Abstract
The era of modern investment treaties began when Germany and Pakistan concluded a bilateral agreement that entered into force in 1962. Germany’s interest in investment treaties was grounded in the loss of its earlier foreign investment in negotiated settlements after 1949 owing to the damage it had caused in World War II. In an investment treaty the host state renounces part of its sovereignty to attract foreign investment. In turn, for an investor an investment treaty provides legal protection against state interference, which can come in a range of different forms, including expropriation, conversion and transfer of assets or any forms of unfair, inequitable, discriminatory or arbitrary treatment. Today, these investment guarantees are contained in large part in the approximately 2,000 bilateral investment treaties (BITs) that are currently in force worldwide. Germany has the most comprehensive network, with around 130 BITs in force, whereas other EU Member States also concluded a great number of BITs and continue to conclude such treaties.
This contribution draws on Burgstaller, European Law and Investment Treaties, Journal of International Arbitration 26 (2009) 2, pp. 181–216 and Burgstaller, European Law Challenges to Investment Arbitration, in: Waibel/Kaushal/Chung/Balchin (eds.), The Backlash Against Investment Arbitration (2010).
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
Other European states with a comprehensive BIT programme are the UK, Italy and France, all of which have around 100 BITs in force. In 2007 the Netherlands (five), Finland, Germany and Spain (three each) together accounted for the majority of the new BITs concluded by EU Member States. See UNCTAD, Recent developments in international investment agreements (2007 to June 2008), available at http://www.unctad.org/en/docs/webdiaeia20081_en.pdf.
- 2.
ECJ, Opinion 1/94, WTO, [1994] ECR I, 5267.
- 3.
The EU-Chile Association Agreement, OJ 2002 L 352/3, is the most advanced bilateral free trade agreement currently in force including investment issues. On the multilateral level, the most important agreement is the Energy Charter Treaty (ECT), a multilateral treaty with 47 contracting parties, including the European Communities and all Member States. Both the European Communities and all Member States are contracting parties to the ECT as it was concluded as a mixed agreement, falling within the scope of both Community and Member State competence. See Council and Commission Decision 98/181/EC, ECSC, EURATOM of 23 September 1997 on the conclusion by the European Communities, of the Energy Charter Treaty and the Energy Charter Protocol on energy efficiency and related environmental aspects, OJ 1998 L 69/1.
- 4.
ECJ, C-205/06, Commission v. Austria, not yet in the official reports; ECJ, C-249/06, Commission v. Sweden, not yet in the official reports. The author represented Austria in these proceedings up until but not inclusive of the oral hearing before the ECJ.
- 5.
ECJ, C-118/07, Commission v. Finland, not yet in the official reports.
- 6.
ECJ, C-205/06, Commission v. Austria, not yet in the official reports, para. 43; ECJ, C-249/06, Commission v. Sweden, not yet in the official reports, para. 43; ECJ, C-118/07, Commission v. Finland, not yet in the official reports, para. 34.
- 7.
Treaty of Lisbon amending the Treaty on European Union (TEU) and the Treaty Establishing the European Community, signed in Lisbon on 13 December 2007, entered into force on 1 December 2009.
- 8.
Article 2(1) TFEU states: “When the Treaties confer on the Union exclusive competence in a specific area, only the Union may legislate and adopt legally binding acts, the Member States being able to do so themselves only if so empowered by the Union or for the implementation of Union acts.” The TFEU put an end to the three-pillar-structure of the EU. Reference in the context of the TFEU is therefore made to “Union,” “EU” and “EU law” rather than “Community” and “EC law”.
- 9.
BVerfG, 2 BvE 2/08, Organstreit, NJW (2009), pp. 2267 et seq., para. 380.
- 10.
Wehland, Intra-EU Investment Agreements and Arbitration: Is European Community Law an Obstacle? ICLQ 58 (2009) 2, pp. 297–320.
- 11.
Eastern Sugar B.V. (Netherlands) v. The Czech Republic, Partial Award of 27 March 2007, available at http://ita.law.uvic.ca/documents/EasternSugar.pdf.
- 12.
Ceyssens, Towards a Common Foreign Investment Policy? – Foreign Investment in the European Constitution, Legal Issues of Economic Integration 32 (2005) 3, p. 259 (261).
- 13.
Cremona, EC External Commercial Policy after Amsterdam: Authority and Interpretation within Interconnected Legal Orders, in: Weiler (ed.), The EU, the WTO, and the NAFTA: Towards a Common Law of International Trade, 2000, p. 5 (15); Herrmann, Common Commercial Policy after Nice: Sisyphus Would have Done a Better Job, CMLR 39 (2002) 1, p. 7 (14).
- 14.
In the early cases concerned with the interpretation of the scope of the CCP, the ECJ took a rather liberal stance when it held that the CCP had the same content as the commercial policy of a state. ECJ, Opinion 1/75, Local Costs, [1975] ECR, 1355; ECJ, Opinion 1/78, International Agreement on Natural Rubber, [1979] ECR, 2871.
- 15.
ECJ, Opinion 1/94, WTO, [1994] ECR I, 5267, para. 57; ECJ, Opinion 2/00, Cartagena Protocol, [2001] ECR I, 9713, para. 40; ECJ, C-281/01, Commission v Council, [2002] ECR I, 12049, paras. 40 and 41; ECJ, C-347/03, Regione autonoma Friuli-Venezia Giulia and ERSA, [2005] ECR I, 3785, para. 75; ECJ, Joined Cases C-402/05 P and C-415/05 P, Kadi and Al Barakaat, not yet in the official reports, para. 301.
- 16.
ECJ, 22/70, AETR, [1971] ECR 263.
- 17.
ECJ, Opinion 1/76, Laying-up Fund, [1977] ECR, 741.
- 18.
See, for example, Articles 47(2), 48 and 56–60 EC.
- 19.
See ECJ, Opinion 2/92, OECD, [1995] ECR I, 521.
- 20.
To the author’s knowledge, the new Denmark–Indonesia BIT has not yet entered into force. Whereas the BIT does not require ratification by the Danish Parliament, it still appears to be awaiting ratification by Indonesia.
- 21.
ECJ, C-205/06, Commission v. Austria, not yet in the official reports, para. 26; ECJ, C-249/06, Commission v. Sweden, not yet in the official reports, para. 27.
- 22.
ECJ, C-205/06, Commission v. Austria, not yet in the official reports, para. 36; ECJ, C-249/06, Commission v. Sweden, not yet in the official reports, para. 37.
- 23.
ECJ, C-205/06, Commission v. Austria, not yet in the official reports, para. 37; ECJ, C-249/06, Commission v. Sweden, not yet in the official reports, para. 38.
- 24.
ECJ, C-205/06, Commission v. Austria, not yet in the official reports, para. 39; ECJ, C-249/06, Commission v. Sweden, not yet in the official reports, para. 40.
- 25.
ECJ, C-205/06, Commission v. Austria, not yet in the official reports, para. 40; ECJ, C-249/06, Commission v. Sweden, not yet in the official reports, para. 41.
- 26.
ECJ, Joined Cases C-402/05 P and C-415/05 P, Kadi and Al Barakaat, not yet in the official reports, para. 301.
- 27.
ECJ, Joined Cases C-402/05 P and C-415/05 P, Kadi and Al Barakaat, not yet in the official reports, para. 304.
- 28.
ECJ, C-118/07, Commission v. Finland, not yet in the official reports, para. 5.
- 29.
ECJ, C-118/07, Commission v. Finland, not yet in the official reports, para. 38.
- 30.
ECJ, C-118/07, Commission v. Finland, not yet in the official reports, paras. 42 and 43.
- 31.
Typically, the BITs at issue remain in force for a further period of 10 years (see, for example, Article 12(3) of the Austria-Turkey BIT, signed on 16 September 1988, entered into force on 1 January 1992, available at http://www.unctad.org/sections/dite/iia/docs/bits/austria_turkey_ger.pdf) to 20 years (see, for example, Article 11(3) of the Sweden-Vietnam BIT, signed on 8 September 1993, entered into force on 2 August 1994, available at http://www.unctad.org/sections/dite/iia/docs/bits/sweden_vietnam.pdf) from the date when the termination of the BIT becomes effective in respect of investments made prior to the effective termination date. However, investments of, say, Austrian investors in Turkey after the termination of the Austria–Turkey BIT would not be protected under the BIT until the entry into force of a new BIT.
- 32.
There is no exact timeframe until when such termination has to take place. However, if Member States do not comply with ECJ judgments, the Commission may institute proceedings under Article 260 TFEU (equivalent to Article 228 EC) for non-compliance. According to the ECJ’s jurisprudence, it has no jurisdiction under this article to require Member States to comply with its judgment within a specified period of time. ECJ, C-473/93, Commission v. Luxembourg, [1996] ECR I, 3207, paras. 46 and 47. However, although Article 260 TFEU does not specify the period within which a judgment must be complied with, the ECJ ruled that the interest in the immediate and uniform application of Community law required compliance as soon as possible. ECJ, C-291/93, Commission v. Italy, [1996] ECR I, 859, para. 6. Judgments in proceedings pursuant to the said article may well result in hefty fines for Member States; see ECJ, C-304/02, Commission v. France, [2005] ECR I, 6263. However, under Article 260 TFEU the court does not have the power either to seek an injunction or to order a Member State to take specific action. ECJ, C-105/02, Commission v. Germany, [1996] ECR I, 9659, paras. 44 and 45.
- 33.
It would seem that a clause such as the one contained in Article 7(c) of the most recent UK Model BIT of 2005 (“The provisions of this Agreement relative to the grant of treatment not less favourable than that accorded to the nationals or companies of either Contracting Party or of any third State shall not be construed so as to oblige one Contracting Party to extend to the nationals or companies of the other the benefit of any treatment, preference or privilege from any requirements of European Community law resulting from the United Kingdom’s membership of the European Union prohibiting, restricting or limiting the movement of capital to or from any third country.”) might be interpreted so as to comply with the UK’s obligations under EU law even though it remains unclear why this provision limits its scope of application to treatment not less favourable.
- 34.
In the draft articles of the Convention’s Praesidium it was explained that FDI was included in the scope of the CCP “in recognition of the fact that financial flows supplement trade in goods and today represent a significant share of commercial exchanges.” European Convention, draft articles on external action in the Constitutional Treaty, CONV 685/03. The Treaty of Lisbon did not change the Constitutional Treaty’s provisions in respect of the EU’s competence for FDI, which is why the Convention’s deliberations are a useful point of reference for the interpretation of the EU’s competence for FDI.
- 35.
Council Directive 88/361/EEC of 24 June 1988 for the implementation of Article 67 of the Treaty, OJ 1988 L 178/5. The ECJ has endorsed this definition of direct investment. See ECJ, C-446/04, Test Claimants in the FII Group Litigation, [2006] ECR I, 11753, paras. 179–182; ECJ, C-157/05, Holböck, [2007] ECR I, 4051, paras. 33 and 34; ECJ, C-112/05, Commission v. Germany, [2007] ECR I, 8995, para. 18; ECJ, C-101/05, Skatteverket v. A, [2007] ECR I, 11531, para. 46.
- 36.
According to the explanatory notes “there is participation in the nature of direct investment where the block of shares held by a natural person of another undertaking or any other holder enables the shareholder, either pursuant to the provisions of national laws relating to companies limited by shares or otherwise, to participate effectively in the management of the company or in its control.” Council Directive 88/361/EEC of 24 June 1988 for the implementation of Article 67 of the Treaty, OJ 1988 L 178/5.
- 37.
The explanatory notes explain that the term “long-term loans” means “loans for a period of more than 5 years which are made for the purpose of establishing or maintaining lasting economic links. The main examples which may be cited are loans granted by a company to its subsidiaries or to companies in which it has a share and loans linked with a profit-sharing arrangement. Loans granted by financial institutions with a view to establishing or maintaining lasting economic links are also included under this heading.” Council Directive 88/361/EEC of 24 June 1988 for the implementation of Article 67 of the Treaty, OJ 1988 L 178/5.
- 38.
See also ECJ, C-463/00, Commission v. Kingdom of Spain, [2003] ECR I, 4581.
- 39.
ECJ, C-446/04, Test Claimants in the FII Group Litigation, [2006] ECR I, 11753, paras. 181 and 182.
- 40.
ECJ, C-492/04, Lasertec, [2007] ECR I, 3775, paras. 22–24.
- 41.
IMF, Balance of Payments Manual, (5th ed.) 1993, p. 86.
- 42.
OECD, Benchmark Definition of Foreign Direct Investment, 1999 (3rd edition), p. 7.
- 43.
Tietje, Die Außenwirtschaftsverfassung der EU nach dem Vertrag von Lissabon, in: Tietje/Kraft (eds); Beiträge zum Transnationalen Wirtschaftsrecht, Heft 83, 2009, p. 16 (discussing systematic problems with this interpretation).
- 44.
Krajewski, External Trade Law and the Constitution Treaty: Towards a Federal and more Democratic Common Commercial Policy? CMLR 42 (2005) 1, p. 91 (113–114).
- 45.
The fact that Article 207 TFEU, unlike Article 133 EC, does not distinguish between trade in goods and other areas of the CCP supports the view that the Treaty of Lisbon put an end to the traditional approach of the CCP which henceforth expands towards other areas of economic activity.
- 46.
Fischer, Amendment Form: Suggestion for amendment of Article: 24, available at http://european-convention.eu.int/Docs/Treaty/pdf/866/Art24Fischer.pdf; De Villepin, Fiche Amendement: Proposition d’amendement à l’article III-211, available at http://european-convention.eu.int/Docs/Treaty/pdf/866/Art%20III%20211%20de%20Villepin%20FR.pdf; Palacio, Fiche Amendement: Proposition d’amendement à l’Article: 23: Chapitre 2, Titre B, Partie, available at http://european-convention.eu.int/Docs/Treaty/pdf/866/Art23Palacio%20FR.pdf.
- 47.
Hain, Amendment Form: Suggestion for amendment of Article: Part II, Title B, Article 23, available at http://european-convention.eu.int/Docs/Treaty/pdf/866/Art23Hain.pdf.
- 48.
Ceyssens, Towards a Common Foreign Investment Policy? – Foreign Investment in the European Constitution, Legal Issues of Economic Integration 32 (2005) 3, p. 259 (279–281); Tietje, Die Außenwirtschaftsverfassung der EU nach dem Vertrag von Lissabon, in: Tietje/Kraft (eds.), Beiträge zum Transnationalen Wirtschaftsrecht, Heft 83, 2009, p. 14–15.
- 49.
ECJ, C-306/93, SMW Winzersekt, [1994] ECR I, 5555, para. 22; ECJ, Joined Cases C-37/02 and C-38/02, Di Lenardo and Dilexport, [2004] ECR I, 6911, para. 82; ECJ, C-347/03, Regione autonoma Friuli-Venezia Giulia and ERSA, [2005] ECR I, 3785, para. 119; ECJ, Joined Cases C-402/05 P and C-415/05 P, Kadi and Al Barakaat, not yet in the official reports, para. 355.
- 50.
See ECJ, 4/73, Nold, [1974] ECR 491; ECJ, C-84/95, Bosphorus, [1996] ECR I, 3953.
- 51.
ECJ, Joined Cases C-402/05 P and C-415/05 P, Kadi and Al Barakaat, not yet in the official reports, paras. 358 and 360.
- 52.
In addition, this footnote also excluded investor–state arbitration from the EU’s FDI competence.
- 53.
Krajewski, External Trade Law and the Constitution Treaty: Towards a Federal and more Democratic Common Commercial Policy? CMLR 42 (2005) 1, p. 91 (116–117).
- 54.
ECJ, Case 22/70, AETR, [1971] ECR 263; ECJ, Opinion 1/75, Local Costs, [1975] ECR 1355.
- 55.
Article 3(2) TFEU states: “The Union shall also have exclusive competence for the conclusion of an international agreement when its conclusion is provided for in a legislative act of the Union or is necessary to enable the Union to exercise its internal competence, or in so far as its conclusion may affect common rules or alter their scope”.
- 56.
It should not be overlooked that the EU’s action on the international scene has to respect some non-economic principles enshrined in Article 21 TEU. Article 21(1) TEU states: “The Union’s action on the international scene shall be guided by the principles which have inspired its own creation, development and enlargement, and which it seeks to advance in the wider world: democracy, the rule of law, the universality and indivisibility of human rights and fundamental freedoms, respect for human dignity, the principles of equality and solidarity, and respect for the principles of the United Nations Charter and international law.” Further, Article 21(2) TEU states: “The Union shall define and pursue common policies and actions, and shall work for a high degree of cooperation in all fields of international relations, in order to [inter alia] foster the sustainable economic, social and environmental development of developing countries, with the primary aim of eradicating poverty; […] help develop international measures to preserve and improve the quality of the environment and the sustainable management of global natural resources, in order to ensure sustainable development; […].” It is unclear, however, to what extent these principles may in effect limit the EU’s competence to conclude investment treaties with third states.
- 57.
As far as negotiation is concerned, the division of competence under a mixed agreement does not, generally, influence participation in negotiations. Although the practice is decided on a case-by-case-basis, it is accepted that the Commission may act as a sole negotiator for the whole agreement according to the mandate given to it by the Council. See Craig/de Burca, EU Law, 2008, pp. 198–199. See also Article 218 TFEU. On the problems with regard to mixed agreements generally see, for example, Weiler, The External Legal Relations of Non-Unitary Actors: Mixity and the Federal Principle, in: Weiler (ed.), The Constitution of Europe: Do the New Clothes Have an Emperor?, 1999, pp. 168–183.
- 58.
ECJ, C-266/03, Commission v. Luxembourg, [2005] ECR I, 4805, para. 60; ECJ, C-433/03, Commission v. Germany, [2005] ECR I, 6985, para. 66; ECJ, C-459/03, Commission v. Ireland, [2006] ECR I, 4635, para. 174. The principle of cooperation can be seen as a constitutional principle within EU external relations law. See Koutrakos, The Elusive Quest for Uniformity in EC External Relations, Yearbook of European Law 4 (2001), p. 243 (258).
- 59.
Compare Eeckhout, External Relations of the European Union, 2004, p. 335; but see Manzini, The priority of pre-existing treaties of EC Member States within the framework of international law, EJIL 12 (2001) 4, p. 781 (785).
- 60.
ECJ, C-466/08, Commission v. United Kingdom, Opinion of AG Tizzano [2002], ECR I, 9427, para. 113.
- 61.
Again, it should be emphasised that most BITs contain post-termination protection clauses.
- 62.
Council Decision of 9 October 1961 on standardisation of the duration of trade agreements with third countries, OJ 1961 71/1274.
- 63.
Council Decision of 16 December 1969 on the progressive standardisation of agreements concerning commercial relations between Member States and third countries and on the negotiation of Community agreements (69/494/EEC), OJ 1969 L 326/42.
- 64.
See, for example, the example of readmission agreements described by Kuijper, Fifty Years of EC/EU External Relations: Continuity and the Dialogue Between Judges and Member States as Constitutional Legislators, Fordham International Law Journal 31 (2008) 6, p. 1571 (1597). In the context of international trade see, for example, Petersmann, Multilevel Judicial Governance of International Trade Requires a Common Conception of Rule of Law and Justice, Journal of International Economic Law 10 (2007) 3, p. 529 (551).
- 65.
See Council Decision No. 2007/339/EC, OJ 2007 L 134/1.
- 66.
See Council Regulation No. 847/2004, OJ 2004 L 157/7.
- 67.
European Convention, Draft Articles on external action in the Constitutional Treaty, CONV 685/03.
- 68.
The Commission made proposals to that effect for example during the intergovernmental conferences leading to the Treaty of Amsterdam and the Treaty of Nice. See European Commission, Report on the operation of the Treaty on European Union, SEC (95) 731, 57–60 and European Commission, Commission Opinion in accordance with Article 48 EU, COM (2000) 34, 27.
- 69.
On the other hand, Member States might have different priorities in the respective third state, depending how extensively their investors are engaged in that state and how strongly they are interested in attracting investors from there. Individual Member States may also have different preferences for political and historical reasons. See the discussion by Karl, The Competence for Foreign Direct Investment – New Powers for the European Union, JWIT 5 (2004) 3, p. 413 (425–426).
- 70.
Drabek/Payne, The Impact of Transparency on Foreign Direct Investment, World Trade Organization Economic Research and Analysis Division Staff Working Paper ERAD-99-02, available at http://www.wto.org/english/res_e/reser_e/erad-99-02.doc.
- 71.
For example, the rules of procedure for arbitral proceedings are specifically tailored for arbitration with the participation of a government party; oversight by the ICSID Secretariat and the availability of the institution’s resources and experienced personnel represent a major asset in investment arbitration; and the self-contained enforcement regime of the ICSID Convention means that enforcement of ICSID awards will generally be smoother than enforcement of non-ICSID awards. See McLachlan/Shore/Weiniger, International Investment Arbitration, 2007, pp. 4–5; Muchlinski, Policy Issues in: Muchlinski/Ortino/Schreuer (eds.), The Oxford Handbook of International Investment Law, 2008, pp. 4–48; Dolzer/Schreuer, Principles of International Investment Law, 2008, pp. 20–21; Schreuer/Malintoppi/Reinisch/Sinclair, The ICSID Convention – A Commentary, (2nd ed.) 2009, pp. 1117–1150.
- 72.
Eastern Sugar B.V. (Netherlands) v. The Czech Republic, Partial Award of 27 March 2007, available at http://ita.law.uvic.ca/documents/EasternSugar.pdf. The Final Award dated 12 April 2007 dealt merely with the arbitration costs, available at http://ita.law.uvic.ca/documents/FinalAward_EasternSugar.pdf.
- 73.
Agreement on encouragement and reciprocal protection of investments between the Kingdom of the Netherlands and the Czech and Slovak Federal Republic, signed on 29 April 1991, entered into force on 1 October 1992. As of 1 January 1993 the Czech Republic succeeded into the Czech and Slovak Federal Republic’s international obligations, including those arising from the BIT.
- 74.
Eastern Sugar B.V. (Netherlands) v. The Czech Republic, Partial Award of 27 March 2007, para. 172.
- 75.
Article 59 VCLT (“Termination or suspension of the operation of a treaty implied by conclusion of a later treaty”) states: “1. A Treaty shall be considered as terminated if all the parties to it conclude a later treaty relating to the same subject matter and: (a) it appears from the later treaty or is otherwise established that the parties intended that the matter should be governed by that treaty; or (b) the provisions of the later treaty are so far incompatible with those of the earlier one that the two treaties are not capable of being applied at the same time. 2. The earlier treaty shall be considered as only suspended in operation if it appears from the later treaty or is otherwise established that such was the intention of the parties”.
- 76.
Eastern Sugar B.V. (Netherlands) v. The Czech Republic, Partial Award of 27 March 2007, paras. 101–104.
- 77.
In Matteucci v. Belgium the ECJ concluded that “[a] bilateral agreement which reserves the scholarships in question for nationals of the two Member States which are the parties to the agreement cannot prevent the application of the principle of equality of treatment between national and Community workers established in the territory of one of those two Member States.” ECJ, 235/87, Matteucci v. Begium, [1988] ECR, 5589, para. 23.
- 78.
Eastern Sugar B.V. (Netherlands) v. The Czech Republic, Partial Award of 27 March 2007, paras. 106–108.
- 79.
Eastern Sugar B.V. (Netherlands) v. The Czech Republic, Partial Award of 27 March 2007, para. 119.
- 80.
Article 292 EC (= Article 344 TFEU) states: “Member States undertake not to submit a dispute concerning the interpretation or application of this Treaty to any method of settlement other than those provided for therein”.
- 81.
Article 8(6) of the Netherlands-Czech Republic BIT states: “The arbitral tribunal shall decide on the basis of the law, taking into account in particular though not exclusively:
-
the law in force of the Contracting Party concerned;
-
the provisions of this Agreement, and other relevant Agreements between the Contracting Parties;
-
the provisions of special agreements relating to the investment;
-
the general principles of international law.”
It bears emphasising that the Commission referred only to the first bullet point of this provision.
-
- 82.
Eastern Sugar B.V. (Netherlands) v. The Czech Republic, Partial Award of 27 March 2007, para. 119 (footnote added).
- 83.
Eastern Sugar B.V. (Netherlands) v. The Czech Republic, Partial Award of 27 March 2007, para. 120.
- 84.
Eastern Sugar B.V. (Netherlands) v. The Czech Republic, Partial Award of 27 March 2007, para. 121.
- 85.
See, for example, CFI, T-126/95, Dumez v. Commission, [1995] ECR II, 2863.
- 86.
Eastern Sugar B.V. (Netherlands) v. The Czech Republic, Partial Award of 27 March 2007, para. 122.
- 87.
Eastern Sugar B.V. (Netherlands) v. The Czech Republic, Partial Award of 27 March 2007, para. 126.
- 88.
Eastern Sugar B.V. (Netherlands) v. The Czech Republic, Partial Award of 27 March 2007, para. 126. Subsequently, the Czech Ministry of Finance proposed to the Czech Government that it terminate Czech intra-EU BITs. As a consequence, Italy and the Czech Republic terminated their BIT and Denmark is in the process of terminating its BIT with the Czech Republic. Slovenia and Malta announced their agreement with the Czech position, and their intent to unwind their own BITs. Italy also has indicated that it intends to terminate a number of other intra-EU BITs. However, not all EU member states concur with the Czech Republic’s approach, including, according to public reports, Belgium, Germany, the Netherlands and the UK.
- 89.
Eastern Sugar B.V. (Netherlands) v. The Czech Republic, Partial Award of 27 March 2007, para. 128.
- 90.
Eastern Sugar B.V. (Netherlands) v. The Czech Republic, Partial Award of 27 March 2007, para. 138.
- 91.
ECJ, Case 102/81, Nordsee, [1982] ECR 1095, paras. 10–12; ECJ, Case C-126/97, Eco Swiss China Time Ltd v. Benetton International NV, [1999] ECR I, 3055, para. 34; ECJ, Case C-125/04, Denuit and Cordenier v. Transorient, [2005] ECR I, 923, para. 13.
- 92.
Eastern Sugar B.V. (Netherlands) v. The Czech Republic, Partial Award of 27 March 2007, paras. 144–158.
- 93.
Eastern Sugar B.V. (Netherlands) v. The Czech Republic, Partial Award of 27 March 2007, para. 165.
- 94.
Eastern Sugar B.V. (Netherlands) v. The Czech Republic, Partial Award of 27 March 2007, paras. 167–168.
- 95.
Article 30 VCLT (“Application of successive treaties relating to the same subject-matter”) states in relevant parts: “2. When a treaty specifies that it is subject to, or that it is not to be considered as incompatible with, an earlier or later treaty, the provisions of that other treaty prevail. 3. When all the parties to the earlier treaty are parties also to the later treaty but the earlier treaty is not terminated or suspended in operation under Article 59, the earlier treaty applies only to the extent that its provisions are compatible with those of the later treaty”.
- 96.
Anthony Aust, Modern Treaty Law and Practice, 2007, p. 293. On the problems regarding the application of Article 30 VCLT see Vierdag, The time of the “conclusion” of a multilateral treaty: Article 30 of the Vienna Convention on the Law of Treaties and related provisions, BYIL 59 (1988), p. 75 (110–111). It has been suggested that owing to the highly integrated nature of Community secondary law the implications of Member States’ duties under Community law should be considered in the light of Article 27 VCLT (“A party may not invoke the provisions of its internal law as justification for its failure to perform a treaty.”) rather than Article 30 VCLT. Licková, European Exceptionalism in International Law, EJIL 19 (2008) 3, p. 463 (470). However, the better view seems to be that EU law constitutes a highly developed order of international law.
- 97.
The tribunal shrugged off Article 30 VCLT and confined itself to stating that: “The Arbitral Tribunal moreover does not believe that it can accept the Czech Republic’s argument that the treaty can end partially and remain in force otherwise. This situation would be governed by Article 30 of the Vienna Convention.” Eastern Sugar B.V. (Netherlands) v. The Czech Republic, Partial Award of 27 March 2007, para. 178.
- 98.
Although Article 307 EC applies to agreements of Member States with third states only, it is nevertheless remarkable that the tribunal did not refer to it, while at the same time rejecting the Czech Republic’s arguments by glancing at Article 13(3) of the Netherlands–Czech Republic BIT. Eastern Sugar B.V. (Netherlands) v. The Czech Republic, Partial Award of 27 March 2007, paras. 174–175. Article 13(3) of the Netherlands–Czech Republic BIT states: “In respect of investments made before the date of the termination of the present Agreement the foregoing Articles [regulation entry into force, tacit extension and procedure for termination; MB] thereof shall continue to be effective for a further period of fifteen years from that date”.
- 99.
See IA Reporter 1 (July 1, 2008) 4, available at http://www.iareporter.com. It seems likely that in other cases based on intra-EU BITs the respondent argued along these lines. The most recent award based on an intra-EU BIT, though unpublished, appears to be Austrian Airlines v. Slovak Republic, Award of 20 October 2009.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2011 Springer-Verlag Berlin Heidelberg
About this paper
Cite this paper
Burgstaller, M. (2011). The Future of Bilateral Investment Treaties of EU Member States. In: Bungenberg, M., Griebel, J., Hindelang, S. (eds) International Investment Law and EU Law. European Yearbook of International Economic Law(). Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-14855-2_4
Download citation
DOI: https://doi.org/10.1007/978-3-642-14855-2_4
Published:
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-14854-5
Online ISBN: 978-3-642-14855-2
eBook Packages: Humanities, Social Sciences and LawLaw and Criminology (R0)