University of Amsterdam
Faculty of Law
MASTER Thesis
LLM International Trade and Investment Law
The necessity of an investment protection mechanism after Achmea with a view to intra-EU bilateral investment treaties
Alexandre Kunz
12352659
List of Abbreviations
BIT...Bilateral Investment Treaty
CEECs...Central and Eastern European Countries CJEU...Court of Justice of the European Union EU...European Union
FET...Fair and Equitable Treatment FPS...Full Protection and Security ISDS...Investor-State Dispute Settlement MFN...Most-Favored-Nation
MIC...Multilateral Investment Court NT...National Treatment
Table of contents
List of abbreviations... A. Introduction... B. Intra-EU bilateral investment treaties …... C. Achmea Judgment...
I. Background... II. The decision... III. Scope... D. Impact on the legal situation of investment protection in the EU...
I. Which protection will be left?... 1. Law of the EU Member States... 2. Law of the EU... 3. International law... 4. Summary... II. Positive impact... III. Negative impact... 1. Investment protection... 2. Economy and unity... IV. Summary... E. Possibility of an investment protection mechanism across the EU...
I. Substantive right framework... 1. Through multilateral agreement... 2. Implementation in the EU law system... II. Procedural mechanism...
1. Amicable resolution of investment disputes within the single market... 2. Non Paper... 3. Multilateral court for settlement of investment arbitration... 4. Direct access to CJEU... III. Transitional measure... F. Conclusion... Bibliography...
A. Introduction
In around 200 bilateral investment treaties the EU member states guarantee each other the protection of investors.1 The issue of these Intra EU BITs was the impulse for this thesis which found its starting point in a time in which the European Union had an interest in the fact that their member states concludes bilateral investment treaties2 (BITs) and found its preliminary end in the ground breaking decision of the CJEU in Achmea. Such a BIT was the basis for the legal dispute between the Dutch health insurance company Achmea B.V. and the Slovak Republic3, which is closely connected to the Declaration of the Member States to terminate all BITs. The Impact of these decisions on the future of investment protection in the EU will be worked out. Moreover, the paper will explain why it is necessary to implement a new investment protection system within the EU and how it might be shaped.
B. Intra EU Bits
Etwas gelöscht und in die Introduction gezogen. Bilateral investment treaties typically provide protection against expropriation, breach of fair and equitable treatment (FET), full protection and security (FPS), national treatment (NT), most-favored-nation treatment (MFN), and prevent arbitrary/unreasonable or discriminatory measures.4 Thus, more important is the offer to solve disputes by arbitration. The treaties dates back to a time in which at least one of the contractual parties was not a member of the EU. Some of these BITs exist within the EU. Most of these intra EU bits were agreed in the 1990s, at a time prior to the EU enlargement in 2004, 2007 and 2013.5 The treaties were concluded between western European states and a number of countries in Central and Eastern Europe (CEECs) which were not Member states of the European Union yet.6
At this time the eastern neighbours of the EU were going through a big change in the political and economical sector. It was the transition from communism and socialism to free market economy. But the economy needed assistance. Against this background investment treaties were used to attract foreign investors. The European Comission recommended this. This strategic guideline was even stipulated in the concluded “European Agreements” with the said CEECs.7 The concluded investment treaties especially protected from the unpredictability of national courts. Little by little the time and the situation changed and a lot of EU neighbour countries became members of the EU. A lot of the concluded investment treaties became thereby contracts between EU member states. This raised the question if the intra EU Bits are compatible with EU law.
C. Achmea judgment I. Background
Etwas gelöscht und in die Introduction gezogen
The dispute in this case will be just outlined, as the important question is if the arbitration was compatible with EU law?
1 Simon Müller, NJOZ 963, Burger, S. 131, AG Wathelet para.3 2 http://europa.eu/rapid/press-release_MEMO-94-7_en.htm
3 JUDGMENT OF THE COURT (Grand Chamber) Achmea, Rn . 23 4 Sicard-Mirabal and Derains, Introduction to Investor State Arbitration, p. 1. 5 http://europa.eu/rapid/press-release_IP-15-5198_en.htm
6 Rösch, Intraeuropäisches Investitionsrecht, 2017, S.25. 7 http://europa.eu/rapid/press-release_MEMO-94-7_en.htm
On the first January of 1993 the Slovak Republic as the successors of Czech and Slovak Federal Republic took the rights and obligations of a BIT which was concluded between the latter and the Netherlands in 1991. In 2004 Slovakia became a Member State of the European Union.
In the same year, Slovakia reformed their health system by opening the Slovakian health market for private insurance services8 and therefore attracted the Dutch health insurance company Achmea to implement an affiliate (Unions Healthcare) in Slovakia.9 The assets of the affiliate amounted to approximately 72 million euros.10 However, in 2007 Slovakia renationalised the health insurance sector by implementing a law which prohibited profit distribution in the form of dividends.11 Furthermore this prohibition was linked with the obligation to reinvest profits in the Slovakian healthcare. Though, due to the Slovakian constitutional court which decided in 2011 that this law is unconstitutional, the law was repealed.12
However, the law meant in effect an expropriation of the investments made by Achmea and the repeal did not meant that Achmea would receive any compensation without taking legal steps on their own. Due to this, already in 2008 Achmea initiated a proceeding based on the Netherlands-Czechoslovakia BIT of 1991. The seat of Arbitration was Frankfurt, so German law applied for this case. In 2012 Slovakia lost the Arbitration proceedings. Due to this, Achmea was awarded 22.1 million Euros plus interest.13 Subsequently, Slovakia requested the annulment of this decision in front of the High Regional Court of Frankfurt.14 Slovakia argued that the arbitral tribunal had no jurisdiction, as the Netherlands-Czechoslovakia BIT is not compatible with EU law and that the EU law does not allow international arbitration within the EU.15 The High regional court rejected the claim.16 So Slovakia addressed the German Federal Court of Justice17. Based on Art. 267 TFEU the German Federal Court of Justice requested a preliminary ruling from the Court of Justice of the European Union.18 The request concerned the question if Art. 344, 267 and 18 TFEU are compatible with Intra EU BITs.19 The CJEU considered that all Intra EU BITs with a clause in which a arbitral tribunal is appointed is incompatible with EU Law.
This is because the arbitral tribunals aren't part of the legal system of the member states and thus can't request a preliminary ruling pursuant to Art. 267 TFEU if there is a need of clarification of EU law. The result is that those tribunals endanger the consistency and uniformity of EU law.
Based on the decision, the German Federal Court of Justice rescinded the arbitration award.20 However, the Achmea Judgment leaves many questions unanswered. Furthermore it raises more issues as its solves.
II. The decision
Prior to the long awaited decision in the case of Achmea contrary approaches evolved to solve the issue of Intra EU Bits.21
8 EuGH, NJW 2018, 1663 Rn.7. 9 EuGH, NJW 2018, 1663 Rn.7. 10 Behrens, RIW 2018, 701-712 (701). 11 EuGH, NJW 2018, 1663 Rn.8.
12 Die Entscheidung mit Aktenzeichen suchen. 13 PCA Case No. 2008-13 , Final Award 2012, Fn. 352 14 OLG Frankfurt, 18.12.2014 – 26 Sch 3/13. 15 OLG Frankfurt, 18.12.2014 – 26 Sch 3/13. 16 OLG Frankfurt, 18.12.2014 – 26 Sch 3/13. 17 BGH, 03.03.2016 - I ZB 2/15. 18 BGH, 03.03.2016 - I ZB 2/15. 19 BGH, 03.03.2016 - I ZB 2/15. 20 BGH Beschluss 24.1.2019; I ZB 2/15.
21 Scholtka EUZW 2018, 243; Hindelang/ Andersen, JWIT 17 (2016), 984 ff. ; Stöbener de Mora 2018, 363 (364); Opinion of Advocate General Wathelet, 19.9.2017, ECLI:EU:C:2017:699 ,
http://europa.eu/rapid/press-release_IP-Root of the matter was the interpretation of Art. 344 TFEU. According to Art. 344 TFEU the member states oblige themselves >not to submit a dispute concerning the interpretation or
application of the Treaties to any method of settlement other than those provided> in the Treaty on the functioning of the EU. One view on this issue is that the investor-state dispute settlement (ISDS) is not comprised by the prohibition to only use the dispute settlement method provided in the TFEU as the arbitral tribunals does not decide disputes between states but between an investor and a state.22 Furthermore an arbitral tribunal only decides on the provisions of the BIT and does not review the validity of acts of the Union or the compatibility of acts of the Member States with EU law.23 On the contrary the European Commission does not follow this argumentation and has the view that intra EU Bits are not compatible with the EU law, as they violate the decision monopoly of Art. 344 TFEU and the principle of non discrimination in Art. 18 I TFEU.24 Art. 18 I TFEU is breached because not all citizens of the EU can rely on an intra EU BIT. Based on this legal argumentations, the European Commission has initiated infringement proceedings against five Member States (Austria, the Netherlands, Romania, Slovakia and Sweden).25 Furthermore the European Commission tried in several judgments to convince arbitral tribunals of the
incompatibility of intra EU bits with EU law by amicus curiae briefs.26
The CJEU followed the view of the European Commission in his Judgment Achmea, which was released on the 6.3.2018. Unfortunately the legal explanations of the judgment were kept short. The released document of the Judgment of the Grand Chamber of the CJEU is only ten pages long. This is insofar surprisingly as the legal and political consequences -which will be discussed in detail below- are far-reaching. The main point in the Argumentation of the CJEU is the autonomy of the EU legal order. The autonomy of the Eu legal order, which should not be jeopardised by
jurisdictions outside of EU treaties was already used as an argument in two opinions. In Opinion 1/09 and Opinion 2/13 the CJEU developed the argumentations which became the basis of the Judgment in the Achmea case.27. On the 23 May 2016 the CJEU received a request for a preliminary ruling under Art. 267 TFEU from the German Federal Court of Justice.28 The following questions were contained in the request:
1. Does Article 344 TFEU preclude the application of a provision in a bilateral investment protection agreement between Member States of the European Union (a so-called intra-EU BIT) under which an investor of a Contracting State, in the event of a dispute concerning investments in the other Contracting State, may bring proceedings against the latter State before an arbitral tribunal where the investment protection agreement was concluded before one of the Contracting States acceded to the European Union but the arbitral proceedings are not to be brought until after that date?
If Question 1 is to be answered in the negative:
2. Does Art. 267 TFEU preclude the application of such a provision?
15-5198_en.htm ;
22 Opinion of Advocate General Wathelet, 19.9.2017, ECLI:EU:C:2017:699, no.138 ff. 23 Opinion of Advocate General Wathelet, 19.9.2017, ECLI:EU:C:2017:699, no. 45
24 Inception impact assessment - Ares(2017)3735364 availabel under: https://ec.europa.eu/info/law/better-regulation/initiatives/ares-2017-3735364_en
25 http://europa.eu/rapid/press-release_IP-15-5198_en.htm 26 Müller/ Simon, 962
27 CJEU, Opinion 1/09, ECLI:EU:C:2011:123, Creation of a unified patent litigation system, no.80 ff.; CJEU, Opinion 2/13, ECLI:EU:C:2014:2454, Accession of the European Union to the European Convention for the Protection of Human Rights and Fundamental Freedoms, Rn. 174 ff.
If Questions 1 and 2 are to answered in the negative:
3. Does the first paragraph of Art. 18 TFEU preclude the application of such a provision under the circumstances described in Question 1?”29
In the judgment, the CJEU started to analyse and answer the questions submitted by the German Federal Court of Justice in different steps. The CJEU starts with general considerations. An international agreement cannot affect the autonomy of the EU legal system.30This principle is enshrined in particular in Art. 344 TFEU.31 Due to the facts that the EU law stems from an independent source of law and binds the Member States as well as the EU it is autonomous to national and international law.32 The EU law is based on the premiss that all Member States share a set of Rules and that each Member states recognise that they share it.33 Moreover the judical system which is based on the Treaties guarantee the consistency and uniformity in the interpretation of EU law, Art. 19 TEU. 34 The key element of this judicial system is the preliminary ruling pursuant to Art. 267 TFEU, which provides a dialogue between the CJEU and the courts and tribunals of the Member States.
The court stated that the first and second question must be answered in the light of those considerations.35 In a first step the court determined if the arbitral tribunal has to apply EU law. Pursuant to Art. 8 (6) of the BIT the arbitral tribunal has to take into account the law of the
contracting party as well as other relevant agreements between the contracting parties.36 The court stated that EU law is part of the law in every Member State and deriving from an international agreement between the Member States.37
Secondly the court determined that a arbitral tribunal like the one in Art. 8 of the BIT is not a tribunal according to Art. 267 TFEU and therefore is not capable of a preliminary ruling. 38 Thirdly the Court discussed the question, if the award of an arbitral tribunal can be reviewed sufficiently by a court of a Member State, in particular in accordance with Art. 10 TEU. This is not the case. The court ascertained that a arbitral Tribunal can have his seat also outside of the EU and even if the seat is inside the EU, as in the Achmea case, the courts of the Member States have only a limited scope to review arbitral awards.39 Lastly the court remarked that an international agreement providing for the establishment of a court and whose decisions can bind the institutions as well as the the CJEU, is not excluded in principle.40Requirement therfore is that the autonomy of the EU and its legal order is respected.41
In conclusion, the CJEU decided that those kind of BITs between Member states which contain a provision like Art. 8 of the BIT are violating Art. 267 and 344 TFEU. Due to his explanations
29 JUDGMENT OF THE COURT (Grand Chamber) Achmea, Rn . 23 30 JUDGMENT OF THE COURT (Grand Chamber) Achmea, Rn . 32 31 JUDGMENT OF THE COURT (Grand Chamber) Achmea, Rn . 32 32 JUDGMENT OF THE COURT (Grand Chamber) Achmea, Rn . 33 33 JUDGMENT OF THE COURT (Grand Chamber) Achmea, Rn . 34 34 JUDGMENT OF THE COURT (Grand Chamber) Achmea, Rn . 34, 35. 35 JUDGMENT OF THE COURT (Grand Chamber) Achmea, Rn . 38
36 Art. 8 (6) BIT: The arbitral tribunal schall 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.
37 JUDGMENT OF THE COURT (Grand Chamber) Achmea, Rn . 41 38 JUDGMENT OF THE COURT (Grand Chamber) Achmea, Rn . 46 39 JUDGMENT OF THE COURT (Grand Chamber) Achmea, Rn . 50 ff. 40 JUDGMENT OF THE COURT (Grand Chamber) Achmea, Rn . 57 41 JUDGMENT OF THE COURT (Grand Chamber) Achmea, Rn . 58
regarding Question one and two the court did not see any need to respond to Question three. III. Brief assessment of the judgment
The judgment of the CJEU is highly controversial.42 Hindelang follows the view of the court and states that the equal application of EU law was threatened by Intra EU BITs.43 In his view the ISDS provisions in the BITs were undermining the monopoly of the CJEU in interpreting and applying the EU law.44 The judgment gives the clear message, that the court wants to have full power over the interpretation of EU law and that the autonomy of EU law has paramount importance. However, the judgment overlooked some important points. First, EU law was not subject of the decision in the case of Achmea. In general the intra EU arbitral tribunals only decide upon the basis of the BITs and not on EU law. And even if EU law is interpreted by the an arbitral tribunal, the decision has no legally binding nature. Therefore, arbitral tribunals do not apply EU law.
In addition it is more then unsure if the judicial system in the EU itself is always consistent and uniform in the interpretation of EU law. Especially against the background that a lot of decisions of courts of lower instances do not reach a court of last instance and therefore are never a subject of a preliminary ruling.45 So it is questionable if the existence of Intra EU BITs really endanger the EU system. On the contrary, the judgment in Achmea decreased -as will be discussed in more detail- the legal protection for investors.46 A solution which was not taken into account by the CJEU was made by Advocate General Wathelet. He explained in a detailed manner, how the raised issues for the compatibility between Intra EU BITs and the EU law can be almost solved. Wathelet stated that the issue could be solved by allowing the arbitral tribunals to request preliminary ruling pursuant to Art. 267 TFEU.47
In conclusion it seems like the CJEU want to prevent itself from any external influences regardless of the intensity and the realness of it and tries to hide his real intentions behind general principles as the autonomy of the EU legal order. Regardless of this criticism, the judgment had already and will have far-reaching consequences on the future of the legal order in the EU.
III. Scope
Until now it is not clear in which extent the judgment in the Achmea case would have an impact on the Intra EU BITs.48 Reason for this was the uncertainty if the decision only refer to the BIT
between the Czech and Slovak Federal Republic and the Netherlands, to all Intra EU BITs which contains a broad provision like Art. 8 (6) of the BIT between the Czech and Slovak Federal
Republic and the Netherlands or if the decision is, due to the purpose of the decision, applicable to all ISDS provisions in BITs concluded between the Member States of the EU. The vast majority take the view that the Achmea judgment do apply to ISDS clauses in all Intra EU BITs.49 This is
42 See: WatheletOpinion of Advocate General Wathelet, 19.9.2017, ECLI:EU:C:2017:699, Miller, EUZW 2018, 357(363), Stöbener de Mora 2018, 363 (364), Krajewski; Power Shift, S.2, Nacimiento/ Bauer, Wirtschaftsrecht 1347 (1348), Klages, EUZW 2018, 217 (218), Deutsches Aktieninstitut Building an efficient p.1, Lang, EuR 2018, 525 (534-535), Hindelang, The immediate, Verfblog 2018
43 Hindelang, The immediate, Verfblog 2018 44 Hindelang, The immediate, Verfblog 2018 45 Miller, EUZW, 2018, 357 (363)
46 Stöbener de Mora, EUZW, 2018 363 (365)
47 Opinion of Advocate General Wathelet, 19.9.2017, ECLI:EU:C:2017:699 Rn. 85 ff.
48 Krajewski, Power Shift, S.2; Lang, EUR 2018, 525 (535-536) ., Lavranos/ Singla 2018, 348 (350); Unterabteilung Europa PE 6 – 3000 – 57/18; Behrens, 701 (711), Ilie, Kluwer Arbitration Blog 21.01.2018, Hummer welches Schicksal eu infothek 23.03.2018, Lang, Autonomie, EuR 2018, 525 (537)
49 Behrens, 701 (711), Unterabteilung Europa, S.11, Hummer oder Waldemar welches Schicksal eu infothek, Hindelang Verfblog 2018, Nacimiento Bauer, Achmea Urteil 1347 (1348), Klages, EUZW 2018 217 (218), Thym, verfblog 8.3.2018., Lang, Autonomie, EuR 2018, 525 (537)
reasonable as the CJEU spoke in some parts of his judgment in a general manner (a provision..., such as Art. 8)50.51 Furthermore, the importance and therefore a broad effect of the judgment was shown by the fact that the judgment was made by the Grand Chamber.52 In the judgment the CJEU stated that the establishment of a court which is responsible for the interpretation of its provision and which can even bind the CJEU itself, is not in principle incompatible with the EU law, as long as the autonomy of the EU is maintained.53 Subsequently the Court talked about his competence to establish such a court. This general statement about the competence was not necessary for the outcome of the case and expose his purpose to underline the general implementation of it. Furthermore, the crucial point of the reasoning of the CJEU was the autonomy of the EU legal order54 -a general principle- and not the concrete provisions of the BITs, which underpin the general bindingness of this decision.55 In addition to that every arbitral tribunal which is established on the basis of a intra EU BIT is not competent to request a preliminary ruling pursuant to Art. 267 TFEU and therefore decide without the control of the CJEU. Due to the statements of the CJEU, this fact will be a sufficient reason for the CJEU to apply the Achmea judgment to all ISDS provisions in Intra EU BITs.56 In fact all those arguments plead for the interpretation that the
Achmea judgment do apply to ISDS clauses in all Intra EU BITs. This view will be the basis for the thesis.
At least, regarding the intra EU BITs the importance of the conflict about the impact of the judgment decreased in January 2019.57 Due to the EU policy in the recent years (concerning Intra EU BITs) and the Achmea judgment, the Member States adopted a Declaration in which they committed to terminate all BITs58 within the EU till the end of 2019.59
Many of the Intra EU BITs contain a so-called sunset clause. It extends the substantive and
procedural protection after the termination of the BIT for a certain time. The supplementary time is usually between 15 and 20 years. For example the Netherlands-Czechoslovakia BIT provided in Art. 13 (3) such a sunset clause.
In the declarations the Member States decided?) to terminate the sunset clauses too.60
Indeed, the benefit of BITs for investors decreased in a radical manner after the decission in
Achmea. At least within Europe the enforcement of arbitral decisions became extremely difficult. In
50 JUDGMENT OF THE COURT (Grand Chamber) Achmea, Rn . 60, 62. 51 Klages EUZW 2018,217 (218), Unterabteilung Europa S. 12
52 Unterabteilung Europa S. 12.; JUDGMENT OF THE COURT (Grand Chamber) Achmea 53 JUDGMENT OF THE COURT (Grand Chamber) Achmea, Rn . 57
54 JUDGMENT OF THE COURT (Grand Chamber) Achmea, Rn . 17, 21, 32, 33, 35, 37, 57, 59. 55 Lang, Autonomie, EuR 2018, 525 (537), Unterabteilung Europa S. 12.
56 Wo steht das
57 Beside of this former dispute, the judgment in the Achmea case raised lots of questions which are not solved yet. For example the impact of the decission on the Energy Charter Treaty or the consequences for billateral investment treaties with Non-EU Member States. In addition it is questionable, if the judgment in the Achmea case do not only have consequences for the Member States, but also for the EU itself.
58 three separate declarations were released in January 2019. Of no importance for this thesis, is the different point of view on the consequences of the Achmea judgment for the Energy Charter Treaty.
All: https://ec.europa.eu/info/sites/info/files/business_economy_euro/banking_and_finance/documents/190117-bilateral-investment-treaties_en.pdf; Sweden etc.
https://www.regeringen.se/48ee19/contentassets/d759689c0c804a9ea7af6b2de7320128/achmea-declaration.pdf; Hungary: https://www.kormany.hu/download/5/1b/81000/Hungarys%20Declaration%20on%20Achmea.pdf 59 Declaration of the Member States!! alle drei nennen
60 All S.1 : https://ec.europa.eu/info/sites/info/files/business_economy_euro/banking_and_finance/documents/190117-bilateral-investment-treaties_en.pdf; Sweden etc. S. 1f.
https://www.regeringen.se/48ee19/contentassets/d759689c0c804a9ea7af6b2de7320128/achmea-declaration.pdf; Hungary S. 1: https://www.kormany.hu/download/5/1b/81000/Hungarys%20Declaration%20on%20Achmea.pdf
the same Declaration the Member States requested the European Commission to examine the need and the potential options of a dispute resolution mechanism. This request was already submitted by the European Council in 201761 and was suggested in a Non-paper from Austria, Finland, France, Germany and the Netherlands.62 Furthermore economic representatives urged the EU to build an efficient EU wide mechanism for investor-state dispute settlement.63
The consequences which result from the Achmea judgment and the future termination of all Intra EU BITs will be explained in detail in the following chapter.
D. Impact on the legal situation of investment protection in the EU
The Issue at hand, is how great the consequences will be on the legal situation of investors after the end off all intra EU BITs ES GEHT NICHT NUR UM DIE AUSWIRKUNGEN AUF DEN INVESTORENSCHUTZ SONDERN AUCH UM POLITISCHE UND ÖKONOMISCHE AUSWIRKUNGEN. FERNER NICHT NUR DAS ENDE DER EU BITS IN DER ZUKUNFT SONDERN AUCH SCHON NACH ACHMEA
To approach the Problem it is helpful to examine, which forum will be left for the Investors after the end of all Intra EU BITs. Only this background enable a deeper look in the future.
I. Which protection is left for the Investors after the End of all BITS?
The protection of Investors against detrimental actions from host states can be divided in three different parts. These are: Investor protection through the law of the EU Member States, through the law of the EU, through international law.
a) Law of the EU Member States
It is possible that an investor can receive legal protection against detrimental actions of a host state already through the forums in this state by referring to constitutional or EU law. According to Peter Behrens it must be assumed that all constitutional laws of the Member States belongs entitles also Investors from other Member States.64 Furthermore, all investors can rely on the appropriate
provision of the EU law. Especially, to the fundamental freedoms. In contrast, investors can not rely on the tribunals of the home state as this would constitute a breach of state immunity.
b) Law of the EU
The EU legal order do not provide any legal instrument that investors can take legal actions against the host state on there own. The only possibilities are the option of commencing infringement proceedings against the host state by the European Commission or the home State pursuant to 258 TFEU or 259 TFEU and the request of a preliminary ruling by the court of the host state.
c) International law
Due to the Declaration of the Member States, all Member States will seek to terminate intra EU BITs till the end of 2019 65, this international protection will not be available from that moment on. Pursuant to the Achmea judgment this is almost the case in the present.66. Furthermore, the
61 Stöbener de Mora, EUZW 2018 363 (369)
62 https://www.bmwi.de/Redaktion/DE/Downloads/I/intra-eu-investment-treaties.pdf?__blob=publicationFile&v=4
63 Deutsches Aktieninstitut; https://www.handelsblatt.com/politik/international/investor-staats-schiedsverfahren- investitionsschutz-ausgehebelt-deutsche-wirtschaft-fordert-neue-regeln/24194786.html?ticket=ST-5256395-guREMqvOIOPBUxCmeDM0-ap2
64 Behrens, RIW 2018 701 (702)
65 Declaration of the Member States S.4 they want to terminate the intra EU BITs on the 6th December 2019 66 Siehe oben unter:
diplomatic protection, as a emanation of international customary, which can be grant by the host state is only applicable after the exhaustion of all legal remedies in the home state.67
d) Summary
Without the Intra EU BITs, the investors of the Member States have only the option to initiate proceedings before the courts of the host state against negative actions taken by the host state. The legal protection depend therefore on the judicial independence. In some Member States, the judicial independence is extremely questionable. Additionally, the remaining proceedings which rely on the law of the Eu or the international law are tedious and are only used rarely by the competent
entities.68 European protection is not enforceable.69 Nevertheless, one could have a positive look on the current and future legal Situation of investment protection in the EU.
II. A positive look on the legal Situation of investment protection in the EU
“The protection for all EU investors against unlawful interference by Member States is provided by EU law, which ensures that all investors are treated equally.”70 As a response to the commitment of the Member States of the EU to terminate all BITs between themselves, the European Commission released this statement. If one would take this statement at face value, without scrutinize it, one would assume that the termination of the BITs do not have any impact on the legal situation. Or that it would even be an improvement. The statement of the European Commission obtained its basis amongst others through the decision of the CJEU in the SEGRO and Horváth case which was released on the same Date as the Achmea judgment.71 This overlap does not seem as a randomness. Rather, the CJEU was aware of the concerns of the investors. Even Advocate General Wathelet expressed his concerns about the protection of investors through the EU treaties.72 In this case the CJEU showed, how the protection of the investors can be guaranteed. The CJEU tries to achieve this protection through the fundamental freedoms and by strengthen the power of national courts in the EU judicial system. The release of this decision on the same date on which the CJEU deprived the Investors of one of their protection systems does seem like an attempt to justify the judgment in Achmea. Other positive perceptions of the termination of intra EU BITs is elucidated by Roland Klages73. He take the view that the existence of intra EU BITs was the reason for the emergence of a not acceptable differentiation of prosecution within the EU judicial system.74 He compares the international Investment dispute settlement system with the in custody of a person which has to trust various governmental agencies or with a parent which has to take the common legal actions, if he wants to receive custody for his children.75 Roland Klages notes thereupon that doubts about the differentiation and deficits of some legal systems will be answered with the principle of mutual trust.76 In his view, this will now also apply for intra EU investment disputes and will lead to the elimination of fragmentation of the law.77 The mentioned arguments are not strong enough, compared to the adverse effect on the legal situation of investment protection in the EU, to justify the future end of all intra EU BITs without an replacement.
67 Hierfür brauch ich unbedingt eine Quelle 68 Fn.
69 Wernicke NJW 2018, 1644 (1647)
70 http://europa.eu/rapid/midday-express-17-01-2019.htm?locale=en , previously: http://europa.eu/rapid/press-release_IP-18-4528_en.htm
71 Segro and Horváth, ECLI:EU:C:2018:157
72 Opinion of Advocate General Wathelet, 19.9.2017, ECLI:EU:C:2017:699, Rn.180
73 Roland Klages is legal secretary under Advocate General at the Court of Justice Maciej Szpunar 74 Klages, EuZW 2018, 217 (218)
75 Klages, EuZW 2018, 217 (218) 76 Klages, EuZW 2018, 217 (218) 77 Klages, EuZW 2018, 217 (218)
III. Negative impact 1. Investment Protection
The most obvious loss for the investment protection -without an adequate replacement mechanism- is the well known advantage of BITs for investors and soon no longer available for the investors within the EU. Due to BITs the disputes between investors and host state are detached from political influences and the decisions are allocated to legal practitioners which are usually proven expert for the subject they have to work on. In addition to that the BITs grant broadly confidential
proceedings, without a high external pressure due to the media and public.
Courts of arbitration are normally the only tribunal which deal with the case (normally no
instances), with the result that the duration of a case is foreseeable. Though, the BITs do not only grant advantages for the investors. Also the states extract advantages from these agreements. Especially the import of asset and knowledge from foreign countries with the probable outcome to boost the economy, which is often the concept behind these agreements. In addition, Bilateral agreements allow the parties to decide, which law should apply, while they have to reach an
agreement only with one other party. However the future investment protection will be formed, the Member States has lost later benefit.
In particular the rule of law is an issue which cannot be disregarded. As said above the main instrument to save the protection of the investors after the termination of the Intra EU BITS is to initiate proceedings before the courts of the host state. It is common, that the judicial independence and therefore along with the rule of law is suffering in some Member States. Without the adherence to the rule of law in some Member States the investors will have to settle their dispute in a system which is influenced by the executive, which is a high risk of there protection.
The said issue of judicial independence in some EU Member States is confirmed by the 2019 World Justice project Rule of Law Index, which ranks Hungary for example only on the 57th place among all countries in the World78 and furthermore, by the 2019 EU justice scoreboard.79 Among others, the scoreboard deals with the perceived judicial independence within the EU. Judicial independence ensure the fairness predictability and certainty of the legal system.80 This principle stems from the principle of effective judicial protection referred to in Art. 19 TEU, and from the right to an effective remedy before a court or Tribunal enshrined in Art. 47 of the Charter of Fundamental Rights of the EU.81 The perceived judicial independence is for 50 up to 60 percent of the general public in six Member States82 fairly bad or very bad.83 Main reason among the general public for the perceived lack of independence, was interference or pressure from the government and politicians.84 This perceived lack of independence is confirmed by the Corruption Perception Index.85
Moreover the lack of expertise in national courts regarding EU and investment law will leave a gap
78 World justice project Rule of Law Index 2019 p. 18. available under:
https://worldjusticeproject.org/sites/default/files/documents/WJP-ROLI-2019-Single%20Page%20View-Reduced_0.pdf
79 EU Justice Scoreboard 2019, available under:
https://ec.europa.eu/info/sites/info/files/justice_scoreboard_2019_en.pdf 80 EU Justice Scoreboard 2019, p. 44, available under:
https://ec.europa.eu/info/sites/info/files/justice_scoreboard_2019_en.pdf 81 EU Justice Scoreboard 2019, p. 44, available under:
https://ec.europa.eu/info/sites/info/files/justice_scoreboard_2019_en.pdf 82 Slovenia, Italy, Spain, Bulgaria, Solvakia, Croatia
83 EU Justice Scoreboard 2019, p. 44, available under:
https://ec.europa.eu/info/sites/info/files/justice_scoreboard_2019_en.pdf 84 EU Justice Scoreboard 2019, p. 45, available under:
https://ec.europa.eu/info/sites/info/files/justice_scoreboard_2019_en.pdf 85 https://www.transparency.org/cpi2018
in the protection system. Furthermore, the national courts are often overhauled with the result of tedious procedures. Unlike to the arbitration courts in which the duration of a case is generally foreseeable. The EU justice board determined that courts of first instances procedures in public law cases in Portugal and Malta took in average around 800 days in 2017.86 In Cyprus even more then 2000 days. Moreover in some Member States discrimination and corruption occurs on a wide scale.87 The BIT itself is a tool which can fight this problem. The risk of a arbitration can have a preventive affect on the states: to act in conformity with the EU and international law as well as to improve there legal system. 88
Even the European Commission acknowledge the issue of rule of law in the Member States.89 the EU stated in a Press release from the 17 July 2019 that they will strengthening the rule of law through increased awareness, an annual monitoring cycle and more effective enforcement.90 The European Commission tries to put pressure on some states to improve the rule of law in their system.
2. Economy and unity
In contrary the new President of the European Commission, Ursula van der Leyen wants to step up to those states in the question of the rule of law.91 But neither the pressure nor a more friendly approach of the European Commission will help to solve the tremendous risk to which we will face in the near future. No answer is in sight yet. Especially with the background that the issue of no intra Eu BITS is not only from an investors point of view disastrous. Rather, one should realize the consequential problems for economy and unity of the EU. The Investor State Dispute Settlement is a tool to attract investors from foreign countries and guarantees growth, jobs and employment in the EU.92 Without the fast implementation of an adequate replacement system the intra EU investors could not rely on the advantageous bilateral agreement system,the EU might loose a part of the investors concerned, as they could invest in countries with which their home states have bilateral agreements, thus still be in favour of the advantageous system of BITs.93 In further consequence the investors will have a disadvantage towards their competition which can still use BITs.94 This
outcome would be opposed to the idea of a Union 95 and would lead to a bad investment
environment within the EU. Especially small and medium sized companies would suffer without the protection of BITs. Whereas the market power of big companies gives them more possibilities to enforce rights.96
Moreover, by decreasing the protection of the investors the EU Member States will have a loos of exchange of knowledge and assets. Therefore the economy of the Member States will suffer without this instrument to boost the economy. Especially the Member States with a higher legal uncertainty
86 EU Justice Scoreboard 2019, p. 45, available under:
https://ec.europa.eu/info/sites/info/files/justice_scoreboard_2019_en.pdf 87 Corruptions Perceptions Index 2018 availabel under:
https://www.transparency.org/cpi2018 88 DIHK public consultation S.3
89 European Comission, COM(2018) 400 final, availabel under:
http://ec.europa.eu/transparency/regdoc/rep/1/2018/EN/COM-2018-400-F1-EN-MAIN-PART-1.PDF;European Commission - Press release 20.12.2017 available under: http://europa.eu/rapid/press-release_IP-17-5367_en.htm; European Commission - Press release 2.7.2018 availabel under: http://europa.eu/rapid/press-release_IP-18-4341_en.htm
90 European Commission press release 17.7.2019 availabel under: http://europa.eu/rapid/press-release_IP-19-4169_en.htm
91 https://www.sueddeutsche.de/politik/leyen-polen-ungarn-italien-1.4530981 92 Deutsches Aktieninstitut, S.4
93 Stöbener de Mora, EUZW 2018, 363 (369) 94 Deutsches Aktieninstitut S.3
95 Stöbener de Mora, EUZW 2018, 363 (369) 96 Stöbener de Mora, EUZW 2018, 363 (369)
will lose there Investors and therefore will be outpaced by the other states in the EU. Those consequences contradicting the interest of the EU, especially the investment plan for Europe: the Juncker Plan.97 However it seems like the European Commission put there future political
advantages before the economy of the Union. This is questionable in a time in which the Member States start to adopt more and more a protectionist policy. In these times in particular it would have been exceedingly important to strengthen the union and not to cut a connection between them. IV. Conclusion
The judgment in the Achmea Case and the future termination of all BITs is not a good sign for the investment climate in the EU. Without the fast implementation of a replacement mechanism, the investment protection will be in danger. In this connection one should not disregard the adverse effect on the economy and unity of the EU. It is not comprehensible why the EU choose this way, as at the moment the legal order of the EU or the host state do not provide sufficient protection. In a time in which the movement of protectionist tendencies is on the rise, a stronger unity between the Member States is required instead of reducing the protection of investors with the outcome of blocking the exchange within the EU. This will lead to a further fragmentation of the EU.
In conclusion the EU need the fast implementation of a replacement mechanism to avoid any adverse effect on current and future investments in the EU and might even take the chance to turn the investment protection within the EU on a higher level. What kind of mechanism comes into question, how it should be shaped and which problems it might faces, will be discussed in the following chapter.
F. Possibility of a investment protection mechanism across the EU
Based on the fact that the current legal order of the EU and within the EU can not offset the said issues, a new protection mechanism across the EU is already discussed for a certain time. The replacement mechanism should ensure the same protection level which is also given by the intra Eu BITs.98 Therefore it is important to distinguish between the need of a substantive right framework and a procedural mechanism to ensure the enforcement of the given rights. In favour of a better overview this distinction will be maintained in the following. However, one should not forget that they are connected. Moreover, the decision for a replacement instrument will take many years of consultation. So it is quite likely that the Intra EU BITs will be terminated much earlier than the implementation of a new mechanism. For the transition period a transitional measure should be implemented
I. Substantive Right framework 1. Multilateral agreement
The present EU law do not grant explicitly any rights to Investors, as it is the case in BITs. In the EU, the protection can be only achieved over a complicated, branched system, which often needs a interpretation. A lot of the EU law is based on general principles and case law, which can not achieve the same level of protection as codified rights. Especially in the view of issues which were not subject of a judgment yet. The predictability and clarity of the EU law is not guaranteed. The Member States law might be helpful to reduce the problem, but one must see the current issue of the rule of law in some Member States which results in a insufficient protection. To achieve a equal
97 https://ec.europa.eu/commission/priorities/jobs-growth-and-investment/investment-plan-europe-juncker-plan_en 98 Kluwer arbitration After Achmea, Non Paper Rn. 6 , Deutsches Aktieninstitut S. 5
protection, the mechanism should include the principles fair and equitable treatment, full protection and security and the protection against direct or indirect expropriation without compensation. Furthermore, equal investment protection provisions throughout the whole Union could even strengthen the Unity.
The establishment of a substantive right framework for a equivalent investment protection might be achieved through two different approaches. One approach is a multilateral treaty among the
Member States of the EU and the other one the implementation of a new legal framework within the EU.
The Idea of an multilateral treaty was already introduced in May 2016 in a Non-Paper by Austria, Finland, Germany, France, Netherlands.99 The Non-Paper was released The proposed principles which should be included, are fair and equitable treatment, full protection and security or
compensation in case of expropriation.100 The five Member States are aware of the difficulties in ascertaining and applying those standards and therefore stress out the importance of the precise wording, to obtain more consistency and predictability.101 Two issues have to be proceed in connection to this option. The first is that not all Member States share the same view on the investor-state right balance.102 So the establishment of such a treaty would be long-winded and complicated. Moreover, the agreement has to comply with the Achmea judgment. One could argue that all intra EU BITs are affected, but the CJEU did not make a statement in relation to the
substantive rights in the Intra EU BITs. Furthermore, the bar substantive right framework without a forum to enforce these rights, can not have any effect on the autonomy of the EU. So, nothing obstruct the Member States to conclude such a treaty.
2. Implementation in the EU law system
To codify investor Rights in the EU system would have the advantage that they would be directly applicable in the EU States.103 Lavranos propose to apply the “golden standard” of the BITs.104 Those BITs offer strong investment protection. But this high investment protection might meet resistance from the Member States. Unlikely that all the Member States will agree to such a broad investment protection.105 However and this is a big advantage to a multilateral treaty that pursuant to Art. 2 (1) (2)TFEU it is not necessary to be in accordance with the views of all Member States as long as the EU has the exclusive or shared competence on this field. Independent, of the concrete standards which could be implemented, this option avoid any legal problems in connection with the Achmea judgment.106
The future will show, if the EU and the Member States can agree of one of those two options or if the EU will rely on the given EU legal order and the member states to protect the investors right and can therefore avoid a long-winded process between the parties. In this case, the EU should take a suggestion into account which was made by Hindelang. The EU legal order is as said not as predictable and clear as a codified right. To solve this problem Hindelang suggests to solve this issue by “raising awareness of existing EU protective standards applicable in particular in administrative procedures and in court proceedings”.107 This “EU Restatement” should take “the
99 Non Paper Rn. 6 100Non Paper Rn. 8 101Non Paper Rn. 8
102JWIT 2016 Hindelang 984-1014 (1001)
103Kluwer arbitration After Achmea, Hindelang JWIT 2016 984-1014 (1001) 104Kluwer Arbitration after Achmea
105JWIT 2016 Hindelang 984-1014 (1001) 106See under Punkt
form of manual or treatise that seeks to inform judges, administrators, and other lawyers”.108 Just raising awareness of the importance of existing EU protective standards in a non binding “EU Restatement” cannot be understood as a equal replacement for intra EU BITs, but could be of current interest for transitional measures.
As aforementioned, the two options (under...) can only be seen in connection to a procedural mechanism which allows to enforce the given protection. To replace the intra EU BITs on a procedural level which is comparable to the one of the arbitral tribunals in intra EU BITs. The following part will ascertain which procedural mechanism could come into consideration. II. Procedural mechanism
The implementation of a new procedural mechanism to replace the Intra EU BITs in an equal manner open the chance to even improve it. Ideas of an improvement would be to decrease the costs as well as the simplification and the acceleration of the proceedings in ISDS.109
In the following, the mentioned procedural measures in the Non Paper of the five Member States, the establishment of a Multilateral Court for Settlement,
All the options which come into consideration must be shaped in a way that they comply with the EU Law. Especially with Art. 267 TFEU.
1. Amicable resolution of investment disputes within the single market
In 2017 the EC suggested an amicable resolution of disputes between investors and public authorities within the single Market.110 The purpose of the suggestion is to advance towards the objectives which are mentioned in the Investment Plan for Europe111.112 Four options are provided. First an EU network of “Investment Contact Points” within the national administrations, to inform and support investors before a dispute arises with national public authorities.113 Second, the creation of an legal framework for mediation, which guarantees a minimum standard of quality and
transparency.114 Third, the creation of permanent agencies in each Member State to govern the mediation procedure.115 Lastly a mediation center which is responsible for the whole EU.116 Those options would help to create a more predictable, stable and clear regulatory for the
investments within the EU. Furthermore, it would evade some lengthy and costly disputes in front of a tribunal. Despite the possible positive effects, a non binding mechanism cannot constitute a equal protection mechanism as provided by a BIT. As well as the “EU Restatement”, the Mediation system is only a instrument to assist the investment protection (see:). Only a binding and
enforceable mechanism, like the ones presented in the following, can provide a sufficient guarantee
108Andersen S.1004
109 DIHK public consultation S.3
110 Inception impact assessment – Ares(2017)3735364, availabel under: https://ec.europa.eu/info/law/better-regulation/initiatives/ares-2017-3735364_en
111 Investment Plan for Europe: the Juncker Plan, available under: https://ec.europa.eu/commission/priorities/jobs-growth-and-investment/investment-plan-europe-juncker-plan_en
112 Inception impact assessment – Ares(2017)3735364, availabel under: https://ec.europa.eu/info/law/better-regulation/initiatives/ares-2017-3735364_en
113 Inception impact assessment – Ares(2017)3735364, availabel under: https://ec.europa.eu/info/law/better-regulation/initiatives/ares-2017-3735364_en
114 Inception impact assessment – Ares(2017)3735364, availabel under: https://ec.europa.eu/info/law/better-regulation/initiatives/ares-2017-3735364_en
115 Inception impact assessment – Ares(2017)3735364, availabel under: https://ec.europa.eu/info/law/better-regulation/initiatives/ares-2017-3735364_en
116 Inception impact assessment – Ares(2017)3735364, availabel under: https://ec.europa.eu/info/law/better-regulation/initiatives/ares-2017-3735364_en
for the investors. Unfortunately, the European Commission do not persist with this idea at the moment.117
2. Non-Paper
The above mentioned Non Paper by the five Member States also included possible options for a procedural mechanism.118 While they acknowledge that the investment disputes should be generally be heard in front of the Member States domestic courts, it has been suggested, to implement a Investor State Mediation mechanism.119 The remarks to the amicable resolution (see:) can be adopted to the Mediation mechanism of the Non Paper.
In the view of the five Member States it is important that beside of a voluntary mediation system, a binding and enforceable settlement mechanism is needed.120 Three options are showed. The first option is to confer the jurisdiction pursuant to Art. 273 TFEU to the CJEU.121 The second one is to form the dispute settlement system on the model of the Unified Patent Court.122 This Idea is also suggest by Hindenlang.123 Lastly they propose the Permanent Court of Arbitration as the basis for the ISDS.124
Legal assessment
The issue about the proposed options are, that they should be founded on a multilateral agreement between the Member States and therefore might not comply with the EU law. As mentioned (see) the Achmea judgment apply to all ISDS provisions in BITs concluded between the Member States of the EU. It is questionable why the CJEU should decide different for multilateral agreements between EU Member States.125
Furthermore, the CJEU showed in his judgment his interest to be solely in charge to decide how to interpret and apply the EU law (see:). This rejects the options to form the dispute settlement system on the model of the Unified Patent Court or to use the Permanent Court of Arbitration as a forum for ISDS. Especially, many of the suggestions made by the CJEU regarding the Unified Patent Court are not suitable for an investment court.126 In the Opinion 01/09 the court stated the creation of the PC is not in conflict with Article 344 TFEU as the jurisdiction which the draft agreement intends to grant to the PC relates only to disputes between individuals in the field of patents.127 At least partly, the only possibility seems to be, to confer the jurisdiction pursuant to Art. 273 TFEU to the CJEU.128 Pursuant to Art. 273 TFEU the Court has jurisdiction in any dispute between Member States which relates to the subject-matter of the Treaties, if that dispute is submitted to it under a special agreement. In this way, the CJEU decision monopoly stays unaffected.
117Stöbener de Mora EuZW 2019, 217 (218). 118 Non Paper Rn. 9 ff. 119 Non Paper Rn. 10 120 Non Paper Rn. 11 121 Non Paper Rn. 11 122 Non Paper Rn. 11 123 Hindenlang JWIT 2016, 984 (1010 f.) 124 Non Paper Rn. 11
125 A possible reason could have been, that an EU wide investment agreement does not breach the prohibition of discrimination. But the CJEU made no comments about the discrimination issue in Intra-EU BITs; hereto: Hindelang, S.1008
126 Nacimiento/ Baur, Wirtschaftsrecht, 1347 (1349)
127 OPINION 1/09 OF THE COURT, ECLI:EU:C:2011:123 , Rn. 63. available under:
http://curia.europa.eu/juris/document/document.jsf;jsessionid=318D273DCBB11E123DC7D72DAA70C7E4? text=&docid=80233&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=3869043
128 Nacimiento/ Baur, Wirtschaftsrecht, 1347 (1349), Stöbener de Mora EuZW 2019, 217 (218), against: Behrens, S. 701 (711)
3. Multilateral court for settlement of investment arbitration
Another option is the establishment of a Multilateral court for settlement of investment disputes (MIC) which was introduced by the European Commission in May 2015.129 The aim is to create a permanent dispute settlement mechanism which will allow to move away from the ad hoc system of ISDS.130 It will be possible to administer dispute under present and future investment treaties.131 For the EU the MIC would replace the tribunal system under the BITS.132 At first sight this looks like the European Commission stated their view which mechanism will replace the arbitral tribunals under intra EU BITs. Though, in March 2018 the Council of the EU clarified this and stated, that Intra EU BITs as well as the ECT shall not fall under the scope of this directive.133
Legal assessment
The issue at hand is if those explicit exception have any impact on a possible substantive right framework based on treaties between the Member States or implemented within the EU legal order in connection with the MIC (see: ). In the past years, the European Commission emphasized its position towards intra EU BITs (see: ). Therefore it is to examine whether the MIC in connection with a substantive right framework based on treaties between the Member States or implemented in the EU legal order adhere to Art. 267 and Art. 18 I TFEIU.
In both cases the prohibition of discrimination is not touched as all citizens of the EU can rely to it. To assess the adherence of the MIC with Art. 267 TFEU it is important to determine which court will have the “last decision”.
Due to the negotiation directives this will not be the CJEU.134 This means, that only in the case, that the substantive law do not contain any EU law, the MIC might be still compatible with Art. 267 TFEU. The argument therefore is that the Achmea judgment only applies to those Intra EU BITs which enables a arbitral tribunal to apply and interpret EU Law, so e contrario those BITs are allowed which do not contain EU Law. Therefore the option to connect the MIC with the
substantive right framework included in the EU law, would breach Art. 267 TFEU and is in result no solution for a replacement mechanism.
The option of connecting the MIC with the multilateral agreement depend on the actual form of the agreement. Only in the case in which EU Law is explicitly excluded, one could argue, that a multilateral if this is compatible with the Achmea judgment.
4. Direct access to CJEU
Lavrannos/ Singla suggest the implementation of a spezialized investment protection chamber within the CJEU.135 The chamber should not only consist of judges but also of law practitioners.136 Due to this standard EU law could be directly applied and interpreted by the EU while the Investors
129 EU Comission, Concept Paper, availabel under:
http://trade.ec.europa.eu/doclib/docs/2015/may/tradoc_153408.PDF
130 Europene Comission – Fact sheet 13.12.2016; availabel under: http://europa.eu/rapid/press-release_MEMO-16-4350_en.htm
131 Europene Comission – Fact sheet 13.12.2016; availabel under: http://europa.eu/rapid/press-release_MEMO-16-4350_en.htm
132 Europene Comission – Fact sheet 13.12.2016; availabel under: http://europa.eu/rapid/press-release_MEMO-16-4350_en.htm
133 Council of the EU, Negotiation Directives 20/03/2018, 12981/17 ADD, p. 3, fußnote 1. availabel under: http://data.consilium.europa.eu/doc/document/ST-12981-2017-ADD-1-DCL-1/en/pdf
134 Council of the EU, Negotiation Directives 20/03/2018, 12981/17 ADD Rn. 10. 135 Lavranos/ Singla, SchiedsVZ 2018, 348 (357)
could rely on a efficient system.137 The advantages of such a EU Regulation would be a direct application to all Member States and that the legal status would be paramount to any law of the Member States.138 To realize this option, Lavranos/ Singla demand “a bit of felxibility and out of the Box thinking by leaving the usual preliminary ruling framework behind”.139
Whether one of this options will be chosen, is a constitutional decision, which has to balance between the interest of all Member States without disregarding the EU legal order. It is plausible that such a decision will take many years of consultation. For this time between, it is inevitable to look at the issue of transitional measures.
Due to the fact that the implementation of the measures at hand is uncertain, it is important to look at the near future. A transitional measure could offset some of the negative impacts which result from the future termination of the BIT. Moreover, such a instrument will give the needed time for sufficient negotiations and considerations.
The necessary timeframes could have been given through the sunset clauses. It is not yet sure how to realise the termination of these clauses.140 However, the sunset clauses will not help as a
transitional measure as they will be terminated.
III. Transitional measure
The transitional measure should be implemented as soon as possible. A fast compromise can be achieved, if the impacts of a transitional measure do not affect the States interests on a large scale. That might well be, at least if the mechanism is not binding or enforceable. In this respect only a “EU Restatement” and the amicable resolution of investment disputes come into consideration (see:). Even after the implementation of a binding and enforceable dispute resolution mechanism the transitional measure can be maintained to bolster the investment protection within the EU.
G. Conclusion
The Achmea judgment was not a good sign for the investment protection within the EU and spread uncertainty across Investors. Furthermore, this uncertainty was strengthened by the Declaration of the Member States to terminate all Intra EU BITs and the contained sunset clauses therein.
Even if the EC takes the view that no extra protection is needed, the thesis showed that this is not the case at the moment and questionable for the future. The reasons are diverse. It is to hope that the EC will take the same view and use the end of all Intra EU BITs as a starting point for the
implementation of a new and better intra Eu investment protection mechanism as well as to
137 Lavranos/ Singla, SchiedsVZ 2018, 348 (357)
138 Kluwer Lavranos, 17.3.2018, Lavranos/ Singla, SchiedsVZ 2018, 348 (357) 139 Lavranos/ Singla, SchiedsVZ 2018, 348 (357)
strengthen the adherence to the rule of law by every Member State. This would also allow to regain the trust of the investors which is already lost in some parts.
It is not comprehensible why the EU do not gave yet a satisfying solution for the future investment protection. Especially as revealed, more than one solution for a replacement mechanism would be in accordance with the law of the EU. The small efforts which were done by the EU to solve the upcoming investment issues within its own territory are not enough. It seems like the EU do not see the importance of a safe investment protection and is more focussed on establishing a multilateral Investment court with foreign countries. With a view to the future this might change. Maybe under the pressure of the Member States which are in some parts aware of the upcoming issues.
It is to hope that the EU change its view and will introduce a transitional measure in the near future to gain the time which is needed for an equal replacement of all Intra EU BITs.
Books:
Simon Burger, ´Clauses Arbitration in Investment Protection Agreements after the ECJ's Achmea Ruling: A Preliminary Evaluation´, 2019, 6 YB ON INT'L ARB 121
Markus Ludwigs / Oliver Remien (Ed), ´Investitionsschutz, Schiedsgerichtbarkeit und Rechtsstaat in der EU`, Nomos, 2018
Articles:
Teis Tonsgaard Andersen / Steffen Hindelang, ´The Day After: Alternatives to Intra- Eu BITs`, Journal of World Investment &Trade Vol. 17, 2016, 984-1014
Peter Behrens, ´Die Zukunft des EU-internen Investitionsschutzes nach dem EuGH-Urteil in der Rs.Achmea` Recht der Internationalen Wirtschaft, RIW, 2018
Peter Behrens, ´Zur Vorlagebefunis von Schiedsgerichten, Europäische Zeitschrift für Wirtschaftsrecht EuZW, 2018
Thomas Jaeger, ´Zum Vorschlag einer permanenten Investitionsgerichtbarkeit `Europarecht, EuR, 2018
Friedemann Kainer, ´Europäische Kommission: Investitionsschutz und
Investitionsschutzabkommen innerhalb der EU, Europäische Zeitschrift für Wirtschaftsrecht EuZW, 2018
Roland Klages, ´Autonomie sticht Schiedsklausel, Europäische Zeitschrift für Wirtschaftsrecht EuZW, 2018
Andrej Lang, ´Die Autonomie des Unionsrecht und die Zukunft der Investor-Staat-Streitbeilegung in Europa nach Achmea. Zugleich ein Beitrag zur Dogmatik des Art. 351 AEUV, Europarecht, EuR, 2018
Nikos Lavranos/ Tania Singla, ´Achmea: Groundbreaking or Overrated?`, SchiedsVZ, 2018
Robin Dominik Miller, ´Autonomie des Unionsrechts versus Schiedsgerichtbarkeit. Zur Bedeutung des EuGH-Urteils in der Rs.Achmea für die Entwicklung der Europäischen Union als
Rechtsgemeinschaft, Europäische Zeitschrift für Wirtschaftsrecht EuZW, 2018
Joscha Müller / Sven Simon, ´Das Achmea-Urteil des EuGH und die Auswirkungen auf
Streitbeilegungsmechanismen im Rechtsraum der EU`, Neue Juristische Online-Zeitschrift NJOZ, 2018
Boris Scholta, ´Investitionsschutzrecht: Schiedsklausel in unionsinternem
Patricia Sarah Stöbener de Mora, Investitionsschutzrecht: Non-Paper der Mitgliedstaaten zu Nachfolgrmechanismen sür Intra-EU-BITs, Europäische Zeitschrift für Wirtschaftsrecht EuZW, 2016
Patricia Sarah Stöbener de Mora, ´Das Achmea-Urteil zum Intra-EU-Investitionsschutz, Europäische Zeitschrift für Wirtschaftsrecht EuZW, 2018
Patricia Sarah Stöbener de Mora, ´Ideen für einen Mechanismus zu Schutz von Investitionen im Binnenmarkt nach Ende der Intra-EU-BITs`, Europäische Zeitschrift für Wirtschaftsrecht EuZW, 2019
Stephan Wernicke, ´Autonomie und Häresie – Investitionsschiedsgerichte in der Rechtsunion`, Neue juristische Wochenschrift, NJW, 2018
Stephan Wilske/ Lars Markert/Laura Bräuninger, ´Entwicklung in der internationalen Schiedsgerichtbarkekeit im Jahr 2018 und Ausblick auf 2019, SchiedVZ, 2019
Websites:
Steffen Hindelang, ´The limited immediate Effects of CJEU's Achmea judgement`,Verfassungsblog on matters constitutional, < https://verfassungsblog.de/the-limited-immediate-effects-of-cjeus-achmea-judgement/ > Acceessed 26. July
Lucian Ilie, ´What is the Future of Intra-Eu BITs? Kluwer Arbitration Blog, <
http://arbitrationblog.kluwerarbitration.com/2018/01/21/future-intra-eu-bits/ > accessed 26.July 2019
Markus Krajewski, ´Die Auswirkung des Achmea-Urteils des EUGH auf die EU-Investitionspolitik`, PowerShift, <
https://power-shift.de/wp- content/uploads/2018/03/PowerShift_BriefingPaper_Krajewski-Folgen-AchmeaUrteil-EU-Investitionspolitik-3-2018.pdf > accessed 26. July 2019
Nikos Lavranos, ´After Achmea: The Need for an EU Investment Protection Regulation` Kluwer Arbitration Blog, < http://arbitrationblog.kluwerarbitration.com/2018/03/17/achmea-need-eu-investment-protection-regulation/ > accessed 26. July 2019
Daniel Thym, ´Todesstoß für autonome Investitionsschutzgerichte`, Verfassungsblog on matters constitutional < https://verfassungsblog.de/todesstoss-fuer-autonome-investitionsschutzgerichte/ > accessed 26. July 2019
Agnieszka Zarowna, ´Terminations of BITs and Sunset Clauses – What can Investors in Poland Expect? Kluwer Arbitration Blog, <
http://arbitrationblog.kluwerarbitration.com/2017/02/28/booked-22-february-polish-bits/ > 26. July 2019
Case Law:
Slowakische Republik (Slovak Republic) v Achmea BV Case (judgement) C-284/16, Slowakische Republik (Slovak Republic) v Achmea BV Case (judgement) C-284/16, ECLI:EU:C:2018:158 (06 March 2018)
Slowakische Republik (Slovak Republic) v Achmea BV Case (Opinion od Advocate General) C-284/16 (19 September 2017)
SEGRO” Kft. gegen Vas Megyei Kormányhivatal Sárvári Járási Földhivatala und Günther Horváth gegen Vas Megyei Kormányhivatal C-52/16, ECLI:EU:C:2018:157
Others
Decleration of the Representatives of the Goernment of the Members States, on the legal
consequences of the judgment of the court of Justice in Achmea and Investment Protection in the European Union, of 15 January 2019
