Adria Group B.V. and Adria Group Holding B.V. v. Republic of Croatia

Case summary

At a glance

Parties: Adria Group B.V. and Adria Group Holding B.V. (Netherlands) v. Republic of Croatia
Case no.: ICSID Case No. ARB/20/6
Forum and rules: ICSID Convention arbitration; ICSID Arbitration Rules in force as of 10 April 2006
Treaty: Croatia–Netherlands BIT of 28 April 1998 (Article 9)
Tribunal: Sir Christopher Greenwood (President), Dr Charles Poncet, Mr J Christopher Thomas
Sector: Retail, food and agriculture conglomerate (Agrokor)
Outcome: Decision of 31 October 2023: Croatia's intra-EU preliminary objection to jurisdiction dismissed unanimously; the case proceeds; costs reserved to the final award.

The dispute

The claimants are two Dutch companies. Agrokor's founder, Ivica Todorić, transferred his shareholding in the Croatian conglomerate Agrokor d.d. to them in 2014 as part of a plan to take Agrokor public, and Adria Group Holding then invested over 183 million euros in Agrokor. The claimants allege that senior Croatian officials conspired to orchestrate a takeover of Agrokor and harassed Mr Todorić. They filed for ICSID arbitration under the Croatia–Netherlands BIT on 14 February 2020. The proceeding was bifurcated so that Croatia's intra-EU objection could be heard first. Croatia, supported by the European Commission and the Netherlands as non-disputing parties, argued that the offer to arbitrate in Article 9 of the BIT was inapplicable after the CJEU's Achmea judgment, was withdrawn by the Member States' Declaration of 15 January 2019, and was retroactively terminated by the 2020 Termination Treaty. It also argued that the BIT's sunset clause did not help the claimants.

Key holdings

Jurisdiction is governed by public international law, not by Article 42(1) of the ICSID Convention, which concerns the merits. The EU Treaties form part of international law, and the Tribunal defers to the CJEU's interpretation of them. But any conflict between EU law and the BIT or the ICSID Convention is resolved by general international law, not by the EU principle of primacy. ¶¶ 110–123
EU law did not by itself terminate or suspend the BIT or Article 9 under Article 59 VCLT. The BIT was terminated only when the Termination Treaty entered into force between Croatia and the Netherlands on 31 March 2021. Article 30 VCLT does not apply, because the EU Treaties and the BIT do not relate to the same subject matter. ¶¶ 158–178
The Termination Treaty could not retroactively remove consent that had already been perfected when the claimants filed their request. Under the second sentence of Article 25(1) of the ICSID Convention, the relevant 'parties' are the parties to the dispute. Croatia's withdrawal of consent was therefore unilateral, even though it acted in agreement with the Netherlands, and the two BIT States are not masters of the ICSID Convention. ¶¶ 189–199
Neither the Termination Treaty nor the Member States' Declaration is a subsequent agreement or subsequent practice on the interpretation of the BIT under Article 31(3)(a) or (b) VCLT. Deleting a clause in its entirety cannot be described as interpretation. ¶¶ 200–214, 229
The Member States' Declaration of 15 January 2019 is a political statement that is attributable to the signatory States, but it is not a treaty. It did not terminate or suspend Article 9. It was a clear indication that the States no longer considered themselves bound, but it could not negate the offer to arbitrate. An investor who invested while both States treated the BIT as in force cannot be retroactively deprived of the unconditional consent in Article 9. The Tribunal made no finding on whether the claimants in fact invested before the Declaration. ¶¶ 219–244
The claimants' allegation that the objection was made in bad faith has no substance. Croatia was entitled, and indeed required by the Termination Treaty, to raise it. ¶¶ 105–108
The Preliminary Objection is dismissed unanimously. Costs are reserved to the final award, and the parties were to submit proposals on the further schedule by 21 November 2023. ¶ 252

Procedural history

14 February 2020Request for Arbitration filed. ICSID registered it on 2 March 2020.
3 December 2020Croatia transmitted to ICSID the Joint Statement of Croatia and the Netherlands dated 18 November 2020 on the inapplicability of Article 9 of the BIT.
3 May 2021Tribunal constituted.
9 September 2021The parties agreed to bifurcate the proceeding into an initial phase on the intra-EU objection.
24 November 2021The European Commission and the Netherlands were granted leave to intervene as non-disputing parties.
20–21 September 2022Hearing on the Preliminary Objection held in London.
31 October 2023Decision on Intra-EU Jurisdictional Objection: the objection was dismissed.