Brussels, 24/07/2014 (Agence Europe) - On Tuesday 22 July, the Council adopted a regulation establishing a framework for managing financial responsibility linked to investor-state dispute settlement (ISDS) proceedings. These new rules, which form part of EU policy on investment protection, set out how the European Commission and member states should cooperate in specific cases as regards ISDS proceedings.
The bilateral investment agreements that already exist (between an EU member state and a third country) or agreements that will exist in the future (between the EU and a third country) will, through an ISDS mechanism, enable an investor from a partner third country to introduce a complaint against the EU or an EU member state when the EU or this member state is alleged to have acted in a way that is out of line with these agreements. The regulation adopted provides clarity as to whether it should be the EU or the member state concerned which conducts the defence of a case and pays the final award or settlement amount where investor-to-state arbitration proceedings take place.
Since the Lisbon Treaty entered into force on 1 December 2009, foreign direct investment (FDI) has come under the EU's common commercial policy whuch is an EU exclusive competence. The Commission therefore proposed a regulation in June 2012 to set a framework for managing the financial consequences of investor-state arbitration. The adoption of the regulations follows on from the agreement between the Council and European Parliament on 2 April. The Parliament adopted its position at first reading on 16 April, in line with the agreement reached.
The new EU policy on investment seeks, on the one hand, the negotiation of new rules on investment with key trading partners and, on the other hand, the continued application of existing bilateral investment treaties between member states and third countries. Until now, the EU has been party to only one agreement with the possibility for an ISDS mechanism (the energy charter treaty). (EH)