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Investor-State Arbitrations and EU State Aid Rules: Conflict or Co-existence?

Kai Struckmann, Genevra Forwood, Aqeel Kadri

This article explores the relationship between, on the one hand, EU State aid rules and, on the other hand, international investment protection treaties. The topic has attracted attention because of the Micula case, in which the European Commission deployed State aid rules to make an unprecedented incursion into the realm of investor-State arbitrations. The article explores three interfaces between the two regimes. First, and perhaps least controversially, EU State aid rules can shape the substantive obligations of the State under the investment treaty. Second, should an arbitral tribunal find that a Member State has failed in its obligations under an investment treaty, and award damages against that State, there is a theory – as yet untested – that EU State aid rules limit the State’s ability to abide by (and the investor’s ability to enforce) such an award. This is the nub of the Micula case. Third, there is an ongoing debate about the compatibility of investment protection treaties between two Member States with the obligations of those Member States under EU law. The question arises how (if at all) this is relevant to the application of State aid rules. Overall, the article proposes that the perceived conflict between the two regimes is overstated: they can, and indeed should, be able to co-exist.
Keywords: Article 107(1) TFEU; Imputability; Advantage; Investor-State Arbitration; International Investment Protection Treaties; Primacy of EU Law.

The authors practice law with White & Case LLP in Brussels. They represent Mr Ioan Micula and the corporate claimants in the Micula case discussed in this article but the views expressed are the authors’ own. They are grateful to Zena Prodromou for her valuable research.


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