by Vasiliki Dritsa, EU Qualified Lawyer; Doctoral Researcher and Teaching Assistant in International Law, Department of Private International Law, University of Geneva. Vasiliki is admitted to the Athens Bar and holds degrees in law from the University of Athens and the Graduate Institute of International and Development Studies in Geneva. Vasiliki's LinkedIn Profile: https://www.linkedin.com/in/vasiadritsa/ 

Introduction

International investment arbitration, once conceived as a system grounded in treaty-based consent and public international law, is increasingly marked by fragmentation. Nowhere is this trend more pronounced than within the framework of the European Union (‘EU’). Through a sequence of judicial interventions, most notably Achmea and Komstroy, combined with coordinated Member State court practice and the collective withdrawal of the EU and several Member States from the Energy Charter Treaty (‘ECT’), intra-EU investor-State dispute settlement (‘ISDS’) has been progressively marginalised. These developments raise a systemic question: do they amount to the effective regionalisation of intra-EU investment disputes, separating them from the broader global regime of investment arbitration?

This contribution argues that while international investment arbitration has not been dismantled, intra-EU disputes are increasingly governed by a distinct regional logic: a framework that distinguishes consent, applicable law, and enforceability based on geographic considerations rather than solely on treaty text. The following sections trace how this regionalisation has emerged through the jurisprudence of the Court of Justice of the European Union (‘CJEU’), beginning with the Achmea and Komstroy rulings and their subsequent doctrinal expansion.

From Achmea to Komstroy: Extending the Autonomy Narrative

The CJEU laid the foundation for its resistance to intra-EU ISDS in Achmea, holding that arbitration clauses in intra-EU bilateral investment treaties (‘BITs’) were incompatible with EU law because they removed disputes potentially involving EU law from the Union’s judicial system and from the preliminary reference mechanism under Article 267 TFEU.[i] The Court grounded its reasoning in the autonomy of EU law and the principle of mutual trust between Member States.

What Achmea left unresolved was whether this logic could be extended beyond BITs to multilateral investment agreements, such as the ECT. In Komstroy, the Court answered this question affirmatively, holding that Article 26 of the ECT could not serve as a valid basis for intra-EU arbitration.[ii] Despite the ECT’s multilateral character and the EU’s own status as a contracting party, the Court characterised Article 26 as governing bilateral relations analogous to those under an intra-EU BIT.[iii] This recharacterisation enabled the Court to extend the reasoning developed in Achmea to the multilateral framework of the ECT without engaging in a full treaty interpretation analysis under public international law.

Subsequent jurisprudence has reinforced and extended the trajectory established by the aforementioned cases. In PL Holdings v. Poland, the CJEU held that Member States may not circumvent the prohibition of intra-EU investment arbitration by concluding ad hoc arbitration agreements with EU-based investors that replicate the content of intra-EU BITs.[iv] The judgment reaffirmed that the autonomy rationale articulated in Achmea applies broadly to mechanisms capable of removing disputes involving EU law from the Union’s judicial system. In doing so, it further narrowed the space for intra-EU investor-State arbitration and demonstrated the continued expansion of the ‘Achmea doctrine’ beyond the bilateral treaty framework in which it originally arose. Yet the extension of the autonomy-based reasoning to multilateral treaties raises significant questions regarding its compatibility with established principles of treaty interpretation under public international law.

Treaty Interpretation and the Limits of Judicial Recharacterisation

The reasoning in Komstroy sits uneasily with established principles of public international law. Under Articles 31 and 32 of the Vienna Convention on the Law of Treaties (‘VCLT’), treaties must be interpreted in good faith according to their ordinary meaning, context, and object and purpose.[v] Neither the text of Article 26 of the ECT nor its travaux préparatoires support the existence of an implied disconnection clause excluding intra-EU disputes from arbitration. On the contrary, the EU initially advocated for an explicit disconnection clause during the ECT negotiations and ultimately abandoned that position.[vi]

The Court’s approach has therefore been criticised for projecting EU constitutional autonomy concerns onto treaty relations governed by public international law, thereby blurring the distinction between EU law as an internal legal order and international law as an external system binding on the EU and third States alike. Relatedly, commentators have questioned the legal relevance of post-Komstroy declarations by EU Member States, noting that such instruments cannot retroactively alter treaty obligations or substitute for interpretation in accordance with the VCLT.[vii] These doctrinal tensions become particularly visible when the consequences of the CJEU’s approach are examined at the enforcement stage.

Member State Court Pushback and Enforcement Asymmetry

The practical consequences of Achmea and Komstroy depend largely on enforcement. In this respect, the alignment of Member State courts with the CJEU’s position has been decisive. Courts in several EU jurisdictions have relied on these judgments to set aside or refuse enforcement of intra-EU investment awards, creating a structurally hostile enforcement environment within the Union.[viii]Outside the EU, however, courts have been markedly more reluctant to accept that EU law can nullify consent to arbitration expressed in international treaties.[ix] Arbitral tribunals have likewise continued to assert jurisdiction over intra-EU disputes, grounding their reasoning in public international law and emphasising the irrelevance of EU constitutional constraints vis-à-vis third parties.[x]

The result is a pronounced enforcement asymmetry: awards recognised as valid under international law may, nevertheless, be deemed unenforceable within the EU, exemplifying regionalisation. The dispute concerning the Micula award illustrates the tension between EU constitutional doctrine and the enforcement of intra-EU awards. In this context, the European Commission has contended that the payment of compensation as determined by the arbitral tribunal would constitute unlawful State aid under EU law, as it would effectively revive an incentive scheme previously deemed incompatible with the internal market.[xi] These proceedings highlight the growing influence of EU constitutional principles on the practical enforceability of intra-EU awards within the Union.[xii]

The ECT Exit and the Deepening of Fragmentation

The coordinated withdrawal of the EU and several Member States from the ECT represents a further step toward institutionalising this regional approach.[xiii] Although sunset clauses preserve protection for existing investments for a transitional period, withdrawal reflects a deliberate policy choice to re-internalise investment disputes within the EU legal order and to replace arbitration with domestic courts and EU law remedies. This development exacerbates an already uneven playing field. Non-EU investors retain access to ECT arbitration against EU Member States, while EU investors are increasingly confined, in practical terms, to national courts and EU remedies. As has been observed, this form of reverse discrimination undermines the uniformity of treaty interpretation and challenges the multilateral character of the ECT.[xiv]

Recent Judicial Developments Beyond the EU

Recent case law outside the EU further illustrates the fragmented landscape. In its decision of 3 April 2024, the Swiss Federal Supreme Court (‘SFSC’) held that it was not bound by the jurisprudence of the CJEU, including the Komstroy ruling, because those decisions do not bind non-EU courts and are rooted in EU constitutional law rather than international law and accepted rules of treaty interpretation.[xv] The Court went on to conclude that Article 26 of the ECT expresses unconditional consent by the Contracting Parties to submit disputes to arbitration and that the text of the ECT contains no provision excluding intra-EU investor-State disputes from the scope of that consent. This reasoning has been reiterated in subsequent proceedings. In its judgment of 13 June 2024, the SFSC dismissed the Czech Republic’s challenge to an arbitral award rendered in Natland v. Czech Republic, rejecting arguments based on Achmea and Komstroy and emphasising that EU law does not affect the validity or enforceability of arbitration agreements under the ECT in Swiss-seated proceedings.[xvi]

Taken together, these decisions underscore the increasing divergence between courts within and outside the EU.[xvii] By 2024-2025, the Achmea-Komstroy line progressively appears outside the Union as a regionally specific constitutional doctrine rather than a generally accepted rule of international law, reinforcing the view that intra-EU ISDS is subject to region-specific constraints rather than universally applicable rules.

Conclusion

The combined effect of Achmea, Komstroy, Member State court practice, and the EU’s withdrawal from the ECT strongly suggests that intra-EU investment disputes are being reconstituted as a regional phenomenon. While this regionalisation does not dismantle investment arbitration globally, it introduces a structural asymmetry that sits uneasily with the system’s original universalist aspirations.

From this perspective, the Achmea-Komstroy line may be understood not merely as fragmentation but as a form of constitutional regionalisation of investment protection within the EU. Although this development may reinforce the autonomy of the EU legal order, it simultaneously deepens the structural divide between EU and non-EU approaches to investment arbitration. Whether this shift ultimately enhances legitimacy within the EU or merely exports uncertainty to the international arena remains an open and pressing question.

[i] Case C‑284/16 Slowakische Republik (Slovak Republic) v. Achmea BV ECLI:EU:C:2018:158 (6 March 2018) (‘Achmea’).

[ii] Case C-741/19 Republic of Moldova v. Komstroy, LLC ECLI:EU:C:2021:655 (2 September 2021) (‘Komstroy’).

[iii] Ibid, paras. 40, 64: ‘It should be noted in that regard that, despite the multilateral nature of the international agreement of which it forms part, a provision such as Article 26 ECT is intended, in reality, to govern bilateral relations between two of the Contracting Parties, in an analogous way to the provision of the bilateral investment treaty at issue in the case giving rise to the judgment of 6 March 2018, Achmea (C‑284/16, EU:C:2018:158, paragraph 58).’

[iv] Case C-109/20 PL Holdings Sàrl v. Republic of Poland EU:C:2021:875 (26 October 2021) (‘PL Holdings’); M. Krestin and B. Van Tornout, ‘Nipping Intra-EU BIT Arbitrations in the Bud: The Republic of Poland v LC Corp BV’ (Kluwer Arbitration Blog, 3 June 2025) < https://legalblogs.wolterskluwer.com/arbitration-blog/nipping-intra-eu-bit-arbitrations-in-the-bud-the-republic-of-poland-v-lc-corp-bv/> accessed 11 March 2026.

[v] Vienna Convention on the Law of Treaties (adopted 23 May 1969, entered into force 27 January 1980) 1155 UNTS 331, Arts 31-32.

[vi] M. Basedow, ‘The Achmea Judgment and the Applicability of the Energy Charter Treaty in Intra-EU Investment Arbitration’ (2020) 23(1) Journal of International Economic Law 271. As Basedow explains, ‘The analysis of the travaux préparatoires yields two important insights for the interpretation of the ECT: first, the mixed ratification of the ECT through the EU and its member states should be considered as a reflection of legal necessity rather than as a deliberate step to ensure the intra-EU applicability of the ECT. The EU was unable to ratify the ECT without member state participation due to the broad substantive scope of the ECT touching on Union, shared, and national competences. Second, the EU member states and the European Commission in consequence insisted on an explicit disconnection clause to avoid that a mixed ratification of the ECT would entail its intra-EU application. The EU member states and the Commission, however, dropped this demand for an explicit disconnection clause at some point in the negotiations. These findings suggest that EU member states and the Commission did not aim for the ECT to apply in intra-EU relations and disputes; yet, they ultimately accepted this possibility as part of a deal to conclude the negotiations. It follows that the Commission’s claim that the ECT contains an implied disconnection clause cannot be upheld.’

[vii] J. Odermatt, ‘Is EU Law International? Case Moldova v Komstroy and the Autonomy of the EU Legal Order’ (2021) European Papers 1255.

[viii] S. Gáspár-Szilágyi and M. Usynin, ‘The Uneasy Relationship between Intra-EU Investment Tribunals and the Court of Justice’s Achmea Judgment’ (2019) European Investment Law and Arbitration Review 29, 35.

[ix] See, for example, ‘MOL Enforces Intra-EU ECT Award in US’ (Global Arbitration Review, 9 March 2026), <https://globalarbitrationreview.com/article/mol-enforces-intra-eu-ect-award-in-us?utm_source=Top%2BDutch%2Bcourt%2Bupholds%2Benforcement%2Bof%2BIndian%2Bsatellite%2Baward&utm_medium=email&utm_campaign=GAR%2BAlerts> accessed 11 March 2026.

[x] Vattenfall AB and others v. Federal Republic of Germany, ICSID Case No. ARB/12/12), Decision on the Achmea Objection, 31 August 2018, para. 133; Masdar Solar & Wind Cooperatief U.A. v. Kingdom of Spain, ICSID Case No. ARB/14/1, para. 682; Antin Infrastructure Services Luxembourg SARL and Antin Energia Termosolar BV v. Kingdom of Spain, ICSID Case No. ARB/13/31, para. 224.

[xi] Ioan Micula, Viorel Micula and others v. Romania, ICSID Case No. ARB/05/20, Award, 11 December 2013; Joined Cases C-638/19 P, C-639/19 P and C-671/19 P European Commission v. European Food SA and Others EU:C:2022:50, para. 86. The CJEU confirmed that the Commission had correctly treated Romania’s payment of the Micula award as State aid, holding that the Commission ‘was correct in regarding Romania’s payment […] whether voluntarily made or enforced […] as constituting a State aid.’

[xii] This development conflicts with the conventional ICSID enforcement framework, under which domestic courts are typically restricted to recognising awards and enforcing their monetary obligations as if they were final judgments of national courts. International Centre for Settlement of Investment Disputes, ‘Compliance with and Enforcement of ICSID Awards’ (ICSID Background Paper, June 2024), 1–2 < https://icsid.worldbank.org/sites/default/files/publications/Enforcement_Paper.pdf> accessed 11 March 2026. In the same study, it is noted that courts outside the EU have generally continued to enforce the Micula award. In the U.S., federal courts confirmed enforcement of the award and held that the jurisprudence of the CJEU did not invalidate Romania’s consent to arbitration or limit the obligation of domestic courts to enforce ICSID awards. By contrast, within the EU, courts have taken a different approach. For example, the Nacka District Court in Sweden declined to enforce the award on the ground that enforcement would conflict with the European Commission’s State aid decision. See, ICSID Background Paper, 39-45.

[xiii] Council Decision (EU) 2024/1638 on the Withdrawal of the Union from the Energy Charter Treaty’ [2024] OJL 2024/1638; ‘Declaration of the Representatives of the Governments of the Member States of 15 January 2019 on the Legal Consequences of the Judgment of the Court of Justice in Achmea and on Investment Protection in the European Union’ <https://finance.ec.europa.eu/publications/declaration-member-states-15-january-2019-legal-consequences-achmea-judgment-and-investment_en> accessed 11 March 2026.

[xiv] C. Prevot, ‘Disputes Under the Energy Charter Treaty in the Wake of Achmea v. Slovakia Remain Arbitrable and Enforceable - Chapter 2 - Investment Treaty Arbitration and International Law - Volume 13 | ArbitrationLaw.Com’ <https://arbitrationlaw.com/library/disputes-under-energy-charter-treaty-wake-achmea-v-slovakia-remain-arbitrable-and> accessed 11 March 2026. Prevot specifically states that ‘the EU itself has agreed and approved the content of the ECT, including its dispute resolution mechanisms, and since the ECT does not contain a disconnection clause or allow for reservations, it was never the intent of the EU that the ECT arbitration clause would not be applicable to intra EU-disputes.’

[xv] Swiss Federal Supreme Court, Decision 4A_244/2023 (3 April 2024) < https://www.bger.ch/ext/eurospider/live/de/php/aza/http/index.php?highlight_docid=aza://03-04-2024-4A_244-2023&lang=de&zoom=&type=show_document> accessed 11 March 2026; A. Ray,‘The Swiss Supreme Court Upholds an Intra-EU Award Under the ECT | Kluwer Arbitration Blog’ (Kluwer Arbitration Blog, 23 May 2024) <https://legalblogs.wolterskluwer.com/arbitration-blog/the-swiss-supreme-court-upholds-an-intra-eu-award-under-the-ect/> accessed 11 March 2026.

[xvi] Swiss Federal Supreme Court, Decision 4A_66/2024 (13 June 2024) < https://www.bger.ch/ext/eurospider/live/de/php/aza/http/index.php?highlight_docid=aza://13-06-2024-4A_66-2024&lang=de&zoom=&type=show_document> accessed 11 March 2026; C. Moehler, ‘Swiss Supreme Court Upholds Arbitral Award in Favor of Investors Against the Czech Republic’ (Kluwer Arbitration Blog, 4 November 2024)
<https://legalblogs.wolterskluwer.com/arbitration-blog/swiss-supreme-court-upholds-arbitral-award-in-favor-of-investors-against-the-czech-republic/> accessed 11 March 2026.

[xvii] ‘Post-Achmea Landscape: Evolving Orientations in Intra-EU Investment Arbitration’ (Global Arbitration Review, 24 September 2025) <https://globalarbitrationreview.com/review/the-european-arbitration-review/2026/article/post-achmea-landscape-evolving-orientations-in-intra-eu-investment-arbitration> accessed 11 March 2026.