Italy’s Waste Crisis Became Europe’s Treaty Reckoning -By Fransiscus Nanga Roka

Italy’s efforts to set aside an €85.8 million investment award goes beyond a dispute over two unsuccessful waste to energy concessions. It is a crisis of state accountability, European legal sovereignty and an international law treaty mechanism that can require taxpayers to pay for public-administration failure.

Italy’s annulment request in Veolia Propreté SAS v. Italian Republic was registered with the International Centre for Settlement of Investment Disputes on September 16, 2026. The award from September 26, 2025, orders Italy to pay Veolia €85,832,011 with pre- and post-award compound interest for non-performance of the contract and in addition $580.958.10 in arbitration costs.

It arose when French investor Veolia entered into integrated waste-management concessions in Calabria and Tuscany. Veolia alleged Italian authorities had undermined the projects by not updating waste-treatment fees, holding back public contributions, providing insufficient volumes of waste and blocking works used to complete the systems. The investment is lost as its Italian subsidiary ultimately goes bust.

Commercial risk did not merely slay the company in this instance. As noted, the tribunal identified legally actionable breaches of public law duties in respect of breaches arising from fair and equitable treatment and Italy’s treaty obligations to maintain commitment to investment. It dismissed indirect expropriation, but awarded significant damages. The award therefore reveals an inconvenient truth, regulatory sovereignty is not a permit to administrative inconsistency. A state cannot invite capital into core functions in its infrastructure, irritate the contracture that makes it work and then call what comes crashing down “public policy.”

Veolia has brought its claim under the 1994 Energy Charter Treaty, having originally lodged it in 2018. Although Italy had exited the treaty in 2016, the ECT’s 20-year sunset clause continued affording protection to qualifying investments made pre exit. This was an escape out the front door of the treaty, while still remaining trapped in its national legal corridor by Italy.

The annulment request has now positioned the case within Europe’s constitutional strife over investor-state arbitration. The intra-EU arbitration poses a risk to EU law autonomy and uniformity under the EU Court of Justice’s Achmea and Komstroy jurisprudence. Italy raised that jurisdictional clash in the original proceedings, when the European Commission tried to intervene. The tribunal, however, continued under both the ECT and ICSID Convention.

But dismissal is not an appeal. An ICSID ad hoc committee does not merely have to reweigh the evidence or replace the tribunal’s interpretation because it finds Italy’s position preferable. Therefore, annulment would only be possible under very limited circumstances described under Article 52, such as a manifest excess of powers, improper constitution of the tribunal, serious departure from a fundamental procedural rule and corruption or failure to state reasons. If Italy does not transmute its objection into one of those narrow defects, the application looks like an appeal in disguise rather than an assessment by institutions.

It is not an impact that is limited to €86 million. Even if the award survives, states within the EU are still exposed to sanctions internationally under grandfathered ECT protections irrespective of its underlying arbitration mechanism being rendered incompatible with EU law. The finality of ICSID will only seem politically negotiable if annulled too broadly whenever its award clashes with a regional legal order.

A five-piece approach for Italy and the European Union Publish grounds for annulment and everything else not marked confidential Second, to the award if enforcement is stayed or suspended thereby preventing annulment from being used as a delaying tactic. Thirdly, conduct an audit of all ECT-protected concessions still on foot; due diligence designed to detect administrative failures prior to their crystallisation in claims. Fourth, the design of enforceable coordination protocols among national regional and municipal agencies in charge of infrastructure contracts. Fifth, agree a coherent international settlement of legacy intra-EU ECT cases as opposed to trying to force tribunals and national courts to create incompatible outcomes.

There is nothing scandalous here in an investor invoking international law. There exist allegations this fragmented government turned a failure in waste management into €85,8 million of public liability and now seeks annulment to clean what its management failed to manage.

Fransiscus Nanga Roka

Faculty of Law University 17 August 1945 Surabaya and Managing Partner Law Firm Victorious Indonesia