Commission refers Belgium to the CJEU over recognition of arbitral damages before state aid review

The European Commission has decided to refer Belgium to the Court of Justice of the European Union over the way Belgian authorities recognized investor-state arbitral awards requiring other Member States to pay compensation to investors. The Commission considers that the recognition made the awards directly enforceable in Belgium before the payments were assessed under EU state aid rules and argues that this situation undermines the autonomy of EU law.

In brief, the Commission is referring Belgium to the CJEU in infringement procedure INFR(2025)2199, following a letter of formal notice in December 2025 and a reasoned opinion in April 2026. The dispute concerns arbitral awards granting investors compensation after changes to national renewable energy support schemes. According to the Commission, Belgian authorities recognized the awards before the European executive had authorized any potential compensation under state aid rules. The Commission invokes the autonomy of EU law, sincere cooperation between Member States and institutions, and the obligation not to implement state aid before its approval. The referral to the CJEU is not a ruling against Belgium. The Court must determine whether the state breached its obligations under EU law.

The dispute arises at the intersection of international investment protection arbitration and the legal order of the European Union. Investors who challenged changes to national renewable energy support schemes obtained arbitral awards requiring Member States to pay them compensation. The Commission considers that such awards cannot be enforced automatically when payment may constitute state aid or when the arbitration conflicts with the autonomy of EU law.

In Belgium's case, the issue identified by the Commission is not that the Belgian state owes the compensation. The awards concern payment obligations of other Member States, but the creditors sought their recognition in Belgium in order to enforce them on Belgian territory.

According to the Commission, Belgian administrative authorities recognized these awards and made them directly enforceable without waiting for the European review of the compensation to be completed. The EU executive considers that this recognition created an immediate risk that the states concerned would be required to pay before Brussels decided whether the payment was compatible with state aid rules.

Article 108(3) of the Treaty on the Functioning of the European Union requires Member States to notify the Commission of aid projects and not implement them before the European review procedure has been completed. This temporary prohibition is known as the standstill obligation.

The Commission considers that compensation awarded through certain arbitrations may fall within the scope of this obligation. An arbitral tribunal may establish the existence of a compensation obligation in the dispute before it, but it cannot authorize the granting of state aid within the meaning of EU law. That power belongs to the Commission, subject to review by the Union courts.

The European executive also invokes Articles 267 and 344 of the Treaty on the Functioning of the European Union. These provisions form part of the architecture through which the interpretation of EU law is maintained within the European judicial system and underpin CJEU case law against investor-state arbitration between Member States when the arbitral tribunal operates outside the Union's jurisdictional system.

In its case law on intra-EU investment arbitration, the Court has established that Member States may not remove disputes concerning the interpretation or application of EU law from the judicial system created by the Treaties. The Commission says that the principle of the autonomy of EU law must also be respected at the stage when an arbitral award is recognized or enforced.

Another argument is the obligation of sincere cooperation laid down in Article 4(3) of the Treaty on European Union. In the Commission's interpretation, Belgian authorities should have refused recognition where it would have allowed enforcement of an award contrary to obligations arising from EU law and to a state aid review procedure that was still ongoing.

The press release of 1 October does not individually identify all the arbitral awards covered by the procedure against Belgium. It describes them as awards through which investors obtained compensation from other Member States after changes to renewable energy support schemes.

However, the Commission expressly refers to Decision SA.40348 concerning Spain's renewable energy support system. This 2017 decision approved the new Spanish scheme and established the Commission's position that any compensation awarded through arbitration in connection with the former schemes must be assessed in light of EU state aid rules.

In recent years, several arbitral awards against Spain resulting from changes to the renewable energy system have been pursued for enforcement in different jurisdictions. In some of these proceedings, the Commission intervened to argue that enforcement of the compensation must comply both with state aid rules and with European case law on intra-EU arbitration.

A separate case documented by the Commission shows how this mechanism can operate in Belgium. An arbitral award initially granted to Japanese company JGC Holdings and subsequently assigned to US fund Blasket Renewable Investments was recognized in Belgium, and in 2024 the attachment of certain funds linked to Spanish air navigation services held through Eurocontrol was authorized.

In that case, the Belgian proceedings subsequently developed, and approximately EUR 33 million deposited in an escrow account was released to Blasket in June 2025. In 2026, the Commission opened a separate in-depth investigation to determine the state aid treatment of that award. The case illustrates the legal context of the dispute, but the press release concerning the procedure against Belgium does not state that the referral to the CJEU is limited to this single award.

The infringement procedure against Belgium began in December 2025, when the Commission sent a letter of formal notice. After receiving the Belgian authorities' response, the European executive concluded that the explanations did not alter its assessment and issued a reasoned opinion in April 2026.

Referral to the CJEU represents the next stage of the procedure. The Commission is asking the Court to declare that Belgium failed to fulfill its obligations under EU law. The referral does not itself establish that an infringement occurred and is not a condemnation of the Belgian state.

The CJEU will be able to examine the Commission's arguments and Belgium's defense before delivering a judgment. If the Court finds an infringement, Belgium will have to take the necessary measures to comply with the judgment. Any subsequent proceedings and financial penalties would involve additional legal conditions and stages and do not automatically result from the referral announced now.