Intra-EU BIT Investment Protection and the EC Treaty

Abstract

Listen

Translate article

The “old” EU Member States, all being traditionally capital exporting countries, have never seen the need to enter into bilateral investment treaties (BITs) with each other. However, these “old” Member States normally have concluded BITs with the East European states formerly belonging to the Eastern bloc, countries which have now emerged as market economies, incorporating themselves in the community of European states. Most recently, Poland, Estonia, Latvia, Lithuania, and the Czech Republic have become EU Member States as of April 2004. This has resulted in a principally new concept, i.e., intra-EU BITs concluded between EU Member States. In this scenario, it has occurred in a number of instances that a new EU Member State, being targeted by an investment claim under an intra-EU BIT, has raised the jurisdictional defense that the BIT is no longer operative. This defense has been raised on the basis of a number of legal theories, that intra-EU investment matters are governed by EC law (making the intra-EU BIT désuet), that intra-EU BITs are superseded by EC law, and/or that the concept of intra-EU investor state arbitration is inconsistent with the EC legal order. Indeed, two recent arbitral awards in investment cases have had to deal with this issue. This article seeks to account for the legal theories which have been invoked in support of the proposition that intra-EU BITs are no longer effective and, at the same time, provide a discussion to illustrate why this proposition cannot be successfully invoked to invalidate intra-EU BITs.