A few days ago, the Commission sent a Communication to the European Parliament and the Council on the protection of intra-EU investments, that is to say, those from a Union State that are made in another member State. The Communication is not Positive Law but it has the undeniable value of setting positions, indicating action guidelines and clarifying certain points.
The Communication revolves fundamentally on three axes: the total and absolute rejection of the intra-European enforcement of the Agreements for the Promotion and Reciprocal Protection of Investments (APPRIs), the inadmissibility in the same area of the Arbitral Courts of investments derived from said Agreements and even of Multilateral agreements and the existence in Union law of diverse legal mechanisms to give adequate protection to investments.
Different European States, before entering the Union, had established APPRIs between themselves. In this way, a parallel conventional system was articulated that overlapped with the rules of the single market and that sometimes led to interpretations and solutions that were incompatible with the EU order. Likewise, an alternative dispute resolution system was established outside the State Courts through Arbitral Courts, which were limited as they could not raise issues and therefore could not properly apply European Law. This situation seriously concerned the Commission, which saw intra-European APPRIs as contrary to Union law, for which reason it formally addressed several Member States to put an end to such agreements.
The position of the Commission has been confirmed by the judgement of the CJEU, dated 6th March 2018 in the Achmea case, which in essence argued that the arbitration solutions established in intra-European APPRIs are illegal from the point of view of the EU order. As a result, European investors cannot invoke intra-European APPRIs, which are illegal and also unnecessary in the single market, as there are plenty of other mechanisms to which they can turn to protect their rights. In addition, investors cannot resort to the arbitration tribunals formed by these APPRIs. All this leads the Commission to draw several important conclusions as the State Courts are obliged to annul any arbitration decision issued on the basis of these APPRIs and to oppose their execution. For their part, the Member States that are currently involved in investment arbitration must act in accordance with the Achmea doctrine and in general all the states in the Union must formally terminate the intra-European investment agreements. These findings have great significance for Spain in its litigation regarding photovoltaic energy.
It is very important that the Commission also adopts the Achmea doctrine for multilateral agreements involving EU Member States and non-European third countries. In this regard, it affirms that the investment arbitration provided for in Article 26 of the Energy Charter Treaty is not applicable in disputes between investors from one Member State and another EU State. This conclusion is not affected by the fact that the EU itself is also part of the aforementioned Treaty, since the participation of the Union only creates rights and obligations for it with third States, but does not affect relations between Member States of the EU.
The Communication expressly states that it does not address European investments in Third Countries or those of the latter in the Union. Consequently, it does not clarify whether the Achmea doctrine is applicable to the APPRIS conducted by European Countries with States outside the Union. Given this silence, we can tentatively say that it does not apply as, otherwise a high degree of legal uncertainty would be introduced in investor relations with Third Countries, especially as regards dispute resolution.
Finally the Communication details at length the way that EU law protects all intra-European international investments. Legislation regarding the single market protects investment throughout its “life” (access to the receiving market, development, etc) and the investor himself in the face of unjustified restrictions, especially as regards fundamental economic freedoms, especially the freedom of establishment and the free movement of capital. In this regard, the Communication recalls that there are various legal mechanisms to guarantee the rights of investors, both administratively and judicially and, within the latter at the level of national courts and the CJEU.
This Communication, which is well prepared and documented, is extremely relevant and has an undeniable explanatory value.
