European Commission communication on protection of intra-EU investment rejects ECT as a basis for intra-EU ISDS

On July 19, 2018, the European Commission (EC) published a communication to the European Parliament and the Council of the European Union (EU) titled Protection of Intra-EU Investment.

The EC stressed its long-standing position that intra-EU bilateral investment treaties (BITs) are incompatible with EU law. It highlighted the March 8, 2018 judgment in the Achmea case, in which the Court of Justice of the European Union (CJEU) held that investor–state arbitration clauses in intra-EU BITs are unlawful. For the EC, the Achmea decision is also relevant for the application of the Energy Charter Treaty (ECT). In the EC’s view, the ECT cannot be used as a basis for dispute settlement between EU investors and EU member states.

The communication recalls the most relevant substantive and procedural standards in EU law for cross-border investments within the EU. It is intended to dispel any perception that, as a result of the Achmea judgment, EU law does not provide for adequate safeguards for intra-EU investors.