{"id":304,"date":"2009-09-28T07:09:00","date_gmt":"2009-09-28T12:09:00","guid":{"rendered":"http:\/\/itn.mattrock.ca\/2009\/09\/28\/advocate-general-renders-opinion-on-finlands-investment-treaties-with-non-eu-countries-sweden-begins-compliance-with-earlier-ecj-decision\/"},"modified":"2024-08-09T18:26:01","modified_gmt":"2024-08-09T16:26:01","slug":"advocate-general-renders-opinion-on-finlands-investment-treaties-with-non-eu-countries-sweden-begins-compliance-with-earlier-ecj-decision","status":"publish","type":"post","link":"https:\/\/www.iisd.org\/itn\/2009\/09\/28\/advocate-general-renders-opinion-on-finlands-investment-treaties-with-non-eu-countries-sweden-begins-compliance-with-earlier-ecj-decision\/","title":{"rendered":"Advocate General renders opinion on Finland’s investment treaties with non-EU countries; Sweden begins compliance with earlier ECJ decision"},"content":{"rendered":"

October 2, 2009 <\/strong><\/p>\n

Correction<\/em>: The original version of this article indicated that the ECJ<\/span> had rendered a decision in the case Finland. In fact, an Advocate General has issued an opinion, which is not binding on the Court. The article has been revised accordingly. <\/strong><\/strong>\u00a0<\/strong><\/p>\n

An Advocate General of the European Court of Justice (ECJ) has opined that some of Finland\u2019s bilateral investment treaties (BITs) with non-European countries are incompatible with European Community (EC<\/span>) law. The opinion comes six months after the ECJ rendered a decision with respect to a number of Sweden\u2019s and Austria\u2019s BITs.<\/p>\n

An opinion of an Advocate General provides guidance but is not binding on the full court.\u00a0An ECJ ruling could still be several months away.<\/p>\n

The case against Finland\u2014as with Sweden and Austria\u2014was led by the European Commission, which argues that BIT<\/span> clauses that protect non-European investors\u2019 freedom to transfer investment-related capital out of the EU<\/span> are incompatible with the European Council\u2019s legal right to restrict capital transfers in exceptional circumstances.<\/p>\n

Finland, along with Sweden, Austria and a number of other EU countries that intervened, maintain that the Commission\u2019s concern is hypothetical until the point that the European Council decides to restrict capital flows. In the judgment involving Sweden and Austria, this line of argument was dismissed by the ECJ, which stressed that the European Council must be able to act immediately to restrict capital flows if deemed necessary. That opinion has been affirmed by an advocate general in the case against Finland.<\/p>\n

But Finland also introduced a new argument, which hinged on the following clause in Finland\u2019s BITs:<\/p>\n

\u201cEvery contracting party guarantees under all circumstances, within the limits authorised by its own laws and decrees and in conformity with international law, a reasonable and appropriate treatment of investments made by citizens or companies of the other contracting party.\u201d<\/p>\n

Finland argued that the \u201climits authorised by its own laws and decrees\u201d includes the constraints set by European Community law, given that EC law forms an integral part of its domestic law. As such, Finland maintained that its treaties protect the right of the European Council to intervene to restrict capital flows.<\/p>\n

However, the ECJ Advocate General\u00a0countered that Finland could not guarantee that an arbitral tribunal would agree with this line of thinking. \u201cThe mere possibility that an international court or an arbitral tribunal might interpret the contested clause in that way does not suffice to discharge Finland\u2019s obligations,\u201d writes the ECJ Advocate General, Eleanor Sharpston.<\/p>\n

Having arrived at the conclusion that BIT clauses that guarantee free movement of capital are incompatible with European Community law, the opinion recommends Finland \u201cto take all appropriate steps to eliminate the incompatibilities …\u201d Similar instructions were left with Sweden and Austria, in the March 3rd ruling involving certain of their bilateral investment treaties.<\/p>\n

The Swedish Ministry of Foreign Affairs tells ITN<\/span> that it is working with its treaty partners to insert new text on capital transfers into the relevant bilateral investment treaties. Repeated queries to the Austrian Ministry of Finance, asking whether it was taking steps to address the ECJ judgment, were not returned.<\/p>\n

The ECJ cases involving Austria, Sweden and Finland mark just one point of tension between the European Commission and EU member states over international investment agreements. While the ECJ cases center on BITs between EU member states and non-European countries, the Commission has also raised concern over the 150 or so BITs that exist between European countries.<\/p>\n

A central concern of the Commission stems from the fact that BITs allow investors to settle disputes through international arbitration, rather than through domestic courts or the ECJ.\u00a0 The Commission warned in 2006: \u201cThis could lead to BIT arbitration taking place without relevant questions of EC law being submitted to the ECJ, with unequal treatment of investors among Member States a possible outcome.\u201d<\/p>\n

However, according to a recent memo from the EU\u2019s Economic and Financial Committee (EFC), most EU countries do not share this concern. After consulting with member states, the EFC concluded that the \u201cclear majority of Member States preferred to maintain the existing agreements.\u201d<\/p>\n

The Opinion of Advocate General Sharpston, Case C\u2011118\/07, Commission of the European Communities v Republic of Finland is available from the website of the ECJ:<\/p>\n

http:\/\/curia.europa.eu\/jurisp\/cgi-bin\/form.pl?lang=en&alljur=alljur&jurcdj=jurcdj&jurtpi=jurtpi&jurtfp=jurtfp&numaff=C-118\/07&nomusuel=&docnodecision=docnodecision&allcommjo=allcommjo&affint=affint&affclose=affclose&alldocrec=alldocrec&docor=docor&docav=docav&docsom=docsom&docinf=docinf&alldocnorec=alldocnorec&docnoor=docnoor&radtypeord=on&newform=newform&docj=docj&docop=docop&docnoj=docnoj&typeord=ALL&domaine=&mots=&resmax=100&Submit=Rechercher<\/a><\/p>\n