This article is originally from The American Review of International Arbitration (ARIA)

PREVIEW

I. INTRODUCTION

Courts play a fundamental role in the effective resolution of disputes. While arbitration and other alternative dispute resolution mechanisms are widely relied upon in cross-border and investment contexts, the authority and involvement of domestic courts remain indispensable. Without judicial enforcement, arbitral awards lack binding effect and practical utility, reducing them to little more than symbolic declarations. Thus, the legitimacy and effectiveness of arbitration are inextricably linked to the supportive function of the judiciary. Recent Court of Justice of the European Union (CJEU) decisions have demonstrated the importance of this function. Beginning with the Achmea case, the CJEU stripped arbitration tribunals of their authority to decide matters involving EU law, opening the floodgates to disputes in Europe that can no longer be resolved through arbitration.

The literature includes significant scholarship examining the interaction between international arbitration and European Union law.  The tension between the European legal order and the international arbitration framework predates the cases analysed in this article,  and has been extensively examined in the literature.  This article examines the three investment arbitration cases,  and progressive narrowing of the jurisdiction of arbitrators and arbitrability in disputes involving European Union law. While earlier scholarship largely analysed the legal landscape as it then existed, much of which has since been overtaken by subsequent developments, this paper offers a more accurate and up-to-date account, incorporating the most recent decisions of the European courts. It further advances the discussion by providing concrete suggestions for arbitrators and other stakeholders regarding the options available considering current CJEU jurisprudence. Accordingly, the article makes a significant contribution to both the academic literature on arbitration and the practice of resolving disputes within the European legal order.

Recent jurisprudence from the CJEU demonstrates a clear trend toward consolidating interpretive authority over EU law within the CJEU itself. As established under the Treaty on European Union and the Treaty on the Functioning of the European Union, the CJEU holds exclusive jurisdiction to interpret matters of EU law.  While bilateral and multilateral investment treaties may confer jurisdiction upon arbitral tribunals, such jurisdiction is inherently limited by the primacy of EU law. Arbitral authority is thus confined to disputes that fall outside the scope of the EU legal order, as EU law supersedes any conflicting provisions arising from international agreements between Member States or with third parties.