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Secondly, the State, knowing that any result of arbitration proceedings detrimental
to the State would markedly affect the State budget, would welcome the possibility
to also take part in, for instance, national court proceedings, which tend to be more
favourable towards States. Additionally, national court proceedings tend to open
new aspects of litigation and could be used in a remedial sense. As an example, the
possibility of EU Member States raising an intra-EU BIT objection before national
courts could be named. Given the reluctant position of arbitral tribunals towards this
highly topical issue,20 national courts, as parts of the EU judiciary, are more or less
obliged to assess the (non-)applicability of BITs, due to EU law discrepancy, more
thoroughly.21 This gives to the Member States an outlook on a new decision which
could be deemed to be more in favour of the preceding character of EU law and bring
a “remedy” to the allegedly committed breach of EU law supremacy committed by
arbitral tribunals.
On the other hand, if an arbitral tribunal would decline its jurisdiction on all
or on a part of the claims presented by the investor since they would not fall within
the categories of disputes covered by a BIT, some investors may tend to initiate
proceedings in the host State in order to avoid the lapse of the period for the assertion
of claims. This would be the case, for instance when the investor seeks to litigate
in front of an arbitral tribunal and relies on the MFN clause to gain access to this
forum. In the Austrian Airlines v. the Slovak Republic case the Tribunal declined its
jurisdiction since the general scope of the limitations imposed on the MFN clause
could not be overcome by the interpretation of the BIT or the possibility to import
20 Arbitral tribunals in general reject the so-called intra-EU BIT objection which aims to challenge the
jurisdiction of the tribunals in cases where BITs concluded between Member States are at stake. Most of
the tribunals reached the conclusion that BIT arbitration clauses providing for an investor-State dispute
resolution mechanism are not at variance with EU law. The reluctance to endorse the argument of the
non-applicability of BITs as a result of the existence of EU law has become evident for instance in the
Eastern Sugar B.V. v. The Czech Republic (SCC No. 088/2004, Partial Award, 27 March 2007) and the
Eureko B.V. v. The Slovak Republic (PCA Case No. 2008-13, Award on Jurisdiction, Arbitrability and
Suspension, 26 October 2010) arbitrations. As some authors suggest, until the creation of a suitable
platform for the resolution of disputes relating to the protection of investment within the EU, other
than that of the Member States’ national court systems; the issue is generally capable of being resolved
also by enabling the arbitration tribunals hearing such disputes to submit their preliminary questions
to the Court of Justice of the EU. M. Olík, D. Fyrbach, “The Competence of Investment Arbitration
Tribunals to Seek Preliminary Rulings from European Courts”, Czech Yearbook of International Law
(2011), p. 195.
21 The approach to the subject of intra-EU BITs, as stated in the previous passage, has been maintained
also by a national court of a Member State. The Court of Appeal in Frankfurt upheld the Eureko Award
on Jurisdiction (ibid) by stating that the challenge commenced by the Slovak Republic was unfounded
since EU law does not prohibit dispute resolution via investment arbitration between investors and
EU Member States. See: Judgement of OLG Frankfurt, 25. Civil Senate, Case No. 26 SchH 11/10,
10. 05. 2012, German language version of the judgement available at:
id=JURE120010262%3Ajuris-r00&documentnumber=1&numberofresults=1&showdoccase=1&d
oc.part=K&paramfromHL=true#focuspoint ; accessed: 4 April 2012.