In February and April 2021, RWE and Uniper commenced ICSID arbitration proceedings against the Kingdom of the Netherlands (see RWE v. Netherlands), alleging that its decision to phase out all coal-fired power plants by 2030 violates the Netherlands’ obligations under the Energy Charter Treaty (ECT).
In response, the Netherlands initiated inadmissibility proceedings before the Higher Regional Court of Cologne, Germany on 11 May 2021. The Netherlands argued that the arbitral proceedings of the two Germany-based companies against an EU Member State qualified as intra-EU investment arbitrations, which are incompatible with EU law. RWE and Uniper in turn argued that the German Court does not have competence to decide on the matter.
On September 1, 2022, the Court declared both ICSID arbitral claims inadmissible pursuant to section 1032 (2) of the German Code of Civil Procedure, which provides that: “Until the arbitral tribunal has been formed, a request may be filed with the court to have it determine the admissibility or inadmissibility of arbitral proceedings.” The Higher Regional Court found the arbitral clause of the ECT incompatible with EU law and thus invalid in intra-EU arbitrations. The Court relied on a number of judgements handed down by the Court of Justice of the European Union (CJEU), including the landmark ruling in Slovak Republic v. Achmea. According to the CJEU, arbitration clauses in intra-EU investment treaties are incompatible with the principle of autonomy of the EU legal order. Disputes on EU law rest within the exclusive competence of the EU judiciary to ensure the autonomy of the legal order and consistent interpretation of Union law.
The Court’s decision can be appealed. However, in September 2022, the German government’s announced that it would take over 99% of Uniper in exchange for which the company agreed to withdraw its ICSID claim against the Netherlands. Uniper’s ICSID proceedings are currently paused until January 2023.
Case Documents:
No case documents are available.