliminary procedure in terms of Article 267 of TFEU.17Id. ¶ 122.X17 
2. There is no impact on the power of the institutions of the EU from operating in accordance with EU framework since CETA tribunals do not have the jurisdiction to declare incompatible with CETA, any level of protection of a public interest established under EU law.18Id. ¶ 130.X18
3. CETA tribunals can consider questions of domestic law only as a matter of fact. This cannot be considered as an opportunity to interpret EU law.19Id. ¶ 131.X19
4. CETA tribunals ensure fair and equitable trial and effective protection of the legitimate interest of the investors through an independent forum, thus dissipating any possible concerns under the Charter of Fundamental Rights of the EU.20Id. ¶¶ 199-200.X20

The Opinion has surreptitiously given a green light to the ISDS reforms undertaken by the EU and to the establishment of a multilateral dispute resolution system.21See Melikyan, supra note 37, at 658.X21  The efforts by the EU has coincided with the work on ISDS reform undertaken by the United Nations Commission on International Trade Law (UNCITRAL) Working Group III.  The Working Group looks to identify the areas of reform in ISDS and evaluate whether a MIC would be an ideal solution to the problems identified.  The Working Group is intent on discussing the structure and function of such a MIC.  In this light, Achmea could be categorized as a catalyst which lit fire to the movement of reform in ISDS.

B. Sustainable Investment

On June 23, 2022, the European Parliament adopted the Resolution on the future of EU international investment policy.22Resolution of 23 June 2022 on the future of EU international investment policy, EUR. PARL. DOC. P9_TA(2022)0268 (2022).X22  The key highlights of the Resolution include the following recognitions:

1. Investments should have positive impact on sustainable economic growth, job creation and sustainable development, and contribute to SDGs.23Id. ¶ 1.X23
2. Investment arbitrations act as barriers for implementation of measures necessary for preservation of the environment and combat climate change.24Id. ¶¶ 28, 36.X24
3. Inclusion of ICS in new investment agreements would support the deliberations for a multilateral reform of ISDS system towards establishment of a MIC.25Id. ¶¶ 26, 45.X25

The principles stressed by the European Parliament make it clear that EU Member States are intent upon acting towards fulfilment of SDGs and consider that purging investment protection through ISDS may be essential to fulfilling their goals.  This policy statement further reiterates the commitment of the European Union to the idea of a MIC and could be a final nail in the coffin for the traditional ISDS system in the EU.

Though the jurisprudence espoused by the CJEU left more questions unanswered than it embarked on answering, the CJEU has helped cement the policy of the EU.  On the strength of the CJEU's judgments, the EU has come to champion the cause of expeditious reform of international investment law and the ISDS system.  This is evident from its newly adopted trade agreements as well as a sustained call for the establishment of a MIC.  International investment law in the EU will thus be characterized by rapid change, and investors must be conscientious of this when investing in the EU and/or conducting arbitrations seated in EU jurisdictions for the foreseeable future.1See Amirfar et al., supra note 36.X1