On the 5th of May 2020, the European Commission announced an agreement to terminate intra-EU bilateral investment treaties (BITs). The agreement aims to simplify and streamline the protection of EU cross-border investments, ensuring the supremacy of EU law in the member states.
Intra-EU BITs have been in place since the early 1990s, creating a web of investment protection agreements between EU countries. However, the European Court of Justice (ECJ) ruled that these treaties were incompatible with EU law, leading to a series of legal challenges and uncertainty.
The termination of intra-EU BITs will provide a more consistent and predictable legal framework for investors, making it easier for companies to conduct cross-border business in the EU. The agreement will also remove the potential for conflicting decisions between national courts and the ECJ.
The agreement provides for the termination of 142 intra-EU BITs, while also addressing the remaining issues of pending arbitration cases and sunset clauses. The sunset clauses are a mechanism that allows investors to continue to benefit from the BITs’ protection for a certain period, even after their termination. The agreement provides for a gradual phase-out of the sunset clauses and ensures that investors are not left without protection.
The termination of intra-EU BITs is a significant step towards the creation of a true single market for investments within the EU. The agreement also reflects the EU’s commitment to promoting a rules-based system for international investment, based on strong protections for investors and respect for the rule of law.
In conclusion, the agreement to terminate intra-EU BITs represents a significant moment for the EU in creating a more harmonized and predictable legal framework for cross-border investments. The simplified system provides a clear and consistent approach to investment protection, ensuring the supremacy of EU law and promoting a rules-based system for international investment.