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EU Provides Legal Certainty To Bilateral Investment Agreements

by Ulrika Lomas,, Brussels

19 December 2012

With foreign direct investment now being an exclusive European Union (EU) competence under the Lisbon Treaty, the European Commission (EC) has welcomed the adoption by the European Parliament and Council of a new Regulation on bilateral investment agreements, which was first proposed in 2010.

Some 1,200 bilateral investment agreements had been concluded by member states with non-EU countries prior to the entry into force of the Lisbon Treaty in 2009, and the status of these agreements needed to be clarified under the new Treaty rules.

"This is a major step forward for EU investment policy and one of the most fundamental updates of trade policy after the Lisbon Treaty,” said Trade Commissioner Karel De Gucht. “It will grant legal security to existing bilateral investment treaties concluded between our member states and non-EU countries, as the EU is moving to replace them over time by EU-wide investment deals.”

“This will protect EU investments abroad and allow investors legal channels to defend themselves when needed - the current dispute between Repsol and Argentina is a case in point,” he added. “It's my ambition that, with time, every European investor has an equal protection of his interests abroad which, for the moment, is only sometimes assured to investors from a limited number of member states."

The Regulation will ensure a smooth transition towards the new EU investment policy in two ways. It provides the legal certainty for European and foreign investors benefiting from investment protection offered in member states' bilateral investment agreements concluded with other parts of the world previous to the Lisbon Treaty, by clarifying the legal status of those agreements under EU laws.

At the same time, it also establishes a mechanism for empowering member states to negotiate further bilateral investment agreements with countries not immediately scheduled for the EU-wide investment negotiations. This is designed to expand the scope of investment protection currently available to European investors.

The EC has confirmed that it is currently negotiating on investment, including investment protection, as part of the free trade agreement talks with Canada, India and Singapore. The Council has also recently welcomed the opening of negotiations with Tunisia, and adopted the negotiating directives for Morocco, Jordan and Egypt. Moreover, following two joint declarations from the EU-China summits this year, the EC is also exploring negotiating opportunities with other important investment partners, such as China.

TAGS: tax | investment | European Commission | law | investment treaty | agreements | legislation | standards | European Union (EU) | Europe

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