International Investment Law and EU Law (European Yearbook of International Economic Law)

European Yearbook of International

Economic Law

Advisory Board

Armin von Bogdandy

Thomas Cottier

Stefan Griller

Armin Hatje

Meinhard Hilf

Horst G. Krenzler

John H. Jackson

Ernst-Ulrich Petersmann

Rudolf Streinz

Editors

Christoph Herrmann

Jörg Philipp Terhechte

.

Marc Bungenberg l Jo¨rn Griebel l

Steffen Hindelang

Editors

International Investment Law

and EU Law

Editors

Professor Dr. Marc Bungenberg, L.L.M.

University of Siegen

Economics and Economic Law

Ho¨lderlinstr. 3

57068 Siegen

Germany

[email protected]

Professor Dr. Jo¨rn Griebel, D.E.S.

University of Cologne

International Investment Law

Centre Cologne

Albertus Magnus Platz

50935 Ko¨ln

Germany

[email protected]

Dr. Steffen Hindelang, L.L.M.

Humboldt-University of Berlin

Juristische Fakulta¨t, WHI

Unter den Linden 6

10099 Berlin

Germany

[email protected]

ISBN 978-3-642-14854-5 e-ISBN 978-3-642-14855-2

DOI 10.1007/978-3-642-14855-2

Springer Heidelberg Dordrecht London New York

# Springer-Verlag Berlin Heidelberg 2011

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Preface

The entry into force of the Lisbon Treaty entails sweeping changes with respect to

foreign investment regulation. Most prominently, the Treaty on the Functioning of

the European Union (TFEU) now contains in its Article 207 an explicit competence

on the regulation of foreign direct investment as part of the Common Commercial

Policy (CCP).

With its new competence the EU will become a new actor in the field of

international investment policy and law. Although the Lisbon Treaty solves pro￾blems of the past in some policy fields, the new empowerment in the field of

international investment law prompts a multitude of questions. Karel de Gucht

was asked in his parliamentary hearings before being appointed Commissioner for

External Trade on his position on the “investment topic”. He stated:

Investment is a completely new competence for DG Trade. ... We will have to address a lot

of issues in this respect, and I suggest that some time soon we should have a follow-up

discussion on this matter on the basis of a communication on how the European Commis￾sion is going to address it. There are existing investment agreements, by which I mean

agreements for protecting investments. ... First of all we will preserve legal certainty, then

we will look closely at what initiatives we should take, and towards which countries.

Within our prerogatives with respect to investment, legal certainty for investments in third

countries is a main topic that we should certainly address very soon because, for example, it

has a lot to do also with energy security. ...

As this statement of Commissioner van Gucht only gave slight indications of

what the answers to many of the key questions arising following the shift

of competence are, it is the purpose of this volume to analyse in depth the new

“post-Lisbon situation” in the area of investment policy, provoke further discussion

and offer new approaches. The “Tu¨bingen Workshop on International Investment

Law and EU Law” of 18 September 2009 – just a little more than 2 months before

the entry into force of the Lisbon Treaty – dealt with the most prominent problems

resulting from the transfer of competences to the European level. This conference

formed the basis of this publication.

The analysis starts off with a contribution by Steffen Hindelang und Niklas

Maydell which does not only reflect on the Union’s new explicit competences on

v

foreign investment in a historic perspective, but places it in their broader context, i.

e. the interrelations with the fundamental freedoms and other Treaty provisions.

Following this, August Reinisch and Marc Bungenberg discuss the division of

competences between the EU and its Member States after the entry into force of

the new treaty. Jo¨rg Philipp Terhechte und Markus Burgstaller proceed with

analysing the impact of the shift of competences on the existing net of bilateral

investment treaties of the Member States. In this context Jo¨rg Philipp Terhechte

also deals with the Lisbon decision of the German Constitutional Court in regard to

EU and German investment policy.

The possible future of a European investment policy is addressed by Tillmann

R. Braun und Carsten Nowak, who discuss the possible options for a future

agreement/future agreements. In his comment Jo¨rn Griebel proposes the adoption

of a multilateral/plurilateral investment platform as the probably most efficient

solution to the problem. Finally, Lars Markert and Andre´ von Walter discuss one

of the key questions of a future investment system, the question of how to balance

investors’ rights with regulatory interests of the host state.

As organizers of the Tu¨bingen Workshop and editors of this volume, we would

like to thank Martin Nettesheim and his chair from the University of Tu¨bingen for

their kind support in organizing the conference at Tu¨bingen University. Thanks are

also due to Gleiss Lutz, Stuttgart, for interest in the topic and the kind financial

support. Albert Alexander Link from the chair of Christoph Herrmann at the

University of Passau took care of language editing and the layout of the manuscript

of this volume – special thanks to him for this substantial help. We are equally

grateful to Christoph Herrmann and Jo¨rg Philipp Terhechte as well as Brigitte

Reschke from Springer for considering this topic as one of the current “hot topics”

in international economic law and accepting it as the first “Special Issue” of the

European Yearbook of International Economic Law.

Marc Bungenberg

Jo¨rn Griebel

Steffen Hindelang

vi Preface

Contents

The EU’s Common Investment Policy – Connecting the Dots .............. 1

Steffen Hindelang and Niklas Maydell

The Division of Competences Between the EU and Its Member

States in the Area of Investment Politics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Marc Bungenberg

The Division of Powers Between the EU and Its Member States

“After Lisbon” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

August Reinisch

The Future of Bilateral Investment Treaties of EU Member States . . . . . . 55

Markus Burgstaller

Art. 351 TFEU, the Principle of Loyalty and the Future Role

of the Member States’ Bilateral Investment Treaties . . . . . . . . . . . . . . . . . . . . . . 79

Jo¨rg Philipp Terhechte

For a Complementary European Investment Protection . . . . . . . . . . . . . . . . . . 95

Tillmann Rudolf Braun

Legal Arrangements for the Promotion and Protection of Foreign

Investments Within the Framework of the EU Association

Policy and European Neighbourhood Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105

Carsten Nowak

The New Great Challenge After the Entry Into Force of the Treaty

of Lisbon: Bringing About a Multilateral EU-Investment Treaty . . . . . . . 139

Jo¨rn Griebel

vii

Balancing Investors’ and Host States’ Rights – What Alternatives

for Treaty-makers? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141

Andre´ von Walter

The Crucial Question of Future Investment Treaties: Balancing

Investors’ Rights and Regulatory Interests of Host States . . . . . . . . . . . . . . . . 145

Lars Markert

Annex

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE

EUROPEAN PARLIAMENT, THE EUROPEAN ECONOMIC AND

SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS

“Towards a Comprehensive European Investment Policy”, COM(2010)343

final

Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND

OF THE COUNCIL Establishing Transitional Arrangements for Bilateral

Investment Agreements and Third Countries, COM(2010)344 final

viii Contents

Contributors

Tillmann Rudolf Braun currently serves in the Coordination Unit of the Federal

Foreign Office, Berlin, Germany. He was Deputy Head, Directorate-General for

External Economic Policy, Federal Ministry of Economics and Technology, Berlin,

where his professional responsibilities included inter alia negotiating bilateral

investment treaties (BITs) on behalf of the German Government. He was a global

fellow of practice and government and visiting scholar at New York University

School of Law. He studied law in Munich and holds an MPA from Harvard

University, Kennedy School of Government, Cambridge, Massachusetts. He has

published and lectured on international investment law and on Germany’s BITs in

German, English and Chinese and is on the scientific board of the International

Investment Law Centre Cologne, Germany.

Marc Bungenberg is Professor of Public Law, European Law, Public International

Law and International Economic Law at the University of Siegen, Germany. He

studied law in Hanover and Lausanne (LL.M. 1995). Marc received a doctorate in

law from the University of Hanover, Germany, and his Habilitation from the

University of Jena, Germany. His main fields of research are European and inter￾national economic law (especially the EU Common Commercial Policy , state aid,

procurement and international investment law). Marc is Academic Advisor at the

International Investment Law Centre Cologne, Germany.

Markus Burgstaller is a Senior Associate in Hogan Lovells’ international arbitra￾tion practice area in London. He has significant experience in advising both

investors and states in international disputes, including arbitrations under ICSID,

ICC, LCIA and UNCITRAL rules. He also advises investors on structuring invest￾ments worldwide. Before joining Hogan Lovells in 2007, Markus worked as

International Legal Advisor to the Austrian Chancellor. Previously, he worked as

Assistant Professor at the University of Vienna’s Institute of Public International

Law and at international law firms in Vienna and Paris. Markus is the author of

numerous publications on public international law and European law. He also

ix

frequently speaks on his areas of interest at international conferences. In 2008 the

Austrian Government nominated Markus to the ICSID Panel of Conciliators.

Markus holds an LL.M. degree from New York University, a master’s degree in

both law and philosophy and a Ph.D. degree in public international law from the

University of Vienna. He is qualified as an attorney and counsellor at law in New

York and as a solicitor in England and Wales.

Jo¨rn Griebel is Assistant Professor of Public Law, International Law and Interna￾tional Investment Law at the International Investment Law Centre Cologne (Uni￾versity of Cologne). He studied at the University of Cologne and University College

London. He gained the qualification diploˆme d’e´tudes supe´rieures (D.E.S.) from the

Institut Universitaire de Hautes E´tudes Internationales (Geneva) and holds a Ph.D.

(Dr. jur.) degree from the University of Cologne. Jo¨rn has published in various

fields of law, in particular international law and international investment law. His

practical experience includes inter alia investment proceedings.

Steffen Hindelang is a Senior Research Associate and Lecturer at Humboldt

University Berlin, Germany, Faculty of Law, Walter Hallstein Institute of European

Constitutional Law. He is also an academic adviser to the International Investment

Law Centre Cologne. Previously, Steffen worked as a Research Associate and

lecturer at the Eberhard Karls University Tu¨bingen. He studied law and economics

at the universities of Bayreuth, Sheffield and Marburg and holds an LL.M. degree

from the University of Sheffield and a Ph.D. degree in law (Dr. iur.) from Eberhard

Karls University Tu¨bingen. His research interests and advisory experiences com￾prise constitutional law; European Union law, especially fundamental freedoms;

public international and international economic law, especially international invest￾ment law, international arbitration and dispute settlement; and comparative public

law. Steffen is a frequent speaker at conferences and seminars on European and

public international law. He has authored several publications in English, German

and Russian.

Niklas Maydell is an Associate in Cleary Gottlieb’s Brussels office. He specializes in

EU law and public international law, in particular investment arbitration. Previously,

he worked as an Assistant Professor at the Vienna University of Economics and

Business, Institute of European and Public International Law and at the European

Commission’s Directorate-General for External Trade, where he was closely

involved in the European Commission’s reform of its investment law regime. Niklas

is the author of numerous publications on EU and public international law. He also

frequently speaks on his areas of interest at international conferences. Niklas holds an

LL.M. degree from Columbia University, a Ph.D. (Dr. iur.) degree in public interna￾tional law from the University of Vienna (Prof. A. Reinisch) and a master’s degree in

law (Mag. iur.) from the University of Vienna. He also studied law at the University

of Urbino in Italy.

x Contributors

Lars Markert is an Associate in the Stuttgart office of Gleiss Lutz. He specializes

in international commercial and investment arbitration, cross-border transactions

and litigation. He is an academic advisor at the International Investment Law

Centre Cologne and frequently publishes on issues of international investment

law and arbitration. Lars studied law at the universities of Wu¨rzburg and Cologne

(Dr. iur). He has also obtained degrees from both the University of Aix-en-Provence

(maıˆtrise en droit) and Georgetown University Law Center (LL.M.). He has been

admitted to the German and New York bars and is a lecturer on international

arbitration and investment law at the University of Speyer.

Carsten Nowak is Professor of Public Law, especially European Union law, at the

Europe University Viadrina Frankfurt (Oder), Director of the new Frankfurt Insti￾tute for the Law of the European Union (FIREU) and Lecturer at the University of

Hamburg/Europa-Kolleg Hamburg (Postgraduate Programme Master of European

and European Legal Studies). He studied law at the University of Hamburg, from

which he received a doctorate in law and his Habilitation. His main fields of

research are German and international public law and European law (especially

European economic law, fundamental freedoms, competition law, judicial protec￾tion and fundamental rights).

August Reinisch is Professor of International and European Law at the University

of Vienna and Adjunct Professor at the Bologna Center/SAIS of Johns Hopkins

University. He holds master’s degrees in philosophy (1990) and in law (1988)

as well as a doctorate in law (1991) from the University of Vienna and an LL.M.

degree (1989) from NYU Law School. He has widely published on international

law, with a recent focus on investment law and the law of international organiza￾tions. He currently serves as an arbitrator on the In Rem Restitution Panel according

to the Austrian General Settlement Fund Law 2001, dealing with Holocaust-related

property claims, and as an arbitrator and expert in a number of investment disputes.

Jo¨rg Philipp Terhechte is Acting Professor for Public Law, European Law and

International Economic Law at Leuphana University Lu¨neburg, Adjunct Professor

at Europa-Kolleg Hamburg, Bielefeld University, the State University of Mongolia

and the China–Europe School of Law, Beijing, and Visiting Lecturer at the Univer￾sity of the Saarland. He studied law, economics and philosophy and holds a doctoral

degree from Bielefeld University. In 2005 and 2006, he was a visiting professor at

the US Federal Trade Commission, Washington, DC, and a visiting scholar at the

George Washington University Law School as well as at Georgetown Law Center,

Institute for International Economic Law, Washington, DC. He is a consultant to

the OECD, GTZ, the European Commission, the Hungarian Competition Authority

and the Mongolian Competition Authority in Ulaan Bator (Mongolia). His main

fields of research are EU law, competition law and international economic law.

Andre´ von Walter is a Political Advisor and Negotiator for International Investment

and Corporate Social Responsibility at the Ministry of Foreign and European Affairs,

Contributors xi

Paris. Previously, he was a Lecturer of public international law and international

economic law at the University Paris I Panthe´on-Sorbonne (2008–2009) and a Senior

Research Fellow at the Institute for Public International Law of the University of

Bonn (2003–2008). He holds an LL.M. degree (Universite´ Paris I Panthe´on-Sor￾bonne/University of Cologne) and an MPA from the E´ cole Nationale d‘Administra￾tion, Paris–Strasbourg, France. Andre´ has authored numerous publications on

international law and international economic law, with an emphasis on international

investment law. He is also an academic advisor to the International Investment Law

Centre Cologne, a former advisor to the OECD and the IMF and a member of the

International Law Association and the European Society of International Law.

xii Contributors

.

The EU’s Common Investment

Policy – Connecting the Dots

Steffen Hindelang and Niklas Maydell

Introduction

The entry into force of the Treaty of Lisbon has shed light on an area that has widely

lacked public attention in recent years: the treatment of investment from non-EU

Member State countries, i.e. third countries, under EU law. By explicitly expanding

the EU’s external competence under the Common Commercial Policy to “foreign

direct investment”, the Lisbon Treaty has posed two questions which, as we argue

in this paper, warrant a holistic view, so far apparently not propagated in the

literature.

The Lisbon Treaty revives the question of, first, what is the predetermining

framework in which the EU’s competences to regulate access and treatment of

third-country investment will have to be exercised and, second, what are in fact the

EU’s internal and external competences with respect to third-country investment.

To this end, the present paper combines in its effort to provide a holistic view on

what we term the Common Investment Policy (CIP), first, an analysis of the

framework preconditioning the exercise of the competence, i.e. primarily the

provisions on free movement of capital, and, second, turning to the competences,

we will focus on the EU’s external competences under Art. 207 of the Treaty on the

Functioning of the European Union (TFEU) and its implied external powers based

on the case law of the Court of Justice of the European Union (ECJ). Key value is

added by putting the Lisbon Treaty’s provisions not just in the perspective of the

previous EU constitutional order but also by showing how the analytical outcome is

indeed determined by the pre-Lisbon legal framework. This historic-systematic

approach will ultimately allow us to comprehensively understand the EU’s powers

S. Hindelang

Chair of Public, International and European Law, Walter Hallstein Institute of European Consti￾tutional Law, Humboldt University, Berlin, Germany

e-mail: [email protected]

N. Maydell

Cleary Gottlieb Steen & Hamilton LLP, Brussels, Belgium

e-mail: [email protected]

M. Bungenberg et al. (eds.), International Investment Law and EU Law,

DOI 10.1007/978-3-642-14855-2_1, # Springer-Verlag Berlin Heidelberg 2011

1