Addiko Bank v. Croatia, Decision on Croatia’s Jurisdictional Objection Related to the Alleged Incompatibility of the BIT with the EU Acquis, 12 June 2020

Achmea	Court of Justice of the European Union Case C-284/16, Slowakische Republik v. Achmea B.V., Judgment (6 March 2018), RLM-12
Achmea Wathelet Opinion	Case C-284/16 Slowakische Republik v. Achmea BV, Opinion of Advocate General Wathelet, CLM–145
Arbitration Rules	ICSID Rules of Procedure for Arbitration Proceedings 2006
Article 11(2)-(3) Meeting Minutes	Minutes of the meeting with the Austrian representatives regarding the interpretation of Article 11 paragraph 2 and 3 of the Agreement on the promotion and protection of investment concluded with Austria, p. 1, 14 February 2018, C-225
BIT or Treaty	Agreement between the Republic of Austria and the Republic of Croatia for the Promotion and Protection of Investments, which entered into force on 1 November 1999
C-[#]	Claimants' Exhibit
CETA	Comprehensive Economic and Trade Agreement between Canada and the EU and its Member States
CJEU	Court of Justice of the European Union
CETA Opinion	CJEU Opinion 1/17, EU:C:2019:341, FJ-41
Cl. Mem.	Claimants' Memorial on Croatia's Preliminary Objections to Jurisdiction dated 29 March 2019
Cl. PHB1	Claimants' Post Hearing Brief dated 18 October 2019
Cl. PHB2	Claimants' Post-Hearing Reply Brief dated 22 November 2019
Cl. Rej.	Claimants' Rejoinder on Jurisdiction dated 28 April 2020
Cl. Reply	Claimants' Reply Submission on Croatia's Preliminary Objections to Jurisdiction dated 7 June 2019
CLM-[#]	Claimants' Legal Authority
Declarations	(i) the declaration by 22 Member States of the European Union on the legal consequences of the Judgment of the Court of Justice of the European Union in the Achmea case; (ii) the declaration by five EU Member States on the legal consequences of Achmea ; and (iii) the declaration by Hungary on the legal consequences of Achmea
GATS	World Trade Organization General Agreement on Trade in Services
Hearing	Hearing on Jurisdiction held from 20 August 2019 through 21 August 2019
ICSID Convention	Convention on the Settlement of Investment Disputes Between States and Nationals of Other States dated 18 March 1965
ICSID or the Centre	International Centre for Settlement of Investment Disputes
R-[#]	Respondent's Exhibit
Resp. Mem.	Respondent's Preliminary Objections to Jurisdiction dated 29 March 2019
Resp. PHB1	Respondent's Post Hearing Brief dated 18 October 2019
Resp. PHB2	Respondent's Reply Post-Hearing Brief dated 22 November 2019
Resp. Reply	Respondent's Reply to the Claimants' Submission on its Preliminary Objections to Jurisdiction dated 7 June 2019
Resp. Request	Respondent's Preliminary Objections to Jurisdiction and Request to Suspend the Proceedings on the Merits dated 21 December 2018
RLM-[#]	Respondent(s)'s Legal Authority
TEU	Treaty on European Union
TFEU	Treaty on the Functioning of the European Union
Tr. Day [#], [page:line]	Transcript of the Hearing
Tribunal	Arbitral tribunal constituted on [date]
UniCredit 2018 Decision	UniCredit Bank Austria AG and Zagrebačka banka d.d. v. Republic of Croatia, ICSID Case No. ARB/16/31, Decision on the Respondent's Article 9 Objection to Jurisdiction, 12 October 2018, CLM-136
UniCredit 2020 Decision	UniCredit Bank Austria AG and Zagrebačka banka d.d. v. Republic of Croatia, ICSID Case No. ARB/16/31, Decision on the Respondent's Application for Reversal of the Article 9 Decision and Decision on Jurisdiction and Admissibility, 24 March 2020, RLM-271
VCLT	United Nations, Vienna Convention on the Law of Treaties, 23 May 1969, United Nations Treaty Series, vol. 1155, p. 331
WTO	World Trade Organization

1.

This case concerns a dispute submitted to the International Centre for Settlement of Investment Disputes ("ICSID" or the "Centre") on the basis of the Agreement between the Republic of Austria and the Republic of Croatia for the Promotion and Protection of Investments, which entered into force on 1 November 1999 (the "BIT" or "Treaty") and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, dated 14 October 1966 (the "ICSID Convention").

2.

The Claimants are Addiko Bank AG, a company organized under the laws of the Republic of Austria, and Addiko Bank d.d., a company organized under the laws of the Republic of Croatia (together, "Addiko" or the "Claimants").

3.

The Respondent is the Republic of Croatia ("Croatia" or the "Respondent").

4.

The Claimants and the Respondent are collectively referred to as the "Parties." The Parties' representatives and their addresses are listed above on page (i).

5.

This dispute concerns Addiko's issuance of loans denominated in Swiss francs to Croatian consumers and businesses, and legislation enacted in the Republic of Croatia to convert the denomination of those loans into Euros. The present ruling, however, concerns Croatia's assertion that the Tribunal lacks jurisdiction pursuant to Article 11(2) of the BIT, which states that "[t]he Contracting Parties are not bound by the present Agreement insofar as it is incompatible with the legal acquis of the European Union (EU) in force at any given time."

6.

On 21 December 2018, the European Commission (the "Commission") filed with the ICSID Secretariat its Application for Leave to Intervene as a Non-Disputing Party, dated 20 December 2018 (the "Commission's Application").

7.

Also on 21 December 2018, Croatia submitted its Preliminary Objection to Jurisdiction, and Request to Suspend the Proceedings on the Merits ("Croatia's Request" or "Resp. Request"), including the following documents:

• Consolidated Index of Supporting Documentation filed with Croatia's pleadings as at 21 December 2018;

• Exhibits R-0001 through R-0005; and

• Legal Authorities RLM-0001 through RLM-0032.

8.

On 24 December 2018, the Tribunal invited the Parties to submit their observations on the Commission's Application using a simultaneous filing procedure on 11 January 2019, which is also the day on which the procedural calendar at Annex B of Procedural Order No. 1 called for Addiko to submit its Response to Croatia's Request.

9.

Prior to the filing of these submissions, Croatia sought leave from the Tribunal on 31 December 2018 to submit into the record of this proceeding, in support of its Request, the Decision on Bifurcation in Raiffeisen Bank AG and Raiffeisenbank d.d. v. Republic of Croatia (ICSID Case No. ARB/17/34) ("Raiffeisen"). On 3 January 2019, Addiko indicated that it had no objection to Croatia's submission of the Decision on Bifurcation in Raiffeisen. On 4 January 2019, the Tribunal granted Croatia's request, and Croatia submitted it as RLM-0033.

10.

On 11 January 2019, Addiko filed both its Observations on the Commission's Application ("Addiko's Observations") and its Response to Croatia's Request (the "Response"). Croatia also filed its Observations on the Commission's Application ("Croatia's Observations").

11.

Following these submissions, on 17 January 2019, Croatia submitted a letter to the Tribunal regarding seeking leave to submit three additional documents in support of Croatia's Request: (i) the declaration by 22 Member States of the European Union ("EU") on the legal consequences of the Judgment of the Court of Justice of the European Union ("CJEU") in the Achmea case ("Achmea");¹ (ii) the declaration by five EU Member States on the legal consequences of Achmea ; and (iii) the declaration by Hungary on the legal consequences of Achmea (collectively, the "Declarations"). The next day, on 18 January 2019, Addiko indicated that it had no objection to the introduction of the Declarations into the record. On 21 January 2019, the Tribunal granted on consent leave to submit the Declarations, and Croatia submitted them into the record the following day as RLM-41 through RLM-43.

12.

Also on 21 January 2019, the Tribunal issued its Procedural Order No. 2 in which it, inter alia, granted the Commission leave to make a written submission as a non-disputing party; declined Croatia's Request to suspend the proceedings on the merits; and determined to accelerate consideration of Croatia's preliminary objection related to the compatibility of the BIT with the acquis under Article 11(2) (the "accelerated issue"). In Procedural Order No. 2, the Tribunal also granted Addiko's request for production of "documents reflecting the occurrence of status of any State-to-State 'dialogue' that may have taken place under Article 11(3) of the BIT,"² a request that Addiko made during the briefing on Croatia's Request. In granting the request for production, the Tribunal invited Addiko to indicate by 28 January 2019 "any other disclosure that it contends would be material to the discrete legal issue accelerated for resolution."

13.

Consequently, on 28 January 2019, Addiko made additional requests for production. First, Addiko requested that Croatia "produce documents created, sent or received by Croatia regarding the status of the BIT or the compatibility of the BIT with the acquis regardless of whether these documents expressly refer to Article 11(3) of the BIT." Second, Addiko requested that Croatia "produce documents created, sent or received by Croatia, including documents sent to or received from the European Commission, regarding the Commission's application for leave to intervene as a non-disputing party in [this] arbitration and/or [the declarations]." Third, given Croatia's reliance on the Declarations, Addiko requested their travaux préparatoires.

14.

On 4 February 2019, the Commission submitted its Amicus Curiae Brief (the "Commission Submission").

15.

Also on 4 February 2019, Croatia submitted its opposition to Addiko's requests for production of 28 January 2019, on the ground that they were overbroad and neither material nor relevant to the accelerated issue. Croatia contended that Addiko's purported justification for the additional requests for production—that the Commission's intervention and the Declarations are the result of political expedience and pressure—was without merit and in any event concerned an inquiry into the actions of the Commission and the Member States of the European Union and not those of Croatia, as the Respondent in this proceeding. To this latter point, Croatia noted that an inquiry into inter-State exchanges may raise confidentiality issues.

16.

Croatia also requested an extension of time until 25 February 2019 to produce documents, given that the Parties had agreed to, and the Tribunal had accepted, a one-week extension of the deadline for first round submissions on the accelerated issue.

17.

On 5 February 2019, the Tribunal, having received confirmation of both Parties' availability, confirmed that a hearing on the accelerated issue would be held in Washington, D.C. on 20 August and 21 August 2019.

18.

On 13 February 2019, the Tribunal issued Procedural Order No. 3, denying Addiko's additional requests for production and granting Croatia's request for an extension of time until 25 February 2019 to produce documents.

19.

On 29 March 2019, in accordance with Procedural Order No. 2, Croatia submitted its Preliminary Objections to Jurisdiction ("Resp. Mem."), including the following documents:

• Legal Opinion of Professor Paul Craig (Hon QC), dated 29 March 2019 ("Craig Opinion");

• Index of the Legal Authorities to Professor Paul Craig's Expert Opinion, with Legal Authorities PC-0001 through PC-0060;

• Consolidated Index of Supporting Documentation Filed with Croatia's pleadings (as of 29 March 2019);

• Exhibits R-0032 through R-0038; and

• Legal Authorities RLM-0001 through RLM-0165.

20.

Also on 29 March 2019, in accordance with Procedural Order No. 2, Addiko submitted its Submission on Croatia's Preliminary Objections to Jurisdiction ("Cl. Mem."), including the following documents:

• Legal Opinion of Sir Francis Jacobs KCMG, QC ("Jacobs Opinion"), with Exhibits FJ-0001 through FJ-0033;

• Consolidated Index of Supporting Documentation Filed with Addiko's Pleadings (as at 29 March 2019);

• Exhibits C-0222 through C-0226; and

• Legal Authorities CLM-0145 through CLM-0184.

21.

On 7 June 2019, Addiko filed their Reply Submission on Croatia's Preliminary Objections to Jurisdiction ("Cl. Reply"), including the following documents:

• Supplemental Legal Opinion by Sir Francis Jacobs KCMG, QC ("Jacobs Supp. Opinion"), with Exhibits FJ-0034 through FJ-0045; and

• Legal Authorities CLM-0185 through CLM-0197.

22.

On the same date, Croatia filed its Reply to Addiko's Submission on its Preliminary Objections to Jurisdiction ("Resp. Reply"), including the following documents:

• Second Expert Opinion of Professor Paul Craig (Hon QC) ("Craig Supp. Opinion"), with an Index of Legal Authorities to Professor Paul Craig's Second Expert Opinion and Legal Authorities PC-0061 through PC-0066;

• Exhibits R-0039 through R-0041; and

• Legal Authorities RLM-0166 through RLM-0176.

23.

On 30 July 2019, the Tribunal held a pre-hearing organizational meeting with the Parties by telephone conference.

24.

On 2 August 2019, the Tribunal issued Procedural Order No. 5³ concerning the organization of the hearing on the accelerated issue.

25.

A hearing on the accelerated issue was held in Washington D.C. from 20 August 2019 to 21 August 2019 (the "Hearing"). The following persons were present at the Hearing:

Tribunal :
Ms. Jean E. Kalicki President
Prof. Guido Santiago Tawil Arbitrator
Mr. Miloš Olík Arbitrator

ICSID Secretariat :
Mr. Alex Kaplan Secretary of the Tribunal

For the Claimants :
Mr. Franz Schwarz WilmerHale
Mr. Gary Born WilmerHale
Mr. Naboth van den Broek WilmerHale
Ms. Danielle Morris WilmerHale
Mr. Daniel Costelloe WilmerHale
Mr. Justine Nguyen WilmerHale
Mr. Jose Romero WilmerHale
Mr. Amy Titus WilmerHale
Mr. Stefan Choi Addiko Bank AG

For the Respondent :
Mr. Robert G. Volterra Volterra Fietta
Mr. Graham Coop Volterra Fietta
Ms. Angela Ha Volterra Fietta
Mr. Govert Coppens Volterra Fietta
Ms. Eva Paloma Treves Volterra Fietta

Court Reporter :
Ms. Dawn K. Larson B&B Reporters

26.

During the Hearing, the following persons were examined:

On behalf of the Claimants :
Sir Francis Jacobs KCMG, QC Fountain Court Chambers

On behalf of the Respondents :
Prof. Paul Craig (Hon QC) University of Oxford, Faculty of Law

27.

On 26 August 2019, the Tribunal issued Procedural Order No. 7⁴ confirming the schedule for post-hearing submissions on the accelerated issue.

28.

The Parties filed simultaneous post-hearing briefs on 18 October 2019 ("Cl. PHB1" and "Resp. PHB1," respectively), and simultaneous reply post-hearing briefs on 22 November 2019 ("Cl. PHB2" and "Resp. PHB2," respectively).

29.

On 20 December 2019, each Party filed a submission on costs.

30.

On 1 May 2020, the Tribunal issued Procedural Order No. 15,⁵ which addressed inter alia the production into the record of this proceeding of a recent decision in another ICSID arbitration against Croatia under the Austria-Croatia BIT (the "UniCredit 2020 Decision").⁶ The record had long included an earlier decision in that case (the "UniCredit 2018 Decision"),⁷ and in light of the Parties' prior advice that the UniCredit 2018 Decision was the subject of a pending reconsideration request, the Tribunal's Procedural Order No. 5 had ordered Croatia to produce a copy of the reconsideration decision when it became available.⁸ In Procedural Order No. 15, the Tribunal directed Croatia to produce in this case only a redacted version of the UniCredit 2020 Decision, to address certain stated concerns about confidentiality.⁹ At the same time, the Tribunal advised that it already was "well on its way to producing" the instant decision, and was "not waiting for access" to the UniCredit 2020 Decision to complete its work.¹⁰

31.

On 29 May 2020, the Tribunal noted with disappointment that it had not yet received the redacted version of the UniCredit 2020 Decision, despite the passage of four weeks from Procedural Order No. 15, but reiterated that it would not defer issuing this ruling (which it was almost ready to issue) to await that authority. Later that day, Croatia submitted the redacted UniCredit 2020 Decision, which has now been added to the record of this case.¹¹

32.

The summary below is intended to frame the issues presented by the Parties, not to be an exhaustive summary of all their assertions or all authorities they invoke in support. The absence of reference to particular assertions or authorities should not be taken as an indication that the Tribunal did not consider those matters. The Tribunal has carefully considered all arguments submitted to it in connection with the accelerated issue.

33.

The Parties have set out their positions on the threshold issue of who bears the burden of proving the Tribunal's jurisdiction.

34.

Croatia asserts that it is "accepted international practice" that Addiko bears the onus to establish the Tribunal's jurisdiction under both the BIT and the ICSID Convention.¹² This is particularly so, Croatia says, as the Contracting Parties to the BIT made an offer to arbitrate only a limited category of claims regarding investments that meet specific conditions.¹³

35.

Specifically, Croatia asserts that Addiko has failed to prove that the conditions for the "Application of the Agreement" enshrined in Article 11 of the BIT are fulfilled. According to Croatia, Article 11(2) of the BIT subordinates the BIT to the EU acquis in force at any given time, yet Addiko has failed to explain how its claims and the arbitration clause at Article 9 of the BIT are compatible with the EU acquis.¹⁴

36.

Croatia also states that Addiko has not established the jurisdiction of this Tribunal under consented under the BIT to submit the Addiko's claims to the Centre. The essential requirement of written consent under Article 25 of the ICSID Convention has thus not been satisfied.¹⁵

37.

Addiko considers that neither party bears the burden of establishing the Tribunal's jurisdiction.¹⁶ Addiko points to jurisprudence from the International Court of Justice ("ICJ") and ICSID to illustrate that while each Party bears the burden of proving the facts on which it relies, the existence of jurisdiction is a "legal determination reserved for the Tribunal" based on the facts presented and the parties' legal arguments.¹⁷ This approach is consistent, Addiko says, "with the principle that the Tribunal is entitled to determine the extent of its own jurisdiction and with other principles of international law such as iura novit curia."¹⁸ Quoting the ICJ, Addiko states that "[t]here is no burden of proof to be discharged in the matter of jurisdiction."¹⁹

38.

In the Tribunal's Procedural Order No. 2, the Tribunal asked "[w]hether Article 11(2) of the BIT anticipates that the issue of alleged incompatibility with the EU acquis should be decided de novo by an arbitral tribunal otherwise empaneled pursuant to Article 9 of the BIT, or alternatively envisions some form of deference on this issue to the views of the EU courts?"²⁰

39.

Croatia asserts that Article 11(2) "not only envisions but mandates deference to the CJEU's binding interpretations of EU law."²¹ The deference reflected in Article 11(2) is "particularly relevant if the CJEU has specifically adjudicated the question before the Tribunal."²² Because (in Croatia's view) the CJEU's Achmea Judgment "removed any uncertainty about the incompatibility of arbitration clauses in intra-EU BITS" with the Treaty on the Functioning of the European Union (the "TFEU"), and "conclusively determined that Article 9 of the BIT is incompatible with—at the very least—Articles 267 and 344 of the TFEU," the Tribunal "cannot in good faith adopt a different interpretation,"²³ and "it would be ultra vires for this Tribunal … to overrule or fail to apply the CJEU's determinative finding …."²⁴

40.

For Addiko, the Tribunal is "not only permitted, but indeed required, to determine the extent of its jurisdiction de novo," and "owes no deference under international law to the views of the CJEU or the European Commission."²⁵ Article 41(1) of the ICSID Convention, which provides that "[t]he Tribunal shall be the judge of its own competence," makes this plain.²⁶ In its view, "Article 11(2) does not, and cannot, displace the basic principle of international adjudication that an international court or tribunal is always the judge of its own jurisdiction."²⁷ Addiko thus rejects any suggestion that Article 11(2) "somehow created a carve-out from the Tribunal's acknowledged competence-competence."²⁸ Nor does Achmea override the Tribunal's mandate to examine and establish its own jurisdiction de novo. In Addiko's view, Achmea does not reach the issues in this case, nor even purport to engage in the public international law analysis of compatibility required by the BIT; in any event, Achmea is "plainly not binding on this Tribunal."²⁹

41.

In Procedural Order No. 2, the Tribunal also asked, "As of what date does Article 11(2) of the BIT anticipate that the issue of alleged incompatibility with the EU acquis be assessed, including inter alia, (i) the date of Croatia's accession, (ii) the date of the investor's request for arbitration or ICSID registration of such a request, or (iii) the date of a tribunal's decision?"³⁰ The Parties' respective answers to this question follow.

42.

For Croatia, "incompatibility should be assessed as at the date the claim is filed." Relying on ICSID Institution Rule 6(2) that states that a proceeding is instituted as of the date of its registration, the relevant date for this proceeding is 27 September 2017.³¹

43.

However, for Croatia, the date as of which incompatibility is assessed must be distinguished from the question of when the BIT became incompatible with the EU acquis. According to Croatia, it is obvious that "in making its case on jurisdiction before a tribunal, a claimant cannot rely on the registration of its claim as proof that an agreement to arbitrate was established upon registration."³² Croatia states that the BIT has been incompatible with the EU acquis from the moment that it acceded to the TFEU on 1 July 2013, and thus when the case was registered on 27 September 2017, the BIT already was incompatible with the EU acquis.³³

44.

Addiko responds that the BIT's compatibility with the EU acquis is to be assessed as of the date of ICSID's registration of the request for arbitration. It reasons that the international law "critical date" doctrine, applied by both the ICJ and investment tribunals (including those constituted under the ICSID Convention), calls for determination of jurisdiction as on the date of institution of proceedings, such that any subsequent lapse or withdrawal of the jurisdictional instrument has no effect on the jurisdiction of the forum.³⁴ Addiko's position, as stated in the hearing, is that it obtained a "vested right […] to arbitrate under this Agreement, after consent ha[d] actually been perfected at the critical date."³⁵ Since ICSID Institution Rule 6(2) states that a proceeding is instituted on the date of registration of the request, and the Parties agree that registration occurred on 27 September 2017, the arbitration agreement between Addiko and Croatia cannot be vitiated on any grounds which arose after that "critical date." In Addiko's view, this would apply to Croatia's arguments about incompatibility between the BIT and the EU acquis under either Achmea or the Declarations, since each of those were issued after registration of Addiko's request for arbitration.³⁶

45.

Croatia argues that consent is irrevocable only to the extent that it is actually given. Croatia reasons that since Article 11(2) relieves the Contracting Parties from BIT obligations incompatible with the EU acquis in force, and the BIT was incompatible as of Croatia's accession to the EU Treaties in July 2013, then Article 9 of the BIT was not binding on Croatia from that date forward. Accordingly, Croatia argues that there was no "irrevocable" offer to arbitrate that Addiko could have validly accepted by initiating this arbitration.³⁷

46.

This is so even in the absence of Achmea, according to Croatia, because the Tribunal still would have had to determine compatibility with the EU acquis pursuant to Article 11(2), and the underlying TFEU provisions were already in place even absent the CJEU's eventual interpretation of them in Achmea. However, now that Achmea has rendered, and given that EU Member States are bound by the CJEU's interpretation of the TFEU, this Tribunal can benefit from that interpretation in the specific context of intra-EU bilateral investment treaties.³⁸

47.

Addiko argues that Article 9(2)(a) of the BIT³⁹ irrevocably binds the Contracting Parties to maintain their offer to arbitrate with investors such as Addiko, with the consequence that Croatia's consent to arbitration is not subject to subsequent events.⁴⁰ Addiko also relies on the UniCredit 2018 Decision for this proposition, where the tribunal stated "the language … does not admit the operation either explicitly or implicitly of any subsequent events … the language of Article 9 negates certain further potential conditions, including the requirement that there by a specific arbitration agreement between the parties or any prior exhaustion of remedies."⁴¹ Addiko also points to Article 25(1) of the ICSID Convention, which prevents States from withdrawing their consent unilaterally after investors have given their own consent.⁴² Addiko therefore concludes that since Croatia consented to arbitration on the date of the BIT, and Addiko consented to arbitration on the date of institution of proceedings, a subsequent event cannot abrogate the irrevocable consent of the parties to this arbitration.⁴³

48.

For Addiko, this is unaffected by Article 11(2) of the BIT which, Addiko argues, calls for compatibility between the BIT and the EU acquis to be assessed based on the state of the acquis in force at the "legally relevant" point in time, which for jurisdictional issues would be the date as determined by the critical date doctrine.⁴⁴ Addiko also argues that Article 11(2) of the BIT must be interpreted in light of both the principle of effectiveness,⁴⁵ and the BIT's object and purpose of promotion and protection of investments,⁴⁶ as safeguarding a tribunal's jurisdiction by freezing the acquis to that in force at the time proceedings are instituted.⁴⁷ In its view, the phrase "at any given time" in Article 11(2) of the BIT could not have been intended to allow State parties to escape responsibility based on developments in the acquis postdating the institution of proceedings. Addiko stresses that the principle of good faith should govern the analysis of these issues as they relate to Croatia's consent to arbitration.⁴⁸

49.

It is Croatia's position that the ordinary meaning of Article 11(2) of the BIT is clear and should be interpreted in light of this meaning pursuant to Article 30 of the Vienna Convention on the Law of Treaties ("VCLT").⁴⁹ For Croatia, there can be no doubt that the article unequivocally refers to the EU acquis in force at any given time. Thus, Croatia is not "bound" by the BIT insofar as it is incompatible with the EU acquis.

50.

According to Croatia, the meaning of Article 11(2) is further supported by the context and purpose of the provision to resolve any conflicts between the BIT and the Contracting Parties' obligations under the acquis.⁵⁰ Indeed, Croatia submits that Article 11(2) was included in the BIT to resolve precisely the conflict of norms now faced by this Tribunal, and to ensure that the Contracting Parties to the BIT would comply "at any given time" with their international legal obligations pursuant to EU Treaties.⁵¹ Croatia also argues that Addiko cannot have more rights under the BIT than those to which the Republic of Austria agreed.⁵²

51.

For Croatia, it is uncontroverted that States can determine the priority of treaties in force between them, and no rule of public international law restricts them from so regulating the priority of norms in force between them. Both the Contracting Parties to this BIT and all Contracting Parties to EU treaties are unanimous in their agreement that EU Treaties prevail over treaties such as this BIT.⁵³

52.

Croatia adds that if the Tribunal does not consider Article 11(2) to be dispositive, the same result (that the Tribunal lacks jurisdiction) in any event should result from the default conflicts rule set out in Article 30 of the VCLT, regarding the application of successive treaties relating to the same subject matter.⁵⁴

53.

Finally, Croatia warns that ICSID case law (such as Caratube v. Kazakhstan) confirms that any award rendered by a tribunal exercising jurisdiction beyond the consent of the parties would be subject to annulment.⁵⁵

54.

Addiko disagrees with Croatia about the impact of Article 11(2) on the Tribunal's jurisdiction. For Addiko, Article 11(2) of the BIT has no impact on the established position under international law that a tribunal is always the judge of its own competence; as a result, the Tribunal has the power to interpret the instrument of consent, and must determine the issue of "incompatibility" based on international law principles, not based on the pronouncements of EU States or institutions.⁵⁶

55.

In response to Croatia's alternative argument on the application of VCLT conflict rules, Addiko notes that investment treaty tribunals consistently have found that intra-EU BITs and EU Treaties do not have the same subject matter. Accordingly, neither VCLT Article 30 nor VCLT Article 59 (regarding the termination or suspension of the operation of a treaty implied by conclusion of a later treaty) have any application. By their terms, both Article 30 and Article 59 apply only when successive treaties address the same subject-matter.

56.

Addiko criticizes Croatia for attempting to circumvent these VCLT provisions by seeking to elevate Article 11(2) of the BIT into a special clause that negates any need to resort to these default interpretive rules in the first place.⁵⁷ In Addiko's view, Article 11(2) requires the same test of compatibility as these VCLT provisions, since it is inherent in the notion of "incompatibility" (expressed in Article 11(2) of the BIT) that treaties must have the same subject matter in order even possibly to be incompatible. Because the BIT and the EU Treaties do not have the same subject matter, Addiko argues that this disposes of the question under either Article 11(2) or the VCLT, without even needing to reach the second element of alleged "incompatibility."⁵⁸

57.

Having argued the relevance of Article 11(2) to the jurisdictional analysis, the Parties turn to the issue of compatibility. Croatia's premise, which forms the basis for this accelerated issue, is that Article 11(2) allegedly vitiates the Tribunal's jurisdiction due to the incompatibility between the BIT and the EU acquis. Croatia argues that both the BIT's arbitration clause (Article 9) and its substantive treatment standards are incompatible with the acquis.⁵⁹ Addiko argues that there is no incompatibility with respect to either the BIT's procedural or substantive provisions.

58.

However, prior to addressing these issues, the Parties address both the standard of "incompatibility" and the weight to be given to decisions of other arbitral tribunals, constituted under bilateral investment treaties as well as the Energy Charter Treaty ("ECT"), which have examined the compatibility of intra-EU investment arbitration.

59.

On the "standard of compatibility," Croatia argues that by Addiko's own submission,⁶⁰ incompatibility arises when complying with one treaty leads to the infringement of another. Using this "strict" definition of incompatibility, Croatia argues that if Article 11(2) of the BIT is not given effect, and this Tribunal upholds jurisdiction, both Croatia and Austria would be in breach of their obligations under the EU Treaties.⁶¹

60.

Addiko argues that "compatibility" has an ordinary meaning which calls for same analysis conducted by numerous other arbitral tribunals which have considered this issue under Article 59 of the VCLT. Under this analysis, as explained below through the lens of prior case law, the BIT is not incompatible with EU law.⁶²

61.

Croatia contends that the numerous other arbitral decisions Addiko cites, as upholding jurisdiction in intra-EU disputes and finding no incompatibility between various investment treaties and the EU acquis, must be disregarded. In Croatia's view, the prior cases are either (a) inapposite to the analysis under Article 11(2) of the BIT, which is unique, or (b) were wrongly decided, in the case of UniCredit which examined Article 11(2) of the same BIT.⁶³ Addiko contends by contrast that the analysis of prior tribunals is instructive.⁶⁴

62.

First, Croatia argues in general terms why this Tribunal must not rely on the decisions of prior tribunals. Second, Croatia discusses and rebuts the post- Achmea cases on which Addiko relies, and discusses extensively the UniCredit 2018 Decision rendered under the same BIT as at issue here

63.

First, Croatia notes that unlike prior arbitrations involving intra-EU BITs, with the exception of the UniCredit case,⁶⁵ this Tribunal need not undertake an extensive public international law analysis of compatibility between the BIT and the EU acquis. Instead, the ordinary, and "clearly drafted," Article 11(2) of the BIT must be interpreted in compliance with Article 31(1) of the VCLT which sets out general rules of interpretation for treaties.⁶⁶ Therefore, Croatia argues that any analysis by other tribunals considering treaties with no specific conflict clause such as Article 11(2) of the BIT are irrelevant. For this reason, Croatia argues that Addiko's reliance on such case law obfuscates the matter before this Tribunal.⁶⁷

64.

Second, Croatia argues that Addiko's position that Article 11(2) of the BIT and Article 30 of the VCLT both call for the application of the "same subject-matter" test is incorrect. Rather, Article 30 of the VCLT does not rightly apply in this context, as it is to be employed only in the absence of an express conflict clause such as Article 11(2) of the BIT and even if Article 30 of the VCLT did apply, the notion that it imposes a predicate "same subject matter" test is based on an "erroneous interpretation."⁶⁸

65.

Third, Croatia argues that Addiko's reliance on arbitral jurisprudence to support a restrictive interpretation of both the EU acquis and the Achmea Judgment exposes the risk sought to be avoided by both Article 11(2) of the BIT and the EU acquis. Croatia reasons that any reliance on prior cases leads (i) to rendering of awards incompatible with respondent-EU Member States' international legal obligations under the EU Treaties, and (ii) to the creation of authority to override the CJEU's binding interpretations of the EU Treaties. Croatia cautions that these issues pose a double risk to the autonomy of the EU legal order envisaged by Achmea and recognized by the Declarations.⁶⁹

66.

Croatia argues that Addiko misrepresents the arbitral case law it invokes as purportedly supportive of the proposition that intra-EU bilateral investment treaties are "fully compatible" with the EU acquis. For Croatia, on closer examination of the case law, it becomes evident that the findings of these cases are "fragmented," in that there is no consensus or uniformity among the tribunals, which in fact have found different ways to reject jurisdictional objections such as Croatia's.⁷⁰

67.

Croatia focuses on those awards, seven in number, which were rendered after Achmea. Of these, Croatia notes that only three were under intra-EU bilateral investment treaties, whereas the rest were under the ECT.⁷¹

68.

With respect to Antin v. Spain, Croatia argues that the tribunal there was concerned with an objection that it had no jurisdiction rationae personae, and in fact refrained from addressing the compatibility issue. The tribunal stated that this was an issue to be sorted out by the EU and the EU Member States parties to the ECT.⁷²

69.

As for Greentech Energy Systems v. Spain, Croatia argues that the tribunal in that case held that both EU law and Achmea were irrelevant for its decision, and therefore did not address the compatibility issue either.⁷³

70.

Croatia observes that in Marfin v. Cyprus, the tribunal had decided it would address compatibility only if it found that the that the Cyprus-Greece Bilateral Investment Treaty and the EU Treaties concerned the same subject-matter. Since the tribunal found no such "same subject-matter," it did not further examine incompatibility issues between the treaty and EU law.⁷⁴

71.

In Vattenfall v. Germany, Croatia says the tribunal did not even touch on the compatibility issue. because it held that EU law did not apply to the ECT provision at issue. That case, according to Croatia, was "highly specific to the ECT."⁷⁵

72.

As for UP and C.D Holding v. Hungary, Croatia argues that the tribunal there merely held that it did not consider a detailed discussion of Achmea to be relevant because the case differed "in determinative aspects" from Achmea, particularly insofar as Achme a did not mention ICSID arbitration. Thus, the tribunal avoided addressing the incompatibility issue.⁷⁶

73.

In Eskosol v. Italy, Croatia submits that the tribunal abstained from ruling on the compatibility issue and instead rejected jurisdictional objections on the basis of the ECT's applicable law provision and the "same subject-matter" requirement of Article 30 of the VCLT. Croatia notes that, as to Achmea, the tribunal held that it was inapplicable as it did not refer to multilateral treaties such as the ECT.⁷⁷

74.

Finally, as to the UniCredit 2018 Decision, Croatia makes extensive arguments.⁷⁸

75.

First, Croatia argues that despite its having raised objections of incompatibility between the BIT and Articles 267 and 344 of the TFEU, the tribunal in UniCredit never once referred to these Articles in rejecting Croatia's jurisdictional objections.⁷⁹ Croatia emphasizes that the EU acquis cannot be reduced to Achmea and, instead, Article 11(2) of the BIT calls for comprehensive analysis of the EU Treaties in their entirety.⁸⁰ This is especially so, Croatia says, because nothing in public international law precludes States from establishing a hierarchy among treaties.⁸¹

76.

Second, Croatia states that the tribunal in UniCredit wrongly rejected application of the principle of ex tunc effect of CJEU decisions. Croatia argues that instead of considering the phrase "at any given time" in Article 11(2) of the BIT as meaning the EU acquis in force at the legally relevant time, the phrase calls for the commonplace diplomatic understanding of the EU acquis to mean the entire body of obligations under the EU Treaties.⁸²

77.

Third, Croatia argues that the UniCredit 2018 Decision unduly relied on the principle of "legitimate expectations" to excuse any ex tunc application of Achmea. For Croatia, this approach is unsupported in the EU acquis and the case law.⁸³ Croatia further notes that neither the claimant in that case nor its legal expert provided a basis for the use of this principle.⁸⁴ Croatia also emphasizes that the only case that the tribunal relied on, ironically also a CJEU decision, also rejected application of the principle of legitimate expectations.⁸⁵

78.

Fourth, Croatia argues that the principle of legitimate expectations is not a part of general public international law. While there may be a basis for the application of legitimate expectations to a merits analysis under the principle of "fair and equitable treatment," that principle was not applicable in UniCredit where the tribunal was concerned with access to dispute resolution, not merits issues.⁸⁶ In addition, Croatia argues that any application of the principle of legitimate expectations would be fickle, since at the time that arbitration was registered, doubt already had been cast on the compatibility of intra-EU bilateral investment treaties with the EU acquis.⁸⁷

79.

Fifth, Croatia argues that the UniCredit tribunal inexplicably rejected the relevance of EU law despite clear reference to it in Article 11(2) of the BIT.⁸⁸ This, Croatia argues, was also the case in the tribunal's incorrect finding that the lack of an express mention of Article 9 in Article 11(2) of the BIT implies an ambiguity in the compatibility analysis with respect to the BIT's arbitration provision.⁸⁹ Croatia also questions the tribunal's decision to use the alleged "object and purpose" of the treaty to override the clear terms of Article 11(2) of the BIT, thereby violating Article 31(1) of the VCLT.⁹⁰

80.

Sixth, and finally, Croatia argues that the tribunal erred in holding that a finding of incompatibility between the BIT and the EU acquis would obviate the sunset provision in Article 12 of the BIT. Croatia argues that such an understanding is unsupported in the VCLT, which contemplates the possibility of one treaty suspending another. At any rate, Croatia argues that Article 70 of the VCLT allows parties to agree on alternate methods for terminating a treaty, which has happened here by way of the Declarations.⁹¹

81.

Addiko relies on numerous arbitral decisions regarding the compatibility issue and urges this Tribunal to follow suit. In this regard, Addiko argues that the arbitral case law establishes compatibility between the BIT and Article 267 and 344 of the TFEU.

82.

First, Addiko argues that there is no reason to depart from the 23 decisions declining preliminary objections that intra-EU BITs allegedly are incompatible with the EU acquis.⁹² For Addiko, no matter Croatia's position on this case law, it cannot be contested that these tribunals confirmed "full compatibility" of intra-EU treaties with EU law under fundamental principles of international law.⁹³

Cl. Mem. ¶¶ 4, 8, 22, 39, 86; Cl. Reply ¶ 16. At Cl. Mem. ¶ 43, Addiko cites to 23 publicly known cases which examined intra-EU arbitration issues: Eastern Sugar v. Czech Republic, SCC No. 008/2004, Partial Award, 27 March 2007, CLM-121 ("Eastern Sugar"); Binder v. Czech Republic, Award on Jurisdiction, 6 June 2007, CLM-115 ("Binder"); Jan Oostergetel and Theodora Laurentius v. Slovak Republic, Decision on Jurisdiction, 30 April 2010, CLM-131 ("Oostergetel"); Achmea (formerly Eureko) v. Slovak Republic, PCA Case No. 2008-13, Award on Jurisdiction, Arbitrability and Suspension, 26 October 2010, CLM-109 ("Achmea Jurisdiction Award"); European American Investment Bank AG v. Slovak Republic, PCA Case No. 2010-17, Award on Jurisdiction, 22 October 2012, CLM-124 ("EAI Bank"); Electrabel S.A. v. Republic of Hungary, ICSID Case No. ARB/07/19, Decision on Jurisdiction, Applicable Law and Liability, 30 November 2012, CLM-56 ("Electrabel"); Charanne B.V. v. Kingdom of Spain, SCC No. 62/2012, Award, 21 January 2016, CLM-119; RREEF Infrastructure (G.P.) Limited & RREEF Pan-European Infrastructure Two Lux S.à.r.l. v. Kingdom of Spain, ICSID Case No. ARB/13/30, Decision on Jurisdiction, 6 June 2016, CLM-135 ("RREEF"); Isolux Infrastructure Netherlands, B.V. v. Kingdom of Spain, SCC Arbitration V2013/153, Award, 12 July 2016, CLM-130; Blusun v. Italy, ICSID Case No. ARB/14/3, Award, 27 December 2016, CLM-116; WNC Factoring Ltd. v. Czech Republic, PCA Case No. 2014-34, Award, 22 February 2017, CLM-139 ("WNC Factoring"); Anglia Auto Accessories Limited v. Czech Republic, SCC Arbitration Case V 2014/181, Award, 10 March 2017, CLM-111 ("Anglia"); I.P. Busta & J.P. Busta v. Czech Republic, SCC Arbitration Case V 2015/014, Award, 10 March 2017, CLM-117 ("Busta"); Eiser Infrastructure Limited and Energia Solar Luxembourg S.à.r.l. v. Kingdom of Spain, ICSID Case No. ARB/13/36, Award, 4 May 2017, CLM-123 ("Eiser"); PL Holdings S.à.r.l. v. Republic of Poland, SCC Arbitration No. V 2014/163, Award, 28 June 2017, CLM-134 ("PL Holdings"); EDF v. Republic of Hungary ; PV Investors v. Kingdom of Spain, PCA Case No. 2012-14; Novenergia v. Kingdom of Spain, SCC Arbitration (2015/063), Award, 15 February 2018, CLM-133; Antin ; Vattenfall ; Marfin ; UP and C.D Holding ; and Greentech.

83.

It is Addiko's position that the persuasive effect of these numerous cases is unimpacted by Article 11(2) of the BIT, since the analysis called for by Article 11(2) of the BIT is identical to the "same subject-matter" standard applied by other tribunals under Articles 30(3) and 59 of the VCLT.⁹⁴

84.

Addiko also agrees with tribunals that have found there could be no incompatibility because the BIT and the EU Treaties do not address the same subject matter. Addiko adds that, even if the BIT and the EU acquis were considered to have the same subject-matter, the earlier of the two only could be rendered inapplicable (by VCLT Article 30(3)) or terminated (by VCLT Article 59) if the two treaties were found to be incompatible. Incompatibility in this context calls for a situation where compliance with one treaty necessarily leads to a breach of the other.

85.

Second, Addiko relies on prior arbitral rulings to argue that there is no incompatibility between the arbitration provision in the BIT and Articles 267 and 344 of the TFEU.⁹⁵ Addiko states that these provisions of the TFEU do not create a "jurisdiction monopoly" for the CJEU which prevents other tribunals from applying EU law.⁹⁶ Finally, Addiko argues that Article 344 of the TFEU is not even applicable to arbitral tribunals adjudicating disputes such as those in investment treaty arbitration.⁹⁷

86.

Member States of the European Union adopted three declarations⁹⁸ (together, the "Declarations") on the consequences and enforcement of the CJEU judgment in Achmea.

87.

The Declarations state:

[A]ll investor-State arbitration clauses contained in bilateral investment treaties concluded between Member States are contrary to [European] Union law and thus inapplicable.⁹⁹

88.

Croatia argues that the Declarations unequivocally demonstrate that "all 28 EU Member States agree that the Achmea Judgment precludes all arbitration clauses in intra-EU BITs,"¹⁰⁰ a conclusion premised on the incompatibility between all intra-EU BITs and the EU acquis.¹⁰¹ Consequently, the instant BIT, and especially its Article 9, is incompatible with the EU acquis. Croatia further submits that the Declarations are themselves a component part of the EU acquis and consequently are authoritative and binding on this Tribunal.¹⁰²

89.

Addiko, on the other hand, argues that the Declarations have no legal force and do not affect the scope of either the Achmea Judgment or the content of EU law.¹⁰³ In other words, Addiko argues that they have no impact on either this Tribunal's jurisdiction or the substantive protections conferred by the BIT.

90.

In the first place, Croatia relies on the wording of the Declarations to argue that since "all" investor-State arbitration clauses in intra-EU BITs have been deemed incompatible with the TFEU (and hence the EU acquis), Article 9 of the BIT is itself incompatible with the EU acquis,¹⁰⁴ and accordingly, the incompatibility foreseen in Article 11(2) of the BIT is fulfilled.

91.

Croatia also says that the Declarations confirm its interpretation of Achmea, namely that Articles 267 and 344 of the TFEU preclude investor-State arbitration clauses in intra-EU BITs. Croatia places specific emphasis on the unanimity among the EU Member States in this regard.¹⁰⁵ Noting Addiko's view that the Member States were not unanimous on the compatibility issue, Croatia cautions that this was only with regard to compatibility of the ECT with the acquis, not with respect to intra-EU BITs.¹⁰⁶

92.

Next, Croatia posits that incompatibility as established in the Declarations is effective from the date of Croatia's accession to the EU Treaties and its membership in the EU, i.e., 1 July 2013. For this, Croatia relies on the allegedly "unequivocal" statement in the Declarations that no valid offer of arbitration could be extended by Member States of the EU.¹⁰⁷

93.

Croatia says this finding is confirmed in the decision of the German Federal Supreme Court, the Bundesgerichtshof, which set aside the award in Achmea. This decision is deemed by Croatia to be prima facie evidence of incompatibility between the BIT at issue in Achmea (a BIT between the Netherlands and Slovakia) and the EU acquis. Croatia highlights that the Bundesgerichtshof set aside the award on this ground despite the CJEU's judgment regarding incompatibility having been rendered after the claim was filed, indicating that incompatibility was understood to run from the date of accession of the relevant Member State to the EU, and not simply from the date of the CJEU's judgment. On this basis, Croatia concludes that the Declarations confirm that the BIT was incompatible with the EU acquis from the date of Croatia's accession to the EU, i.e., 1 July 2013.¹⁰⁸

94.

Last, Croatia calls on the text common to all Declarations that the Member States undertook to "inform investment arbitration tribunals about the legal consequences of the Achmea … in all pending intra-EU investment arbitration proceedings" to argue the particular relevance of the Declarations in the present proceeding.¹⁰⁹

95.

Addiko does not speak to the impact that any of the Declarations have on the compatibility between the BIT and the EU acquis. Instead, Addiko argues that this Tribunal must pay no heed to the Declarations as they are irrelevant to its analysis of its jurisdiction under Article 9 of the BIT. Therefore, Addiko confines its arguments to those summarized below.¹¹⁰

96.

Croatia argues that the Declarations are authoritative, binding this Tribunal to follow their interpretation of the BIT and the TFEU.¹¹¹

97.

First, Croatia relies on the Eur-Lex Glossary¹¹² to demonstrate that the definition of the "EU acquis" includes "declarations and resolutions adopted by the [European] Union." Accordingly, Croatia argues that this Tribunal is bound by the Declarations, as Article 11(2) mandates this Tribunal to apply the EU acquis.¹¹³

98.

Although Addiko argues that the EU Member States, even collectively, are "not an institution of the EU" for purposes of the definition of the EU acquis, Croatia disagrees because the Member States who signed the declarations acted within the powers of the EU and the Council of the EU (an EU institution), whose declarations are part of the EU acquis. To substantiate this argument, Croatia underscores that the Declarations were signed by the Member States in Brussels through their respective ambassadors to the EU or an equivalent EU body.¹¹⁴

99.

Second, Croatia draws the Tribunal's attention to Article 11(3) of the BIT, also relied on by Addiko. Croatia argues that since Article 11(3) of the BIT calls for the Contracting Parties of the BIT to enter into a dialogue regarding any uncertainty about the effects of Article 11(2) of the BIT, the Declarations reflect the common position of both Austria and Croatia on the effect of incompatibility between the BIT and the EU acquis.¹¹⁵

100.

Third, Croatia argues that the Declarations evidence the organization of mutual treaty obligations of both Austria and Croatia – i.e., "[European] Union law takes precedence over bilateral investment treaties concluded between Member States." This, Croatia argues, is within their sovereign rights, with which this Tribunal cannot interfere. Croatia observes in this regard that a hierarchy between EU law and the BIT is not novel.¹¹⁶ Instead, it is present in both Article 4(3) of the TFEU¹¹⁷ and in the EU "Declaration on Primacy,"¹¹⁸ which must be treated as an authoritative and binding interpretation of the Treaty of Lisbon under VCLT Article 31(2)(a). In other words, Croatia argues that the Declarations' subordination of the BIT to the EU acquis is well supported, and therefore authoritative for this Tribunal to follow.¹¹⁹

101.

Fourth, Croatia argues that the Declarations are a "subsequent agreement between the parties (Croatia and Austria) regarding the interpretation of the treaty (BIT) of the application of its provisions" under VCLT Article 31(3)(a), which sets out general rules of treaty interpretation. Accordingly, Croatia argues, the Declarations are binding on this Tribunal. Croatia further argues, relying on scholarship,¹²⁰ that the interpretation afforded by the Declarations is both prospective and retrospective, leading to the conclusion that this Tribunal is bound by the supremacy of EU law established by the Declarations.¹²¹

102.

Croatia characterizes as hyper-formalistic and manifestly absurd Addiko's argument that the failure of any mention of the BIT in the Declarations deprives them of any significance for the purposes of VCLT Article 31(3)(a).¹²² Rather, for Croatia, the Declarations are a subsequent agreement between the parties to the BIT, as both Austria and Croatia declared (in concurrence with all Member States of the EU) that "all" of their intra-EU BITs are incompatible with the EU acquis.¹²³

103.

Addressing Addiko's argument concerning the critical date doctrine, Croatia argues that Addiko's reading of the doctrine is inapposite, as the ICJ calls for inclusion of acts by a party to the dispute that are the "normal continuation of prior acts," and are not undertaken to improve that party's position in an ongoing dispute.¹²⁴ Croatia argues that the Declarations are a normal continuation of diplomatic relations between Member States.

104.

With respect to Addiko's reliance on a decision of a Singaporean Court regarding the admissibility of post-critical date evidence, Croatia argues that Addiko reads the judgment selectively, ignoring the principle that post-critical date evidence is relevant if it confirms the position established by pre-critical date evidence.¹²⁵

105.

With regard to Addiko's reference to Austria's prior statements about the BIT, Croatia highlights that it had informed Austria of the incompatibility between the BIT and the EU acquis by a note verbale even before it acceded to the EU Treaties.¹²⁶ In response to this, Austria deferred the resolution of this issue to the EU.¹²⁷ Accordingly, the Declarations cannot be rightly described as a change in Croatia's position on the compatibility between the BIT and the EU acquis, but rather as confirmation of the position it had held along. Instead, Croatia argues that it was Austria which changed its position on the compatibility of intra-EU BITs with the EU Treaties.¹²⁸

106.

Moreover, even accepting arguendo Addiko's argument on a bar on evidence after the so-called critical date, Croatia argues that the very presence of Article 11(2) of the BIT clearly indicates that both Croatia and Austria contemplated prior to the critical date the issue of compatibility between the BIT and the EU Treaties.¹²⁹

107.

Fifth, and finally, Croatia argues that any award this Tribunal renders after confirming its jurisdiction would be unenforceable. For this, Croatia relies on the text of the Declarations, read in conjunction with Article 9(3) of the BIT.¹³⁰ In its view, the Declarations establish that an award by a tribunal recognizing jurisdiction under an intra-EU BIT would be in violation of the EU acquis, and Article 9(3) of the BIT establishes that an award would be unenforceable if it is beyond the limits of the national law of the Contracting States. On this basis, Croatia claims that any award rendered in violation of the EU acquis would be unenforceable since the national law of the enforcing Contracting State would call for that State's obligations under the EU Treaties to prevail over contradictory obligations. To confirm this argument, Croatia relies on decisions from German and Swedish Courts refusing to enforce awards on the grounds of incompatibility of intra-EU BITs with the EU acquis¹³¹.

108.

Addiko argues that the Declarations are political and of no relevance for this Tribunal's inquiry into EU law or international law.¹³² Addiko adds that they are also irrelevant given their silence on the compatibility of EU law with ICSID arbitration.¹³³ Addiko makes four points regarding the declarations.

109.

First, Addiko relies on its argument, discussed above, that the critical date for determining this Tribunal's jurisdiction is the date of institution of proceedings, which predates the Declarations.¹³⁴

110.

Second, Addiko argues that the Declarations do not form part of the EU acquis,¹³⁵ and are thus irrelevant to application of Article 11(2) of the BIT. Addiko reasons that by the EU's own definition, also relied on by Croatia, the EU acquis comprises only those declarations that are "adopted by the Union."¹³⁶ Addiko says that the Declarations were issued in the name of Member States of the European Union and not in the name of the EU, which has its own distinct legal personality. Accordingly, Addiko argues (relying in part on the Jacobs Opinion with respect to past practice) that since the Declarations are "expressly issued in the name of the relevant member States, acting as such…[they are] (therefore) not an act of the EU at all and not part of the EU acquis."¹³⁷ Nor does Croatia's own expert consider the Declarations to be part of the EU acquis, instead choosing to refer to them as a "political manifestation of the Member States' obligations" within the EU legal order.¹³⁸

111.

Addiko goes on to argue that the Declarations are not an interpretation of EU law, since the power to interpret is exclusive to the CJEU.¹³⁹ Nor can Member States alter or even confirm a judgment of the CJEU.¹⁴⁰

112.

Third, Addiko argues that since the EU Member States have no authority to interpret EU law, the Declarations are not (contrary to Croatia's contention) an authoritative interpretation of the relationship between the TFEU and the BIT.¹⁴¹ Addiko argues that Declarations do not constitute "a subsequent agreement regarding the interpretation" of Article 11(2) of the BIT, because they merely adopt the Member States' position on the legal consequence of Achmea, with no reference to the BIT whatsoever. Addiko argues that this very principle was followed by the tribunal in Eskosol to hold that Declarations were not an interpretation of the ECT.¹⁴² Therefore, Addiko argues, the Declarations have no significance under Article 31(3)(a) of the VCLT.¹⁴³

113.

Fourth, Addiko says that since the Declarations were issued after the critical date, they have no interpretive use and are irrelevant to this Tribunal's analysis of its jurisdiction under Article 9 of the BIT. Addiko's reasoning relies on the decision of the Singapore Court of Appeals in Sanum v. Laos¹⁴⁴ under the China-Laos BIT. There, the Singaporean Court rejected as irrelevant under VCLT Articles 31(3)(a)-(b) two notes verbales between China and Laos because they post-dated the critical date of jurisdiction. The Singaporean Court held:

The critical date doctrine … acts as a time constraint in the context of determining the relevance or weight of evidence in cases concerning issues of public international law. In short, the doctrine or principle renders evidence, which comes into being after the critical date and is self-serving and intended by the party putting it forward to improve its position in the arbitration, as being of little, if any weight … This suggests that if post-critical date evidence is sought to be adduced, it should be consistent with and a continuation of what the pre-existing position establishes. Its function is to corroborate and explain. To the extent that it contradicts what has been established by the pre-existing position to give the party seeking to rely on it an evidential advantage in its case, it should not be admitted.¹⁴⁵

Applying the reasoning of the Singaporean Court, Addiko argues that since the critical date for determining this Tribunal's jurisdiction is 27 September 2017, the Declarations are not irrelevant to prove a joint understanding between Croatia and Austria as to the alleged incompatibility of the BIT with the EU acquis.¹⁴⁶

114.

By contrast, Addiko argues that the evidence pre-dating the critical date of 27 September 2017 points to Croatia's and Austria's understanding that the BIT and the EU acquis were compatible. For example, Addiko relies on the failure of the Treaty of Accession to address the status of intra-EU BITs as evidence that at the time of Croatia's accession to the EU, Austria and Croatia understood that compatibility existed between the BIT and the EU acquis.¹⁴⁷

115.

Addiko also relies on a meeting between the Austrian and Croatian government on 14 February 2018, during which Austria (i) "reiterated its previously expressed position that it considers BITs valid and that it does not deem them incompatible with EU law," (ii) contended that incompatibility would have to be determined by the CJEU, (iii) remarked that "incompatibility should have effect as of the time when it is established, that is without retroactive effect," and (iv) considered that any decision finding incompatibility "would have no impact on pending proceedings."¹⁴⁸

• Addiko concludes on the basis of this evidence that at no time relevant for this Tribunal's determination of its jurisdiction was there an agreement between Austria and Croatia that the BIT was incompatible with the EU acquis. Accordingly, Addiko says that even if the Declarations arguendo were capable in principle of having significance under VCLT Article 31(3)(a), they are irrelevant to this Tribunal's determination of its jurisdiction under Article 9 of the BIT.¹⁴⁹

116.

The CJEU in Achmea considered a reference by the Bundesgerichtshof regarding Article 8(6) of the Netherlands-Slovak BIT, regarding the following question:

Does Article 344 TFEU preclude the application of a provision in a bilateral investment protection agreement between Member States of the European Union (a so-called intra-EU BIT) under which an investor of a Contracting State, in the event of a dispute concerning investments in the other Contracting State, may bring proceedings against the latter State before an arbitral tribunal where the investment protection agreement was concluded before one of the Contracting States acceded to the European Union but the arbitral proceedings are not to be brought until after that date?¹⁵⁰

117.

The CJEU ruled on the question with the following text serving as its dispositif:

Articles 267 and 344 TFEU must be interpreted as precluding a provision in an international agreement concluded between Member States, such as Article 8 of the Agreement on encouragement and reciprocal protection of investments between the Kingdom of the Netherlands and the Czech and Slovak Federative Republic, under which an investor from one of those Member States may, in the event of a dispute concerning investments in the other Member State, bring proceedings against the latter Member State before an arbitral tribunal whose jurisdiction that Member State has undertaken to accept.¹⁵¹

118.

Both Parties agree that this dispositif forms part of the EU acquis. They disagree, however, on the impact of Achmea on the jurisdictional question before this Tribunal. Croatia argues that (1) Achmea confirms the incompatibility of Article 9 of the BIT with the EU acquis, effective from the date of Croatia's accession to the EU Treaties, and (2) Achmea is binding on this Tribunal.¹⁵² Addiko by contrast (1) questions the correctness of the decision and (2) argues that Achmea is irrelevant to this Tribunal's decision on its jurisdiction, on the multiple grounds of being neither binding nor persuasive, inapplicable to ICSID arbitrations, and temporally inapplicable.¹⁵³

119.

In response to Addiko's argument that Achmea was wrongly decided, Croatia contends that is neither for Addiko nor this Tribunal to determine the soundness of the judgment. Instead, since CJEU judgments are binding on the EU Member States, and form part of the legal acquis which in turn are prioritized in Article 11(2) of the BIT,¹⁵⁴ this Tribunal is bound by the Achmea precedent.

120.

Addiko critiques the outcome of Achmea as wrong in its conclusion, and unpersuasive because it does not comport with the well-reasoned analysis of various investment law decisions and of the CJEU's own Advocate General.¹⁵⁵

121.

In particular, Addiko submits that Achmea did not offer any persuasive reasons for distinguishing intra-EU investment treaty arbitrations from intra-EU commercial arbitrations, extra-EU investment arbitrations and proceedings before courts of non-EU Member States, in all of which a question of EU law may arise.¹⁵⁶

122.

Addiko also aligns itself with Advocate General Wathelet's opinion in Achmea that (1) the CJEU has jurisdiction only over Member States and does not provide for a dispute settlement method between private parties and Member States, and (2) nothing in Article 267 of the TFEU prohibits the submission of a dispute to a court or tribunal to which that provision does not apply.¹⁵⁷

123.

Addiko further relies on the Jacobs Opinion to argue that Achmea likely does not follow a number of fundamental principles of EU law, including deference to established international law principles such as legal certainty and proportionality.¹⁵⁸

124.

Addiko notes that these arguments are further supported by the fact that other arbitral tribunals have come to the same conclusion regarding the shortcomings of the Achmea Judgment.

125.

Croatia argues that this Tribunal is bound by the CJEU's decision in Achmea and must therefore defer, while determining its jurisdiction under Article 9 of the BIT, to the CJEU's finding on the incompatibility with the EU acquis of arbitration clauses in intra-EU investment agreements. Croatia makes four points to advance this position.

126.

First, Croatia submits that the EU Treaties are 'treaties' for the purposes of public international law.¹⁵⁹ Croatia then refers to provisions of the EU Treaties to demonstrate that the CJEU has been designated to resolve questions relating to their interpretation.¹⁶⁰ Croatia argues that as a matter of public international law, the CJEU is established as the authoritative adjudicative body tasked with the interpretation of EU Treaties, binding on the Member States.¹⁶¹ Accordingly, Austria and Croatia are bound by CJEU decisions.¹⁶²

127.

Croatia argues that even if there was doubt as to the status of the EU Treaties, those doubts are resolved by the express terms of Article 11(2) of the BIT which mandates the application of EU acquis as a matter of treaty law.¹⁶³

128.

Second, Croatia argues that decisions of the CJEU form a part of the EU acquis, relying on multiple sources.¹⁶⁴ In addition, Croatia notes that Addiko itself relies on substantially the same source as Croatia for the definition of "EU acquis." to state that it is "the entire body of rights and obligations that are binding on the EU Member States. It includes…case law of the CJEU. It covers, in other words, all laws and regulations and other rules that are considered internally binding as a matter of EU law."¹⁶⁵ Croatia therefore argues that Addiko contradicts its own definition of the "EU acquis," by characterizing Achmea as "neither persuasive nor binding."¹⁶⁶ Croatia also points out that Addiko's own expert agrees that Achmea is an authoritative statement of EU law and forms part of the EU acquis.¹⁶⁷

129.

Third, Croatia claims that since the CJEU's interpretation of the EU Treaties establishes their international legal effects, other courts and tribunals cannot in good faith (as required by Article 31 of the VCLT) apply an interpretation of the EU acquis that contradicts the interpretation of the CJEU.¹⁶⁸

130.

Fourth, Croatia cites the decision of the Dutch government to terminate all of its intra-EU BITs, despite initially having argued against the position eventually adopted by Achmea. Croatia claims that this decision, along with the Declarations, reflects the serious consequences¹⁶⁹ of Member States refusing to comply with the EU acquis. Accordingly, Croatia warns that any decision of this Tribunal that conflicts with Achmea would result in both Croatia and Austria infringing their EU Treaty obligations, a result that was sought to be avoided by Article 11(2) of the BIT.

131.

For these reasons, Croatia argues that this Tribunal must accept the incompatibility between Article 9 of the BIT and the EU acquis which has been definitively established by the CJEU in Achmea.¹⁷⁰

132.

It is Addiko's position that this Tribunal owes no deference to the position of the CJEU or the European Commission.¹⁷¹

133.

Addiko first argues that while the CJEU has a mandate to interpret EU law, and in doing so applies principles specific to EU law developed in its own jurisprudence, the CJEU has no mandate to make authoritative findings on the state of public international law.¹⁷²

134.

For this reason, Addiko emphasizes that this Tribunal must make an independent determination of its jurisdiction, including what comprises "incompatibility" for purposes of Article 11(2) of the BIT. There is nothing in the EU Treaties stating that CJEU judgments are determinative for international tribunals in proceedings governed neither by the EU or its institutions.¹⁷³ Therefore, Addiko argues that this Tribunal is permitted to interpret the BIT in the manner called for by Article 31 of the VCLT.

135.

Addiko also points out that for the most part, Achmea is silent on the specific issues raised by Croatia's jurisdictional objections.¹⁷⁴

136.

Croatia makes the following arguments relating to the applicability of Achmea to ICSID arbitrations.

137.

First, Croatia argues that the dispositif of Achmea contemplates that all arbitration clauses in intra-EU BITs are incompatible with the EU acquis. In light of this, Croatia argues that this Tribunal must examine, not whether ICSID arbitrations were expressly included within the scope of the decision (as Addiko frames the question), but rather whether the decision expressly carves out ICSID arbitrations. Croatia argues that this lens is evident¹⁷⁵ from the general references in Achmea to arbitration clauses in intra-EU BITs, without distinguishing specifically between cases heard under the UNCITRAL Rules versus the ICSID Rules.¹⁷⁶

138.

According to Croatia, the CJEU's primary concern in Achmea was the effect of intra-EU arbitration clauses on the autonomy of the EU legal order and on the mutual trust and cooperation among EU Member States. Croatia observes that these concerns arise in ICSID arbitrations as well.¹⁷⁷

139.

Croatia also submits that Achmea is applicable to ICSID arbitration given the possibility that an ICSID tribunal "may" have to apply or interpret the EU acquis. In this particular case, it submits that this follows from the second sentence of Article 42(1) of the ICSID Convention, since the BIT does not contain an applicable law clause; this Tribunal accordingly would have to apply Croatian law, which derives in various respects from EU law. Croatia further submits that Article 11(2) of the BIT likewise requires the Tribunal to interpret or apply EU law, given that the accelerated jurisdictional issue turns directly on an assessment of the compatibility of the BIT with the EU acquis.¹⁷⁸

140.

Second, and in response to Addiko's argument that the absence of any mention of ICSID arbitration in Achmea restricts its scope, Croatia argues that it is impracticable for the CJEU to list all possible fora where a dispute could be brought under an intra-EU investment agreement. Instead, Croatia argues, this Tribunal must pay heed to the general principle outlined in Achmea and apply it to the BIT.¹⁷⁹

141.

Third, and finally, Croatia argues that Addiko's reliance on UP and C.D Holding and UniCredit to argue that Achmea does not apply to ICSID arbitrations is ill-conceived. Croatia critiques both decisions, also noting that the UniCredit decision was under reconsideration by the tribunal that issued it.¹⁸⁰

142.

As to UP and C.D Holding, Croatia argues that the tribunal there preoccupied itself with the question of whether Hungary was still a party to the ICSID Convention, even though that question had no bearing on the validity of Hungary's consent to arbitrate. In other words, the tribunal confused the instrument of consent (the intra-EU investment agreement at issue) with obligations under the ICSID Convention. Croatia argues that the tribunal in UniCredit repeated the error in UP and C.D Holding.¹⁸¹

143.

Instead, Croatia submits, the ICSID Convention is irrelevant for interpretation of Croatia's consent, since Article 25(1) of the ICSID Convention comes into play only after it is established that the parties have consented to ICSID arbitration in another instrument. In other words, the effect of Achmea on the ICSID Convention cannot be considered before it is determined that the ICSID Convention indeed applies.¹⁸² Croatia adds that any reliance by Addiko on its expert, Sir Francis Jacobs, for the purposes of addressing the ICSID Convention is misplaced, because the subject falls outside the scope of his expertise.¹⁸³

144.

Addiko argues that, contrary to Croatia's broad reading of Achmea as extending to ICSID arbitrations, Achmea is silent regarding its applicability to ICSID arbitrations. Accordingly, Addiko argues that by virtue of its silence, Achmea does not extend to ICSID arbitrations, and therefore does not result in any incompatibility between Article 9(2) of the BIT and the EU acquis.¹⁸⁴

145.

First, Addiko says that since Achmea interprets provisions of the EU Treaties as precluding "international agreements concluded between Member States, such as Article 8 of the [Netherlands-Slovakia BIT]," the ruling must be read as confined to intra-EU BITs which are similar in all material respects to the Netherlands-Slovakia BIT.¹⁸⁵ This also responds to Croatia's argument that Achmea was not limited in its applicability.¹⁸⁶

146.

Second, Addiko argues that given its poor reasoning even from the perspective of internal EU law, Achmea must be adopted narrowly to avoid negative effects of the judgment from being multiplied, becoming difficult to correct and undermining the coherence and credibility of EU law. Addiko says this is especially true because of the lack of engagement of Achmea with General Advocate Wathelet's arguments.¹⁸⁷

147.

Third, Addiko argues that Achmea overstated the policy consideration of ensuring a uniform interpretation of EU law, when the CJEU in fact exercises only a very limited control over EU law. Addiko attributes this to the limited number of cases involving EU law that are referred to the CJEU. Accordingly, Addiko argues that Achmea 's preclusion of investment arbitration is disproportionate.¹⁸⁸

148.

Fourth, Addiko cites the 29 January 2019 Opinion of Advocate General Bot, prepared at Belgium's request, regarding the compatibility with EU law of the Comprehensive Economic and Trade Agreement between Canada and the EU and its Member States ("CETA").¹⁸⁹ Addiko argues that given the pains to which Advocate General Bot had to go to distinguish Achmea from the CETA, Achmea must be interpreted narrowly by this Tribunal.¹⁹⁰ This, along with the lack of persuasive value of Achmea, is also clear from Advocate General Bot's opinion that the CETA is compatible with EU law.¹⁹¹

149.

Fifth, Addiko argues that there are compelling grounds on which Achmea is distinguishable from the issues presented in this proceeding. The Netherlands-Slovakia BIT at issue in Achmea called for arbitration under the UNCITRAL Rules, while this arbitration is conducted under the multilateral ICSID Convention, with the result that Croatia is required to comply not only with its obligations under the BIT but also with its undertakings under the ICSID Convention. Addiko argues further that since the ICSID Convention has non-EU Member States as parties, Croatia's participation in arbitration proceedings such as this one is a matter not only between EU Member States, but rather one of interest to all ICSID Convention parties. Since this obligation of respondent States would be affected by extending Achmea to ICSID arbitrations, Addiko argues that Achmea ought to be read narrowly as not extending to intra-EU BITs providing for ICSID arbitration.¹⁹² Addiko adds that since the CJEU did not consider these material differences between ICSID and UNCITRAL arbitrations, indeed not mentioning ICSID at all, Achmea cannot be assumed to apply to ICSID arbitrations.¹⁹³

150.

Croatia argues that since the CJEU merely interprets provisions of the EU Treaties, the interpretation in Achmea applies from the date on which the underlying EU Treaty provisions it interprets came into force.¹⁹⁴ In other words, Achmea has an ab initio or ex tunc effect.¹⁹⁵ Croatia cites to decisions of the CJEU, the Craig Opinion, and other decisions and scholarship for this proposition.¹⁹⁶ Accordingly, Croatia argues that since the principle of ab initio effect is a universally applied principle (not limited to the EU acquis), the incompatibility between intra-EU BITs and the EU acquis established by Achmea applies from the date the EU Treaties came into force as between the Contracting States to the BIT, which is the date of Croatia's EU accession (1 July 2013).

151.

Croatia argues that an interpretation of a treaty provision is inherently retroactive. For Croatia, if an interpretation cannot be read into the original document retroactively, that interpretation would not apply to the litigants before it. Croatia therefore disagrees that Achmea is exceptional and prospective only in its effect.¹⁹⁷

152.

Croatia emphasizes that the ab initio or ex tunc effect of the CJEU's interpretation of EU Treaties is a principle of the EU acquis, integrated into the BIT via Article 11(2). This, Croatia argues, is accepted by Addiko in light of its definition of the "EU acquis," which includes "principles" of EU law such as the ex tunc effect of the CJEU's interpretations.¹⁹⁸ Therefore, without the CJEU itself having imposed a temporal limitation on the effect of its decision in Achmea, that decision is effective from the effective date of the EU Treaties it interprets.¹⁹⁹

153.

First, Addiko argues that Achmea does not apply ex tunc even under EU law. Addiko reasons that the principle of ex tunc effect of CJEU decisions was developed to protect private parties found to have been harmed by Member States conduct, and to prevent Member States from deriving an advantage from their own past failure to adhere to their EU Treaty obligations. By contrast, Addiko says, the effect of extending Achmea back in time would be the opposite, namely to deprive private parties of the protections that BITs afforded them up to the date of the Achmea decision.²⁰⁰ Therefore, consistent with the concerns in EU law, the Achmea decision should be interpreted as not affecting intra-EU arbitration cases that already had commenced prior to the date when it was rendered.

154.

Second, Addiko submits that Achmea need not be taken into consideration as it became part of the EU acquis, if at all, after the initiation of this arbitration. Addiko argues Achmea does not form part of the "EU acquisin force" on the date these proceedings were instituted, within the meaning of Article 11(2) of the BIT, because there is no indication in the BIT that Article 11(2) was to have retroactive effect.²⁰¹ Addiko adds that EU law (such as the principle of ex tunc effect of CJEU decisions) cannot override or circumvent the critical date doctrine for jurisdictional purposes under international law.²⁰² Addiko underscores that the UniCredit tribunal reached this same conclusion.²⁰³

155.

Addiko therefore concludes that the CJEU's finding of incompatibility, if at all applicable as a part of the EU acquis, came into existence as of 6 March 2018, prior to which time there was no determination by the CJEU of such incompatibility. In fact, every other forum concerned with the question until then had ruled that there was no incompatibility between the EU acquis and arbitration clauses in intra-EU BITs.²⁰⁴ The fact that Achmea B.V., the losing party in Achmea, did not make a request to the CJEU for non-retroactivity (as may be relevant in EU law under the "First Occasion Rule") should not affect the outcome of the international law question of compatibility in this case.²⁰⁵

156.

Third, Addiko argues that the ex tunc principle of EU law is not mandatory in any event, and must instead be balanced against other principles of EU law such as legal certainty, proportionality and the protection of fundamental rights, to which the "First Occasion Rule" must give way.²⁰⁶ Addiko says that legal certainty requires that individuals be able to unequivocally ascertain their rights at a given point in time, especially where financial consequences are involved. Addiko describes the principle of proportionality as calling for legal measures to pursue a legitimate aim and to be limited to what is necessary to achieve that aim. Finally, Addiko submits that the principle of protection of fundamental rights calls for non-interference with fundamental rights unless there is legal basis and need for retroactivity either to serve a general interest or to protect the rights of others.

157.

Addiko also argues that the fact that Achmea was both radical and detrimental to claimants, while favorable to Member States, provides a further reason to refuse the ex tunc application of the decision. Addiko says that this is particularly the case for investors who brought proceedings before Achmea under the reasonable belief that the BIT was valid and enforceable.²⁰⁷

158.

Croatia argues that the BIT is incompatible with the non-discrimination principle that it deems to be part of the EU acquis. Addiko disagrees.

159.

Croatia draws this Tribunal's attention to Articles 18, 49 and 63 of the TFEU which establish the principle of non-discrimination between EU Member States. Croatia explains that these provisions prohibit EU Member States from discriminating between individuals of different Member States of the grounds of their nationality.²⁰⁸

160.

According to Croatia, the BIT is incompatible with the principle of non-discrimination since it grants rights only on a bilateral basis, an point that it contends was confirmed by the CJEU in Achmea.²⁰⁹ Croatia argues that the BIT constitutes indirect discrimination in violation of the TFEU, as it makes the exercise of fundamental freedoms under the EU Treaties less attractive for nationals from Member States that are not party to the BIT.²¹⁰

161.

Specifically, Croatia argues that BIT perpetrates discriminatory treatment both substantively (through its Article 2(1) requiring fair and equitable treatment, Article 3(1) requiring national treatment, and Article 4 protecting against expropriation) and procedurally (through its Article 9 arbitration clause). Each of these provisions benefits to Austrian and Croatian investors that are not available to investors from other Member States. Accordingly, Croatia argues that these provisions violate Articles 18, 49 and 63 of the TFEU, and for that reason the BIT is incompatible with the EU acquis.²¹¹

162.

Croatia further points to the consistent support that the non-discrimination argument has received from the European Commission by way of its Guidance Fact Sheet ("EC Guidance Fact Sheet")²¹² and its interpretation of rulings of the CJEU.²¹³

163.

Croatia disagrees with Addiko's argument that the BIT is compatible with non-discrimination obligations under the EU Treaties since it does not require the Contracting States to treat investors from non-Contracting States differently. In Croatia's view, this argument is unavailing, as the BIT provides indisputable advantages for Austrian and Croatian investors that are unavailable to investors from other Member States.²¹⁴ Croatia adds that, at any rate, Article 11(2) of the BIT calls upon this Tribunal to test discrimination as interpreted by the CJEU, which contradicts Addiko's proposed definition of discrimination.²¹⁵

164.

As to Addiko's argument that the BIT is akin to intra-EU taxation treaties which are permitted by the EU acquis, Croatia relies on its legal expert's opinion to state that double taxation treaties cannot be equated to bilateral investment treaties since Member States have expressly retained competence over direct taxation in Article 65(1)(a) of the TFEU.²¹⁶

165.

In response to Croatia's argument that the BIT is incompatible with Articles 18, 49 and 63 of the TFEU because it confers protections bilaterally on the basis of investors' nationality in violation of the principle of non-discrimination, Addiko points to the findings of at least two dozen arbitral tribunals regarding compatibility of the BIT and the EU acquis.²¹⁷ Addiko adds that neither Croatia nor its legal expert offer any basis to distinguish this case from the prior ones, especially because neither Achmea nor the Declarations even address the issue of compatibility between the EU acquis and substantive protections in intra-EU bilateral investment treaties.²¹⁸

166.

In submitting that there is no incompatibility between the arbitration provision at Article 9 of the BIT and the general discrimination provision at Article 18 of the TFEU, Addiko relies on its legal expert's opinion that the BIT does not require Croatia to provide less favorable treatment to non-Austrian investors, just to ensure that Austrian investors would not be treated less favorably than the others.²¹⁹ Addiko contends that this argument is supported by the CJEU's own case law.²²⁰ Addiko also recalls General Wathelet's opinion in Achmea that intra-EU investment treaties, like double taxation treaties, are not discriminatory simply because they afford treatment on a bilateral basis.²²¹ This is so, according to Addiko, because investors who enjoy protection under a treaty occupy a different position from those who do not, since the treaty is likely to have been a factor in their decision to make their investment in the first place.²²² This reasoning, Addiko states, has been followed by tribunals in Binder and EAI Bank.²²³

167.

Addiko also argues that there is no incompatibility between the substantive protections in the BIT and the TFEU.²²⁴ Addiko notes that Croatia disregards multiple arbitral decisions that consistently rejected assertions of incompatibility between substantive investment protections in intra-EU bilateral investment treaties and the TFEU.²²⁵

168.

In any event, Addiko states that, as with the arbitration provisions, nothing in the BIT's substantive protections requires the Contracting States to treat investors from other EU Members less favorably than others. Addiko argues that treaties dealing with the same subject matter can be cumulatively applied, and since the TFEU contains no substantive equivalent to the protections confirmed by the BIT, the two are not incompatible.²²⁶

169.

Croatia contends that the BIT conflicts with obligations under the World Trade Organization ("WTO") General Agreement on Trade in Services ("GATS") and as such with the EU acquis. Addiko disputes the GATS' place in the EU acquis and argues that the BIT does not violate it in any event.

170.

Croatia makes a three-fold argument. First, it argues that the GATS forms part of the EU acquis, requiring an assessment of the BIT's compatibility with the GATs for purposes of Article 11(2) of the BIT. Second, Croatia argues that the BIT breaches Croatia and Austria's obligations under Article II(1) of the GATS. Third, and finally, Croatia argues that nothing in public international law restricts the application of the GATS to investment treaties.

171.

First, Croatia argues that agreements concluded by the EU are binding on its Member States, and accordingly, form an integral part of the EU acquis.²²⁷ Since the EU is a party to the GATS, the GATS and other WTO agreements (by virtue of EU's membership to the WTO) are part of the EU acquis, and any failure by a Member State to implement these international agreements constitutes a violation of obligations under EU law by that Member State. Accordingly, an incompatibility between the BIT and the GATS would give rise to an incompatibility between the BIT and the EU acquis.²²⁸ Moreover, although Addiko points out that the CJEU has stated it will not review the legality of WTO agreements, Croatia argues that CJEU review is irrelevant to the substantive question of whether the BIT is compatible with the acquis.²²⁹

172.

Second, Croatia notes that Article II(1) of the GATS imposes upon the Member States an obligation requiring "that investment incentives or restrictions be applied equally to all foreign sources of inward service industry-related investments,"²³⁰ which is equivalent to a most-favored nation ("MFN") requirement. In Croatia's view, the BIT is a trade measure that is covered by the GATS. Since the BIT by definition is a bilateral treaty, it necessarily does not accord MFN treatment to all WTO members. For this reason, the BIT is incompatible with the GATS, and thus with the acquis.²³¹ Croatia rejects Addiko's point that relations among EU Member States are considered domestic and unregulated by GATS, relying on scholarship to explain that by virtue of being an individual member of the WTO, Croatia and each EU Member State had the obligation of non-discrimination.²³² Accordingly, Croatia's obligation under the GATs to render no less favorable treatment extends to other EU Member States as well.²³³

173.

Third, Croatia argues that as multiple WTO Member States have expressly exempted bilateral investment treaties from the scope of their MFN obligations under the GATS, it is clear that investment treaties such as the BIT otherwise fall within the scope of Article II of the GATS.²³⁴ Croatia argues that since neither Austria nor Croatia so excluded investment treaties from Article II of the GATS, Article II applies to their investment treaties, thereby creating an incompatibility between the BIT and the GATS.²³⁵

174.

Addiko presents five arguments why this Tribunal need not take into consideration the GATS which, at any rate, should be considered as compatible with the EU acquis.

175.

First, Addiko argues that although the EU acquis may include a few international agreements concluded by the EU, that is not the case for the GATS (or any other WTO agreement). Addiko relies on the CJEU's consistent jurisprudence²³⁶ that the flexibility²³⁷ the WTO agreements offer for conduct among WTO Member States makes them "in principle" not among the rules under which the CJEU must review the legality of measures adopted by the Community institution. Croatia argues that, in fact, the CJEU (at the request of the European Commission and Council) has found WTO Agreements to be persuasive but not binding upon the EU. Addiko therefore argues that the GATS is not a part of the EU acquis.²³⁸

176.

Second, Addiko argues that even if the GATS was considered to be part of the EU acquis, it does not generate obligations for the EU towards investors in Austria. Addiko argues that the WTO Agreements impose upon the EU the duty to refrain from discriminating against foreign goods and services in favor of domestic goods and services. Accordingly, Addiko argues, the EU's obligation under the GATS is to accord MFN treatment to services and supplies from outside the EU, not to those from EU Member States such as Croatia or Austria. Therefore, the GATS is not incompatible with the BIT since they do not overlap in their scope. While the GATS caters to obligations towards service and service providers from non-EU WTO Member States, the BIT merely applies to service and service providers from its Contracting Parties.²³⁹

177.

Third, Addiko argues that nothing in the BIT calls on Croatia or Austria to provide a certain level of treatment to investors not from the other Contracting Party. Instead, Addiko argues, each Contracting Party remains open under the BIT to accord identical or no less favorable treatment to all other States. Accordingly, in its view, the BIT does not violate the GATS MFN obligation.²⁴⁰

178.

Fourth, Addiko rejects Croatia's argument that the exclusion by some States of investment agreements from Article II of the GATS indicates incompatibility between such agreements and the GATS. In its view, the fact that many prominent WTO Member States have not excluded investment agreements from the application of Article II of the GATS indicates that those WTO Member States do not believe that there is any such incompatibility.²⁴¹ Addiko notes that when pressed at the hearing, Croatia admitted that its argument about the GATS would mean that unless expressly exempted through the procedure provided by the GATs, "no BIT would be valid under this argument."²⁴²

179.

Fifth, Addiko argues that by Croatia's own argument, bilateral investment treaties are not "measures" within the meaning of Article II of the GATS. At any rate, Addiko argues that, assuming investment treaties are "measures" for purposes of Article II of the GATS, Croatia's argument that by their very nature such treaties violate the GATS MFN obligation would cause seismic ramifications for the over 3,000 bilateral investment treaties²⁴³ between WTO Member States. For these reasons, Addiko argues that Croatia's arguments must be approached with caution.²⁴⁴

180.

The Commission's Submission is focused on the legal consequences of the CJEU's Achmea Judgment. The Commission argues that the judgment is an authoritative interpretation of EU law, binding upon EU Member States, investors established in those States and intra-EU arbitral tribunals as a part of international law applicable to the dispute. Accordingly, the Commission argues that the offers by Croatia and Austria to investors from the other State to arbitrate investment disputes were invalid since Croatia's accession to the EU on 1 July 2013. The Commission accordingly considers that the Tribunal lacks jurisdiction over this case.²⁴⁵

181.

The Commission cites the ICJ for the proposition that an international court or tribunal "must... always be satisfied that it has jurisdiction, and must if necessary go into that matter proprio motu."²⁴⁶ In its view, "[t]he competence to decide on such claims necessarily presupposes the possibility to analyse possible obstacles to the validity of the offer to arbitrate, and the existence and validity of consent to arbitrate."²⁴⁷ Accordingly, this Tribunal must assess whether the offer of arbitration made by Croatia was applicable when Addiko filed its request for arbitration.

182.

The Commission argues that there is a conflict between Article 9(2) of the BIT and the EU law because (i) the Tribunal may have to apply and interpret the EU law, (ii) there is no valid offer to arbitrate, and (iii) the sunset clause in the BIT are either not triggered or are inapplicable.

183.

The Commission argues that the scope of Achmea disallows the application and interpretation of the EU law by any tribunal established under any intra-EU BIT. That is because these tribunals are not part of EU judicial system, cannot be regarded as courts of Member States and cannot make a reference to the CJEU for a preliminary ruling. The application and interpretation of EU law by these tribunals thus contradicts the principle of mutual trust among Member States and the preservation of the nature and autonomy of the EU law, which moreover was confirmed by the German Federal Supreme Court. In this case, the Commission argues, the applicable law of the BIT includes Croatian law, which comprises EU law, and for this reason a tribunal established under Article 9 of the BIT would have to interpret and apply EU law just as would the arbitral tribunal proceeding under the BIT at issue in Achmea.²⁴⁸

184.

The Commission contends that the conflict between Article 9 of the BIT and the EU law has existed since the date of Croatia's accession to the EU, 1 July 2013. The Commission argues that Achmea applies ex tunc, i.e., from the very outset of Croatia's accession. The CJEU has the authority to limited the ex tunc application of its rulings, but it did not do so in Achmea. Thus, since consent to arbitrate under the BIT was lacking ab initio, since 1 July 2013, there was no valid offer to arbitrate outstanding at the time Addiko filed its request for arbitration. The Commission supports this argument by relying on the Bundesgerichtshof 's final decision in Achmea and the Svea Court of Appeal's suspension of the enforcement of two intra-EU investment arbitration awards seated in Stockholm.²⁴⁹

185.

The Commission submits that the sunset clause in Article 12(3) of the BIT regulates only the legal consequences of unilateral termination of the BIT. Here, however, the BIT was terminated by the plurilateral Treaty of Accession of Croatia to the EU, which is not addressed by Article 12(3) of the BIT. In the alternative, the Commission stresses that Achmea precludes the offer for arbitration, which itself renders the sunset clause incompatible with and precluded by the EU law.²⁵⁰

186.

The Commission invites the Tribunal to find it lacks jurisdiction because the BIT has been terminated.²⁵¹ The Commission contends that (i) the requirements of VCLT Article 59 for implied termination of the BIT are fulfilled, (ii) the BIT and the EU law have the "same subject matter" for purposes of Article 59, (iii) there is no need to follow the formal requirements of VCLT Articles 65-68 for termination of the BIT, and (iv) Croatia and Austria confirmed the lack of valid consent to arbitration by a declaration consistent with VCLT Article 31.²⁵²

187.

The Commission argues that the investments listed in Article 1 of the BIT fall within the ambit of application of the fundamental freedoms guaranteed by the EU law, namely the TFEU. Importantly, EU law provides for a complete set of legal remedies and effective judicial protection in the case of violations of investors` rights. Contrary to the decision in Eastern Sugar, the Commission considers that the protection of fundamental freedoms includes the post-establishment phase of the investment. The Commission also relies on CJEU decisions that EU law takes precedence over agreements concluded between Member States, to argue that such precedence also applies to treaties that originally were not between Member States but became such upon the latter's State's accession to the EU. With regard to this case, the Commission argues that Croatia and Austria both were well aware of the rule of primacy of the EU law as of Croatia's accession on 1 July 2013, and therefore their intention when signing the Treaty of Accession was for the protection of intra-EU investments to be governed henceforth only by EU law. This is especially evident under this BIT, the Commission says, given its inclusion of Article 11(2). Thus, the Commission argues, the BIT has been impliedly terminated since 1 July 2013.²⁵³

188.

Alternatively, the Commission considers that all substantive provisions of the BIT are incompatible with the EU law because they implement a parallel system overlapping with Single Market rules, preventing a full application of the EU law. The overlap occurs when intra-EU investment agreements form the basis for an award of unlawful State aid or when they confer rights only in respect of investors from one of two Member States, conflicting with the principle of non-discrimination on the ground of nationality. For these reasons, the Commission argues, the BIT in its entirety is incompatible with EU law, fulfilling the condition under Article 59(1)(b) of the VCLT. In this regard the Commission mentions that Article 59 of the VCLT also can support partial termination of an international agreement.²⁵⁴

189.

The Commission states that arbitral tribunals have previously considered the requirement that two treaties relate to the same subject matter as an additional condition for VCLT Article 59, rather than as a condition that is automatically met whenever other conditions of Article 59 are fulfilled. However, such decisions in its view are superficial and at odds with Article 59's drafting history. In this regard, citing the VCLT's travaux préparatoires, the Commission argues that Article 59(1) does not require that two treaties be related to the same subject matter, but only that they lay down rules for the same issue. Thus, since any investment made by an investor from one Member State in another falls within the scope of application of the fundamental freedoms of the EU law, both the BIT and the EU law govern the same issue.²⁵⁵

190.

The Commission argues that, contrary to rulings of other arbitral tribunals, the travaux préparatoires of the VCLT makes it clear that implied termination under VCLT Article 59 does not require the formal steps for termination under VCLT Articles 65-68 to be followed.²⁵⁶

191.

The Commission argues that a Declaration²⁵⁷ dated 15 January 2019 issued by Croatia and Austria together with other EU Member States confirms that (i) Achmea precludes Article 9(2) of the BIT, (ii) the effects of Achmea are ex tunc as of 1 July 2013, (iii) the conflict between Article 9(2) of the BIT is governed by the conflict rule of primacy of the EU law, and (iv) the application of VCLT Article 30 leads to the same outcome. According to the Commission, this Declaration serves as a clarification by both Croatia and Austria that the object and purpose of the Treaty of Accession, within the meaning of VCLT Article 31(1), was to impliedly terminate the BIT altogether, or at least terminate its Article 9.²⁵⁸

192.

The Commission argues that in the event the Tribunal disagrees with its submission under VCLT Article 59, under all possible conflict of law rules applicable, the conflict between Article 9(2) of the BIT and the EU law must be resolved in favor of EU law.²⁵⁹

193.

Replying on the Bundesgerichtshof 's final decision on Achmea and decisions in JSW v. Czech Republic and Zhinvali v. Georgia, the Commission argues that the general principle of primacy of EU law is part of the Croatian legal order and of international law applicable between Croatia and Austria. Thus, EU law governs the jurisdiction of this Tribunal and takes precedence over Article 9(2) of the BIT. The Commission acknowledges an alternative view, supported by practice of the PCIJ and in academic writing and reflected by the decision in CSOB v. Slovakia, to the effect that the question of whether the parties have effectively expressed their consent to arbitral jurisdiction is governed by international law. However, it contends that this view is not applicable in this case, which presents the inverse scenario of that in CSOB v. Slovakia. Thus, the Commission considers that to assess the validity of the arbitration agreement, the law of the host State should be applied. Even if international law regulates the issue of consent, it contends that the outcome will be the same: EU law should be applied when assessing jurisdiction.²⁶⁰

194.

In the Commission's view, the applicable conflict rule is that of the primacy of EU law vis-à-vis other international agreements concluded between Member States, including pre-accession international treaties. For this argument, the Commission relies on Costa/ENEL, the Declaration 17 annexed to the Final Act of the Intergovernmental Conference adopting the Treaty of Lisbon, and Article 11(2) of the BIT. Also, based on decisions of the CJEU, and the ICSID award in Electrabel v. Hungary, the Commission considers that in the case of pre-accession international treaties the precedence of EU law takes effect as of the date of accession.²⁶¹

195.

The Commission argues that application of VCLT Article 30(3) also would result in EU law prevailing over Article 9(2) of the BIT. The reason is that in contrast to Eastern Sugar, and according to the VCLT's travaux préparatoires and the decision in PL Holding, Article 30(3) does not impose two separate conditions requiring the "same subject matter" and a "conflict" between treaties; instead, there is only a single requirement of conflict. In the context of this argument, the Commission contends that the Tribunal ought to consider the interpretation given by the Contracting Parties themselves to their successive obligations, namely through their Declaration of 15 January 2019, stressing that cross-border investment in the EU is governed by the complete framework of EU law. Thus, the Commission concludes that under VCLT Article 30(3), the arbitration clause and the sunset clause in the BIT are incompatible with the Treaty of Lisbon and the Treaty of Accession.²⁶²

196.

Finally, relying on the Bundesgerichtshof 's final decision in the Achmea case, the Commission argues that Addiko cannot invoke the doctrine of legitimate expectations. The Commission also argues that the Eastern Sugar tribunal misapplied VCLT Article 70, interpreting it contrary to the International Law Commission's ("ILC") observation that Article 70 was not concerned with the rights of individuals but solely with those of States.²⁶³

197.

Article 25(1) of the ICSID Convention, to which both Austria and Croatia are Contracting States, provides that jurisdiction "shall extend to any legal dispute arising directly out of an investment, between [Croatia] and a national of [Austria], which the parties to the dispute consent in writing to submit to the Centre."²⁶⁴ The question for this Decision is whether Croatia has consented to submit to ICSID arbitration the particular dispute at issue, namely a claim by an Austrian investor alleging violation of certain substantive standards of the Austria-Croatia BIT. There is no question that the other party to this dispute, Addiko, has consented to any valid offer of consent that Croatia may have made, by initiating this arbitration consistent with the ICSID Rules. At the same time, it is trite law that an investor may not bind a State beyond the limits of the State's own predicate offer of consent, and States are free to limit the circumstances of their advance consent to ICSID arbitration.²⁶⁵ Where they have done so, tribunals must respect the clear limits of the requisite consent.

198.

The starting point for determining the validity and reach of Croatia's consent is the BIT itself, which must be interpreted according to the principles set forth in VCLT Articles 31 and 32. In conducting such an analysis, the Tribunal bears in mind several propositions. First, under VCLT Article 31, the provisions of the BIT are to be interpreted and applied in accordance with the "ordinary meaning" of their terms, in the "context" in which they occur and in light of the Treaty's "object and purpose."²⁶⁶ While the Contracting Parties' use of unambiguous terms should be taken as reflecting their clear intent, context and purpose must also be considered. The relevant "context" for construing any given passage in a treaty includes the words and sentences found in close proximity to that passage, including definitional terms, as well as other provisions of the same treaty which help illuminate its object and purpose.²⁶⁷ In accordance with VCLT Article 31(3), a tribunal construing the terms of the Austria-Croatia BIT should also take into account (inter alia) "[a]ny subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions," as well as "[a]ny subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation" and "[a]ny relevant rules of international law applicable in the relations between the parties.²⁶⁸

199.

In accordance with Article 32 of the VCLT, "[r]ecourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion," only "to confirm the meaning" resulting from the textual approach required by Article 31, or in the event the textual approach leaves a meaning "ambiguous or obscure" or would lead to a result that is "manifestly absurd or unreasonable."²⁶⁹ The ICJ has explained that even in these circumstances, "a decisive reason" (such as unmistakable evidence of the State Parties' intentions from such supplementary materials) would be required "[t]o warrant an interpretation other than that which ensues from the natural meanings of the words" of a provision.²⁷⁰

200.

In applying these VCLT principles to interpret a treaty text, no burden of proof applies as between the parties to a particular dispute. The Tribunal must satisfy itself of the correct meaning of the treaty, and this correct reading will not shift based on traditional notions of burden of proof, which exist primarily to define the duty placed on a party to demonstrate or refute a disputed fact.²⁷¹ The fact that the treaty interpretation exercise in this case is necessary to determine the Tribunal's jurisdiction further underscores the point, since – as the ICJ has stated – "the establishment or otherwise of jurisdiction is not a matter for the parties but for the [Tribunal] itself," which must determine from all the points advanced by the Parties "whether an intention on the part of the Parties exists to confer jurisdiction upon it."²⁷² The Tribunal turns below to interpretation of the particular BIT provisions that are most central to the accelerated jurisdictional issue here.

201.

Articles 9 and 11 of the BIT contain the provisions which are critical for interpreting the scope and limits to Croatia's consent, and these two Articles must be read in the context of each other, pursuant to VCLT Article 31(1). Beginning with Article 9, entitled "Settlement of Investment Disputes," the BIT refers to a class of disputes, described in Article 9(1) as "[a]ny dispute arising out of investment, between a Contracting Party and an investor of the other Contracting Party." In accordance with Article 9(2), if such a dispute cannot be settled amicably within three months of notification by the investor, then upon the request of either the investor or the host State, "the dispute shall … be subject to the following procedures" (emphasis added). The word "shall" connotes a mandatory requirement, subject only to such conditions or exceptions as may also be specified in the BIT. Article 9(2) then provides a choice between two dispute resolution procedures, namely ICSID arbitration (addressed in Article 9(2)(a)) or UNCITRAL Rules arbitration (addressed in Article 9(2)(b)).

202.

Importantly, for either path, the BIT expressly states that "[i]n the case of arbitration, each Contracting Party, by this Agreement irrevocably consents in advance, even in the absence of an individual arbitral agreement between the Contracting Party and the investor, to submit such dispute" for resolution by the applicable tribunal.²⁷³ This statement of "irrevocabl[e] consent[] in advance" contains two important elements. First, irrevocability means what it says: the States may not resile from the consent so granted. Second, and equally important, what is irrevocable is the "consent[] in advance," namely the offer of consent to qualified investors of the other State. Under the plain language of Articles 9(2)(a) and 9(2)(b), Austria's and Croatia's mutual pledge of irrevocability does not attach only after a particular investor accepts an offer of arbitration for a particular dispute, in the fashion in which (for example) Article 25(1) of the ICSID Convention operates (i.e., "[w]hen the parties [plural] have given their consent, no party may withdraw its consent unilaterally"). Rather, the irrevocability addressed in Articles 9(2)(a) and 9(2)(b) of the BIT relates to the Contracting States' advance offer itself. The ordinary meaning of the phrase "irrevocably consents in advance" thus means that neither Austria nor Croatia may withdraw its standing advance offer of ICSID or UNCITRAL arbitration, made for the benefit of qualified investors of the other State, so long as the BIT itself (or at least Article 9, which contains this stipulation) remains in full force and effect.

203.

Article 9 must however be read in the context of Article 11 of the BIT, which is entitled "Application of the Agreement." The "Agreement" at issue in Article 11 is the BIT itself, i.e., "[t]he present Agreement" between Austria and Croatia,²⁷⁴ not the subsequent agreement that may come into mutual force with a particular investor by consequence of its acceptance of the "irrevocabl[e] consent[] in advance" that each Contracting State offered in Article 9. Since Article 11 relates to "Application" of the BIT itself, the terms of Article 11 operate as a gateway to all other provisions of the BIT, including both those addressing the Contracting Parties' substantive obligations (Articles 2-8) and those addressing their procedural obligations (Articles 9-10). As a result, an investor can invoke the substantive and procedural protections of these other Articles only if the circumstances exist for "Application of the Agreement," as specified in Article 11 of the BIT.²⁷⁵

204.

The critical provision for this dispute is Article 11(2), which provides that "[t]he Contracting Parties are not bound by the present Agreement insofar as it is incompatible with the legal acquis of the European Union (EU) in force at any given time." The Tribunal agrees with Croatia that this is an unusual provision, not present in other investment treaties that tribunals have analyzed for purposes of jurisdictional objections in intra-EU investment disputes (except for the UniCredit case, which concerned the same BIT as here).²⁷⁶ Article 11(2) therefore requires special attention, beginning with a careful VCLT analysis of its terms.

205.

The first terms of note are included in the phrase, "the Contracting Parties are not bound by the present Agreement insofar as …" (emphasis added). Structurally, this sentence has two parts, with the first part ("are not bound by") identifying the consequence of a stated circumstance, and the second part defining the nature of the circumstance that would trigger such consequence ("insofar as …"). Starting with the former, the consequence is not that the BIT ceases to be in force as such; Article 11(2) does not provide for the express or implied termination of the treaty or any of its provisions. Rather, the consequence of the circumstance arising is that the Contracting Parties are excused from ("not bound by") particular obligations that they otherwise undertook in the BIT. The phrase "insofar as" demonstrates, according to its ordinary meaning, that the Contracting Parties will be so excused only if and to the extent compelled by the applicable circumstance (i.e., "insofar as," but no farther than). Otherwise stated, Article 11(2) is not necessarily an all-or-nothing proviso regarding applicability of the BIT, such that either all of the BIT's provisions apply or none of them do. It is entirely possible, consistent with the phrase "insofar as," that the Contracting Parties could be held "not bound by" a particular provision of the BIT as to which the stated circumstance applies, while remaining bound by other provisions of the BIT as to which there is no Article 11(2) cause for concern.

206.

This is an important distinction in the context of the next relevant term in Article 11(2), which concerns "incompatib[ility]" with another body of law ("the legal acquis of the [EU] in force at any given time"). The Tribunal accepts Croatia's point that State Parties can agree on any hierarchy among their mutual obligations that they wish,²⁷⁷ but in the case of Article 11(2), they have not said that the EU acquis occupy the entire field of their obligations inter se, such that there is no possible room for BIT provisions to apply in parallel. Rather, they have agreed to excuse each other from BIT obligations only "insofar as" (and no farther than) an incompatibility exists. The question for the Tribunal is whether a particular incompatibility arises here, and if so, in what manner and to what extent. One hypothesis could involve a per se incompatibility, under which the very notion of an intra-EU BIT (or at least one in which disputes are to be resolved by arbitration) is by definition incompatible with the acquis. Another hypothesis could involve a more nuanced approach to incompatibility, in which only the manner in which particular provisions of the BIT are invoked in the context of a particular dispute might render them potentially incompatible with the acquis. (A third hypothesis, of course, is no incompatibility at all.) The Tribunal returns to these distinctions further below, in the context of the Parties' particular arguments about incompatibility. The point here is simply to note that as a matter of ordinary meaning, Article 11(2)'s use of the phrase "insofar as" requires a Tribunal to consider not only whether an incompatibility in fact exists, but if so, to what extent, since the Contracting Parties will be excused from their BIT obligations only to that applicable extent.

207.

The next relevant phrase in Article 11(2) is "incompatible with," used in the context of describing another body of law. The word "incompatible" is not defined in the BIT, but the notion of incompatibility has a recognized meaning in public international law, in the context of resolving alleged conflicts between two different sets of international obligations. The same word is used inter alia in Articles 30 and 59 of the VCLT, and given that both Austria and Croatia have ratified the VCLT, the Tribunal considers that they should be viewed as intending to incorporate a consistent meaning for purposes of Article 11(2).

208.

Fortunately, there is no dispute between the Parties as to what the term "incompatibility" means for purposes of international law. Both Parties accept that obligations in two treaties are incompatible if compliance with one obligation places a State into non-compliance with the other obligation.²⁷⁸ This definition of incompatibility necessarily requires a finding that the obligations of two separate treaties cannot be cumulatively applied, as perhaps imposing parallel or additional obligations but not flatly inconsistent ones. Rather, under public international law, incompatibility arises only when the act of complying with one obligation brings a State into non-compliance with another. In that sense, a relationship of "incompatibility" between treaty provisions is fundamentally distinct from a relationship of complementarity.²⁷⁹

209.

Because Article 11(2) of the BIT contains its own rule about the relationship between the BIT and the EU acquis, there is no need to resort to Article 30 of the VCLT with respect to that issue, because (as the Parties seem to agree), the VCLT's rules about the relationship between successive treaties are residual ones, which are meant to be invoked only where there is no lex specialis rule already agreed. Article 11(2) however operates as a lex specialis rule for this purpose, so Article 30 of the VCLT does not govern the issue at hand.²⁸⁰

210.

The Tribunal does not accept Addiko's invitation to conclude that Article 11(2) of the BIT nonetheless requires an examination of whether two sets of treaties have the "same subject matter." For Addiko, the concept of "incompatibility" in Article 11(2) of the BIT "requires as a … logical prerequisite" that the two sets of treaties have the "same subject matter," or else they could never have incompatible provisions.²⁸¹ Addiko therefore suggests that the Tribunal need not even assess putative incompatibility between the BIT and the EU acquis, unless it first finds them to have the same overall subject matter.²⁸² But this would collapse the Article 11(2) inquiry into the same type of analysis as under VCLT Article 30, when Article 11(2) does not so provide. Unlike VCLT Article 30, which explicitly imposes a "same subject matter" test as part of determining the relationship between successive treaties, Article 11(2) of the BIT conditions non-applicability of its terms only on the issue of "incompatibility," without imposing a threshold "subject matter" test or in any other way cross-referencing VCLT Article 30 or its additional terms. In these circumstances, the Tribunal cannot sidestep the central question Article 11(2) poses, by reverting to a separate inquiry that VCLT Article 30 requires but Article 11(2) of the BIT does not. The Tribunal instead focuses squarely on the issue of incompatibility, without reaching the hypothetical question of whether there ever could be a situation in which specific provisions of two treaties are incompatible even though the treaties in general, taken at a macro-level, may address different subject matters.

211.

The next logical step in construing Article 11(2) is to determine the specific body of law on which the provision conditions application of BIT terms, based on a threshold requirement of no incompatibility. Article 11(2) refers to the "legal acquis of the European Union (EU) in force at any given time." The first part of this phrase, referencing to the EU "legal acquis," is not terribly controversial, as it has an accepted meaning under EU law. The Parties both accept that the acquis communautaire of the EU includes, inter alia, (a) the content, principles and political objectives of the EU Treaties (notably the Treaty on European Union ("TEU") and the TFEU); (b) legislation adopted by the EU in application of the EU Treaties; (c) the case law of the CJEU; (d) declarations and resolutions adopted by the EU; and (e) international agreements concluded by the EU that are binding on it and on its Member States.²⁸³ The Parties and their legal experts also agree that the acquis includes opinions rendered to the CJEU by its Advocates General, to the extent not subsequently rejected by the CJEU or otherwise incompatible with primary elements of the acquis such as the EU Treaties.²⁸⁴

212.

With respect to the judgments of the CJEU, it is undisputed that (in the words of the Eskosol tribunal) these constitute "decisive interpretations of the particular issues of EU law that they actually reach."²⁸⁵ The Tribunal thus agrees with Croatia that in considering the content of the EU acquis for purposes of an Article 11(2) objection under the BIT, it would not be "at liberty to set … aside" the CJEU's clear statements of what the acquis actually provide.²⁸⁶ However, while the CJEU's interpretations of the acquis are authoritative to the extent the CJEU has clearly spoken, this does not mean that an international tribunal applying Article 11(2) of the BIT has no independent role in assessing incompatibility with the acquis. As with any other provision of the BIT, the arbitral tribunal must render its best and most faithful interpretation of Article 11(2), as that provision becomes relevant in any given case. This may arise in a number of different contexts.

213.

First, on any given question, there may be a dispute as to whether the CJEU has yet spoken. If the CJEU has not yet spoken to an issue, then the tribunal necessarily must examine for itself the content of other elements of the acquis with which particular BIT provisions are said to be incompatible and thus inapplicable under Article 11(2). Moreover, even if the CJEU has spoken to some element of an issue, there may be a dispute between the parties to a BIT dispute as to the scope of its pronouncements. Unless and until the CJEU resolves such ambiguities by subsequent rulings, it necessarily falls to this Tribunal applying Article 11(2) to determine the extent to which the CJEU's prior judgments actually reach the particular issue, as to which a claim of incompatibility with the acquis has been presented to the tribunal.²⁸⁷

214.

Finally, in all instances, after identifying the point at issue in the acquis, the Tribunal must independently determine the claim of incompatibility, since incompatibility under Article 11(2) is an international law question, not a question of EU law. Consistent with the notion of competence-competence, the BIT does not require a tribunal to suspend its independent judgment with respect to a claimed incompatibility. Article 11(2) is not self-judging, as it might have been if it were phrased alternatively, "[t]he Contracting Parties are not bound by the present Agreement insofar as [one such Contracting Party claims that] it is incompatible with the legal acquis of the European Union (EU) in force at any given time." Rather, it falls to the Tribunal to determine whether the BIT indeed is incompatible, in the public international law sense previously discussed, with the acquis "in force at any given time," while exercising appropriate deference to the CJEU as to what the content of that acquis actually was at the relevant time.

215.

This point brings the Tribunal finally to the important temporal elements of Article 11(2), reflected in the phrase "in force at any given time," within the broader context of absolving the Contracting Parties from the BIT "insofar as it is incompatible with the legal acquis of the European Union (EU) in force at any given time." The first point is that "in force at any given time" is a composite of two smaller phrases, "in force" and "at any given time," and that the latter point about a "given time" qualifies the former point about the scope of the relevant acqui s (that it be the acquis then "in force"). While this may appear obvious, it is nonetheless worth mentioning, because a slightly different interpretation of Article 11(2) might result if the phrase "at any given time" were to qualify the reference to incompatibility, rather than the reference to the acquis (viz., "[t]he Contracting Parties are not bound by the present Agreement insofar as it is incompatibl e [at any given time] with the legal acquis …"). The question in that case might be whether the acquis, as it has evolved in toto by the date of the Tribunal's assessment, compels a finding of incompatibility such as to release the Parties from obligations otherwise imposed by the BIT. By contrast, under the actual placement of the phrase "at any given time" (referring to "the legal acquis … in force at any given time"), the temporal inquiry must be into the state of the acquis itself (i.e., what elements were or were not in force as part of the acquis, as of a particular date).

216.

This is consistent with the reality that all bodies of law evolve over time, including the EU acquis. The acquis evolves in at least two different senses. First, elements of it emanate from political acts that are taken at a particular moment in time, such as entry into additional treaties binding the EU Member States (e.g., the Lisbon Treaty), or adoption of particular legislation in application of the EU Treaties. Second, elements of the acquis emanate from the case law of the CJEU, which like courts in many jurisdictions progressively interprets underlying texts (e.g., the EU Treaties) as particular questions about those texts are put to it. The CJEU's interpretation of the EU Treaties may evolve over time, just as the opinions rendered to the CJEU by its Advocates General may also evolve. Any given pronouncement by the CJEU (or any given opinion by an Advocate General, prior to the CJEU's decision) may become part of the acquis once it is rendered, but it cannot be said to have be "in force" as part of the acquis prior to when it is rendered. By contrast, the underlying texts which the CJEU interprets (the EU Treaties) were "in force" as of the date of their adoption, even if the CJEU has not yet had occasion to opine on a particular question arising about those texts.

217.

This distinction becomes particularly relevant here, as it relates to the Parties' discussion of whether and how Achmea should be considered as part of the Tribunal's jurisdictional analysis. The Parties agree that for purposes of any jurisdictional question under the ICSID Convention, the "critical date" for determining the existence of consent to arbitration is the date on which the relevant request for arbitration was registered (here, 27 September 2017). What follows from that, and from Article 11(2) of the BIT, is that (a) if the Tribunal were to find that as of that critical date, Croatia's offer of consent to arbitration in Article 9(2) of the BIT was not already incompatible with the acquis then in force (i.e., with the EU Treaties), (b) then no subsequent event could retroactively vitiate the mutual consent to arbitration cemented by the act of Addiko's acceptance.²⁸⁸ As previously discussed, any such retroactive vitiation of prior consent would be inconsistent with Article 9(2)'s own express provision that the standing offer of consent is irrevocable, so long as that Article was valid under Article 11(2), with which it must be read in context. Accordingly, since Achmea postdated the critical date for determining compatibility, it cannot itself be said (qua a CJEU judgment) to have comprised part of the acquis "in force at [the] given time" relevant to the jurisdictional analysis. However, this does not excuse the Tribunal from assessing, for purposes of the incompatibility analysis, the content and import of the EU Treaties, which (unlike Achmea) were clearly already part of the acquis "in force" as of the critical date.

218.

In this context, the Tribunal acknowledges that Croatia is not arguing that post-critical date events (such as Achmea) dramatically altered the pre-existing acquis, creating a new incompatibility that should be applied retroactively to vitiate a prior consent that was valid under the acquis as of the critical date. Croatia rather argues that certain incompatibilities between the BIT and the EU Treaties were inherent from the date of its accession to the EU (1 July 2013), even if the CJEU did not have occasion to "clarify" that point until years later.²⁸⁹ According to Croatia, the CJEU's eventual pronouncement in Achmea was simply a "confirmation" of what always had existed in the acquis,²⁹⁰ not a declaration of change, and therefore "[e]ven without the Achmea Judgment, this Tribunal would have to interpret and apply these provisions" of the EU Treaties.²⁹¹ The Tribunal acknowledges this argument, and therefore considers it essential that it address directly the content of the Achmea as it relates to the pre-existing provisions of the EU Treaties, and not simply sidestep that content on the grounds that Achmea was issued only after the critical date in this case.

219.

At the same time, the Tribunal acknowledges Addiko's counter-argument that an incompatibility between the EU Treaties and the BIT could not be said to have existed sub rosa, as part of the EU acquis already in force, before it was ever recognized as such by the CJEU. To some extent, the Parties' contrasting positions on this point – whether an incompatibility can be said to have existed vis-à-vis the EU Treaties, before the CJEU announced any interpretation one way or the other – can be said to echo the famous metaphysical question about observation and perception, "if a tree falls in a forest and no one is around to hear it, does it make a sound?"²⁹² Of course, as Addiko also argues, there was at least one sound in the forest of relevant interpretations as of the critical date, namely Advocate General Wathelet's opinion on the EU Treaties offered in the Achmea case, which Addiko asserts formed part of the acquis "in force" up until such time as the CJEU later departed from it.

220.

The Tribunal considers each of these arguments as presenting serious issues, and returns to them further below, after first examining certain predicate contentions about the nature of the alleged incompatibility itself (as expressed in Achmea and otherwise).

221.

Croatia alleges that from the date of Croatia's accession to the EU, the BIT is incompatible with the EU acquis – and therefore was not binding on the Contracting Parties pursuant to Article 11(2) of the BIT – in two different respects.

222.

First, Croatia contends that Article 9(2)'s offer to submit BIT disputes to international arbitration was incompatible from the date of Croatia's EU accession with Articles 267 and 344 of the TFEU. In Croatia's view, these Articles categorically forbid referral of any EU law questions to an authority (the arbitral tribunal) that is unable to make a preliminary reference to the CJEU, the way the national courts of EU Member States could do. These Articles therefore (in its view) do not allow the creation of any dispute settlement mechanisms outside the EU court structure that may have to consider issues of EU law.

223.

Second, Croatia argues, the BIT violates anti-discrimination principles in the EU acquis, reflected in particular in Articles 18, 49 and 63 of the TFEU, because it extends special rights and protections (both procedurally and substantively) to Austrian and Croatian nationals, which the Contracting Parties do not also extend to nationals of other EU Member States. The procedural discrimination is said to arise from the grant of arbitration rights only to Austrian and Croatian nationals, and the substantive discrimination to arise from the grant only to the same nationals of various protections reflected in the BIT's substantive treatment obligations. In Croatia's view, these two aspects of favorable treatment also violate core principles of equal treatment reflected in the GATS, which Croatia contends is part of the EU acquis.

224.

The Tribunal addresses these contentions separately below.

225.

Article 267 of the TFEU provides as follows:

The Court of Justice of the European Union shall have jurisdiction to give preliminary rulings concerning:

(a) the interpretation of the Treaties;

(b) the validity and interpretation of acts of the institutions, bodies, offices or agencies of the Union;

Where such a question is raised before any court or tribunal of a Member State, that court or tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request the Court to give a ruling thereon.

Where any such question is raised in a case pending before a court or tribunal of a Member State against whose decisions there is no judicial remedy under national law, that court or tribunal shall bring the matter before the Court.

If such a question is raised in a case pending before a court or tribunal of a Member State with regard to a person in custody, the Court of Justice of the European Union shall act with the minimum of delay.

226.

Article 344 of the TFEU provides as follows:

Member States undertake not to submit a dispute concerning the interpretation or application of the Treaties to any method of settlement other than those provided for therein.

227.

According to Croatia, the incompatibility of intra-EU BIT arbitration with these two provisions of the EU acquis was "clarified and confirmed" by Achmea,²⁹³ even if (in its view) that proposition already was inherent in Articles 267 and 344 of the TFEU prior to the CJEU's pronouncement. Otherwise stated, while Croatia does not invoke Achmea as a new event somehow transforming the pre-existing acquis, it does rely almost entirely on the analysis in Achmea as reflecting the applicable meaning of Articles 267 and 344 of the TFEU as it relates to intra-EU BIT arbitration. Given this reliance on Achmea to frame the content of the relevant acquis, it is necessary for the Tribunal to consider what the CJEU actually decided in Achmea, and correspondingly what the CJEU did not unambiguously decide. For this purpose, the Tribunal considers it important to view the Achmea dispositif in the context of the CJEU reasoning which preceded it, and not simply in isolation.

228.

The Tribunal therefore starts with a summary of Achmea (section "a" below), before turning to a discussion of the scope of the CJEU's ruling (section "b") and the implications of Achmea for the compatibility of Article 9(2) of the Austria-Croatia BIT (section "c"). The Tribunal then discusses the temporal issues debated by the Parties, including the application of any broader interpretation of Articles 267 and 344 of the TFEU to BIT cases commenced before Achmea (section "d"). Finally, the Tribunal discusses the relevance of the Declarations (section "e") and certain other issues raised by Croatia and the Commission (section "f"), before setting forth in section "g" below its conclusions on the alleged compatibility of this BIT arbitration with Articles 267 and 344 of the TFEU.

229.

The Tribunal prefaces this summary with an acknowledgment that it largely tracks the detailed summary of Achmea set forth in the Eskosol decision,²⁹⁴ by a tribunal which included two members of this Tribunal. Since the Tribunal agrees with that summary, it sees no need to reformulate the summary in different language. The Tribunal of course could have simply cross-referenced the relevant passages of Eskosol, but that would require readers of this decision to resort to that decision, to follow the Tribunal's assessment of the implications of Achmea provided in subsequent sections of this Decision. Since the Tribunal prefers this Decision to stand on its own, it instead incorporates the relevant summary here, rather than simply cross-referencing it.

230.

The Achmea matter came before the CJEU on a request by the German Bundesgerichtshof for a preliminary ruling. In December 2012, an UNCITRAL tribunal had issued an arbitration award in favor of Achmea B.V., a Dutch company, finding that the Slovak Republic had violated certain obligations owned to the company under the Netherlands-Slovakia BIT. As the seat of the arbitration was in Frankfurt, the Slovak Republic brought a set-aside action before the Oberlandesgericht Frankfurt am Main, and when that court dismissed its action, the Slovak Republic appealed to the Bundesgerichtshof on a point of law.

231.

The Bundesgerichtshof in turn decided to stay the appeal and sought a preliminary ruling from the CJEU on the following questions, referring to the text of Articles 18, 267 and 344 of the TFEU:

(1) Does Article 344 TFEU preclude the application of a provision in a bilateral investment protection agreement between Member States of the European Union (a so-called intra-EU BIT) under which an investor of a Contracting State, in the event of a dispute concerning investments in the other Contracting State, may bring proceedings against the latter State before an arbitral tribunal where the investment protection agreement was concluded before one of the Contracting States acceded to the European Union but the arbitral proceedings are not to be brought until after that date?

If Question 1 is to be answered in the negative:

(2) Does Article 267 TFEU preclude the application of such a provision?

If Questions 1 and 2 are to be answered in the negative:

(3) Does the first paragraph of Article 18 TFEU preclude the application of such a provision under the circumstances described in Question 1?²⁹⁵

232.

Advocate General Wathelet proposed that the CJEU should answer these questions as follows:

Articles 18, 267 and 344 TFEU must be interpreted as not precluding the application of an investor/State dispute settlement mechanism established by means of a bilateral investment agreement concluded before the accession of one of the Contracting States to the European Union and providing that an investor from one Contracting State may, in the case of a dispute relating to investments in the other Contracting State, bring proceedings against the latter State before an arbitral tribunal.²⁹⁶

233.

The CJEU did not, however, accept Advocate General Wathelet's proposed resolution. Instead, it began by reformulating the questions posted by the Bundesgerichtshof, into a combined first and second questions framed as follows:

By its first and second questions, which should be taken together, the referring court essentially asks whether Articles 267 and 344 TFEU must be interpreted as precluding a provision in an international agreement concluded between Member States, such as Article 8 of the BIT, under which an investor from one of those Member States may, in the event of a dispute concerning investments in the other Member State, bring proceedings against the latter Member State before an arbitral tribunal whose jurisdiction that Member State has undertaken to accept.²⁹⁷

Jean E. Kalicki	President
Guido Santiago Tawil	Appointed by the investor
Miloš Olík	Appointed by the State

Addiko Bank v. Croatia

Documents of the case

Lawyers, other representatives, expert(s), tribunal’s secretary

Decision on Croatia’s Jurisdictional Objection Related to the Alleged Incompatibility of the BIT with the EU Acquis

TABLE OF SELECTED ABBREVIATIONS AND DEFINED TERMS

I. INTRODUCTION AND PARTIES

II. PROCEDURAL HISTORY

III.THE PARTIES' POSITIONS

A. PRINCIPLES REGARDING THE DETERMINATION OF JURISDICTION

(1) Burden of Proof

a. Croatia's Position

b. Addiko's Position

(2) Tribunal's Standard of Review

a. Croatia's Position

b. Addiko's Position

(3) Date of Determination of Jurisdiction

a. Croatia's Position

b. Addiko's Position

(4) Status of Croatia's Consent to Arbitration

a. Croatia's Position

b. Addiko's Position

B. IMPACT OF ARTICLE 11(2) OF THE BIT

(1) Croatia's Position

(2) Addiko's Position

C. COMPATIBILITY ANALYSIS UNDER ARTICLE 11(2) OF THE BIT

(1) Standard of Compatibility

a. Croatia's Position

b. Addiko's Position

(2) Import of Other Arbitrations with Similar Issues

a. Croatia's Position

(i) General Objections to other Arbitral Case Law

(ii) Case-specific Objections to other Arbitral Case Law

b. Addiko's Position

D. EU DECLARATIONS

(1) The Declarations' Effect on Compatibility Between Article 9 of the BIT and the Acquis

a. Croatia's Position

b. Addiko's Position

(2) Whether the Declarations Are Binding on this Tribunal

a. Croatia's Position

b. Addiko's Position

E. ACHMEA

(1) Correctness of Achmea

a. Croatia's Position

b. Addiko's Position

(2) Force of Achmea in These Proceedings

a. Croatia's Position

b. Addiko's Position

(3) Applicability of Achmea to ICSID Arbitrations

a. Croatia's Position

b. Addiko's Position

(4) Retroactive Application of Achmea

a. Croatia's Submissions

b. Addiko's Position

F. THE BIT'S COMPATIBILITY WITH EU'S NON-DISCRIMINATION PRINCIPLES

a. Croatia's Position

b. Addiko's Position

G. THE BIT'S COMPATIBILITY WITH GATS OBLIGATIONS

a. Croatia's Position

b. Addiko's Position

IV. THE EUROPEAN COMMISSION'S POSITION

A. COMPETENCE OF THE ARBITRAL TRIBUNAL TO RULE ON ITS JURISDICTION

B. CONFLICT BETWEEN ARTICLE 9 OF THE AUSTRIA-CROATIA BIT AND EU LAW

(1) The Tribunal May Have to Apply and Interpret EU Law

(2) Lack of Valid Offer for Arbitration Since 1 July 2013

(3) Sunset Clauses Are Not Triggered and Inapplicable

C. THE AUSTRIA-CROATIA BIT HAS BEEN TERMINATED

(1) The Conditions for Both Alternatives of VCLT Article 59(1) Are Fulfilled

(2) The Question of "Same Subject Matter"

(3) There Is No Need to Follow the Formal Steps for Termination in VCLT Articles 65-68

(4) Croatia and Austria Have Confirmed the Lack of Valid Consent to Arbitration in a Declaration Pursuant to VCLT Article 31(2)(b) and 31(3)(a)

D. IN THE ALTERNATIVE: EU LAW PREVAILS OVER ARTICLE 9(2) OF THE BIT

(1) Law Applicable to the Decision on Jurisdiction

(2) Primacy of EU Law as a Special Conflict Rule Codified in Declaration 17 of the Lisbon Treaty and Article 11(2) of the BIT

(3) In the Alternative: The VCLT's Conflict Rules Lead to the Conclusion that EU Law Prevails over Article 9(2) of the BIT

(4) No Legitimate Expectations and No Protection by VCLT Article 70

V. THE TRIBUNAL'S ANALYSIS

A. INTRODUCTORY PRINCIPLES

B. INTERPRETATION OF KEY BIT PROVISIONS

C. THE ALLEGED INCOMPATIBILITY OF THE BIT WITH THE EU ACQUIS

(1) Alleged Incompatibility with Articles 267 and 344 TFEU