By Dean Feinman and Alexandre Malan

The European Union’s legal order is one of its greatest achievements and most jealously protected features. As the Union grew from humble origins as a regional coal and steel community into a uniquely competent international organization, so too emerged, sui generis, an entirely new legal framework. For decades the Court of Justice of the European Union (CJEU) has closely guarded the monopoly it holds, along with European courts, in interpreting and applying Union law.

1.     Achmea and progeny

European legal autonomy was central to the Court’s 2018 Slovak Republic v. Achmea decision. Case C-284/16. Achmea brought a definitive answer to whether the EU would permit intra-EU investor-State arbitration clauses stemming from Bilateral Investment Treaties. The Court ruled no.

In the subsequent years, the court expanded its decision: first prohibiting enforcement of intra-EU investor-State arbitration clauses in Multilateral Investment Treaties and later prohibiting such arbitration even when purely ad hoc. See Case C-741/19, République de Moldavie v. Komstroy LLC, and Case C-109/20, Republiken Polen v. PL Holdings, respectively.

Achmea and progeny have left open questions on how far the CJEU’s arbitration jurisprudence can go. The Commission has already signaled its disapproval of intra-EU application of arbitration clauses found in investment contracts. Meanwhile, the Court has encroached into other forms of arbitration, as well. For example, in Case C-124/21 P, International Skating Union v. Commission, the CJEU applied Achmea logic to sports arbitration. In that case, it required effective European judicial review on merit questions, but avoided, at least in this instance, answering whether sports arbitration was compatible with EU law.

The Courts’s insistence on legal autonomy portends an expansive jurisprudence with uncertain results. The situation is exacerbated by a broad interpretation of the type of EU-law questions forbidden from submission to non-EU venues. What is preventing the Court from applying Achmea to all forms of arbitration, and not just investor-State? What will stop the CJEU from interjecting itself in foreign disputes—even ones in foreign venues with foreign parties applying foreign law—so long as there is an incidental question of, or with impact on, European law? And what impact will all of this have on investor and commercial confidence, both within and without the Union?

2.     The Blasket saga

A series of cases has arisen in the United States that may push the limits of the CJEU’s arbitration jurisprudence and may expose the fault lines of aggressive legal autonomy.

Blasket Renewables Investments LLC v. Kingdom of Spain involves two Dutch renewable energy firms and Spain. 665 F. Supp. 3d 1 (D.D.C. 2023), rev’d sub nom. NextEra Energy Global Holdings B.V. v. Kingdom of Spain, 112 F.4th 1088 (D.C. Cir. 2024). The companies brought an ad hoc arbitration under the Energy Charter Treaty (ECT) before the PCA, sitting in Geneva. The tribunal issued the claimants an award of EUR 26.5 million.

Spain petitioned Swiss courts for annulment, arguing that the tribunal had failed to properly consider jurisdiction in light of Achmea. The Swiss court denied the request, largely on procedural grounds, noting that Spain had not properly pursued the question in arbitration. Foreseeing a protracted enforcement process, the Dutch companies assigned their rights to the Delaware corporation, Blasket Renewable Investments. Blasket subsequently sought enforcement of the award under the New York Convention in U.S. Federal court.

The D.C. District Court (acting as the court of first instance) accepted Spain’s arguments. The court—in reasoning anomalous to U.S. law—recognized EU law as cognizable and applicable “international law” for the purposes of interpreting the ECT’s arbitration clause. Following the Achmea precedent, the court concluded, as applied intra-EU, the ECT’s arbitration clause was invalid ab initio. The finding left the Court free to rule that, since there was no valid consent to arbitrate, Spain had not waived its sovereign immunity under the arbitration exception of the Foreign Sovereign Immunity Act. See FSIA, 28 U.S.C. § 1605(a)(6). The decision created an intra-circuit split, conflicting with two simultaneous cases brought against Spain on similar ECT grounds.

Blasket appealed the District Court’s ruling. The three cases were consolidated and heard along with oral amici curiae representing the United States and the European Commission.

The consequence of enforcement, the Commission argued, would be a form of State aid in violation of Spain’s legal obligations. See Brief for the European Commission at 11, NextEra Energy, 112 F.4th 1088. The Commission’s arguments were summary, but the logic is familiar from the Commission’s decision on State aid in the Micula case. See Commission Decision (EU) 2015/1470 of 30 March 2015, aff’d sub nom. Case C-638/19 P, European Commission v. Micula (ECJ 2022).

More fundamentally, however, the Commission advanced its theory of EU legal autonomy. Citing Achmea and Komstroy, the Commission follows the well-beaten path that Articles 267 and 344 TFEU “ensure that the specific characteristics and the autonomy of [the EU] legal order are preserved” by keeping questions of EU law “in house,” so to speak. See Brief for the European Commission at 11. Allowing disputants to seek redress in fora outside the EU judicial system would “upend the institutional structure laid down in the EU Treaties.” Id. at 16. “To put it simply” the Commission reiterates, “the [ECT] contains no valid offer of arbitration from the EU and its Member States to investors of other Member States.” Id.

Spain lost at the D.C. Circuit Court of Appeals. As of writing, Spain has appealed its case to the U.S. Supreme Court. The European Commission, along with Poland, Romania, and Bulgaria, have all filed amicus briefs. The court has invited the U.S. Solicitor General to submit his views.

3.     What’s Next?

Whether the Supreme Court grants certiorari and takes up the case is anyone’s guess. Should the Court deny, the lower court’s decision will take effect and Spain will be obliged to satisfy its debts. But it is unlikely the Commission will accept such an outcome lying down. The EU, after all, still has tools in its kit to facilitate Spain’s resistance to making payment on the award.

Should the Supreme Court accept the case, the European Commission may have yet another opportunity to cement the EU legal order as an independent body of law with international reach.

It is clear the EU has an impassioned interest in protecting its hegemony over EU law. What is missing, however, is an explanation as to why. The Court will have to wrestle with challenging questions: what concern a U.S. court should have in also protecting EU legal autonomy; what implications such a robust legal protectionism would have in other areas of the law; and what consequences on the global arbitration system would result if it refused to enforce the award.

Blasket will have far-reaching consequences. The case is of great interest to the EU, the autonomy of its legal order, and the international system of investor-State arbitration. Bélot Malan et Associés will continue to report on developments.

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To follow the Blasket case on the U.S. Supreme Court docket, see Kingdom of Spain v. Blasket Renewable Investments LLC, No. 24-1130 (petition filed May 1, 2025).

See also our previous article on the judgment of the Court of Appeal of Paris dated 19 April 2022 concerning the Achmea case.