Intra-EU BIT Archives - international litigation blog
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Intra-EU BIT

EU Commission Presents Proposals for Investment Court System in CETA and Announces Plurilateral Treaty to Terminate Intra-EU BITs

A couple of days before Working Group III of the United Nations Commission on International Trade Law (UNCITRAL) held its 38th session on the reform of investment arbitration, the European Commission (the Commission) presented four proposals (the Proposal(s)) to the Council of the European Union (the EU) for specific rules to put into place the Investment Court System (the ICS) provisions in the EU-Canada Comprehensive Economic and Trade Agreement (the Agreement or CETA).

The ICS included in CETA represents a new approach by the EU in relation to investment-related disputes and is the same approach taken in the agreements the EU has negotiated with Singapore, Viet Nam and Mexico, while also being on the table in all on-going investment negotiations.

The foundation of the ICS is already established in CETA (as discussed here, here and here), however it remains to be applied pending ratification of the Agreement by all of the EU Member States. The Joint Interpretative Instrument on CETA agreed by the EU and Canada in October 2016 includes a commitment to make the system operational as soon as the Agreement enters into force. The Proposals are thus necessary to deliver on this commitment and these rules complete the putting together of the reformed approach to investment dispute settlement under CETA.READ MORE

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EU Commission Appeals EU General Court’s Judgment in Micula

On 27 August 2019, the European Commission filed an appeal before the Court of Justice of the European Union against the judgment of the EU General Court handed down on 18 June 2019 in the Micula case.

As we discussed previously, in its judgment of 18 June 2019, the EU General Court annulled the 2015 European Commission’s decision which found that an ICSID arbitral award handed down against Romania in favour of Swedish investors (the Miculas) amounted to State Aid.

The case is filed under the number C-638/19P (Commission v. European Food and Others). A summary of the main grounds of appeal should be published in the coming weeks in the EU’s Official Journal.

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EU General Court Annuls Micula State Aid Decision

On 18 June 2019, the General Court of the European Union (the General Court) handed down its long-awaited judgment in the Micula case.

As we discussed before, this case finds its origins in the investment made by the Miculas, two investors of Swedish nationality, in the food production sector in Romania in the 1990s. At the time of investment they relied on numerous tax incentives regimes that Romania had put in place in order to attract foreign investment.

In 2005, as Romania prepared to accede to the European Union, the tax incentives were revoked in an effort to conform to EU law on State aid.

The Miculas then instituted ICSID proceedings against Romania based on the Romania-Sweden Bilateral Investment Treaty, arguing that the revocation of the tax incentives constituted a breach of their rights under that treaty. The arbitral tribunal issued its award in 2013, holding that by revoking the incentives, Romania had indeed failed to award the claimants fair and equitable treatment. The arbitral tribunal awarded the Miculas EUR 180 million.

In 2015, the European Commission handed down a decision (the 2015 EU decision) declaring that the ICSID award in favour of the Miculas amounted to State aid. The 2015 EU decision required Romania to refrain from paying the amount due under the award. The Commission also ordered Romania to recover any compensation already awarded to the Miculas.

The Miculas sought to challenge this 2015 EU decision before the General Court.READ MORE

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Achmea – A Year After: My Contribution in European Papers

Dear readers,

As we have just celebrated the first anniversary of the Achmea judgment (which the Court of Justice of the European Union (CJEU) handed down on 6 March 2018), I wanted to share with you an article that I have just published in the European Papers[1] on the implications of that judgment on investor-State dispute settlement and applicable law clauses in BITs and other agreements concluded by the EU (or its Member States) with third countries.READ MORE

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ISDS Reform, Intra-EU BITs and CETA: New and Upcoming Developments

On 19 January 2019, the European Union submitted new proposals to the United Nations Commission on International Trade Law (UNCITRAL) Working Group III (WGIII) tasked with examining the reform of investor-State dispute settlement (ISDS).

As we have reported before (see here, here, here and here), discussions are currently being held within WGIII on a possible reform of ISDS mechanisms. Those rounds of discussions take place twice a year (in April and in November) and were initiated in November 2017. The discussions are divided into three distinct phases: identifying concerns about ISDS (Phase I); considering whether reform of the current system is desirable in the light of any identified concerns (Phase II); and designing options for reform responding to any such concerns (Phase III).

After its 36th Session (which took place in Vienna in October-November 2018), WGIII has now almost completed Phase II of its mandate.

In order to move into Phase III and start discussing concrete reform options, the Chairman of WGIII has invited countries involved in the discussions to submit proposals regarding the content of such reform as well as the roadmap to achieve those reforms. Those proposals would then be discussed during the next meeting of WGIII in April 2019.

In light of this invitation, the EU has now submitted two papers to the WGIII Secretariat.READ MORE

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Vattenfall v. Germany: Tribunal Subtly Avoids Applying Achmea Judgment and Finds that Article 26(6) ECT Does Not Apply to Jurisdiction Issues

On 31 August 2018, the ICSID tribunal in Vattenfall v. Germany issued a decision addressing the consequences, for this case, of the Achmea judgment handed down by the Court of Justice of the European Union (the CJEU) on 6 March 2018 (see previous analysis of the Achmea judgment here and here).

The case at hand is a well-known investment dispute whereby a Swedish investor (Vattenfall) initiated arbitral proceedings against Germany seeking compensation for damages incurred following Germany’s decision to shut down all the nuclear power plants on its territory and to replace them with green energy alternatives. Vattenfall, which owned such nuclear power plants, argued that such decision amounted to an expropriation which violated the Energy Charter Treaty (the ECT – a multilateral agreement to which both Germany and Sweden were parties to, together with all other EU Member States, the European Union and several third countries (including Japan, and Central Asian countries)).

In the Achmea judgment, the CJEU ruled that an intra-EU investment arbitration case between two EU parties, a Dutch investor and Slovakia, violated EU law. However, in stark difference with the Vattenfall case (where the underlying basis for arbitration was the ECT’s investor-State dispute resolution clause provided for in Article 26), the basis for the jurisdiction of the arbitral tribunal in Achmea was the Czechoslovakia-Netherlands bilateral investment treaty (BIT).

Based on that judgment, and since the Vattenfall case also involved EU parties (i.e., a Swedish investor against an EU Member State), Germany argued that the arbitral tribunal in Vattenfall lacked jurisdiction since the findings of the CJEU in Achmea were “not limited to BITs between EU Member States, but must also be applied to multilateral agreement to which EU Member States are party, such as the ECT“.READ MORE

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