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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.