BRUSSELS, March 6 (Reuters) - The European Union's top court ruled on Tuesday that arbitration clauses common to almost 200investment agreements between EU member countries violate EU law, casting doubt on such deals and others struck by the bloc as a whole.
The Court of Justice of the European Union (ECJ) found thatan award of damages in 2012 to Dutch insurer Achmea from Slovakia under a bilateral investment treaty (BIT) inheritedfrom former Czechoslovakia breached EU law.
It said the arbitration tribunal that made the order was nota court of a member state, had no power to refer matters to theECJ and that its decisions were final, even though disputesreferred to it could concern EU law.
"The arbitration clause in the BIT has an adverse effect onthe autonomy of EU law, and is therefore incompatible with EUlaw," the court said.
The European Commission said the judgment was in line withits position.
"This is not related to the investment we have ininternational trade agreements -- this is another family ofissues," a spokesman told a regular news briefing.
The case has been followed closely within the European Unionas 196 BITs between EU members contain such clauses. Some wereconcluded between western EU countries to protect investments oftheir companies in eastern countries before the latter joinedthe EU.
The Czech Republic, Estonia, Greece, Spain, Italy, Cyprus,Latvia, Hungary, Poland, Romania and the Commission submittedobservations in support of Slovakia's arguments.
Germany, France, the Netherlands, Austria and Finlandcontended that such clauses were valid.
The ruling could also have a bearing on EU trade deals,which contain systems for dispute settlement.
Environmental campaign group Friends of the Earth said theruling made it even more uncertain that trade deals withparallel legal systems, such as the EU-Canada agreement, werelegal under EU law.
The European Commission has changed its model for investmentprotection for future deals, after vocal opposition to theexisting system, which critics said gave multinationals toogreat a power to influence public policy.
The ECJ will rule in a separate case on the legality of thenew system.
In Tuesday's case, the ECJ had been asked to rule on a BITagreed between the Netherlands and the former Czechoslovakia in1991.
Slovakia brought a legal action in Germany, from where thecase was referred to the ECJ to decide whether clauses onarbitration were compatible with EU law.
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