Stockholm Arbitration Tribunal Denies Jurisdiction over Intra-EU Investment Dispute under the Energy Charter Treaty


In a groundbreaking award, dated 16 June 2022, made in Green Power Partners K/S and SCE Solar Don Benito APS v The Kingdom of Spain, a tribunal constituted under the Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce (“SCC”) unanimously denied its jurisdiction ratione voluntatis over an intra-EU investment dispute arising under the Energy Charter Treaty (“ECT”), a multilateral treaty that has been ratified by some 50 countries as well as the European Union. This is the first known award to deny jurisdiction on the basis that EU law applies to the question of the tribunal’s jurisdiction and that such law precluded the offer of Spain, as an EU Member State, to submit to arbitration a dispute with investors from another EU Member State (here, Denmark).


The Green Power dispute is one of more than 50 investment disputes arising from Spain’s alteration of its regulatory framework applicable to solar energy. Most of these disputes have been resolved, or are still awaiting resolution, under the arbitration rules of the World Bank’s International Centre for Settlement of Investment Disputes (“ICSID”) and its attendant ICSID Convention.

Although ICSID arbitration was an option available to them, the Danish investors in this case opted for SCC arbitration. The arbitration commenced in September 2016 and proceeded in parallel with the fast-paced judicial and legal developments triggered by the landmark judgment of the Court of Justice of the European Union (“CJEU”) in Slovak Republic v Achmea B.V. (the “Achmea Judgment”). In September 2021, the CJEU extended the effect of the Achmea Judgment to intra-EU disputes under the ECT (the “Komstroy Judgment”), see here.

In accordance with the SCC Arbitration Rules, the SCC Board fixed the seat of the arbitration in Stockholm. Among others, Spain argued that the tribunal lacked jurisdiction ratione voluntatis as EU law precludes intra-EU arbitration under the ECT. The Respondent argued, among others, that the tribunal had to determine the validity of its offer to arbitrate in accordance with the Swedish Arbitration Act (“SAA”) as the law of the seat of the arbitration (“lex arbitri”). The investors argued that the matter should be decided in accordance with public international law on the basis that the tribunal had been established under a public international law instrument – the ECT. The investors submitted that the choice of Sweden as the seat of arbitration by the SCC Board was “fortuitous” and, therefore, “the arbitration agreement should only be affected by international law, from which it emanated.

The SCC Arbitration Rules are silent on the question of what law applies to the determination of the tribunal’s jurisdiction. Section 48 of the SAA provides that, in the absence of the parties’ agreement, “the arbitration agreement shall be governed by the law of the country in which, by virtue of the agreement, the proceedings have taken place or shall take place.

The Tribunal Denies its Jurisdiction

The tribunal, chaired by Professor Hans Van Houtte (Belgium) and including arbitrators from Germany and Argentina, acknowledged “the importance of the question [of the law applicable to the determination of its jurisdiction] for the analysis of the objections raised by the Respondent.” In line with the position adopted by other tribunals, it noted that the applicable law provision in Article 26(6) of the ECT contains a choice of law rule only for the merits of the dispute. It stated that “this conclusion means that the Parties have not agreed on the law applicable to jurisdictional matters under Article 26(6) ECT.” The tribunal then distinguished this dispute from the precedent ICSID cases involving Spain on the basis that in non-ICSID cases the choice of an arbitral seat triggers the application of lex arbitri and the attendant supervision of the local courts. The tribunal concluded that “[a]s the Parties have not explicitly agreed on the law governing the arbitration agreement and neither the ECT nor the SCC Rules, to which the Parties have agreed, determines the law applicable to the arbitration agreement, it follows that, pursuant to Section 48 SAA, Swedish law, i.e. the law of the seat, is applicable to the determination of jurisdictional matters.” The selection of the seat in Sweden in turn triggered the application of EU law, as the law in force in every EU Member State, including Sweden. The tribunal concluded that “under the applicable lex arbitri, it is required to take as a starting point Article 26 ECT [i.e., the dispute settlement provision of the ECT] and then consider and, if necessary, apply other rules of both international and domestic law, as relevant for each question.” With respect to EU law, the tribunal determined that it can be viewed both as a matter of international and of domestic law.

The tribunal rejected a binary en bloc analysis that would entail applying either EU law or public international law to the question of jurisdiction. Instead, it noted that “[t]he analysis must be conducted at a finer-grained level whereby certain questions are governed by the combined operation of certain specific norms, whether from international or domestic law.

The tribunal examined Article 26 ECT pursuant to the well-established interpretation rules of the Vienna Convention on the Law of Treaties (“VCLT”). It noted that, according to the ordinary meaning of Article 26 ECT, Spain had given its unconditional consent to arbitration. However, the tribunal said that it must keep in mind the relevant facts of the case, without which “the interpretation effort [would turn] into an exercise in abstraction.” It considered the various instruments made in connection with the conclusion of the ECT and its subsequent agreements, including the 2019 Declaration of 22 EU Member States, including Denmark and Spain, on the legal consequences of the Achmea Judgment (the “Declaration”) see here. The tribunal concluded that the effect of the Declaration was “only of an interpretive nature, providing “an additional indication of how Spain and Denmark understood and understand their legal relations under the ECT and EU law, including the application in such relations of a unilateral offer of arbitration by one of these countries made to an investor of the other.” Finally, the tribunal considered systemic integration by reference to Article 31(3)(c) VCLT, which provides that “[t]here shall be taken into account together with the context [….] (c) Any relevant rules of international law applicable in the relations between the parties.” In this context, the tribunal noted that it “has not been persuaded that one clear meaning of Article 26 ECT has emerged” from the ordinary meaning, context, object and purpose of the ECT, and, therefore, recourse can be had to this rule of interpretation. Having reached the conclusion that “interpreting Article 26 ECT without resorting to EU law is inconclusive in the circumstances of this case,” the tribunal turned to the relevant EU norms on the basis that the seat of the arbitration was Sweden, an EU Member State. The tribunal accepted that the Achmea and Komstroy Judgments were relevant and decisive, as interpretations of the law, to the question of the validity of an investor-State arbitration clause under the applicable EU law in the context of an intra-EU dispute. The tribunal observed that the Declaration is an authentic interpretation of the Achmea Judgment. It concluded that the Achmea Judgment led to a “clear answer,” as confirmed in the Komstroy Judgment, that “Spain’s offer to arbitrate under the ECT is not applicable in intra-EU relations and hence there is no offer of arbitration that the Claimants could accept.

The tribunal noted that the European Commission had informed Spain that it had initiated State aid proceedings in connection with the compensation awarded by another tribunal. State aid is a matter of exclusive competence of the European Commission. In a clear sign of further deference to EU law, the tribunal stated that the EU law regulations on State aid mean that “[i]f the Tribunal were to assert jurisdiction over the claims brought by the Claimants, it would have to decide the merits of claims relating to matters that pursuant to the EU Treaties are under the exclusive competence of the European Commission.


The ECT tribunal’s reasoning exposes a divergence between non-ICSID tribunals and ICSID tribunals regarding the question of the law applicable to jurisdictional matters in investment treaty arbitrations. Multiple tribunals within and without the ECT context have held that this matter is to be determined based on the constitutive treaty alone. This tribunal did not stop at the interpretation of the ECT, finding that it was inconclusive on the issue of jurisdiction and decisively applying also EU law through the gateway of the lex arbitri. While referring to the lex arbitri in this context may be legally correct, it is still questionable, as a matter of principle, if the jurisdiction of a tribunal constituted under a public international instrument should be decisively determined by reference to the lex arbitri, i.e., a national legal order, as opposed to public international law alone. The existence and scope of an offer to arbitrate contained in an investment treaty are best ascertained by reference to public international law or else the interpretation risks being exposed to the fortuitous choice of the arbitral seat. The lack of discussion of the key legal principle of effectiveness, or effet utile, under the law of treaties in relation to the ECT’s arbitration provision in the Green Power award is perplexing in this context.

The tribunal’s reference to EU law as being part of public international law is contentious in the investment arbitration jurisprudence and literature. Further, the tribunal’s retroactive application of the 2019 Declaration, as an interpretive instrument, to third party investors having accepted a treaty-based offer of arbitration in good faith raises its own set of questions under the law of treaties and general international law. The award also underscores the significance of the choice of the seat in a non-ICSID arbitration and exposes the different implications of the choice of forum by the investors in situations where a choice between an ICSID and a non-ICSID forum is available.

While it can be expected to generate polarised views and debate, this ECT award may mark an inflection point in the mission of non-ICSID tribunals to resolve an undoubtedly complex issue under the ECT. It remains to be seen if intra-EU BIT tribunals will follow the reasoning of this ad hoc ECT tribunal and will take into account the latest judicial and legal developments in the EU on the issue of jurisdiction over intra-EU treaty disputes. ICSID tribunals, which are detached from any national legal order and lack a formal seat, likely will be hesitant to adopt the Green Power tribunal’s position in intra-EU disputes under the ECT or in an intra-EU BIT arbitration in light of the low intrinsic persuasive strength of this ruling.