In the absence of investment protection agreements at EU level, Member States continue to negotiate, away from the spotlight, their own bilateral investment treaties with non-Member States, according to a report published by the Commission on 7 April.
With the Treaty of Lisbon, the Union acquired exclusive competence in the area of Foreign Direct Investment (FDI), including its protection. Pending these new European investment agreements, it was agreed that the existing Bilateral Investment Treaties (BITs) concluded by Member States would remain valid (see EUROPE 12274/23).
This transition, governed since 2013 by a Commission Regulation, is the subject of the report published this week. It covers the 1,360 BITs maintained at the request of Member States, but also new bilateral treaties negotiated by Member States. Indeed, the Twenty-Seven can always enter into negotiations with a non-Member State: over the period 2013-2019, 304 applications for authorisation and around 276 negotiations were opened, on a discretionary basis. However, only 40 additional BITs have been signed to date, as the negotiation processes on these issues still prove to be lengthy, notes the Commission in its report.
What about the investor-to-State dispute settlement system?
Over the past seven years, the EU's investment protection policy, and especially its investor-to-State dispute settlement system, has been the subject of much criticism, which has been followed by reforms, the paper says. At the bilateral level, the EU has proposed a new ‘Investment court system’ ICS, pending the eventual replacement of its own agreements and BIT provisions by a Multilateral Court of Investment (see EUROPE 12182/18 and 12176/8).
However, “in view of the pursued objective of replacing the Member States’ bilateral investor-to-State dispute settlement provisions by a Multilateral Investment Court” and the resource implications for separate ICSs in all national BITs, the Commission is not asking Member States to put them in place in their treaties, only calling on them to reflect as far as possible its guidance.
Since the entry into force of the Regulation, the EU, for its part, has concluded Investment Protection Agreements (IPAs) with four countries - Canada, Mexico, Singapore and Vietnam - which will replace 57 national BITs. But “none of the investment protection provisions have yet entered into force”, the Commission points out. Other negotiations are taking place with China, Chile, Indonesia, Japan and Tunisia.
At the end of its report, the Commission concludes that the transitional arrangements should be maintained, as “replacement by EU investment agreements will take some time”.
However, the Commission welcomes the fact that some Member States, such as the Netherlands, are still adopting new model agreements that reflect modernised EU standards.
Read the report: https://bit.ly/2ww8IAw (Original version in French by Hermine Donceel)