EC Launches 4 Actions Over Free Movement Of Capital

by Ulrika Lomas, for LawAndTax-News.com, Brussels

12 May 2004

The European Commission revealed on Monday that it has decided to send formal requests for information to Denmark, Austria, Finland and Sweden concerning possible incompatibilities with the EC Treaty contained in several bilateral investment treaties that they concluded with non-EU countries before acceding to the European Union.

In a statement released this week, the Commission explained its concerns that the investment treaties may affect the application of powers reserved to the EU's Council of Ministers to adopt measures on the movement of capital to and from non-EU countries.

The bilateral investment treaties in question grant, in particular, unconditional rights to establishments of investors of non-EU countries to conduct international transfers freely. They also provide guarantees as to the treatment which will be accorded to those establishments now, and in the future.

The EC went on to announce that to the extent that the international agreements they have concluded before their accession are not compatible with the Treaty, member states are obliged to take all appropriate steps to eliminate such incompatibilities.

The requests for information take the form of letters of formal notice, and are meant to stimulate a constructive dialogue with Denmark, Austria, Finland and Sweden in order to find solutions compatible with Community law.

The affected member states have been given two months to respond, after which period, the EC may decide to issue formal requests for them to change the terms of the relevant bilateral investment treaties.

Recommended