EU law in arbitration refers to the interaction between arbitral proceedings—both commercial and investor-state—and the body of primary and secondary EU law, including the Treaty on European Union (TEU), the Treaty on the Functioning of the European Union (TFEU), and Court of Justice of the European Union (CJEU) jurisprudence. Arbitrators seated in EU Member States, or whose awards may be enforced there, routinely confront EU provisions on competition (Articles 101–102 TFEU), free movement, state aid (Article 107 TFEU), and consumer protection.
The leading early authority is Eco Swiss v. Benetton (Case C-126/97, 1999), in which the CJEU held that national courts must annul or refuse enforcement of arbitral awards that violate EU competition law, treating it as part of public policy under Article V(2)(b) of the New York Convention. Consumer-protection cases such as Mostaza Claro (C-168/05) extended this reasoning.
The relationship became markedly more hostile in investor-state arbitration. In Slovak Republic v. Achmea (Case C-284/16, 2018), the CJEU ruled that investor-state arbitration clauses in intra-EU bilateral investment treaties (BITs) are incompatible with Articles 267 and 344 TFEU because they remove disputes involving EU law from the EU judicial system. Komstroy (C-741/19, 2021) extended this logic to intra-EU disputes under the Energy Charter Treaty, and PL Holdings (C-109/20, 2021) blocked ad hoc workarounds. Following Achmea, 23 Member States signed the 2020 Agreement for the Termination of Intra-EU BITs.
Key practical issues include:
- whether arbitrators must apply EU law ex officio;
- enforcement risks when awards conflict with state aid decisions of the European Commission (see Micula v. Romania);
- the diverging treatment of intra-EU awards by courts inside the EU versus those in the US, UK, and under ICSID.
For commercial arbitration seated in the EU, however, the Eco Swiss framework remains stable: tribunals routinely apply EU mandatory rules, and awards survive review provided they do not manifestly disregard EU public policy.
Example
In the 2018 Achmea judgment, the CJEU ruled that the arbitration clause in the 1991 Netherlands-Slovakia BIT was incompatible with EU law, prompting Member States to terminate intra-EU BITs in 2020.
Frequently asked questions
Yes. Since Eco Swiss (1999), EU competition law is treated as public policy, and tribunals seated in the EU regularly apply Articles 101–102 TFEU; failure to do so can lead to annulment or refusal of enforcement.
Keep learning