Whither Mutual Trust? Brexit, Achmea and the Future of Investor-State Arbitration in the EU-UK Investment Relations

Abstract

A lot of ink has been devoted to Brexit: when (and if) it will happen, under what terms, and what its legal effects will be. Some have enquired whether Brexit can create an avalanche of investor-state disputes potentially based on the frustration of the investors’ legitimate expectations. This article takes a step back from the current volatility of the ongoing negotiations and addresses a bigger policy question, which has been emerging steadily also in other contexts: what will be the actual interplay between international, EU and domestic laws for the resolution of investment disputes after Brexit? To address this question, this article first examines the Withdrawal Agreement and the new arbitration mechanism that it establishes. Second, it explores the interaction between international and domestic laws, in light of the current developments in EU law, especially the Achmea judgment and the Member States’ Declarations on Achmea, as well as implications for the enforceability of arbitral awards in the UK post-Brexit. The article concludes with the remark that policy makers need to address the current underlying tensions between the three laws of international investment; domestic, EU, and international, by paying due respect to international law.