Abstract
The protection of foreign investment is undergoing profound modifications worldwide, in light of the new agreements currently under negotiations as well as the reaction of States and public opinion (for only partly coinciding reasons) to certain arbitral decisions. The synthetic model of investment agreement of European origin is being largely substituted, especially in the context of broader FTA negotiations with major or regional players, by the more analytic North American model, strong of 20 years of NAFTA experience. In its negotiations with Singapore and Canada, the EU associated to this trend, and endeavoured to build texts that are believed to represent the foundation of its international investment law policy and programme. Internal differences within the EU constitutional organs and Member States about the interpretation of the new regime of competences designed by the Lisbon Treaty have, nevertheless, stalled the process. The path to entry into force of the agreement with Singapore awaits a preliminary pronouncement of the European Court of Justice, while several Member States currently oppose that with Canada because of its Investor-State Dispute Settlement Mechanism. In the meantime, the Commission pursues negotiations with the US and China, in the attempt not to leave EU investors less protected than their counterparts, in either State.
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Notes
- 1.
Cf., Dolzer and Stevens (1995), p. 1: ‘BITs are European in Origin’.
- 2.
Sacerdoti (1997), pp. 327–328.
- 3.
Switzerland has been the second State to begin a BIT programme; it signed its first BIT in 1961, with Tunisia. By the time the Netherlands signed its first BIT, in 1963, Switzerland was party to 7 BITs already.
- 4.
- 5.
There will not be another French BIT until 1972—which was a renegotiation of that with Tunisia.
- 6.
Côte d’Ivoire appears to have represented at the time for BITs what Chile is today with regard to FTAs: by 1966, it enjoyed agreements with Switzerland, the Netherlands, Italy, Sweden and Germany.
- 7.
Despite being primarily concerned with trade, FCNs are considered the forerunners of BITs as they feature, inter alia, guarantees on property rights and business interests of foreigners. According to Dolzer and Stevens (1995), p. 11, however, ‘…the broad spectrum of close political, economic and cultural cooperation which was envisaged by FCNs (such as unrestricted right to entry and the unqualified right of national treatment) were thought to be incompatible with the new political realities [of the late 1950s]’, and this brought to the end of the stipulation of FNCs in 1966 (with the conclusion of the last two: US-Togo and US-Thailand).
- 8.
The first BIT the UK signed with a Commonwealth State was in 1980, with Sri Lanka.
- 9.
Newcombe (2013), p. 17.
- 10.
Art. 7 of the 1969 Italy-Chad BIT reads: ‘Tout différend concernant les investissements, objet du présent Accord, qui s’élèverait entre un Etat contractant (ou n’importe quelle Institution ou Organisation dépendante ou contrôlée par le même Etat) et une personne physique ou morale, ayant la nationalité de l’autre Etat, sera soumis à la juridiction du Centre International pour le règlement des différends relatifs aux investissements, conformément à la Convention Internationale de Washington du 18 mars 1965. Toute contestation ou tout différend entre les deux Etats, portant sur 1’interprétation ou l’application du présent Accord, seront réglés par la voie diplomatique’.
- 11.
The first publicly known ICSID Award was rendered on 29 August 1977, in the case involving the Italian investor Adriano Gardella S. p. A. v. Côte d’Ivoire, ICSID Case No. ARB/74/1.
- 12.
Such resistance on the part of developing States is exemplified by Resolution A/RES/S-6/3201, Declaration for the Establishment of a New International Economic Order, adopted by the General Assembly of the United Nations in 1974; also of 1974, General Assembly Resolution A/RES/29/3281, Charter of Economic Rights and Duties of States.
- 13.
Already noted back in 1995 by Dolzer and Stevens, p. 3, and maintained until nowadays (cf., Table 1).
- 14.
Since its first BIT with Switzerland (1973), Egypt has rapidly concluded BITs with all major capital-exporters: Germany and France in 1974, Italy in 1975, the Netherlands in 1976, Japan in 1977 and the US in 1982; notably, Egypt appears also to be the first developing State to have signed a BIT with another developing State (i.e., the Egypt-Morocco BIT, of 1976).
- 15.
ICSID n.d.
- 16.
The US entered into over 100 of such treaties (starting with the Treaty of Amity and Commerce with France, in 1782, and ending, in 1966, with the agreements with Togo and Thailand).
- 17.
Still today, the US appears continuing to conclude these agreements; for instance, in 2006 it signed a Trade and Investment Framework Arrangement with the ASEAN (the text of the arrangement is available via http://www.ustr.gov/sites/default/files/uploads/agreements/tifa/asset_upload_file932_9760.pdf).
- 18.
According to the US Trade Representative n.d.
- 19.
For a review of the early US BIT programme, see Vandevelde (1988), pp. 208–211.
- 20.
In that year the USSR also concluded BITs with Germany, France, Italy, Canada, the UK, the Netherlands, the Belgium-Luxembourg Economic Union, and Finland.
- 21.
Cf., UNCTAD n.d. at http://investmentpolicyhub.unctad.org/IIA/CountryBits/27#iiaInnerMenu.
- 22.
- 23.
- 24.
- 25.
Notwithstanding the release of the SADC Model BIT, in September 2012, South Africa has terminated the agreements with the Belgium-Luxembourg Economic Union, in November 2013 with the Netherlands and Switzerland, in December 2013 with Spain, and, in October 2013, with Austria and Germany.
- 26.
See, e.g., Mehdudia (2013).
- 27.
Despite the late start, since joining the trend of modern BITs the US is found to have been ‘…at the forefront of varying the BIT pattern started by Germany by the way of dramatically extending its length, and also by deviating from the basic pattern by way of combining matters of trade and investment in Free Trade Agreements instead of concluding solely investment-focused agreements’, see Dolzer and Kim (2013), p. 290.
- 28.
The US Models of 2004 and 2012 (which are, for the most part, identical, substantially, when not outright literally), are both composed of 3 sections featuring 37 Articles in total, plus 4 draft Annexes; both Canadian Models are divided into 5 sections, but that of 2004 contains 52 Articles (and 7 draft Annexes), while in that of 2006 the number of provisions is reduced to 42.
- 29.
Huiping (2006), p. 144.
- 30.
E.g., ASEAN Member States accepted investment liberalization in the Framework Agreement on ASEAN Investment Area, but strictly limited to the ASEAN area; singular ASEAN Members—such as Malaysia, Indonesia, Thailand and the Philippines—along many other States such as, e.g., India and China, still oppose it; nevertheless, ASEAN insisted for liberalization within the China-ASEAN FTA framework (cf., Chapter IV, Section D1).
- 31.
Agreement on Trade-Related Investment Measures; conversely, the EC did not participate in the negotiations for GATS Mode 3 (on commercial presence).
- 32.
Chapter 2 dealing with the Specific Provisions on the Common Foreign and Security Policy.
- 33.
Emphases added.
- 34.
Emphases added.
- 35.
Based on Art. 3.2 TFEU (competence to conclude agreements when necessary to exercise EU internal competence), and Art. 63 TFEU (free movement of capital within the EU extending to third countries).
- 36.
Communication of 7 July 2010 from the European Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions, Towards a Comprehensive European International Investment Policy, pp. 2, 8 and 10, available via http://trade.ec.europa.eu/doclib/docs/2010/july/tradoc_146307.pdf.
- 37.
Ibid.
- 38.
See the Conclusions adopted by the Council of the European Union on 25 October 2010 on a Comprehensive European International Investment Policy, available via https://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/foraff/117328.pdf.
- 39.
I.e., in all matters covered by Art. 16 TEU and Art. 238 TFEU: under the ordinary legislative procedure, the Council acts by qualified majority, in co-decision with the European Parliament. The qualified majority mechanism introduced with the Lisbon Treaty requires at least 55 % of the Council to vote in favour of any topic, corresponding to at least 15 Members representing at least 65 % of the EU population. This notwithstanding, a block of at least four Members may veto the adoption of the debated measure.
- 40.
European Parliament Resolution of 6 April 2011 on the Future European International Investment Policy, 2010/2203 (INI), available via http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P7-TA-2011-141.
- 41.
The text of the Regulation is available via http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:32012R1219. Currently, in principle Member States no longer have the competence to conclude new investment agreements, while those concluded before the entry into force of the Lisbon Treaty remain in force, but shall be notified to the Commission (Art. 3 Reg. 1219/2012). Under certain conditions, nevertheless, Member States can still amend existing agreements, or even conclude new BITs (Art. 7).
- 42.
The text of the Regulation is available via http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2014.257.01.0121.01.ENG.
- 43.
Cf., European Commission Report of 2012 on Monitoring Activities and Analysis, Bilateral Investment Treaties Between Member States (Intra-EU BITs), available via http://ec.europa.eu/internal_market/capital/analysis/monitoring_activities_and_analysis/index_en.htm#maincontentSec5.
- 44.
Cf., the unassertive attitude displayed by the Commission (as opposed to the rather firm view of the arbitral panel) in the first intra-EU investment arbitration, Eastern Sugar B. V. v. Czech Republic, SCC Case No. 088/2004, Partial Award, available via: http://www.italaw.com/cases/documents/369.
- 45.
See the latest European Commission Report of 17 October 2014, available via http://ec.europa.eu/internal_market/capital/analysis/monitoring_activities_and_analysis/index_en.htm#maincontentSec5.
- 46.
Cf., Vis-Dunbar (2009).
- 47.
- 48.
E.g., the observation of the Commission in the amicus curiae brief for the European American Investment Bank (EURAM) AG v. Slovak Republic, available via http://www.italaw.com/cases/1706; also, see the still on-going Micula case saga (Ioan Micula, Viorel Micula, S. C. European Food S. A, S. C. Starmill S. R. L. and S. C. Multipack S. R. L. v. Romania, ICSID Case No. ARB/05/20, available via http://www.italaw.com/cases/697).
- 49.
The original negotiating directive, aiming at a comprehensive FTA, is of 2008; in 2010 its scope has been narrowed down to trade and investment only.
- 50.
Building on negotiating directives granted by the Council in 2007 for the negotiation of a Comprehensive Free Trade Agreement, the Commission obtained an additional mandate to also negotiate investment protection in 2011.
- 51.
Additional mandate, based on the 2007 ASEAN negotiating directive.
- 52.
In this category, the Commission also includes Egypt, Tunisia, Morocco, Jordan, Malaysia, and Vietnam (see: http://ec.europa.eu/trade/policy/accessing-markets/investment/). Nevertheless, the investment protection regime therein featured or negotiated is not comparable to a typical BIT, nor do these agreements feature the Investor-State Dispute Settlement Mechanism.
- 53.
European Commission Overview of 5 May 2015 of FTA and Other Trade Negotiations, available via http://trade.ec.europa.eu/doclib/html/118238.htm.
- 54.
After the review of the initiative, on 4 March 2015, the newly installed Commission decided to go ahead with the request for the Court’s opinion.
- 55.
The numbering is still provisional (that is why it is not perfectly consequential between the two Sections).
- 56.
Through the ASEAN Comprehensive Agreement on Investment (ACIA), signed in 2009.
- 57.
2006 UK model BIT, Art. 5.2; the wording was already adopted by China since the adoption of the 1989 model BIT (Art. 4.2).
- 58.
Cf., footnote 2 to Art. 4.c of the ACIA.
- 59.
Cf., Art. 1 of the Supplementary Agreement on Investment of the China-Chile FTA (2012), and Art. 1.4 of the China-Canada BIT (2012).
- 60.
Fedax N. V. v. The Republic of Venezuela, ICSID Case No. ARB/96/3, Decision on Objections to Jurisdiction, 11 July 1997; Salini Costruttori S. p. A. and Italstrade S. p. A. v. Kingdom of Morocco, ICSID Case No. ARB/00/4, Decision on Jurisdiction, 23 July 2001; Joy Mining Machinery Limited v. Arab Republic of Egypt, ICSID Case No. ARB/03/11, Award on Jurisdiction, 6 August 2004; Mr. Patrick Mitchell v. Democratic Republic of the Congo, ICSID Case No. ARB/99/7, Decision on the Application for Annulment of the Award, 1 November 2006; Saipem S. p. A. v. The People’s Republic of Bangladesh, ICSID Case No. ARB/05/07, Decision on Jurisdiction and Recommendation on Provisional Measures, 21 March 2007; Malaysian Historical Salvors, SDN, BHD v. The Government of Malaysia, ICSID Case No. ARB/05/10, Award on Jurisdiction, 17 March 2007; M. C. I. Power Group L. C. and New Turbine, Inc. v. Republic of Ecuador, ICSID Case No. ARB/03/6, Award, 31 July 2007; Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania, ICSID Case No. ARB/05/22, Award, 24 July 2008; Malaysian Historical Salvors, SDN, BHD v. The Government of Malaysia, ICSID Case No. ARB/05/10, Decision on the Application for Annulment, 16 April 2009; note, however, the dissenting opinion of Judge M. Shahabuddeen; Saba Fakes v. Turkey, ICSID Case No. ARB/07/20, Award, 14 July 2010; Abaclat and Others v. Argentine Republic, ICSID Case No. ARB/07/5, Decision on Jurisdiction, 4 August 2011.
- 61.
A provision of ‘scope’ in this Section is also present in ACIA and CAIA; together with that in the AANZFTA, it may thus be assumed that such a provision constitutes a solid practice of ASEAN.
- 62.
Art. 14.1 (emphasis added).
- 63.
Such a separation may ease possible future amendments of the text.
- 64.
Art. 24.2 US model BIT.
- 65.
Cf., e.g., Art. 40 ACIA; Art. 19 China-Chile Supplementary Agreement on Investment; Arts. 18.2 and 30 China-Canada BIT.
- 66.
The first two paragraphs of Art. 23 EU-Singapore reproduce Art. 36.2 ACIA.
- 67.
Oil Platforms (Islamic Republic of Iran v. United States of America), Preliminary Objection, ICJ Reports 1996, p. 822.
- 68.
Art. X.1 (emphasis added).
- 69.
Art. 2 China-Canada BIT (2012).
- 70.
Emphasis added.
- 71.
Art. 7.2 recites: ‘For greater certainty, the treatment accorded by a Party under paragraph 1 means, with respect to the a government in Canada other than at the federal level or, with respect to a government of or in a European Member State, treatment accorded, in like situation, by that government to investors in its territory, and to investment of such investors, of any third country’.
- 72.
Emilio Agustín Maffezini v. The Kingdom of Spain, ICSID Case No. ARB/97/7, Decision of the Tribunal on Objections to Jurisdiction, 25 January 2000.
- 73.
Art. 7.4, first sentence.
- 74.
Art. 7.4, second sentence. The wording is original in that it pre-emptively excludes expansive interpretations of the MFN clause. In the past, doubts have arisen as to whether the FET clause would be violated by a breach of other obligations (whether in the same or another Treaty) of the host State. Never before, however, did such an issue emerge with regard to the MFN clause.
- 75.
Art. 9.2.
- 76.
- 77.
Annex on Expropriation, para. 2.
- 78.
Art. 20, para. 1.
- 79.
Art. 20, paras. 3 and 4.
- 80.
Art. 20, para. 4.
- 81.
Art. 20, para. 7.
- 82.
Art. 20, para. 6.
- 83.
Art. 43 Canada model BIT of 2004 (not the slightly different formulation featured in Art. 35 Canada draft model BIT of 2006).
- 84.
E.g., in Italy, arbitral panels do not have the power to adopt enforceable provisional measures (cf., Art. 818 of the Italian Code of Civil Procedure).
- 85.
Art. 33 Chapter X EU-Canada FTA.
- 86.
Cf., European Parliament Resolution of 6 April 2011 on the Future European International Investment Policy, 2010/2203 (INI), available via http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P7-TA-2011-141.
- 87.
After the review of the initiative, on 4 March 2015, the new Commission decided to go ahead with the request of the Court opinion.
- 88.
The only exceptions were the BITs concluded by Germany with Spain, Portugal and Greece, due to the later accession of these States to the EU.
- 89.
Cf., e.g., Blanchfield (2015).
- 90.
Council of the European Union Directives of 17 June 2013 for the Negotiation on the Transatlantic Trade and Investment Partnership between the European Union and the United States of America, Doc. ST11103/13, paras. 22–23.
- 91.
European Parliament Resolution of 9 October 2013 on the EU-China Negotiations for a Bilateral Investment Agreement, Doc. 2013/2674 (RSP), lett. N and points 23 and 36.
- 92.
E.g., lett. L.
- 93.
Id., point 41.
- 94.
David Fouquet, Senior Associate at the European Institute for Asian Studies of Brussels, statement as reported by Borderlex 2014.
- 95.
The EU-China trade is in excess of 480 billion euros; conversely, only 2.1 % of EU FDI lands in China, and 6 % of Chinese FDI is destined to the EU area.
- 96.
Cf., Borderlex 2015; also, European Commission Overview of 5 May 2015 of FTA and Other Trade Negotiations, available via http://trade.ec.europa.eu/doclib/html/118238.htm.
- 97.
Cf., in the context of the negotiations for the US-Korea FTA, Letter of 22 July 2010 on the Korea Free Trade Agreement to President Obama from 110 Members of Congress (available via http://www.citizen.org/documents/KORUSLetterJuly2010.pdf), and Letter of 22 September 2010 on the Korea Free Trade Agreement to President Obama from 550 Organizations (available via http://www.citizenstrade.org/pdf/Korea_Opposition_Final.pdf), both requesting to discard from the Treaty the Investor-State Dispute Resolution Mechanism.
- 98.
Cf., Berger and Skovgaard Poulsen (2015).
- 99.
For instance, in 2013 Australia refused to grant to Chinese investors the same treatment accorded to US investors (US and New Zealand investments are the only ones not subject to review from the Australian Foreign Investment Review Board up to a value of 1 billion AUS dollars; all other States—including China—are subject to a much lower threshold, set at 258 million AUS dollars); this is considered to have contributed to the failure of the negotiations for an Australia-China FTA. Cf., Wallace (2013).
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Vaccaro-Incisa, G.M. (2016). Protection of Foreign Investment and the EU: Framework, Legal Risks, and First Fruits. In: Mišćenić, E., Raccah, A. (eds) Legal Risks in EU Law. Springer, Cham. https://doi.org/10.1007/978-3-319-28596-2_6
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