European American Investment Bank AG v. Slovak Republic
PCA · Investment (ICSID and treaty) · Slovak Republic · 22 Oct 2012
Why it matters
This is a landmark intra-EU BIT award that addressed whether EU accession terminates prior BITs between EU member states. The tribunal rejected the argument that the BIT was terminated by EU law, finding no conflict between the BIT and EU treaties. It also clarified the scope of arbitration clauses limited to expropriation and transfer disputes, and the application of MFN clauses to import broader dispute resolution provisions.
Summary
European American Investment Bank AG (Euram Bank), an Austrian bank, invested in the Slovak health insurance sector through a subsidiary. After Slovakia introduced regulatory changes that allegedly harmed its investment, Euram Bank initiated arbitration under the Austria-Slovakia BIT. The Slovak Republic raised four jurisdictional objections: (1) the BIT was terminated by Slovakia's accession to the EU (intra-EU objection); (2) Euram Bank's claims did not arise from a qualifying investment; (3) the BIT's arbitration clause (Article 8) only covered disputes about the amount of compensation for expropriation or transfer obligations, not other treaty breaches; and (4) Euram Bank failed to comply with notice and amicable settlement requirements for claims under Article 2. The tribunal rejected the first objection, holding that the BIT and EU treaties did not relate to the same subject matter and that the parties did not intend to terminate the BIT. It also found that the investment qualified under the BIT. On the third objection, the tribunal interpreted Article 8 narrowly, limiting arbitration to disputes concerning the amount of compensation for expropriation or transfer obligations, but allowed the claimant to invoke an MFN clause to import broader dispute resolution provisions from other BITs. The tribunal upheld jurisdiction over claims under Articles 4 and 5, but declined jurisdiction over Article 2 claims due to non-compliance with procedural requirements. The award is significant for its detailed analysis of intra-EU BITs and the scope of arbitration clauses.
The detail
Parties: European American Investment Bank AG v. Slovak Republic
Case number: PCA Case No. 2010-17
Outcome: The Tribunal upheld jurisdiction over most claims but declined jurisdiction over claims under Article 2 of the BIT due to failure to comply with notice and amicable settlement requirements.
Applicable law: Austria-Czech and Slovak Federal Republic BIT (1990); UNCITRAL Rules (1976); Vienna Convention on the Law of Treaties; EU law (ECT, TFEU)
Issues in play: The case involved a conflict between the BIT's dispute resolution clause and EU law, specifically whether EU membership terminated the BIT under Article 59 VCLT or rendered its arbitration clause inapplicable under Article 30(3) VCLT.
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