CYIL 2011

CZECH EXPERIENCE WITH BILATERAL INVESTMENT TREATIES: SOMEWHAT BITTER … the tribunal in Eastern Sugar was not comprehensive, it has been often cited in literature as proof of the validity and applicability of intra-EU BITs. The conclusion upholding the validity of these agreements has been affirmed, since the Eastern Sugar award, also by investment tribunals in other cases. 61 Therefore, it should be safe to say today that the validity and applicability of intra-EU BITs, at least from the perspective of public international law, is supported by established case-law of international arbitration tribunals. 62 Anyway, political considerations may produce different conclusions than considerations made under international law. Having experienced painful arbitrations, while others were still in progress, the need to maintain BITs with EU Member States was being seriously reconsidered by the Czech Republic and its officials. After the stabilization of the domestic legal and judicial system and particularly after the accession of the country to the EU, the positive effect of BITs on inflow of foreign investments was put in doubt. On the other hand, the budgetary implications of lost arbitrations were measurable quite precisely. Encouraged by the supportive standpoint of the Commission, a decision was made by the Czech Government to terminate the existing BITs with EU Member States. After some discussions between the involved Governmental departments, 63 in July 2008 the Government finally approved the procedure for terminating BITs with EU Member States 64 and in December 2008 it authorized the Minister of Foreign Affairs to conclude termination agreements by an exchange of verbal notes. 65 A consensual solution, based on termination by mutual consent of the parties to the agreements, was adopted instead of unilateral termination, probably for two main reasons. First, unilateral termination, although possible under all BITs, might be perceived as a rather unfriendly act by other Member States. Second, all BITs provide for a safeguard period in case of termination (usually 10 years) – during this period, investments are still protected although the BIT itself has been terminated, entailing the possibility of arbitrations. Therefore, at the beginning of 2009, the Czech Republic approached EU Member States with a proposal to terminate the BITs by consent of the parties. 66 The verbal notes also 61 A similar conclusion was reportedly reached in a partial award in case Binder v. Czech Republic , and recently in case Eureko v. Slovak Republic , where the tribunal provided comprehensive reasoning on the issue. 62 On the other hand, should the question be decided by the CJEU, primarily taking account of EU law, the result may be very different. 63 To the best of the author’s knowledge, the idea of termination of intra-EU BITs was supported by the Ministry of Finance, responsible for foreign investments agenda, while the Ministry of Foreign affairs was slightly hesitant to agree with such solution. 64 Resolution of the Government of the Czech Republic No. 853 dated 8 July 2008. Available in Czech at www.vlada.cz. 65 Resolution of the Government of the Czech Republic No. 1529 dated 1 December 2008. Available in Czech at www.vlada.cz. 66 Government proposal to the Parliament of the Czech Republic for approval of the Agreement between the Czech Republic and the Kingdom of Denmark on Amendment and Termination of the Agreement between the Czech and Slovak Federative Republic and the Kingdom of Denmark on Promotion and Reciprocal Protection of Investments signed on 6 March 1991 in Prague, concluded by exchange of

255