Mutual Termination of Sunset Clauses in Intra-EU BITs: The Search for Investor Protections - ARIA -Vol. 29, No. 2
Originally from American Review of International Arbitration, (ARIA)
Over the past decade, the European Commission (“Commission”) has shown clear hostility towards bilateral investment treaties concluded between member States of the European Union (“Intra-EU BITs”). Beginning in 2004, the Commission has intervened as amicus curiae in many arbitrations initiated pursuant to intra-EU BITs, taking the position that such BITs are contrary to European Union (“EU”) law.
According to the Commission, intra-EU BITs are therefore void, and tribunals constituted pursuant to these BITs have no jurisdiction to hear investment claims.
The Commission has made similar interventions in domestic enforcement proceedings around the world when parties seek to enforce awards arising out of these arbitrations,and, separately, has launched infringement proceedings against EU member States to force them to terminate their intra-EU BITs.
The Commission’s efforts culminated in the recent Achmea decision by the Court of Justice of the European Union (“CJEU”) that declared intra-EU BITs to be contrary to EU law. This means that member States now have an obligation under EU law to terminate or re-negotiate their intra-EU BITs.
This paper thus seeks to answer the question whether, in the context of intra-EU BITs, the protections of sunset clauses are truly illusory against mutual termination or whether investors in fact have plausible claims against the Commission, the host-State, or their home-State upon the mutual termination of a sunset clause and the underlying BIT. This paper will first detail how the mutual termination mechanism operates under orthodox treaty law (Part B). In particular, it will outline the traditional understanding of intra-EU BITs as conventional bilateral treaties that confer mere privileges to investors which are terminable by the States at will and without consequences to the States.
This paper will then present and evaluate causes of action that investors may have—under the BIT (Part C), and under EU law (Part D)—to obtain a remedy for the mutual termination of a sunset clause by States.