Jurists are concerned about the European Commission’s decision, following a Communication on investor protection published last Thursday and published today by Cinco Días. According to the European Commission, the international awards that have been made in favour of European investors have no value, whether they invoke bilateral protection treaties or invoke the Energy Charter. Both would be incompatible with EU law, which reserves the exclusive competence of national and European courts to interpret EU law and ensure investor protection.
The Commission has published on the 19th of July 2018 a set of guidelines (http://ec.europa.eu/finance/docs/policy/180719-communication-protection-of-investments_en.pdf) to help EU investors to assert their rights before national administrations and courts and to help Member States protect the public interest in accordance with EU law. The Communication aims to strengthen the business environment for EU investors. This is a crucial element in enhancing investment in the EU single market. Union law does not solve all the problems that investors may face in their activities. However, the Notice specifies that EU law protects the rights of EU investors and that investors can assert these rights before national administrations and courts.
EU investors can no longer rely on bilateral investment treaties (hereinafter referred to as’EU internal BITs’). As the Commission has repeatedly stated, these treaties are illegal because they overlap with EU single market rules and discriminate between EU investors. In a recent judgment (in the Achmea case), the European Court of Justice confirmed that investor-state arbitration in EU internal BITs is illegal. Following this judgment, the Commission has intensified its dialogue with all Member States, calling on them to take action to end the EU’s internal BITs.
Meanwhile, there is uncertainty about the fate of any awards that may be made condemning Spain to compensate investors, for which Spain can save 7.5 billion in arbitrations. It is possible that the courts of EU countries may refuse its enforcement insofar as the decision has qualified the compensation as State aid and it cannot be granted without notice to the European Commission. This problem, however, would not arise in the enforcement of such awards outside the EU. The Energy Charter Treaty does not apply to investors from one Member State who initiates a dispute against another EU country. Therefore, Brussels only protects claims from non-EU investors.