Quarterly Review: January – March 2023

The first quarter of 2023 proved rife with important developments in international investment law and arbitration involving Europe, the United States and the Indo-Pacific area. The star of the show remains the ECT, and its troubled relationship with the European Union and its Member States. Indeed, by the beginning of March, the Depositary of the Energy Charter Treaty confirmed receipt of the written notifications of withdrawal from the Treaty of France, Germany and Poland, and more Member States might follow in the foreseeable future.

However, the months leading to this announcement were equally exciting.


January has seen the Komstroy saga coming to an end. The cour d’appel de Paris set aside the award issued by the ad hoc arbitration tribunal in Energoalliance Ltd. v. The Republic of Moldova. Our Readers will remember how, in September 2021, the CJEU rendered the judgement in the case The Republic of Moldova v. Komstroy in which the Court held that the acquisition of a claim arising from a contract for the supply of electricity – in the fashion of the contracts entered by Komstroy (at the time Energoalians) – does not constitute an ‘investment’ within the meaning of Article 1(6) and Article 26(1) ECT. In application of the CJEU principle in Komstroy, the cour d’appel de Paris held that the debt that Moldova owed to Energoalians did not constitute either “claims to money […] associated with an Investment, pursuant to Article 1(6)(c) ECT”, nor a “right conferred by law or contract […] to undertake any Economic Activity in the Energy Sector” pursuant to Article 1(6)(f); and thus, it was not an investment.

In January, the debate on the reform of ISDS continued in front of the United Nations. The UNCITRAL Working Group III met in Vienna for its 44th session between 23-27 January 2023. The Working Group III discussed the codes of conduct for arbitrators and judges and its accompanying commentary. It also resumed the discussion on a possible reform of ISDS appellate and multilateral court mechanism expressing a “general interest” for an appellate mechanism in the ISDS. Further discussion on this issue should be expected soon, even though the annotated provisional agenda for the 45th Session – held in New York, 27–31 March 2023 – does not expressly include the topic.

January has also provided some good reading materials and resources within and outside the browser tabs of the EFILA Blog. The Blog welcomed submissions from Lili Feher and Sebastian Lukic titled “Adjudicating actions of EU institutions in ICSID proceedings: A comment on PNB Banka v. Latvia”, from Emma Iannini on “Euroscepticism: A Driver of the EU’s Clash with ISDS and Public International Law?” and from Simon Weber explaining “Fair and Equitable Treatment in CETA from a German Perspective”.

The UNCITRAL Working Group III advanced Report of the 44th Session is now available to the public through the United Nations Website. Additionally, our editor Mark Konstantinidis has analysed the Investment Protection and ISDS under the EU-Chile Advanced Framework Agreement in a Blog Post titled “The EU-Chile Advanced Framework Agreement, ISDS, and the Big Bad Dilemma”. In late January, Pacôme Ziegler and our junior editor Cristian Gallorini, published with The Journal of World Investment & Trade an open-access article on the topic of, and in favour of, ex-post valuation of damages under international investment law titled “The Case for the Ex-Post Valuation of Damages Under International Investment Law”.


In the previous quarter the stability of the ECT was tested by Poland, Spain, The Netherlands, France, Germany, Luxembourg, and Slovenia declaring or taking actions to exit the ECT. In February the debate continued at the EU and the Secretary General of the ECT levels. On 8 February, a non-paper prepared by the EU Commission was leaked. In the document the Commission declared that “it appears there is no scenario in which the EU and Euratom could allow the adoption of the modernised ECT, ratify it and remain party to a modernised ECT. As a result, a withdrawal of the EU and Euratom from the Energy Charter Treaty appears to be unavoidable”; and thus recommended co-ordinated withdrawal. An answer from the Secretary General of the ECT was not delayed. The 13 February letter clarified a few important points. First, according to Mr Lentz, the adoption of a modernised ECT is “part of the ongoing reform processes incorporating climate change” and not “a serious obstacle to the mitigation of climate change”. Second, the EU withdrawal would have an impact on other agreements (i.e., the “Association Agreement with Ukraine”; or “the current application, through the ECT, of WTO rules to non-WTO members”, among those listed in the letter). Third, an ex-ante termination of ECT and sunset clauses will ultimately impact legal certainty and protection. The letter concludes with the ECT Secretariat’s proposal to the EU Parliament to separate the potential withdrawal of the ECT from the adoption of the modernisation: the Secretariat suggests the EU not to object to the adoption of the modernisation of the ECT, before any withdrawal because this would not impact or require the EU and the Member States to ratify the modernised ECT. We are eager to see how the letter will be welcomed by the EU and the EU Member States and the actions that will eventually be taken.

In the meantime, on the other side of the Atlantic, the United States District Court for the District of Columbia (DDC) affirmed its approach in upholding to international law and protecting the operation of United States law from sovereign’s attempt to foreclose investors from enforcing intra-EU awards (though March would bring a very different interpretation…). In Nextera Energy v. Spain, the US District Court for the District of Columbia granted anti-suit injunctions against Spain and enjoined Spain from taking any action in the Dutch proceedings that could interfere with the investors petition to confirm the award (and thus its enforcement in the United States).

Also on the ECT front, on 27 February the very first intra-State arbitration (under Article 27 ECT) was brought by Azerbaijan against Armenia, claiming “illegal exploitation and expropriation” of its energy resources on its “internationally recognised sovereign territory”.

February has also seen the creation of the New Trade and Technology Council (TTC) between EU and India to promote cooperation and development of a “digital transformation, green technologies and trade.” The TTC is a “high-level coordination platform” for deepening the strategic collaboration between EU and India and for the furtherance of digital transformation, green technologies and trade (cfr. Joint Statement on the establishment of the EU-India Trade and Technology Council). The creation of the TTC is part of a broader strategy that intends to increase the EU engagement with the Indo-Pacific region. The so-called “EU Strategy for Cooperation in the Indo-Pacific” was inaugurated in the 2021 with a Joint Communication to the European Parliament and the Council. More information can be accessed through the European Commission’s Press Release.

In February, we continued our series “Young EFILA in conversation with…” by interviewing Michael Davar of Squire Patton Boggs in London. Young EFILA was also shortlisted for the Global Arbitration Review Awards 2023 in the category of best development of the year. And although we did not ultimately win, we could not have been more thrilled to be amongst this year’s nominees!


In March, the Depositary of the Energy Charter Treaty satisfied our curiosity by confirming receipt of France, Germany and Poland written notifications of withdrawal from the ECT. The withdrawal will take effect on 8 December 2023 (France), 21 December 2023 (Germany), 29 December 2023 (Poland). The withdrawals will also trigger the sunset clause under which investment covered by the ECT at the time of the withdrawal will continue to enjoy protection for an additional 20 years.

In March, two ad hoc committees rejected Spain’s attempt to annul the two awards rendered in favour of the investors in OperaFund Eco-Invest v. Spain and Hydro Energy 1 and Hydroxana v. Spain. The decisions follow a line of similar decisions in which Spain failed to meet the threshold to annul the intra-EU awards, including Watkins Holdings v. Spain from February.

On 29 March 2023, in an unprecedented move, the United States District Court, for the District of Columbia refused to enforce the award rendered in Blasket v. Spain. The DDC’s opinion echoes all arguments that have been passionately advanced by the EU Member States and the EU Commission for the past 20 years and regularly rejected by arbitral tribunals (but for a few exceptions). Indeed, the DDC explicitly deferred to the interpretation provided by the Member States (in this case Spain and the Netherlands, the investor’s Home State) according to which the ISDS provision in the ECT is incompatible with EU law. Judge Leon concluded holding that Member States lacked the legal capacity to enter into an agreement to arbitrate pursuant to Article 26 ECT. Something that may go unnoticed here, which is also unprecedented, is the acceptance of the argument that the Declaration of the Member States of 15 January 2019 on the legal consequences of the Achmea judgement and on investment protection are evidence of a “subsequent interpretation of the signatories”, instead of being mere political act with no interpretive effect. Readers would have to wait and see whether this opinion is going to remain an unique decision, or if the decision would encourage the DDC to resolve the pending enforcement proceedings in the same manner. Meanwhile, this seems to be a win for the EU outside of its territory.

March was an important month for EFILA and Young EFILA with the 8th EFILA Annual Conference 2023 hosted by Cuatrecasas on 16 March 2023 in Madrid, preceded by the Young EFILA panel discussion hosted by Allen & Overy the day before.

The Young EFILA discussion, centred around the theme “Combatting Climate Change: ISDS, friend or foe?”, proved very lively with five panellists (Emma Iannini, Isabel San Martín, Borja Álvarez Sanz, Richard Trinick, Gary Smadja and Antonio Vázquez-Guillen as moderator) discussing issues of investments in renewable energy, legitimacy and desirability of ISDS as a dispute-settlement mechanism, “regulatory chill”, the ECT, and the new generation of IIAs and of arbitrators.

The main EFILA Conference was equally exciting! The overarching theme for this year was: “Climate Change and International Investment Law & Arbitration: challenges and uncertainties”. We were grateful to hear the keynote address by Wendy Miles KC, in which she observed:

I’m unpersuaded that International Investment law, ISDS or the ECT are forces for evil or indeed forces for good. They’re simply narrow laws or implementing mechanisms. They’re made by humans and they can be unmade by humans.

This speech (excerpts of which will soon be published on our blog) was a great segue into the conference’s other panels. Another big highlight of the day was the fantastic fireside chat with Sir Francis Jacobs, where he shared with us his candid observations about the Achmea case and the wider role of CJEU. We are also very proud of our senior editor, Velislava Hristova, who together with her co-author Stanislav Cherkezov received the top prize in the EFILA Young Practitioners and Scholars Essay Competition for their essay titled “Going Out of Business: Representing Insolvent Claimants Seeking Investment Treaty Protection in Arbitrations Brought against States”.

As a Blog, in March we were incredibly grateful to Dmitri Evseev for his wide-ranging interview as part of the “Young EFILA in conversation with…” series; as well as to Stanislava Nedeva for her excellent piece entitled “On the Road to Neutrality: Multilateral Investment Court and Appointment of Adjudicators”.

The Future

At the time of writing, the 45th Session of the UNCITRAL Working Group III and the Paris Arbitration Week are still ongoing. What should we expect in the foreseeable future? Well… we are certainly looking forward to the ECT Contracting Parties vote at the end of April 2023 to see whether the Modernised ECT will be formally adopted…

We will keep you posted with the new developments in three months. In the meantime, remember that you are always welcome to contribute to the Blog yourself.

The Editorial Board at EFILA Blog

***This quarterly review was prepared by Cristian Gallorini with assistance from Agata Daszko***

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