EU Member States agree treaty on termination of intra-EU BITs

On 24 October 2019, the European Commission (Commission) announced that EU Member States had approved the text of a plurilateral treaty entitled “Agreement for the Termination of Bilateral Investment Treaties between the Member States of the European Union” (Treaty).  In its statement, the Commission noted that “a small minority” of Member States had decided not to endorse the Treaty’s text.  The Treaty requires formal signature and ratification by each Member State before it will enter into force vis-à-vis that State.

 

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Last year, on 6 March 2018, the Court of Justice of the European Union (CJEU) rendered its decision in Achmea v. Slovak Republic, finding that the investor-State arbitration clause in the bilateral investment treaty (BIT) between the Netherlands and Czech and Slovak Federal Republic was incompatible with EU law.  Earlier this year, on 15 and 16 January 2019, Member States issued political declarations on the consequences of the CJEU’s Achmea ruling for intra-EU BITs and the Energy Charter Treaty (ECT) (Declarations).  In the Declarations, Member States said that they envisaged terminating all intra-EU BITs by December 2019 by way of a plurilateral treaty, unless bilateral termination was more expedient. Once it enters into force, the Treaty will effect termination of intra-EU BITs between the Member States that become parties to it.

 

Recitals XV and XVI of the Treaty reference an ongoing review of the adequacy of investment protection that will be provided within the EU following termination of intra-EU BITs.  Recital XV recalls that “Member States and the Commission will intensify discussions without undue delay with the aim of better ensuring complete, strong and effective protection of investments within the European Union.  Those discussions include the assessment of existing processes and mechanisms of dispute resolution as well as the need and, if the need is ascertained, the means to create new or improve relevant existing tools and mechanisms under Union law”.  Recital XVI recalls that  the Treaty “is without prejudice to further measures and actions that may be necessary within the framework of Union law in order to ensure a higher level of protection of cross-border investments within the European Union and to create a more predictable, stable and clear regulatory environment to incentivise investments within the internal market”.

 

As regards those Member States that refuse to terminate their intra-EU BITs and do not agree to the Treaty, the Commission has underscored that it will “consider resuming or initiating infringement procedures” against them.  As noted in the Declarations, the Commission recognised that Member States have differing views on the implications of Achmea for intra-EU arbitration under the ECT.

 

Under Article 15, the Treaty will require Member State ratification, approval or acceptance.  Article 16 states that the Treaty will enter into force 30 calendar days after the Depositary receives the second instrument of ratification, approval or acceptance.  It will then enter into force with respect to each Member State 30 days after the date of deposit by such Member State of its individual instrument of ratification, approval or acceptance.  Article 17 provides that, in the meantime, Member States may decide to apply the Treaty provisionally “in accordance with their own constitutional requirements”.

 

The Treaty is available here.

The Commission’s statement on the Treaty is available here.

Member State Declarations are available here.