On 20 December 2012 the Official Journal of the EU published Regulation No. 1219/2012 of the European Parliament and of the Council of 12 December 2012 establishing transitional arrangements for bilateral investment agreements between Member States and third countries: 

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:351:0040:0046:EN:PDF    

Regulation 1219/2012 shall enter into force on 9 January 2013 (20 days after its publication in the Official Journal, according to its Article 17).

The aim of Regulation 1219/2012 is to define an orderly transition for existing BITs between EU Member States and third countries after the EU Lisbon Treaty, which entered into force on 1 December 2009, included foreign direct investment as an exclusive competence of the EU (Articles 3(1)(e) and 207(1) of TFEU). According to Article 3, the BITs may be maintained in force, or enter into force, in accordance with the TFEU and this Regulation, until a BIT between the EU and the third country enters into force.

This Regulation affects hundreds of BITs signed by EU Member States with third countries as early as in 1959. However, this Regulation is not applicable to so-called intra-EU BITs (i.e., between two EU Member States).

The Regulation includes provisions for:

a) BITs signed before 1 December 2009 (Bloc I);

b) BITs signed between 1 December 2009 and 9 January 2013 (Bloc II); and,

c) BITs to be signed after 9 January 2013 (Bloc III).

A short explanation of the provisions of the Regulation is included in the appendix below.

Furthermore, it is to note that, under Article 13, from now onwards the Commission shall be immediately informed by a Member State of any request for dispute settlement under a BIT (i.e., investment treaty arbitration and State-to-State arbitration). For investor-to-State arbitration, Article 13(b) of Regulation 1219/2012 states that the Member State and the Commission shall fully cooperate and take all necessary measures to ensure an effective defence which may include, where appropriate, the participation in the procedure by the Commission.

We would like to conduct a survey about the impact of this Regulation State by State. We would be glad to have your input about your country.

APPENDIX

BLOC I

Signature of the BIT State A (EU Member State) – State B (non-EU Member State) before 1 December 2009

 

Circumstances of the BIT for State A

a)       already in force (State A wishes to maintain it); or,

b)       not yet in force (State A wishes to permit it to enter into force)

 

Applicable provisions: Articles 2-6

  • Notification by State A to the Commission of the list of BITs by 8 Feb 2013[1] (Art. 2).
  • First list of BITs to be published by the Commission in the OJEU by 8 May 2013 (Art. 4(2)).
  • The Commission may object to a BIT if it establishes that one provision thereof constitute a serious obstacle to the negotiation or conclusion by the EU of a BIT with third countries → opening of consultations between the Commission and State A (Art. 6(2)).
 
 

BLOC II

Signature of the BIT State A (EU Member State) – State B (non-EU Member State) between 1 December 2009 and 9 January 2013

 
Circumstances of the BIT for State A a) already in force (State A wishes to maintain it); or,

b) not yet in force (State A wishes to permit it to enter into force)

 

Applicable provisions: Article 12

  • Notification by State A to the Commission of the list of BITs by 8 Feb 2013 (Art. 12(1)).
  • The Commission shall make an assessment as to whether the BIT complies with Article 9(1) and (2) of the Regulation (Art. 12(2)).

→ Yes: authorisation by the Commission by 8 Aug 2013 (Art. 12(3) and (4)).

→ No: no authorisation by the Commission on reasons given by the Commission (Art. 12(8)).

 
 

BLOC III

Signature of the BIT State A (EU Member State) – State B (non-EU Member State) after 9 January 2013

 
Circumstances of the BIT for State A

a)       State A wishes to amend an existing BIT; or,

b)       State A wishes to conclude a new BIT

 

Applicable provisions: Articles 8-11

  • Notification by State A to the Commission at least 5 months before formal negotiations are to commence (Art. 8(1) and (3)).
  • Authorisation by the Commission unless it concludes that the opening of negotiations would:

a)       be in conflict with EU law;

b)       be superfluous, because the Commission has submitted or has decided to submit a recommendation to open negotiations with the third country;

c)       be inconsistent with EU’s principles and objectives for external action; or

d)       constitute a serious obstacle to the negotiation or conclusion of a BIT with third countries by the EU (Art. 9(1)).

Furthermore, the Commission may require State A to include or remove from such negotiations and prospective BIT any clauses where necessary to ensure consistency with the EU’s investment policy or compatibility with EU law (Art. 9(2)).

  • The Commission may request to participate in the negotiations (Art. 10).
  • State A shall transmit the text of the BIT to the Commission before its signature (Art. 11(1)).

→ Yes: authorisation by the Commission to State A to sign and conclude the BIT (Art. 11(4)).

→ No: no authorisation by the Commission on reasons informed by the Commission (Art. 11(8)).

 


[1] Or within 30 days of the date of their accession to the EU. This is relevant for Croatia as it will become a EU Member State on 1 July 2013.

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