Briefly Noted

Extract

On October 26, 2021, the Court of Justice of the European Union (CJEU) issued its judgment in Case C-109/20 Poland v. PL Holdings. The case concerned an arbitral award issued in favor of PL Holdings against Poland. The arbitration clause which served as the basis for resolving the parties’ dispute is contained in a 2017 bilateral investment treaty between Poland and the Belgium-Luxembourg Economic Union (BLEU BIT). One year after the award was made, the CJEU ruled in Achmea that intra-EU investor-state arbitration clauses in treaties between EU member states are incompatible with EU law. The Court conversely held that commercial arbitration was compatible with EU law because it is an expression of the will of the parties, rather than a consequence of a treaty between states. Poland used Achmea to argue against the arbitral tribunal's jurisdiction, but the objection was considered by the Arbitration Institute of the Stockholm Chamber of Commerce to have been registered too late and Poland was ordered to pay damages to PL Holdings. Poland then brought an action before the Svea Court of Appeal (Svea hovrätt) to set aside the award, based on the invalidity under EU law of the arbitration clause in the BLEU BIT. Though the Swedish court accepted that, based on Achmea, the clause was invalid, it held that Poland's late objection to the jurisdiction of the tribunal and subsequent arbitration with PL Holdings meant that an ad hoc arbitration agreement had been established between the parties that was not precluded by Achmea and thus, the Court denied Poland's request to set aside the award. Poland appealed to the Supreme Court of Sweden (Högsta domstolen), which requested a preliminary ruling from the CJEU as to whether “Articles 267 and 344 TFEU precluded the conclusion of an ad hoc arbitration agreement between the parties to the dispute where the content of that agreement is identical to an arbitration clause that is set out in the BIT and is contrary to EU law.” The CJEU answered this question in the affirmative.