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Brussels provides guidance on protection of cross-border EU investments

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Brussels provides guidance on protection of cross-border EU investments

Photo © Lee Torrens - Fotolia

(BRUSSELS) - The EU Commission issued guidance Thursday to help EU investors invoke their rights before national administrations and courts and to help states protect the public interest in compliance with EU law.

The Communication aims to strengthen the business environment for EU investors, says the Commission, aiming to support more investment in the EU Single Market. While EU law does not solve all problems investors may face in their activities, the EU executive says the Communication clarifies that EU law protects EU investors' rights, and investors can enforce these rights before national administrations and courts.

EU investors are no longer able to rely on intra-EU bilateral investment treaties ('intra-EU BITs'). The Commission has previously been clear that these treaties are illegal, as they overlap with the EU single market rules and discriminate between EU investors. In a recent judgment (on the Achmea case), the European Court of Justice confirmed that investor-State arbitration in intra-EU BITs is illegal. Following this judgment, the Commission has intensified its dialogue with all Member States, calling on them to take action to terminate the intra-EU BITs.

"There is no place in the Single Market for bilateral investment treaties between Member States, said EC vice-president Valdis Dombrovskis: "Today's Communication sends a strong signal that EU law already protects investors. They can therefore remain confident when investing within the EU."

The new Communication clarifies that:

-   The free movement of capital, services, goods and workers in the EU Single Market are fundamental freedoms for EU individuals. They give companies and citizens the right to establish a business, invest in a company and provide services and goods across European borders. EU investors are also protected by general principles of non-discrimination, proportionality, legal certainty and protection of legitimate expectations. EU law also recognises fundamental rights, such as the right to conduct a business, the right to property and the right to effective judicial protection. EU rules protecting investors can be found in the EU Treaty, in the Charter of Fundamental Rights of the European Union, in the general principles of Union law, and in extensive sector-specific legislation;

-   Investor-State arbitration between a Member State and an investor from another Member State is incompatible with EU law, including through 'intra-EU BITs', as the  European Court of Justice recently held in the recent judgment in the Achmea case. In that case the Court considered that investor-State arbitration clauses in EU bilateral investment treaties are not compatible with EU law and that they do not have legal effect. The Achmea judgment is also relevant for the application of the Energy Charter Treaty between EU Member States. In the Commission's view that Treaty cannot be used as a basis for dispute settlement between EU investors and EU Member States. EU law already offers a comprehensive and effective legal framework, including remedies, to intra-EU investors when they invest in another Member State;

-   At the same time, EU law allows for markets to be regulated to pursue legitimate public interests such as public security, public health, social rights, consumer protection or the preservation of the environment, which may have negative consequences for investors. Public authorities of the EU and in the Member States have a duty and a responsibility both to protect investment and to regulate markets. Therefore, the EU and Member States may take legitimate measures to protect those interests. However, they can do so only in certain circumstances and under certain conditions, and in compliance with EU law.

The Commission says the Communication will help to prevent Member States from adopting measures that infringe EU rules and assist investors in invoking their rights before administrations and national courts. It will also help legal practitioners to apply EU rules.

EU guidance on protection of cross-border EU investments - background guide

Link to the Communication

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