European Investment Agreements in the Post-Lisbon Era: Perspectives from the European Parliament

Abstract

Professor Moreira’s presentation attempts to address his perspectives regarding the future of European investment law and policy. With the entry into force of the Treaty of Lisbon on 1 December 2009, the competence to regulate foreign direct investment has shifted from the Member States to the European Union. Before the Treaty of Lisbon, the European Union already had the competence to negotiate various investment-related issues, in particular certain investment liberalization elements. What the European Union was not able to do, was to negotiate agreements providing protection to established investment. Until the entry into force of the Treaty of Lisbon, this area remained in the hands of the Member States, which by 2009 had negotiated over 1,200 bilateral investment treaties (BITs) worldwide.

The transfer of competences in the investment field constitutes a development of enormous importance not only for Europe, but also for the development of international investment law and policy in general. The shift opens up the chance for the European Union to develop a new approach towards international investment regulation, taking into consideration the prolific jurisprudence and practice developed in more than a decade of investor–state arbitration activism. Further, the transfer of competences will eventually entail the substitution of the myriad of BITs subscribed to by Member States with a common European treaty practice. Such a development would certainly have an impact on the current extensive and patchy international investment regime, which comprises thousands of different kinds of international investment agreements.

The shift in competences resulting from the Treaty of Lisbon also raises numerous issues, challenges and questions which have yet to be answered. The international investment context has significantly changed over the last two decades. Trade and investment flows have become complementary to each other. Investment flows no longer move exclusively in a North–South direction. Emerging economies have become the main investors in developed countries. New kinds of investors – such as sovereign wealth funds and state enterprises – have also appeared on the international investment scene. All these transformations will have to be taken into account in the development of the post-Lisbon European Investment Agreements. Further, the transfer of competences in the investment area also raises numerous complex legal issues which will need to be resolved. One of them is how to effectively execute the transition from the numerous existing BITs – some even currently applying among EU Member States — to the new common instruments. Other unresolved questions are whether to apply investor—state arbitration as a means to resolve disputes related to the interpretation or application of the new investment agreements, and how such arbitrations would operate when a supra-national entity – such as the European Union — is involved in the dispute.