By: Thomas Bickl
PDF Version: Bickl AG CJEU SLO CRO
Matter commented on: Advocate General Opinion Case Republic of Slovenia v Republic of Croatia (C-457/18), 11 December 2019
I. Introduction
The Republic of Slovenia brought infringement proceedings against the Republic of Croatia under Article 259 TFEU before the Court of Justice of the European Union (CJEU) on 13 July 2018 (C-457/18). Slovenia claims that Croatia violates its obligations to respect EU law by refusing to implement the arbitration award on the maritime and land border between Croatia and Slovenia issued on 29 June 2017.
To that end, an Arbitration Agreement between the Republic of Croatia and the Republic of Slovenia had been concluded on 04 November 2009 in the course of Croatia’s EU accession negotiations. During the arbitration procedure, a disruption occurred due to a leaked intelligence recording of unlawful conversations (ex-parte communication) between a Slovenian government representative and the Tribunal member appointed by Slovenia. As a result, the Republic of Croatia decided to withdraw from the arbitral proceedings as of 31 July 2015 invoking a material breach of the Arbitration Agreement on the part of Slovenia pursuant to Art. 65(1) VCLT. On 30 June 2016, the Tribunal issued a Partial Award to the effect that the arbitration procedure would continue. In particular, the Tribunal noted that, by means of ex-parte communication, the Agent of Slovenia and the arbitrator appointed by Slovenia “acted in blatant violation of [the confidentiality] provisions” (PCA Partial Award, 2016: para 175). The Tribunal subsequently explored whether the integrity of the proceedings could be preserved, and, if so, in what way. It recalled that the Tribunal had been recomposed properly with two new and independent Members following the resignation of the two party-appointed arbitrators (ibid, paras 183-6). In relation to the two documents, the arbitrator appointed by Slovenia had introduced into the proceedings after the ex-parte communication with Slovenia’s Agent, the Tribunal found that the arbitrator had not presented any new arguments or facts that were not already in the official record of the Tribunal. Besides, the views expressed by both party-appointed arbitrators vis-à-vis the arguments and facts on the Tribunal’s record were of no relevance for the work of the current Tribunal as the previous party-appointed Members both had resigned, so procedural imbalance could not be observed, either. In conclusion, the Tribunal noted no obstacles as to the continuation of the arbitral proceedings (ibid, paras 187-196). For the Tribunal’s jurisdiction on procedural matters see III.3.
The Republic of Croatia denies the legality of the Tribunal’s decision and does not recognise the Partial Award and the Final Award.
The Slovenian claim before the Court consists of six pleas, two on EU primary law: the respect of the rule of law (Art. 2 TEU) and the duty of sincere cooperation (Art. 4(3) TEU), and four on EU secondary legislation: obligations arising from the Fisheries Regulation 1380/2013, the Fisheries Control Regulations 1224/2009 and 404/2011, the Schengen Code (Arts. 4, 13, and 17), and the Maritime Planning Directive 2014/89 (see Advocate General Opinion C-457/18, paras 51-63; NB: Quotations from the Advocate General’s Opinion are taken from the original French- and the German-language version and may thus differ from the still-to-be-published official English version which was not available yet at the time of writing.)
In short, Slovenia’s main argument is that the non-implementation of the Arbitration Award by Croatia prevents Slovenia from fulfilling its obligations of territorial application of EU law.
The Republic of Croatia submitted a motion of inadmissibility on 21 December 2018 on the grounds that the Court had no jurisdiction to hear the Slovenian claims based on Art. 259 TFEU as the claims in substance referred to a legal dispute about the Arbitration Agreement and the Arbitration Award both of which were outside the scope of EU law. Further, the Court had no competence to decide on the legality of the Arbitration Agreement and the Arbitration Award. Thus, the real dispute between Croatia and Slovenia did not require an interpretation of EU law. Consequently, the jurisdiction of the Court under Art. 259 TEU was not an issue in the present Case (Advocate General Opinion C-457/18, paras 62-68).
The Court has decided to separate the issues of admissibility and, if necessary, the merits of the Case. A hearing on the issue of admissibility and jurisdiction was held before the Grand Chamber on 08 July 2019. The Advocate General presented its Opinion on 11 December 2019. The Court is going to hand down its judgement on admissibility presumably in the spring of 2020.
II. Summary Opinion Advocate General
Examining the relationship of the Arbitration Agreement and the Final Award with EU law and whether the EU is bound by them, the Advocate General suggests, inter alia, that
- the situations in which the EU is bound by international law were: the rules and principles of international law, international conventions concluded by the EU or where the EU assumes powers previously exercised by the Member States, and by rules of customary international law (Advocate General Opinion C-457/18, paras 103-104);
- the territorial scope of the Treaties was an objective fact determined by the Member States, and which was why the EU and thus the Court had no jurisdiction on the delimitation of national territory (ibid, para 111);
- the Arbitration Agreement and the Final Award did not fall within any of the situations in which the EU is bound by international law (ibid, para 127);
- in terms of the Slovenian claims regarding EU primary law, those were only ancillary to the issue of maritime and terrestrial delimitation between two Member States, and thus the Court had no jurisdiction (ibid, para 140-1);
- as regards Slovenia’s claims in relation to EU secondary legislation, Slovenia was relying on the false premise that the boundary had been determined by the Final Award. Rather, it lacked implementation which was a matter of the two Member States (ibid, 149);
- Slovenia was implicitly seeking implementation of the Final Award which was outside the competence of the EU and thus outside the Court’s jurisdiction (ibid, 161).
III. Vulnerable points of the Advocate General’s Opinion
The Opinion of the Advocate General is not free of controversy. The following points merit closer examination ahead of the Court’s judgement on admissibility.
III.1 Situations where the EU is bound by international law
To determine the situations where the EU is bound by international law, the Advocate General examines the existing jurisprudence of the Court. Quoting from Case C-266/16 (Western Sahara Campaign UK), the Advocate General concludes that the situations in which the EU is bound by international law, beyond its rules and principles, are “well-defined”: (i) international agreements concluded by the EU which have subsequently become part of EU law, (ii) international agreements where the EU assumes powers previously exercised by the Member States, and (iii) customary international law. It followed, that all other agreements were not EU legal acts and thus not binding for the EU (Advocate General Opinion C-457/18, paras 103-104). Further, both the Arbitration Agreement and the Final Award the Advocate General considers an international law instrument which does not fall within the scope of EU law, and thus the Court has no jurisdiction (ibid, para 106). This calls for two comments.
First, the Croatia-Slovenia Case before the Court is a sui generis Art. 259 TFEU dispute Member State v Member State. Therefore, it may merit considerations beyond existing jurisprudence of the Court. In fact, it is the first Case where the territorial application of EU law is at issue in Art. 259 TFEU infringement proceedings. Moreover, there is some genuine EU involvement in the context of the then Croatian accession negotiations (see also III.2).
Second, in quoting existing jurisprudence of the Court, the Advocate General fails to address, in the sphere of rules and principles of international law (see ibid, 103), the role of decisions of international courts or tribunals as binding settlements under international law. By way of example, in Case C-286/90 (Poulsen), the Court acknowledges that the EU is bound to respect international law including the rules of the international law of the sea:
“It must be observed […] that the European Community must respect international law in the exercise of its powers and that [EU law] must be interpreted, and its scope limited, in the light of the relevant rules of the international law of the sea.” (C-286/90, judgement 24 November 1992, para 9)
Those rules include a number of dispute settlement procedures and fora, such as international arbitration, ITLOS and the ICJ, as stipulated by UNCLOS Part XV entailing binding third-party judicial procedures. Furthermore, there should be no doubt that the obligation to respect international law includes general legal principles such as pacta sunt servanda and res iudicata (the Advocate General notably does consider the Final Award as res iudicata; Advocate General Opinion C-457/18, para 142), i.e. in the context of the present Case both the Arbitration Agreement and the Final Award. Notwithstanding the well-established nature of the above-mentioned principles, they are even expressly enshrined in Art. 7(2) of the Arbitration Agreement (“The award of the Arbitral Tribunal shall be binding on the parties and shall constitute a definitive settlement of the dispute”; For the full text of the Arbitration Agreement see the Annex to the Final Award, pp. 391-398).
III.2 Relationship between the Arbitration Agreement and the Final Award with EU law
The Advocate General posits that “there is no doubt that the Union was neither involved in the Arbitration Agreement nor in the arbitration proceedings [and that] the Union had offered the Parties Good Services and signed the [Arbitration] Agreement only as an observer” (Advocate General Opinion C-457/18, para 123). Whilst it is true that the EU played no role in the operational proceedings of the Arbitral Tribunal as such, it is a blatant error that the Union had nothing to do with the Arbitration Agreement.
On the contrary, the European Commission played an active role as a mediator/facilitator in the travaux préparatoires of the Arbitration Agreement. This was expressly acknowledged in the Agreement’s Preamble (“Welcoming the facilitation offered by the European Commission”). In fact, as this author has demonstrated, the Commission prepared two drafts of the Arbitration Agreement (“Rehn I” and “Rehn II”) – following an initial draft for a mandate for a “Senior Experts Group”- and discussed them with the Parties in various meetings and through written correspondence including amendments to the drafts by the Parties. That phase where the European Commission brokered the lion share of the later Agreement lasted from January to June 2009 (Bickl, 2019: 149-161).
In addition, from July to November 2009, the Swedish EU Presidency assisted the Parties in their bilateral finalising of the Arbitration Agreement. The Swedish Presidency’s positive facilitating role which included the country’s Foreign Minister and State Secretary has been expressly acknowledged to this author by both parties (Bickl, 2019: 165-166). During the Swedish Presidency, a remaining obstacle ahead of concluding the Agreement was removed: the issue of the potentially prejudging Croatian documents from the accession negotiations with reference to the common State border. An exchange of letters between the Croatian Prime Minister and the Swedish Prime Minister in his role as EU Council President defused the issue. The Advocate General only briefly mentions the exchange of letters in a footnote to para 126 making no further comments. In fact, the drafting of that letter had taken several weeks and involved members of the bilateral Croatian-Slovenian “Silent Diplomacy Group”, the Swedish State Secretary and the Swedish Prime Minister (Bickl, 2019: 163-164). The role of the Swedish Presidency was officially recognised by signing the Arbitration Agreement as a witness together with the Parties on 04 November 2009.
III.3 Legality of the Partial and Final Award
The Advocate General refers to the Arbitration Agreement, the arbitration procedure, and the Partial and Final Award on several occasions (e.g. paras 1; 5-12; 27-40; 142-149; 152; 154-156). However, he omits referring to the Final Award as a binding settlement under international law (see also III.1). Instead, the Advocate General refers to Croatia’s refusal to recognise the legality of the Final Award by stating:
“It cannot be denied that the Republic of Croatia has notified the Republic of Slovenia by means of note verbale dated 30 July 2015 the termination of the Arbitration Agreement [and the] application of Art. 65 of the Vienna Convention [on the Law of Treaties].” (Advocate General Opinion C-457/18, para 145; emphasis added)
In a summary of the arbitration procedure in para 35, the Advocate General refers to Croatia’s note verbale of 31 July 2015 as
“notifying the Arbitral Tribunal of [the] decision [of the Republic of Croatia] to terminate the Arbitration Agreement […]” (emphasis added).
Whilst it is true that Croatia has indeed notified Slovenia that it is no longer participating in the arbitral proceedings, it must be observed that it is the Arbitral Tribunal alone which has the competence to decide on procedural matters such as the termination of an arbitration agreement or the arbitral proceedings altogether. The Croatian action, legally speaking, was in fact a termination request of one party to the Arbitration Agreement. Practically speaking, it was a unilateral withdrawal from the proceedings. It is useful to note in this context, that the Advocate General neither mentions the fact that the compétence de la compétence or Kompetenz-Kompetenz of an International Court or Tribunal is a universally established principle of international law (see e.g. Bantekas, 2015: 109-112; Tanaka, 2018: 106; 109; Degan, 2019), nor does he invoke any reference to Art. 3(4) of the Arbitration Agreement which explicitly reiterates this principle (“The Arbitral Tribunal has the power to interpret the present Agreement”).
Instead, the Advocate General only generally refers to the Partial Award’s decision on the continuation of the arbitration procedure and the legality of the Croatian termination request without quoting the relevant paragraphs of the Partial Award (Advocate General Opinion C-457/18, para 39).
What leaves the observer somewhat puzzled in that context, is the Advocate General’s wording on the Republic of Croatia’s position towards the Final Award:
“It is […] hardly surprising, that the Republic of Croatia, in explaining the reasons for its refusing of the disputed Final Award, argues that the Arbitral Tribunal, in handing down the Final Award, has gone beyond its competence.” (Advocate General Opinion C-457/18, para 147; emphasis added)
It is not a matter of splitting hairs in this regard to insist that it is not the Final Award as such (delivered unanimously by the tribunal members) that is “disputed”. Rather, it is the Republic of Croatia’s refusal to recognise the Arbitral Tribunal’s decisions and Kompetenz-Kompetenz which renders the binding settlement under international law unilaterally questioned.
III.4 Relationship between the Final Award and EU Fisheries Regulation 1380/2013
A direct link between the arbitration award and EU law does exist by way of the provisions in Annex I of Regulation 1380/2013 governing the mutual access regime for fishing vessels to the respective territorial waters. With regard to Slovenia and Croatia, footnotes 8 and 10 of Annex I pursuant to Art. 5(2) of the Regulation hold that the implementation of that regime is subject to the implementation of the delimitation decision delivered by the Final Award:
“The above-mentioned regime shall apply from the full implementation of the arbitration award resulting from the Arbitration Agreement between the Government of the Republic of Slovenia and the Government of the Republic of Croatia, signed in Stockholm on 4 November 2009.” (identical footnotes 8 and 10 of Annex I Regulation 1380/2013)
To that end, the Advocate General opines that the question of whether Croatia has violated the provisions of Art. 5(2) Annex I is outside the jurisdiction of the Court (Advocate General Opinion C-457/18, para 153). His rationale is based upon the argument that the Annex I special provisions for the mutual access of fishing vessels to the territorial waters of Croatia and Slovenia respectively are not applicable as the arbitration award has not been implemented due to the reluctance of the Republic of Croatia to respect the Final Award (ibid, para 156).
Whilst this statement indeed reflects the current situation with regard to implementation, the above mechanistic line of argumentation again avoids an examination of the question whether the Final Award is a binding settlement of the border dispute under international law thus triggering an obligation of the parties to execute the decision. The Advocate General merely hints, by way of a footnote, on the provisions of Art. 7(3) of the Arbitration Agreement (“The Parties shall take all necessary steps to implement the award, including by revising national legislation, as necessary, within six months after the adoption of the award”):
“I point out that Art. 7(3) of the Arbitration Agreement stipulates the obligation to do ‘everything necessary’ for the implementation of the Final Award within six months of its delivery.” (Advocate General Opinion C-457/18, para 156, fn 95)
IV. Conclusion
The present Art. 259 TFEU Case Slovenia v Croatia is one of the very rare Member State against Member State cases of which there have only been seven (including the present one) in the history of the EEC/EC/EU. What makes it particularly genuine is the fact that it has a territorial issue at its core. The crucial and highly controversial issue in the CJEU’s deliberations on admissibility appears to be whether, and if so, to what degree, an instrument of international law in the form of an arbitration award originating from a bilateral arbitration agreement has a relationship with European Union law and would thus fall within the jurisdiction of the Court.
The Advocate General takes the view that such nexus cannot be established and, therefore, the Court has no jurisdiction to hear the case. However, this author posits that, upon closer examination, the relationship between the Arbitration Agreement and the arbitration award from the realm of international law on the one hand with EU law on the other hand is considerably more robust than the Advocate General suggests.
First, the role of the EU in the genesis of the Arbitration Agreement was vital, way beyond a mere role of offering Good Services, and not only accounts for the political link between the settlement of the common State border with Slovenia and the accession of Croatia to the EU. As a matter of fact, the European Commission and the Swedish EU Council Presidency took on a very active role as mediator-facilitator in the drafting stages of the Arbitration Agreement, the legal mandate for the subsequent judicial procedure of international arbitration. It is empirically established that the Commission drafted the Arbitration Agreement in close collaboration with the parties and that the final stage of the drafting would hardly have been possible without the skilled facilitation of the Swedish Presidency who signed the Arbitration Agreement together with the parties.
Second, the relevance of the Final Award in the hierarchy of international law acts is insufficiently acknowledged. Decisions of International Courts and Tribunals do have an impact also on the EU legal sphere. Further, there is no doubt as to the fact that unilateral withdrawal from an arbitration procedure cannot prevent a Tribunal which has the inherent powers to decide also on procedural matters from delivering a binding settlement of the dispute (another example is the Award in the South China Sea Case Phillipines v China where China had refused to participate in the proceedings). It appears not only too rigid, but also inappropriate to categorically rule out a CJEU position on the legality of the Final Award.
The above issues may be points of departure for further deliberations for the college of judges ahead of the Court’s decision on admissibility. The Opinion of the Advocate General appears to be at one end of the spectrum of viewpoints on the issue. It is true, that the Opinion of the Advocate General more often than not tends to shape the judgement of the Grand Chamber. However, there are exceptions to that rule of thumb, most notably and recently another rare Member State against Member State Case: Austria v Germany (C-591/17) on the infrastructure use charge for passenger vehicles.
References
Bantekas, Ilias. 2015. An introduction to international arbitration. Cambridge: Cambridge University Press.
Bickl, Thomas. 2019. The border dispute between Croatia and Slovenia. The stages of a protracted conflict and its implications for EU enlargement. Doctoral thesis. Duisburg-Essen University. Available at: https://duepublico2.uni-due.de/receive/duepublico_mods_00070297.
Court of Justice of the European Union. Opinion Advocate General. 11 December 2019. Case C-457/18 Republic of Slovenia v Republic of Croatia. Available at: http://curia.europa.eu/juris/documents.jsf?num=C-457/18#.
Degan, Vladimir-Đuro. 2019. Spor o granicama između Hrvatske i Slovenije. in: Poredbeno Pomorsko Pravo, Vol. 58 (173), 11-66. Available at: https://www.google.de/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=2ahUKEwjA1oaSocTmAhXIOcAKHUDODF0QFjAAegQIBRAC&url=https%3A%2F%2Fhrcak.srce.hr%2Ffile%2F324286&usg=AOvVaw17pkhg_uyyw2gYDgRevBt0.
Permanent Court of Arbitration. Croatia/Slovenia. Partial Award of 30 June 2016. Available at: https://pcacases.com/web/sendAttach/1787.
Permanent Court of Arbitration. Croatia/Slovenia. Final Award of 29 June 2017. Available at: https://pcacases.com/web/sendAttach/2172.
Regulation (EU) No 1380/2013 of the European Parliament and of the Council of 11 December 2013 on the Common Fisheries Policy. Available at: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32013R1380.
Tanaka, Yoshifumi. 2018. The Peaceful Settlement of International Disputes. Cambridge: Cambridge University Press.
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This post may be cited as: Thomas Bickl, “The Advocate General’s Opinion on Slovenia v Croatia: A proper reflection of international law and the EU’s role in the Arbitration Agreement?” (January 7, 2020), on-line: Bickl AG CJEU SLO CRO
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