A document leaked in April 2016 revealed that at least 5 EU-member States (Austria, Finland, France, Germany and the Netherlands) are proposing to replace their existing bi-lateral investment treaties (BITs) with a single multilateral agreement (‘EUMI’) amongst all 28 EU members. These members appear to be concerned that the European Commission is not sufficiently experienced or expert to properly accomplish what is required to meet their interests.
The process would follow Article 59 of the Vienna Convention on the Law of Treaties in that once the EUMI is complete it would supersede, and thus effectively terminate, the previous BITs. Achieving the success of this proposal would require some legal maneuvering, such as a new approach to sunset clauses, as well as the need to preserve and protect current European investors operating within the EU internal market.
These states also express their commitment to resolve any investor-State disputes through investment treaty arbitration (‘ITA’), well aware that this contradicts the European Commission’s long-term vision for investor-State dispute settlement (for more details on this subject visit our client alert here).
It will be interesting to see how this initiative develops for the States that join it, as well as how the European Commission publicly receives it, especially now, in the context of Brexit, when a business and investment-friendly UK may soon be a direct competitor for foreign investment with a reduced European Union.