European Commission requests Member States to terminate intra-EU BITs

On June 18, 2015, the European Commission initiated infringement proceedings against Austria, the Netherlands, Romania, Slovakia and Sweden, formally requesting them to terminate their bilateral investment treaties (BITs) with other EU Member States.

According to the Commission, these treaties are out-dated and no longer necessary, since all Member States are subject to the same rules on cross-border investments, such as freedom of establishment and of capital. It indicates that the rights conferred by intra-EU BITs on a bilateral basis to investors of some Member States constitute nationality-based discrimination and are incompatible with EU law.

The five states have two months to reply to the request. While other infringement proceedings are expected, the Commission is initiating an administrative dialogue on intra-EU BIT termination with all other Member States—except for Ireland and Italy, which terminated their own in 2012 and 2013, respectively. A meeting to ensure coordinated termination will be held in October.

In parallel, the Commission plans to discuss improved investment protection within the bloc. Lord Jonathan Hill, EU Commissioner for Financial Services, Financial Stability and Capital Markets Union, stated that “the Commission is ready to explore the possibility of a mechanism for the quick and efficient mediation of investment disputes.”