EU Announces Plurilateral Agreement to Terminate Intra-EU Investment Treaties

By Gabriel M. Lentner

On October 24, 2019, the European Commission announced that most (not all) member states agreed to a plurilateral treaty to terminate all remaining intra-EU bilateral investment treaties (BITs). These treaties provide for the protection of foreign investors’ rights (including intellectual property rights) that can be enforced against states through investor-state dispute settlement. The Court of Justice of the European Union (CJEU) ruled last year in Achmea that these treaties between EU member states (intra-EU BITs) are incompatible with EU law but left the question of how this affects existing treaties unanswered.

According to the EU announcement, only a “small minority” of states have not endorsed the plurilateral treaty. Those states are reportedly Finland and Sweden; they object to the treaty due to conflicts the text raises with how they view the relationship between EU law and public international law. The European Commission has stated that it will “consider resuming or initiating infringement procedures” against states not terminating their intra-EU BITs.

The text of the treaty is not yet available.

Possible Implications for Energy Charter Treaty Disputes

The implications for Energy Charter Treaty (ECT) disputes are unclear. The ECT is a multilateral treaty to which EU member states as well as the EU in its own right, and non-EU states are parties. There are many investment arbitration cases dealing with intra-EU investments that have led to a number of decisions against EU states. While the European Commission and a number of EU Member States view the CJEU Achmea ruling also applicable to these disputes, others disagree, the CJEU has been silent on the matter.

In its announcement, the European  Commission urges member states to further discuss “whether any additional steps are necessary to draw all the consequences from the Achmea judgment in relation to the intra-EU application of the Energy Charter Treaty.”

As a result, the fate of the Energy Charter Treaty within the EU framework is still not decided.