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Case C-109/20: an ad hoc arbitration agreement cannot be used to circumvent an invalid arbitration clause in an intra-EU BIT

  • 04/11/2021
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On 26 October 2021, the Court of Justice of the European Union (“CJEU”) decided, in its judgment in Case C-109/20 Republic of Poland v PL Holdings, that where an investor-State arbitration clause in an intra-EU bilateral investment treaty (“BIT”) is invalid under European Union (“EU”) law, investors cannot rely on a tacit ad hoc arbitration agreement with identical content to the arbitration clause. Importantly, the CJEU clarified that EU Member States must contest the jurisdiction of an arbitral tribunal in such a situation and national courts of the Member States must uphold an action to set aside an arbitration award made on the basis of an arbitration agreement that is contrary to EU law.

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    • 10/11/2021
    • Articles

    BITs and FITs: Investment treaty claims arising out of Ukraine’s recent amendments to its FIT scheme

    On 28 October 2021, the International Centre for Settlement of Investment Disputes (ICSID) registered a new request for arbitration proceedings brought against Ukraine by SREW NV (SREW). SREW, which owns the 110-megawatt Dnepro-Bugsky wind power station in southern Ukraine, is claiming that Ukraine’s reforms to its tariff regime are in breach of the BLEU (Belgium-Luxembourg Economic Union) - Ukraine bilateral investment treaty (BIT). This follows the claim earlier in the year by Modus Energy International (Modus Energy), a Lithuanian investor in three solar power plants in Ukraine, which filed SCC arbitration proceedings against Ukraine under the Energy Charter Treaty (ECT). Modus Energy is claiming, by way of its Dutch subsidiary, that Ukraine has breached the ECT through the adoption of Law No. 810-IX, a legislative reform which reduced guaranteed feed-in tariffs (FITs). It is reported that Modus Energy is claiming damages of approximately EUR 11.5 million. Yet, the claims by SREW and Modus Energy may only be the first set of claims in a potential wave of investment treaty claims, under the ECT or other bilateral investment treaties, that Ukraine may face over recent amendments to its FIT regime. Elementum Energy, a UK investor, has already filed a notice of dispute under both the ECT and the UK-Ukraine BIT and it is reported that investors from Norway, South Korea and Turkey are also considering or have already filed similar trigger letters in response to Ukraine’s legislative reforms. In this Client Alert, we discuss the recent legislative reforms to Ukraine’s FIT regime which have already given rise to the disputes referred to above. We also consider the claims which Ukraine could face in the context of similar claims which other States have faced in response to the reduction in FITs.

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