This article focuses on the recent judgment of the Court of Justice of
the EU (CJEU) in European Commission v Micula (C-638/ 19 P)
concentrating on two paragraphs in particular, namely paragraphs 144–145.
These passages lead us to believe that the Court of Justice’s more recent and
hostile attitude towards intra- EU investment treaty arbitration (in Achmea, Komstroy,
and PL Holdings) might be a result of several misunderstandings by
the Court on how investor-state arbitration and BITs work. The first concerns
the nature of consent to arbitrate under an investment agreement. The second
concerns the purpose of investor-state dispute settlement (ISDS), and the third
relates to the retroactive effects of the Court’s judgment in relation to
Romania’s consent to arbitrate under the Romania-Sweden BIT. From these three
issues the fourth misunderstanding follows, which is a lack of clarity on the
relationship between EU law and the Member States’ existing obligations under
the ICSID Convention. This discussion is relevant because it shows that when a
court which is foreign to a system and uses the features of that system to define
and develop its own legal system, the chances that the foreign system will be
potentially misunderstood or mischaracterised are very high. This in turn will
not only cause legal problems, such as issues with legal certainty and the
finality of decisions for already concluded arbitrations, but it will also set
in motion other unexpected consequences.