Spotlight on the UK-Singapore BIT in the context of Brexit (July 2019)

31 July 2019

The EU has negotiated two new trade and investment protection agreements with Singapore (the EU-Singapore Free Trade Agreement and the EU-Singapore Investment Protection Agreement (IPA)) (details here).  The agreements were signed in October 2018.  Neither is yet in force.  The new EU-Singapore IPA makes provision for the suspension or termination of certain existing bilateral investment treaties between EU Member States and Singapore, as and when the IPA is provisionally applied or enters into force (respectively) (EU-Singapore IPA, Article 4.12(3(a) and (b)), including the UK-Singapore BIT.

The EU-Singapore IPA received the consent of the European Parliament on 13 February 2019.  It now needs to be ratified by all EU Member States according to their own national procedures before it can enter into force.  It seems unlikely that that will happen, and therefore it is unlikely that the EU-Singapore IPA will enter into force, before the UK leaves the EU, given Prime Minister Boris Johnson’s strong commitment to leave by 31 October 2019.  However, if the EU-Singapore IPA did enter into force while the UK remained an EU Member State, it would have the effect of terminating the UK-Singapore BIT.  UK investors with investments in Singapore (and vice versa) would, from that moment, look to the EU-Singapore IPA for treaty protection of their investments, provided that they qualify for such protection under the terms of the IPA .  If and when the UK subsequently leaves the EU, future UK and Singaporean investors would – as things stand – most likely be left with no investment treaty protection for their investments in the other contracting State.   (There is academic debate as to whether certain provisions of mixed bilateral treaties (of which the EU-Singapore IPA is one) ratified by the UK would continue to apply to the UK after it leaves the EU.  The EU has stated that mixed bilateral agreements will cease to apply to the UK from the date of its departure.  It is also possible that existing investors may be able to rely on the “sunset clause” in the UK-Singapore BIT (Article 14), which is not expressly terminated by the EU-Singapore IPA.)

If, on the other hand, provisional application of the EU-Singapore IPA commences while the UK remains an EU Member State, but the EU-Singapore IPA has not yet entered into force, it is probably the case that the application of the UK-Singapore BIT is only suspended until the moment of the UK’s departure from the EU.  Upon that date, the suspension of the UK-Singapore BIT would cease and the UK-Singapore BIT would once again have effect.  This succession of treaty regimes would raise complex issues in any dispute that may arise between UK or Singaporean investors and the respective host State.

It is more difficult still to predict what effect the EU-Singapore IPA would have on the UK-Singapore BIT if it entered into force during any “transition or implementation period” (IP), as foreseen by Article 126 of the draft Withdrawal Agreement.  During the IP as currently envisaged, EU law would continue to be applicable to and in the UK (pursuant to Article 127(1)).  Relatedly, the UK would continue during this period to “be bound by the obligations stemming from the international agreements concluded […] by the Union and its Member States acting jointly” (Article 129(1)).  The EU has also agreed that it will notify the other parties to these agreements that, during the IP, the UK is to be treated as a Member State for the purposes of those agreements (footnote to Article 129(1)).  What effect this would have on the UK-Singapore BIT may turn on Singapore’s response (if any) to such a notification.  Should the EU-Singapore IPA enter into force during any IP, Singaporean and UK investors would be well-advised to seek legal advice as to how (if at all) their investments continue to be covered by an applicable investment treaty.

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