ECJ Arbitration

Small Court Case, Big Implications

LUXEMBOURG - OCTOBER 23: The Grand Chamber at the European Court of Justice, from left: Judges Aindrias O'Caoimh, Jerzy Makarczyk, Christiaan Willem Anton Timmermanns, Vassilios Skouris, president of the European Court of Justice, Allan Rosas and Anthony Borg Barthet U.O.M. arrive at the courtroom for the decision of the Volkswagen trial in Luxembourg, Luxembourg, on Tuesday, Oct. 23, 2007. Germany's so-called Volkswagen law is illegal, the European Union's highest court said in a ruling that may remove the last hurdle for a takeover of Europe's largest carmaker by Porsche AG. (Photo by Wolfgang Von Brauchitsch/Bloomberg via Getty Images)
The Grand Chamber at the European Court of Justice.
  • Why it matters

    Why it matters

    The case raises the issue of jurisdiction of arbitration courts in Europe, which could have far-reaching effects for investors.

  • Facts


    • The suit was brought by a Dutch insurance company against Slovakia, as the legal successor to a 1991 treaty with Czechoslovakia.
    • When the Dutch company appealed to an arbitration court in Frankfurt, Slovakia argued that the court had no jurisdiction over the case because the BIT became invalid when Slovakia joined the E.U.
    • The case is now before the European Court of Justice.
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Opponents of the planned free trade agreement between the European Union and the United States are keeping a close eye on anything to do with arbitration courts.

After all, the model they sharply criticize as “parallel justice” beyond the reach of government jurisdiction is still on the table as part of the negotiations for the Trans-Atlantic Trade and Investment Partnership, known as TTIP.

They will therefore undoubtedly be aware of the fact that Germany’s Federal Court of Justice has submitted questions to the European Court of Justice on the effectiveness of arbitration agreements in bilateral investment protection treaties between European Union member states.

“The case is rather small, and the amount in controversy is relatively small, but the decision will be extremely exciting,” explained Markus Burianski, who heads the department that handles national and international arbitration proceedings at the law firm of White & Case in Frankfurt.

In the case in question, the Netherlands and the former Czechoslovakia had signed a bilateral investment protection treaty, or BIT, in 1991.

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