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Protection of Foreign Investments in an Intra-EU Context Protection of Foreign Investments in an Intra-EU Context Not One BIT? Dominik Moskvan Affiliated Researcher at the Faculty of Law, Business and Law Research Group, University of Antwerp, Belgium Cheltenham, UK • Northampton, MA, USA © Dominik Moskvan 2022 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA A catalogue record for this book is available from the British Library This book is available electronically in the Law subject collection http://dx.doi.org/10.4337/9781800880382 ISBN 978 1 80088 037 5 (cased) ISBN 978 1 80088 038 2 (eBook) EEP BoX Contents List of abbreviations vi 1 Introduction: Investment protection in intra-EU BITs and EU law 1 2 Material and personal scope of protection 6 3 National treatment and most favoured nation treatment 24 4 Free transfer of funds 45 5 Fair and equitable treatment 63 6 Expropriation 112 7 Dispute settlement 162 8 Which investor benefits most from intra-EU law protection in the post-Achmea context? 200 9 EU foreign investment court: A normative proposal 210 10 Conclusion: Rethinking intra-EU investment policy beyond Achmea 223 Bibliography 226 Index 257 v Abbreviations BIT Bilateral investment treaty Intra-EU BIT BIT concluded between two EU MS Extra-EU BIT BIT concluded between an EU MS and a third state BOP balance of payments CCP the Common Commercial Policy CEE Central and Eastern Europe CETA Comprehensive Economic and Trade Agreement CJEU Court of Justice of the European Union ECHR European Convention on Human Rights ECPC European and Community Patent Court ECtHR European Court of Human Rights ECT Energy Charter Treaty EEA European Economic Area EFTA European Free Trade Association EU European Union EUFIC Intra-EU foreign investment court FDI foreign direct investment FET fair and equitable treatment FTA free trade agreement GATS General Agreement on Trade in Services ICC International Chamber of Commerce ICSID International Centre for Settlement of Investment Disputes vi Abbreviations vii ICS Investment Court System IIA international investment agreement IMF International Monetary Fund IP intellectual property LRM less restrictive means MFN most favoured nation MNE multinational enterprise MS Member State (of the European Union) NAFTA North American Free Trade Agreement NPM non-precluded measures NT national treatment OECD Organisation for Economic Co-operation and Development PCA Permanent Court of Arbitration PTA preferential trade agreement REIO Regional Economic Integration Organisation SCC Stockholm Chamber of Commerce SME small and medium-sized enterprises SWF sovereign wealth fund TEU Treaty on European Union TFEU Treaty on the Functioning of the European Union TRIPS Agreement on Trade-Related Aspects of Intellectual Property Rights UNCITRAL United Nations Commission on International Trade Law UNCTAD United Nations Conference on Trade and Development UPC Unified Patent Court VCLT Vienna Convention on the Law of Treaties WTO World Trade Organization 1. Introduction: Investment protection in intra-EU BITs and EU law Since the first bilateral investment treaty was signed in 1959, bilateral investment treaties (BITs) have established themselves as well-known and popular instruments of international economic law. However, in the European Union (EU) only two intra-EU BITs (BITs concluded between European Member States) existed before the 2004 Union enlargement.1 The issue of incompatibility of BITs with EU law was amplified due to the fact that the prospective Central and Eastern European (CEE) EU Member States (MS) had concluded a significantly higher number of BITs before their accession. Since the 2004 accession the incompatibility of the intra-EU BITs with EU law has been invoked not only by the European Commission, but also by the MS in an opportunistic manner when it served their defence interests in investment arbitration.2 Until then the interaction of EU law and international investment law had not raised many questions. The two systems used to coexist until their parallelism became asymmetric with the claims of the supremacy of EU law over BITs. Intra-EU BITs and BITs concluded between an EU country and a third state (extra-EU BITs) have therefore been subjected to significant legal uncertainty. While the articulation of the extra-EU investment dimension has natural linkages with the intra-EU protection, the rulings of the Court of Justice 1 They were a BIT between Germany and Greece (1981) and the Germany– Portugal BIT (1980). 2 For instance, in its submission to the arbitration tribunal in Eastern Sugar of 31 May 2006 the Czech Republic argued that the court should request a preliminary ruling at the CJEU as to the date on which the relevant intra-EU BIT stopped being applicable (p. 10). Since then the argument of incompatibility has been raised in number of other cases shortly after: Eastern Sugar BV v. Czech Republic, Partial Award, SCC Case No. 088/2004 (27 March 2007); Eureko B.V. v. the Slovak Republic, PCA Case No. 2008-13 (UNCITRAL); EDF International S.A. v. Hungary (UNCITRAL); Electrabel S.A. v. Hungary, ICSID Case No. ARB/07/19; AES Sumnit Generation Ltd and AES-Tisza Erömü Kft v. Hungary, ICSID Case No. ARB/07/22; ADC Affiliate Limited and ADC & ADMC Management Limited v. The Republic of Hungary, ICSID Case No. ARB/03/16, para. 268; Binder v. Czech Republic, Award (UNCITRAL, Not Public); Ioan Micula, Viorel Micula and Others v. Romania, ICSID Case No. ARB/05/20, Decision on Jurisdiction and Admissibility; European American Investment Bank AG (EURAM) v. Slovak Republic (UNCITRAL). 1