FISMA Intra EU investment protection law for judges

The European Union's single market is a unique area of investment opportunities in which EU law guarantees investors a high level of protection. Cross-border investors in the Union may invoke directly applicable EU rights which have supremacy over national law. Together with the Court of Justice of the EU ("CJEU") through the preliminary reference procedure national judges must ensure the full application of EU law and judicial protection of the rights of individuals in all Member States. Thus, national judges have a unique role and responsibility to implement EU law and protect intra-EU investments.

Be that as it may, governments have encouraged cross-border investments by concluding bilateral investment treaties (BITs) which foresee various protection standards, the violation of which may be claimed before investor-State arbitration tribunals. Some countries with which EU Member States had previously concluded BITs have thereafter joined the European Union. Thus, the substantive rules of BITs between Member States ("intra-EU BITs") became a parallel treaty system overlapping with single market rules. Furthermore, intra-EU BITs confer rights only to investors from one of the two Member States which are contracting parties, contrary to the principle of non-discrimination among EU investors within the single market under EU law. In addition, by foreseeing arbitration as the alternative system of dispute resolution, intra-EU BITs take away from the national judiciary litigation concerning national measures and involving EU law.

As a result, in the Achmea judgment the CJEU ruled that investor-State arbitration clauses in intra-EU BITs are unlawful, since the arbitrators adjudicating the dispute may be in need to apply EU law without having a standing to initiate a preliminary ruling procedure on the correct interpretation and application of EU law before the CJEU. Following this landmark decision, the European Commission started a procedure to terminate the intra-EU BITs which eventually resulted in the Agreement on the termination of BITs between the MS of the EU in 2020. In the aftermath of the Achmea judgment, the unlawfulness of intra-EU investor-State arbitration may result in the perception that intra-EU investors are left out in the cold in terms of adequate substantive and procedural protection. To the contrary, as already mentioned, the EU legal system protects cross-border investors in the single market. In order to remind of the most relevant substantive and procedural standards in EU law for the treatment of cross-border investments in the Union, the European Commission issued the communication on the protection of intra-EU investment.