This draft discusses the current debate over intra-EU bilateral investment treaties (intra-EU BITs). This is an esoteric issue for all who do not have some interest in EU and investment law. But the controversy over these agreements is likely to affect current conceptions of investment protection in trade agreements like the CETA as well as the future of the envisaged Multilateral Investment Court (MIC).
Are bilateral investment treaties between EU member states (intra-EU BITs) compatible with EU law and the rules of the Single Market? The case Slovak Republic v Achmea BV (C-284/16) represents the first opportunity for the Court of Justice of the European Union (CJEU) to examine this question and decide on the compatibility of intra-EU BITs with EU law. Even more important, its outcome will determine not only the uncertain future of the 196 intra-EU BITs that remain currently in force as well as ongoing disputes, but also address some of the controversies over the EU’s vision for a multilateral investment court.
Intra-EU BITs have only recently become popular with investors. Most of these treaties date back to the 1990s when one or both countries were not yet a member of the EU. However, the number of investor-state arbitrations based on these agreements has only risen significantly over the last few years: while we rarely saw more than two or three intra-EU arbitrations initiated in a single year before 2011, the number of new cases started to increase rapidly in 2012. In 2015 alone, out of a total of 74 new investment disputes worldwide, 28 were initiated between EU-based investors and EU member states. These figures are based on data in UNCTAD’s Investment Policy Hub. The darker section of each bar indicates the number of arbitrations in which the claimant is an investor based in the EU and the respondent is an EU member state; this includes cases under the multilateral Energy Charter Treaty.
Figure 1 – Number of Investor-State Arbitrations Initiated per Year
EU member states are divided on the issue of intra-EU BITs, with some maintaining that intra-EU BITs are incompatible with the EU treaties and others arguing the opposite. According to the recent opinion in Slovak Republic v Achmea BV, delivered by Advocate General Wathelet on 19 September 2017, Germany, France, the Netherlands, Austria and Finland have all intervened on the side of the investor (Achmea BV). These are mostly home states of investors and have therefore never or rarely been respondents in arbitral proceedings launched by investors. In contrast, the Slovakian position has been supported by a larger group including the Czech Republic, Italy, Spain, Greece, Hungary and Poland, which have all repeatedly been respondents in arbitral proceedings relating to intra-EU investment.