International Investment Agreements between EU Member-States

More than half of all the ISDS cases ever brought by German investors have been directed against other EU member-states. The European Commission has demand-ed that the EU member-states terminate their international investment agreements with other EU states. Nevertheless, investor protection must be upheld.

Almost half of all German foreign investment (44.7 percent) is located in the rest of the EU, with a stock of 410.7 billion euros (2013). The foreign turnover generated by German companies through these investments (1.1 billion euros) far exceeds Germany’s exports to those countries (2013: 0.6 billion euros). These investments are protected by 14 German IIAs with other EU member-states (intra-EU IIAs), including Bulgaria, the Czech Republic, and Poland. While that represents little more than 10 percent of the 129 currently valid German IIAs, 30 of the 51 cases initiated by German investors up to January 2016 have been against members of the EU-28. Of these 51 cases, 15 were pursued under the plurilateral Energy Charter Treaty, which also has signatories outside the EU.

In the EU as a whole, according to UNCTAD, there were 196 intra-EU IIAs as of January 2016. In June 2015, the European Commission wrote to 26 member-states demanding that they terminate all their existing intra-EU IIAs. Ireland and Italy had already terminated their intra-EU IIAs and were therefore unaffected. In five cases, the Commission announced that it would launch an infringement procedure (Austria, the Netherlands, Romania, Slovakia, and Sweden). For the other 21 member-states, including Germany, it announced a preliminary procedure. The Commission believes that the existence of a shared internal market makes intra-EU IIAs superfluous, and in fact incompatible with European law. Although many of the Commission’s arguments are reasonable, investor protection must not be removed without a proper replacement. The Commission and the member-states are currently discussing how to proceed.