Arbitration
The interplay between arbitration proceedings and state aid has become increasingly important in recent years. We support with our coordinated strategy in worldwide arbitration proceedings to secure compliance regarding the European internal market and the state aid rules.
Our expertise encompasses disputes concerning energy and infrastructure, offering core support in arbitration proceedings and state aid litigation.
BIT
The state aid risks associated with arbitral awards under bilateral investment treaties (BITs) become more apparent. While BITs in principle protect foreign investors from discriminatory or unfair treatment, recent judgments, such as the Court of Justice’s rulings in Achmea (6 March 2018, C-284/16) and in Micula (2 October 2024, T-624/15 RENV, T-694/15 RENV, and T-704/15 RENV), highlight the potential state aid risks linked to arbitral awards.
Contractual Arbitration
Recent judgments (e.g., Court of Justice, judgment of 22 February 2024, joined Cases C-701/21 P and C-739/21 P, Mytilinaios v DEI & European Commission) emphasise the importance of considering state aid risks in contractual arbitration. Parties must remain vigilant, as potential grant of state aid could lead to the unenforceability of arbitral awards.
Public Undertakings
Public undertakings are often at the centre of state aid disputes in arbitration, particularly when they receive advantages that could distort competition under EU rules. Recent case law judgments (e.g., Court of Justice, judgment of 22 February 2024, joined Cases C-701/21 P and C-739/21 P, Mytilinaios v DEI & European Commission) underscores the need for a strategic approach.
Energy Disputes
All investments in decarbonisation projects such as CCU/CCS projects involve contracts and potential disputes that could be subject to both commercial and investment arbitration. With significant public and private capital being funnelled into CCU/CCS and other energy transition-related technologies, one must be aware that arbitration institutions such as the ICC have already noted a surge in activity related to climate change – always leading to potential state aid risks.
Infrastructure Disputes
The number of infrastructure disputes remains high, with global inflation staying above pre-pandemic levels. This, combined with supply chain disruptions and ongoing geopolitical tensions, has contributed to increased costs and delays in construction projects worldwide. Projects such as LNG terminals, hydrogen core networks, and offshore renewable facilities—along with many others—are subsidised with state aid and can, in principle, be subject to arbitration proceedings, highlighting the mutual significance of state aid and arbitration
State Litigation
State litigation and arbitration frequently intersect with state aid when disputes involve measures potentially granting selective advantages funded by public resources. One must assess compliance with EU state aid rules, including the classification of measures as aid and the application of the market economy operator principle in order to prevent economic risks of a litigation strategy.