Turkey: A Comprehensive Guide To International Arbitration In Turkey: Part VIII (Turkish Approach To EU's Approach: A Short Summary Of Comments Of The Turkish Academics On The Achmea Decision)

Slovakia v. Achmea¹, also known as The Achmea case, involved an arbitration clause in a bilateral investment treaty (BIT) between the Netherlands and Slovakia². Achmea, a Dutch insurance company, had invested in Slovakia and then commenced arbitration proceedings against the country, alleging a violation of the BIT. Slovakia argued that the arbitration clause in the BIT was unlawful under EU law on the basis of Articles 18, 267, and 344 TFEU³ because it permitted disputes to be resolved by an ad hoc arbitral tribunal as opposed to the national courts of EU member states.

In 2006, Slovakia partially reversed the previous liberalization of its health insurance market, prohibiting the dissemination of proceeds generated by Achmea's insurance operations in Slovakia⁴. In 2008, Achmea initiated arbitration proceedings against Slovakia under the BIT for violation of substantive treaty requirements⁵. In its final 2012 award, the ad hoc arbitral tribunal constituted under the UNCITRAL Rules and situated in Frankfurt determined that Slovakia had violated the BIT and ordered it to pay Achmea damages totaling approximately 22.1 million euros⁶. Slovakia challenged the jurisdiction of the arbitral award, by arguing that the tribunal lacked the authority to hear the claims because the arbitration clause in Article 8 of the BIT was incompatible with EU law, more specifically articles 18, 267, and 344 of the TFEU, upon the referral of the German Federal Court of Justice, ECJ process started⁷. Briefly, In March 2018, the European Court of Justice ruled that the arbitration clause in the BIT was incompatible with EU law because it undermined the autonomy of the EU and its legal order and the function of EU courts in assuring the uniform interpretation and application of EU law⁸. The Achmea Judgment raised debates between Member States on CETA as well as ICSID jurisdiction. As well known, ICSID rejected the objections on the basis of reasoning in the Achmea Judgment about the intra-EU jurisdiction⁹.

The Achmea Judgment quickly attracted the attention of Turkish academics. The first Turkish translation of the judgment was published in an academic journal three months after the Judgment was released¹⁰. Turkish academics alluded¹¹ that the Achmea Judgment provided the legal ground for the EU to promote unitary policies and showed that the European Commission, in its "communication" dated 19 July 2018¹², described the bilateral investment agreements concluded by the member states of the European Union as a parallel contract system by referring to the Achmea¹³ that constitutes an obstacle to the single market in the Union and also that the European Commission declared it planned to supervise the member states in the process of terminating bilateral investment agreements and might even impose various sanctions on member states¹⁴.

By citing the works of Emmanuel Gaillard, Turkish academics likened the Achmea Judgment to a bomb that suddenly detonated on 200 intra-EU investment agreements and set off a series of chaotic repercussions whose exact destination has yet to be predicted¹⁵. The decision also was criticized as preventing the investors from non-member States of the EU from applying to the international investment dispute mechanisms and obliged them to bring their disputes in front of the EU Courts¹⁶. On the other hand, ICSID decisions¹⁷ on not recognizing the conclusion of the Achmea Case were also touched¹⁸. To sum up, according to the general view of Turkish academics who have a reputation in the field of international investment law, they argued that the "investor-state" arbitration is replaced by the project of "Multilateral Investment Court (MIC), or International Investment Court (IIC)"¹⁹.

Footnotes

1. Judgment Of The Court (Grand Chamber), C-284/16, 6 March 2018. https://www.italaw.com/sites/default/files/case-documents/italaw9548_0.pdf. 07.05.2023

2. Agreement On Encouragement And Reciprocal Protection Of Investments Between The Kingdom Of The Netherlands And The Czech And Slovak Federal Republic, Date of signature: 29/04/1991, Date of entry into force: 01/10/1992, Date of termination: 31/03/2021. https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:62016CJ0284. 07.05.2023. https://investmentpolicy.unctad.org/international-investment-agreements/treaties/bit/2650/netherlands---slovakia-bit-1991- 07.05.2023

3. The Achmea Judgment, C-284/16, 2018, para. 1.

4. Ibid. para. 8.

5. Ibid. para. 9.

6. Ibid. para. 12.

7. Ibid. para.10-12.

8. Ibid. para. 57-59.

9.https://www.iisd.org/itn/en/2020/06/20/icsid-tribunal-rejects-intra-eu-jurisdictional-objection-and-upholds-jurisdiction-over-mass-claim/. 07.05.2023.

10. ZORLU, Süleyman Yasir, "Avrupa Birliği Adalet Divanından Yatırım Tahkimini İlgilendiren Önemli Bir Karar: Achmea Kararı", Küresel Bakış, 8/24 (June 2018), https://dergipark.org.tr/tr/download/article-file/1671853. 07.05.2023.

11. Some articles explicitly took the opinions which argued that the Achmea Judgment had been politically influenced by the European Commission. See: BİRENGEL, Tilbe, "Achmea Kararının Yatırım Tahkimine Etkisi", October 2018, in the databank of the Law firm owned by Professor Ercument Erdem, https://www.erdem-erdem.av.tr/bilgi-bankasi/achmea-kararinin-yatirim-tahkimine-etkisi. 07.05.2023

12. Communication From The Commission To The European Parliament And The Council. https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52018DC0547&rid=8. 07.05.2023

13. Ibid. p.2

14. İLHAN, Ekin Deniz, "Uluslararası Yatırım Uyuşmazlıkları Ve Yatırım Tahkimi Yargılamasında Karşılaşılan Sorunlar", Current Issues On International Investment Disputes And Investment Arbitration, TBB Dergisi 158, 2022, p. 449.

15. ENER, Mustafa Alper, "Abad'in Achmea Karari Ve Yatirimci-Devlet Uyuşmazlik Çözümü Açisindan Yansımaları", Ankara Hacı Bayram Veli Hukuk Fakültesi Dergisi, C. XXVI, Y. 2022, Sa. 1 (165-208), p. 197.

16. Ibid. p. 198.

17. For instance, Masdar Solar & Wind Cooperatief U.A. v. Kingdom of Spain, ICSID Case No. ARB/14/1.

18. İLHAN, Ekin Deniz, Uluslararası Yatırım Uyuşmazlıklari Ve Yatırım Tahkimi Yargılamasında Karşılaşılan Sorunlar, p. 450.

19. KARACAN, PINAR, "Avrupa Birliğinde "Achmea" Kararı ve "1/17 Sayılı Görüş" Işığında "Yatırımcı-Devlet" Uyuşmazlık Çözüm Mekanizmasının Geleceği", Public and Private International Law Bulletin, 40(2): 1507–1534, Prof. Dr. Cemal Şanlı'ya Armağan, p. 1533-1534.

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