CYIL 2015

POSTǧLISBON EXERCISE OF EU COMPETENCE IN THE FIELD OF FOREIGN INVESTMENT… powers ( A ). These powers are generally brought to their paramount purpose when the Union negotiates and concludes international investment-related instruments possibly equipped with an ISDS mechanism 11 which calls for intra-EU rules to govern the apportionment of financial liability that the Union and/or the Member States may incur in this context ( B ). A. EU-Driven Management of the Member States’ Extra-EU BITs One of the questions raised when the Lisbon Treaty was signed, not to mention when it entered into force, was what would happen to the existing Member States’ extra EU-BITs. With the benefit of several years of experience, and despite the fact that these treaties defy the new exclusive competence of the EU under Art. 207TFEU, the answer to this question is (essentially, and at least for the time being) surprisingly succinct: “nothing, really”. Obviously, a closer look calls for a more nuanced answer as the relevant legal framework has undergone certain changes whose very progressive rhythm contrasts with the somewhat radical “overnight” disenfranchisement of the Member States, and this contrast may be expected to linger for some time to come. At the international level, which is most relevant for practical enforcement of the extra-EU BITs, nothing suggests that the validity or applicability of these instruments have been contested by an investment tribunal as a consequence of the post-Lisbon reshuffle of the intra-EU division of competences. Indeed, the principle of effet relatif des traités , enshrined in the Vienna Convention on the Law of Treaties, 12 indicates that this reshuffle remains an EU “domestic” matter and as such cannot affect the international-law status of treaties concluded by the Member States with non-EU actors. 13 On the other hand, seen from the EU-law perspective, the extra-EU BITs manifestly constitute a problem because, as already mentioned, they defy the exclusive competence of the Union under Art. 207 TFEU. This holds true irrespective of whether a given extra-EU BIT otherwise complies with EU-law substantive standards. At the same time, it became obvious when the Lisbon Treaty entered into force that the Union was not ready to exercise its new FDI competence. Besides the international-law hurdles which the termination of the extra-EU BITs would have necessarily hit, such termination would have also led to an international legal vacuum, in the absence of any instrument to replace them. This discrepancy between the “law on the books” 11 Providing investor nationals of the third-State party to a treaty with the possibility to claim damages before an international investment arbitral tribunal. 12 155 UNTS 331, 8 ILM 679 (1969). 13 This has been acknowledged also in EU law: “Although bilateral investment agreements remain binding on the Member States under public international law […]”. Recital 5 of Regulation (EU) 1219/2012 of the European Parliament and of the Council of 12 December 2012 establishing transitional arrangements for bilateral investment agreements between Member States and third countries, OJ L 351, 20 Dec. 2012, p. 40.

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