European Commission publishes model BIT clauses between EU member states and third countries

In September 2023, the European Commission has unveiled a non-paper presenting model clauses for BITs between EU member states and third countries. These model clauses, accompanied by annotations, aim to guide member states in negotiating or renegotiating their BITs with third states. They reflect the EU’s investment-protection approach but are not an official EU model BIT. The model clauses cover various aspects like FET, expropriation, relationship to tax agreements, sustainable development, parallel claims, early dismissal of unfounded claims, and arbitrators’ ethical conduct. They also contain a number of EU-specific provisions, such as temporary measures to safeguard the operation of the economic and monetary union, and limits to arbitrators’ power to assess domestic and EU law in investor–state disputes. While promoting a multilateral investment court, they do not prohibit states from using investor–state arbitration. The model clauses are likely to influence future BIT negotiations despite being non-binding. What is worth highlighting is that while they are presented as being based on member states’ best practices, overall, the model clauses are based on a strong investment-protection rationale, containing, for example, broad definitions of “investor” and “investment” and even an umbrella clause. Their CSR provisions do not contain investor obligations.