The aim of this seminar paper will be to firstly give an overview of the role of investment treaties in general, followed by a retrospective on the legal situation of the foreign direct investments (FDI) prior the Treaty of Lisbon (TOL) and an analysis of the current legal framework. Based on primary and secondary sources, the scope of the Union’s exclusive FDI competence of Art. 206/207 TFEU will be inquired as well as questions of legal implementation centred on the issue of financial responsibility within ISDS. By addressing the legal status of the Bilateral Investment Treaties (BIT) concluded by MS the legal basis is set to analyse the Austrian Nigerian Agreement for the Promotion and Protection of Investment which was authorized by the Commission (COM)and concluded by the Republic of Austria in 2013. In this context it will be interesting to assess the potential for the template of this agreement to become a kind of EU-third country model BIT to be concluded by the Union and to which extent the content of the agreement would be covered by the Unions FDI competence.
With the entering into force of the TOL the European Union was massively changed in order to take on the challenges that lie ahead in the future. Among many of those institutional changes, the powers of the Union in the field of investments have been enlarged, with FDI now being part of the Common Commercial Policy (CCP). The motivation for such a an empowerment is manifold, reaching from FDI attraction and facilitation both important for European economic growth, the establishment of a level playing field for investors, to the beneficial effect of an increased negotiation leverage.
Four years have passed since the new FDI competence has been established and on the face of it not much has been achieved. Only one piece of regulation addressing questions of legal implementation has been adopted. Exclusive EU Free Trade Agreements (FTA) containing comprehensive investment provisions are still to be concluded. Nevertheless a lot of preparatory work has been conducted by the COM and the European Parliament (EP). Of course the academic debate regarding the scope of the competence is vivid as well as the other obstacles regarding the legal implementation, mainly in the field of Investor to State Dispute Settlement (ISDS).
Table of Contents
1. Introduction
2. The role of Investment Treaties and their significance in general
3. The situation before TOL and the status quo
4. What does the FDI competence of Art 206/207 really cover and what is outside the exclusive competence?
5. Legal questions and problems of the new FDI competence regarding implementation
6. The current status and the future of BITs signed by MS
7. Austrian – Nigerian Agreement for Promotion and Protection of Investment
8. Conclusion
Objectives and Research Themes
This seminar paper examines the implications of the European Union's newly acquired exclusive competence for foreign direct investment (FDI) following the Treaty of Lisbon. It aims to clarify the scope of this competence, specifically addressing legal challenges such as financial responsibility in investor-state dispute settlement (ISDS), the transition of existing bilateral investment treaties (BITs), and the potential for new investment agreements.
- The scope of the EU's exclusive FDI competence under Articles 206/207 TFEU.
- Legal implementation issues, particularly concerning financial responsibility within ISDS.
- The transition and future status of bilateral investment treaties (BITs) concluded by Member States.
- An analysis of the Austrian–Nigerian Agreement for Promotion and Protection of Investment as a template for future agreements.
- The role of the Court of Justice of the European Union (CJEU) in interpreting the competence.
Excerpt from the Book
5. Legal questions and problems of the new FDI competence regarding implementation
One aspect of crucial importance is the ISDS that will be needed in the future for the Union to fully implement its new competence and to achieve the aims set out in the introduction. If a pure Union IIA is concluded the international responsibility of the Union regarding arbitration awards is undeniable. In the case of a mixed agreement both the MS together with the Union are responsible under public international law. Although for the third country concluding such an IIA with the Union can rely on legal certainty, an internal mechanism allocating financial responsibility must be established. The following chart shows that in the past frequent violations regarding BITs have occurred. This implies that ISDS claims will also be likely in the future when the Union concludes such IIA.
Summary of Chapters
1. Introduction: This chapter introduces the transition to the new EU FDI competence under the Treaty of Lisbon and outlines the paper's aim to analyze the resulting legal framework and implementation challenges.
2. The role of Investment Treaties and their significance in general: This section provides an overview of the purpose and categorization of international investment agreements, emphasizing their role in risk mitigation and legal certainty for investors.
3. The situation before TOL and the status quo: This chapter reviews the legal landscape regarding FDI prior to the Treaty of Lisbon, noting the dualism between EU market-access agreements and Member State standalone BITs.
4. What does the FDI competence of Art 206/207 really cover and what is outside the exclusive competence?: This section discusses the scope of the new exclusive competence, specifically whether it covers investment protection and portfolio investments, and notes the Commission's broad interpretation.
5. Legal questions and problems of the new FDI competence regarding implementation: This chapter analyzes the mechanism for allocating financial responsibility in ISDS and the role of the Union versus Member States in defending such claims.
6. The current status and the future of BITs signed by MS: This section examines the transition of existing Member State BITs to the EU system, focusing on Regulation 1219/2012 and the "replacement system."
7. Austrian – Nigerian Agreement for Promotion and Protection of Investment: This chapter provides a case study of a recent Austrian BIT to illustrate practical application, model functions, and the inclusion of social/environmental provisions.
8. Conclusion: The concluding chapter summarizes the key findings regarding the EU's FDI competence, the ongoing debate on portfolio investments, and the potential of current agreements as templates for future Union-wide investment policy.
Keywords
European Union, Foreign Direct Investment, Common Commercial Policy, Treaty of Lisbon, Investor-State Dispute Settlement, Bilateral Investment Treaty, Financial Responsibility, Investment Protection, Market Access, Portfolio Investment, Legal Implementation, ANAPPI, Member States, European Commission, Arbitration.
Frequently Asked Questions
What is the core subject of this seminar paper?
The paper focuses on the legal implications and implementation challenges of the European Union's shift to an exclusive competence for foreign direct investment (FDI) following the Treaty of Lisbon.
What are the primary themes discussed in the work?
Key themes include the scope of the Union's exclusive FDI competence, the mechanism for allocating financial responsibility in investor-state disputes, the status of existing Member State BITs, and the development of a model for future Union-wide investment agreements.
What is the main research question or goal?
The goal is to analyze the legal basis of the EU's exclusive competence under Articles 206/207 TFEU, assess the management of financial responsibility in ISDS, and evaluate how the Austrian-Nigerian Agreement functions as a template for future agreements.
Which scientific methodology is applied?
The paper utilizes a legal and institutional analysis based on primary sources (Treaties, Regulations, Commission proposals) and secondary academic literature to examine the evolution of EU investment policy.
What is covered in the main body of the text?
The main body covers the transition from the pre-Lisbon legal landscape, the interpretative debate regarding the scope of the new competence (including portfolio investments), mechanisms for financial liability in ISDS, and a specific case study of the Austrian-Nigerian investment agreement.
Which keywords best characterize this publication?
The work is characterized by terms such as EU FDI competence, Common Commercial Policy, ISDS, BITs, financial responsibility, and investment protection.
How does the author view the "replacement system" for existing BITs?
The author describes the replacement system introduced by Regulation 1219/2012 as a hybrid of authorization and replacement, noting the power struggle between the Council and EU institutions during its legislative process.
What is the significance of the Austrian-Nigerian Agreement (ANAPPI) in this study?
The ANAPPI serves as a practical case study of a BIT concluded after the introduction of the new EU framework, acting as a potential role model or template for future agreements, despite its marginal economic volume.
Why are portfolio investments a point of academic contention?
They are contentious because the Treaties do not explicitly define FDI in a way that excludes portfolio investments, leading to debates about whether the Union's exclusive competence covers both or only direct investments.
- Quote paper
- Sebastien Meilinger (Author), 2014, The New EU Competence for Foreign Direct Investment. Legal Questions of its Implementation, Munich, GRIN Verlag, https://www.grin.com/document/334924
