Documents considered by the Committee on 24 April 2019 Contents

2Protection of intra-EU investment

Committee’s assessment

Politically and legally important

Committee’s decision

Not cleared from scrutiny; further information requested; drawn to the attention of the International Trade Committee

Document details

Communication on the Protection of intra-EU investment

Legal base

Department

International Trade

Document Number

(40011), 11509/18, COM(18) 547

Summary and Committee’s conclusions

2.1As part of the Commission’s wider initiatives to encourage, enable and protect investments within the Single Market, the Communication aims to provide guidance on existing EU rules for the treatment of intra-EU cross-border investments6 and available means of redress at both EU and Member State level.

2.2Following the Achmea judgment of the European Court of Justice, which ruled that investor-State dispute settlement (ISDS) clauses in Bilateral Investment Treaties between Member States (“intra-EU BITs”) are not compatible with EU law—the Commission’s view is that:

2.3In his Explanatory Memorandum of 29 August 2019, the Minister for Investment (Graham Stuart MP):

2.4We note that in January 2019, all Member States, including the UK, committed to terminating all intra-EU BITs and that 21 Member States, including the UK, considered that the ISDS clause in the Energy Charter Treaty (ECT) cannot be used as a basis for arbitration between EU investors and Member States.7

2.5The Commission welcomed these commitments, considering that they provide additional legal clarity for investors and arbitral tribunals and help prevent new arbitral awards and arbitration procedures that are incompatible with EU law.8

2.6We ask the Minister to:

2.7In the meantime, we retain the document under scrutiny and draw our conclusions to the International Trade Committee.

Full details of the documents

Communication on the Protection of intra-EU investment: (40011), 11509/18, COM(18) 547.

Background

Achmea case (Slovak Republic v Achmea BV, C-284/16)

2.8Following a referral by the German Federal Court of Justice to the ECJ for a preliminary ruling on whether the UNCITRAL arbitration clause in Article 8 of the Dutch-Slovak BIT is compatible with EU law, the ECJ held in March 2018 that arbitration clauses such as the one contained in Article 8 of the Slovak-Netherlands BIT, are incompatible with EU law. The ECJ did not follow the non-binding opinion of Advocate General Wathelet issued in September 2017 that such clauses are compatible with the Treaty on the Functioning of the EU (TFEU).

The Communication

2.9The Communication forms a distinct work strand under the Commission’s overarching Investment Plan for Europe and the Capital Markets Union (CMU) Action Plan. The guidance:

Declarations by Member States on the legal consequences of the Achmea judgment and on investment protection in the EU

2.10In January 2019, Member States issued separate declarations on their interpretation of the application of the Achmea judgment (as set out below). While they differed in several respects, all Member States committed to: terminating intra-EU BITs; informing tribunals in pending arbitrations initiated under intra-EU BITs of the Achmea decision; challenging the validity or enforcement of arbitration awards issued against them pursuant to intra-EU BITs; and informing the ‘investor community’ that no new intra-EU investment arbitration should be commenced.

2.11On 15 January 2019, 21 Member States, including the UK, signed a declaration stating that:

2.12On 16 January 2019, Finland, Luxembourg, Malta, Slovenia and Sweden adopted a declaration similar to that of the majority of Member States of 15 January 2019, except in respect of the ECT. It states that it would be inappropriate to express views on the compatibility of EU law with any intra-EU application of the ECT as the question of whether the ECT contains an ISDS clause applicable between Member States is currently being contested before a national court of a Member State.

2.13On 16 January 2019, Hungary released a declaration on 16 January 2019 in which it considered that the Achmea decision concerns intra-EU BITs and not any pending or prospective arbitration under the ECT.

Previous Committee Reports

None.


6 It does not cover investments made by EU investors in third countries or by third country investors in the EU.

8 Commission press release dated 17 January 2019: ‘Single Market: Commission welcomes Member States’ commitments to terminate all bilateral investment treaties within the EU’.




Published: 30 April 2019