The Compatibility of Future EU Investment Agreements with EU Law

Compatibility with EU law presents a key challenge for the success of EU investment policy. When EU institutions conclude EU IIAs, they should consider the limitations imposed by primary EU law and the impact of EU IIAs on the legality and validity of secondary Union law.

As comprehensive EU IIAs will integrate investment liberalization and protection and will be (partly) based on BITs, significant adjustments to BIT language are required in order to ensure compatibility: the definition of investor has to respect Article 54 TFEU, exceptions reflecting the TFEU should be included to the provisions on capital transfers, Most Favoured Nation (MFN) and National Treatment, and the subject-matter and the available remedies under investor-state arbitration should be limited so as to respect the autonomy of the EU legal order. Equally important, EU IIAs provisions on Fair and Equitable Treatment (FET), umbrella clauses and expropriation have to establish linkages with internal Union rules, promoting legal certainty and avoiding future challenges of secondary Union rules.