CYIL vol. 12 (2021)

CYIL 12 (2021) THE KOMSTROY JUDGMENT AND ITS POSSIBLE IMPLICATIONS the EU, as it was initiated between a Ukrainian claimant and Moldova as respondent. Yet the dispute ended up before the Court of Justice of the European Union (the CJ EU). The Court not only confirmed its jurisdiction but also ruled that investment arbitration under the ECT does not apply to disputes between a Member State and an investor of another Member State. This article will analyse the following questions: (i) How exactly did the Court manage to establish jurisdiction over a dispute of parties outside the EU? Moreover, how did the Court end up reviewing the applicability of the ECT between the Member States? (ii) What are the pitfalls of the Komstroy judgment implementation? Lessons learnt from the Achmea judgment implementation? (iii) Is there a risk of spillover effect and how does Opinion 1/17 fit in the overall framework? (iv) And eventually, how does the Komstroy judgment interact with the ongoing modernisation of the ECT and what is the future of the EU cross border investment protection? 1. The Komstroy Judgment 1.1 History of the dispute The dispute originated in a sequence of electricity sales between various Ukrainian entities (Ukrenergo, Derimen, Energoalians 3 ). The electricity was sold to Moldovan entity Moldtranselectro to export it in Moldova. The dispute was caused by unpaid debts of Moldtranselectro, which Energoalians tried to recover before the Moldovan Courts. Energoalians considered the conduct of the Republic of Moldova as serious breaches of the obligations under the ECT and initiated the investment arbitration under Article 26(4)(b) ECT 4 . The tribunal decided in 2013 on breach of the ECT and ordered Moldova to pay compensation. Moldova commenced set aside proceedings before the Paris Court of Appeal), which court has set aside the award in 2016. Subsequently in 2018 the French Court of Cassation, upon motion of Komstroy as the legal successor of Energoalians, has terminated the judgment of the Paris Court of Appeal and returned it 5 . Moldova objected before the Court of Appeal that electricity contract claim does not qualify as an investment under the ECT, Derimen is located in the British Virgin Islands and the electricity sale took place outside Moldova territory 6 . Hence the Paris Court of Appeal has approached the CJ EU with the following preliminary questions: ‘ [(1)] Must [Article 1(6) ECT] be interpreted as meaning that a claim which arose from a contract for the sale of electricity and which did not involve any economic contribution on the part of the investor in the host State can constitute an “investment” within the meaning of that article? [(2)] Must [Article 26(1) ECT] be interpreted as meaning that the acquisition, by an investor of a Contracting Party, of a claim established by an economic operator which 3 Jagush, S., Sinclair, A., Devenish, P.: The Energy Charter Treaty, The Range of Disputes and Decisions, p. 41, in Rowley, J.W.: The Guide to Energy Arbitrations, Law Business Research , 2015. 4 Komstroy judgment, para 8–12.

5 Komstroy judgment para 13–16. 6 Komstroy judgment, para 17.

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