CYIL 2011

TOMÁŠ FECÁK

CYIL 2 ȍ2011Ȏ

4.2 Intra-EU BITs The situation with respect to intra-EU BITs is even more complicated. Before ten new members acceded to the EU in 2004, there were only two BITs concluded between Member States in force 55 and they had never evoked any notable controversy. After two enlargement rounds in 2004 and 2007, the number of intra-EU BITs suddenly rose to about 190. 56 Soon, the status of these agreements, in particular their validity, applicability and political desirability, became widely discussed. The issue of intra-EU BITs is quite sensitive from a political point of view, especially as these agreements have been the basis for many investment arbitrations against host states. This fact is an important determinant shaping the positions of the parties concerned. From the beginning, intra-EU BITs have been faced with the animosity of the European Commission. In November 2006, the European Commission sent a Note to the Economic and Financial Committee (ECOFIN), where it wrote that “there appears no need for agreements of this kind in the single market and their legal character after accession is not entirely clear”. 57 According to the Commission, most of their content was superseded by community law upon accession. Furthermore, there was a risk of arbitrations taking place without taking proper account to EU law, circumventing the interpretative role of ECJ. Therefore the Commission recommended to the Member States to formally terminate such agreements. 58 However, the Commission’s initiative has not elicited a positive reaction from all Member States, especially as far as the “old” Member States are concerned, even though the Commission has been regularly repeating its appeal. The position of the parties concerned on the matter has been so far mostly formed by a mixture of legal arguments and pragmatic reasons. So was the case of the Czech Republic. In the landmark investment arbitration Eastern Sugar v. Czech Republic , which took place shortly after its accession to the EU, the Czech Republic based its jurisdictional defence on an EU law objection, arguing that after accession, the BIT with the Netherlands was no longer applicable. 59 However, the tribunal rejected the Czech Republic’s arguments entirely and accepted its jurisdiction. According to the tribunal, the BIT had neither been terminated by the parties expressly, nor had it been implicitly superseded by acquis communitaire . Considering the provision of Article 59 of the Vienna Convention on International Treaties, the tribunal found that (i) the EC Treaty and the BIT do not cover same subject matter, (ii) a common intention of the Czech Republic and the Netherlands to supersede the BIT had not been established and (iii) the EC Treaty and the BIT are not incompatible with each other. 60 Although the reasoning of 55 BIT between Germany and Greece and BIT between Germany and Portugal. However, these agreements were concluded before Greece and Portugal respectively acceded to the EC. 56 Wehland, H. op. cit. supra note 43. 57 Eastern Sugar B.V. v. Czech Republic , UNCITRAL Arbitration. Partial Award (2007), para. 126. 58 Ibid. 59 Ibid. , para. 97. 60 Fort the tribunal’s reasoning on jurisdiction, see supra note 57 , paras. 114-181.

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