EU state aid law: further EU challenges to investment arbitration

It is common knowledge by now that EU law does not take a favourable view of intra-EU investment arbitrations. As discussed in previous issues of the Investment Arbitration Outlook,1 the Court of Justice of the European Union (‘CJEU’) has handed down a number of landmark judgments essentially concluding that there is no place for investment arbitration between EU Member States and EU investors.

While the general stance in the Achmea case2 and subsequent decisions has attracted the arbitration world’s attention, the idiosyncratic EU State aid laws are on the radar as the next concern for EU investors (and perhaps even non-EU investors) who seek to obtain or enforce a favourable investment arbitration award.

This Article reveals that EU State aid law, in the subset of investment cases where it could apply, may have more far-reaching effects than the general prohibition on intra-EU investment arbitrations. Firstly, State aid rules may apply to all arbitration cases where an

EU Member State is the respondent (i.e. even if the claimant is not based in the EU), so the scope of these rules exceeds that of the intra-EU arbitration concerns that the CJEU has raised to date. And secondly, where they are applied, the strong enforcement measures that underpin EU State aid rules could present an insurmountable obstacle to actually enforce an award.

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