Achmea, Komstroy and Intra-EU Arbitration Enforcement Risk
The European Commission’s decision to open an in-depth investigation into a €61 million arbitration award against Bulgaria did not come as a surprise to EU lawyers.
What makes it worth revisiting is not the headline, but what it quietly reinforces: inside the EU, winning an investor-state arbitration no longer guarantees you can collect.
The dispute stems from changes Bulgaria made to its renewable energy support scheme and an arbitral award issued in January 2024 under the Energy Charter Treaty (ECT).
The tribunal ordered Bulgaria to compensate a Maltese investor for losses caused by those changes. Bulgaria has not paid. Instead, it notified the award to the Commission, which is now assessing whether paying it would amount to unlawful State aid.
For readers who want a primer on arbitration procedures that form the basis of investor‑State disputes, see How Does International Arbitration Work?
This development goes beyond the familiar debate around the Energy Charter Treaty. It shows how, within the EU, an arbitration award can remain legally fragile even after a tribunal has ruled and the compensation figure is fixed.
Who Is Exposed
This matters to organisations with existing or planned intra-EU investment arbitration claims. It affects how those claims should be valued, how enforcement risk is assessed, and how much confidence can be placed in an eventual payout.
The exposure is most obvious in energy, infrastructure, and other regulated sectors, where legacy disputes under bilateral investment treaties or the Energy Charter Treaty are still active.
In those cases, the key issue is no longer whether an investor can succeed before a tribunal, but whether a Member State can lawfully pay the award.
For boards and in-house teams deciding whether to fund litigation or pursue settlement, that difference is critical. An award that triggers regulatory review or State aid scrutiny does not carry the same certainty as a standard damages judgment.
What Happens After an Award Is Issued
In practice, the Commission’s position means that an arbitral tribunal is no longer the final stop in an intra-EU investment dispute.
Where an award orders a Member State to pay compensation arising from an intra-EU claim, that payment can be treated as State aid in its own right.
In those circumstances, the State cannot lawfully pay unless the Commission approves the measure as compatible with the internal market. If the award is rooted in an arbitration mechanism that EU law considers invalid, that approval is unlikely.
For investors, the pattern is becoming familiar: a successful arbitration, followed by delayed or refused payment, and then regulatory scrutiny at EU level that can stall enforcement for years.
The practical effect is a shift in leverage. Enforcement risk moves away from the arbitral forum and toward EU institutions and domestic courts, while Member States gain a legally robust basis for withholding payment during review.
Where the Legal Risk Sits
The immediate risk is not the Commission investigation itself, but the body of EU case law that has steadily closed off space for intra-EU investor-state arbitration.
Since the 2018 Achmea judgment, arbitration clauses in intra-EU bilateral investment treaties have been treated as incompatible with EU law.
The Komstroy ruling in 2021 extended that position to the Energy Charter Treaty, confirming that its arbitration mechanism cannot apply to disputes between EU investors and EU Member States.
The practical impact is felt after an award is issued, not just at the jurisdictional stage.
Even where a tribunal proceeds and rules in an investor’s favour, enforcement runs into overlapping constraints: the EU prohibition on unauthorised State aid, the primacy of EU law over international agreements within the Union, and the exclusive role of EU courts in interpreting that law.
Taken together, those constraints shift leverage away from arbitral tribunals and toward regulators and courts.
What the Commission Is Assessing
The Commission’s investigation rests on established EU competition law, not a new or exceptional theory. Under Article 107(1) TFEU, State aid is defined broadly and prohibited unless approved.
In certain circumstances, compensation ordered by an arbitral tribunal can fall within that definition, particularly where it involves state resources and confers a selective economic advantage.
EU law also limits what the Commission can approve. Aid that conflicts with other Treaty provisions cannot be cleared under State aid rules.
Where an arbitration award is based on a mechanism that EU law considers incompatible, that incompatibility becomes decisive.
Alongside the State aid analysis, the Commission is examining whether payment of the award would cut across the EU judicial framework by sidestepping national courts and the preliminary reference process.
That concern goes to the structure of the EU legal system, not the merits of the underlying investment dispute.
FAQs – Intra-EU Arbitration Enforcement
Can EU investors still rely on the ECT or intra-EU BITs for arbitration?
No. Following the 2018 Achmea and 2021 Komstroy rulings, intra-EU arbitration clauses in BITs and the ECT cannot apply to disputes between EU investors and EU Member States. Investors must now rely on domestic courts or challenge Commission State aid decisions.
What happens if an arbitration award is issued against an EU Member State?
Even if a tribunal issues an award, enforcement may be blocked under EU law. The European Commission can treat the award payment as State aid, which requires approval to be lawful. If the award conflicts with EU law, approval is unlikely.
What This Means for Enforcement
The Bulgaria investigation does not mean arbitration has ended in Europe. It shows that intra-EU investor-state arbitration can no longer be treated as a reliable route to payment, even where a tribunal has ruled in an investor’s favour.
For lawyers, this affects how claims are priced, how enforcement risk is explained, and how settlement options are evaluated. For boards and investors, it highlights a shift in where outcomes are decided.
EU regulatory and constitutional limits now play a decisive role alongside the arbitral process.
The practical question is no longer limited to whether an award can be won. It is whether, under EU law, that award can be enforced at all.
