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the EU-law division of competences) between the respective entries into force of the
Lisbon Treaty and the Extra-EU BITs Regulation.25
While the language framing the Commission’s review remains preponderantly
broad, it is made clear that the Extra-EU BITs Regulation purports to bridge the
illegality that the extra-EU BITs engender from the standpoint of the intra-EU division
of competences, but it is without prejudice of the Member States’ duty to respect the
substantive requirements of EU law, such as the rules on capital movements. 26 As the
proposal of this regulation 27 indicates, this hints to the pre-Lisbon case law in which
the CJEU held that the “transfer clause” contained in the extra-EU BITs concluded
by Austria, Finland and Sweden were incompatible with the powers of the Council
to adopt measures restricting the movement of capital.28 By failing to eliminate these
incompatibilities, the above-mentioned Member States violated the requirement
spelled out in the second indent of Art. 351 TFEU (then Art. 307 TEC) to bring
their extra-EU BITs concluded prior to joining the EU in compliance with EU
law.29 Interestingly, this finding was made while competence over FDI was shared.30
The issue at hand was therefore not about a violation of EU competence but about
a violation of a specific EU-law standard combined with the obligation to eliminate
incompatibilities under Art. 351 TFEU.
Presumably, in reaction to this case law the Czech Republic, for instance,
has modified some of its extra-EU BITs.31 Remarkably, this happened partly in the
post-Lisbon period when competence over the matter shifted to the benefit of the
Union. The underlying government proposition of one such modifying protocol
does not mention the competence issue but rather recalls the obligation of the
Czech Republic to eliminate EU-law incompatibilities. This is not the only example
of a Member State acting in the foreign investment field in the “post-Lisbon/pre-
Extra-EU BITs Regulation” period. Besides the German-Pakistani BIT “case” invoked
25 Art. 12 of the Extra-EU BITs Regulation quoted above fn. No. 13.
26 Recital 4, in fine, Recitals 11 and 12 and the “without prejudice” proviso in Art. 3 as well as the
condition laid out in Art. 9(1) a) of the Extra-EU BITs Regulation quoted above fn. No. 13.
27 COM (2010) 343 final, see page 4, fn. 2.
28 Ex-art. 57(2) EC, 59 EC and 60(1) EC. See CJEU, Commission c. Sweden(Grand Chamber), 3Mar. 2009,
C-249/06, ECLI:EU:C:2009:119, Commission c. Austria (Grand Chamber), 3 Mar. 2009, C-205/06
(ECLI:EU:C:2009:118); Commission c. Finland, 19 Nov. 2009, C-118/07, ECLI:EU:C:2009:715.
29 For more on this provision see below.
30 On the changes brought in this field by the Lisbon Treaty (and prior to that, by the “European
Constitution”) see e.g. Ceyssens (J.), “Towards a Common Investment Policy? Foreign Investment on
the European Constitution”, LIEI (2005) vol. 32, No. 3, pp. 259-291; Eilmansberger (T.), “Bilateral
Investment Treaties and EU Law”, CMLRev. (2009) vol. 46, No. 2, pp. 383-429.
31 For one example see the changes made to the BIT between the Czech Republic and Albania, http://
podpore-a-ochra and the governmental proposal of the modifying protocol Sněmovní tisk 160/0 Prot.
mezi ČR a Albánskou rep. o podpoře a ochraně investic, available at
sqw?O=6&CT=160&CT1=0.