Abstract:
Recent activity has affected international investment law in the European Union and will
have flow-on affects around the world. Specifically, the European Court of Justice decisions
in European Commission v Austria, European Commission v Sweden and European
Commission v Finland have affected the validity of pre-accession Member State bilateral
investment treaties (BITs) with third states. Further, the Lisbon Treaty, which came into
effect in 2009, transferred competence over foreign direct investment from Member States to
the European Union. These significant events have raised questions about the continued
validity of Member State BITs, and the approach the EU will take to exercise its new
competence. This paper will focus on the impact of these developments on the EU, Member
States, and European investors, as the most obviously affected parties. However, there will
also be considerable impact on third states that are party to extra-EU BITs and investors
under those BITs. In addition, the approach the EU takes in implementing the new
competence over FDI may have wide-reaching effects. This paper will first address the
impact and importance of BITs and the availability of international investment arbitration.
This will establish the context for the issues discussed later in the paper. Second, it will
discuss the European Court of Justice’s BIT judgments and the impact of these three
decisions. Third, the paper will examine the changes to the EU’s international investment
strategy with the entry into force of the Lisbon Treaty and TFEU. Finally, it will analyse the
benefits and detriments of an EU strategy of replacing Member States’ BITs with a network
of pan-EU investment agreements. This will lead into a discussion of the practical difficulties
of concluding such pan-EU investment agreements.