Singapore enforces Energy Charter Treaty award against Poland

Poland was ordered by a SIAC tribunal to pay compensation to GreenX Metals following a 2024 decision finding the state liable for breach of investment protection obligations in the context of mining investments.

Last year, Poland sought to overturn the award in the Singapore courts, arguing that the tribunal did not have jurisdiction because the investment arbitration clause under the ECT conflicted with EU law. This position is based on two decisions by the Court of Justice of the European Union (CJEU), the EU's highest court, in the Achmea and Komstroy cases.

In the Achmea case, the CJEU held that the investor-state arbitration provisions in bilateral investment treaties (BITs) between EU member states were incompatible with EU law. In the Komstroy case, the CJEU held that the same principle applied to arbitrations between EU member states and EU investors under the ECT.

The Singapore court dismissed Poland’s challenge (77-page / 1.09MB PDF) and made it clear that the ECT operates as an international agreement, rather than an intra-EU BIT under EU law. In addition, the court noted that the principle of supremacy of EU law in Komstroy was inapplicable to the UK investors since that decision was rendered after the UK left the EU.

“This ruling is particularly significant as many EU member states have attempted to block the enforcement of ECT arbitration awards by arguing that such enforcement is incompatible with EU law,” said Sylvia Tonova, an investment arbitration expert at Pinsent Masons.

“Unlike some European courts, Australia, the US and now Singapore courts have rejected this jurisdictional objection as inapplicable to international agreements such as ECT,” she added.

The Singapore court followed the Federal Court of Australia’s recent decision ordering the enforcement of several ECT awards rendered against Spain in the renewable energy sector. The Federal Court of Australia also rejected the supremacy of EU law outside the EU system.

Johanne Brocas, an international arbitration expert in Singapore, added: “The Singapore court considered if the ECT award's potential conflict with EU law would make it violate Singapore’s public policy, and determined that this was not the case.

“This ruling demonstrates that Singapore courts maintain their stance on enforcing ECT awards, regardless of objections based on EU law, even if such enforcement may place the debtor in the challenging position of having to pay contrary to EU law requirements.”

“This decision demonstrates Singapore courts’ strong pro-arbitration approach in the sphere of investment arbitration.”.