“For investments made prior to the termination date of this agreement, the above articles remain applicable for a period of fifteen years from that date.” “Sunset Clause”, any provision of a bilateral investment contract that extends for a further period the protection of investments made before the termination date of the contract. The impact of this agreement cannot be underestimated. Most of the bits affected by this agreement were signed between the countries of Eastern and Western Europe before the first members of the EU became members. The end of the EU`s internal bit marks the end of an era of investor-state dispute settlement (ISDR) and could close a considerable number of future claims to states. But there`s more to it than that. The signing and entry into force of the termination agreement are important developments in the investor-EU dispute settlement landscape. It is recommended that the contracting parties to the arbitration procedures between investors and Member States existing in the EU, in which the states that are signatories to the termination agreement participate, as well as to the parties considering undertaking such a procedure, to draw up guidelines on the effects of the termination contract. Article 5 of the termination contract provides that an arbitration procedure is prosecuted to death within the EU-EU BITS. It provides that the arbitration clauses contained in the internal ILO in the EU “do not serve as a legal basis for new arbitration procedures” (defined as arbitration procedures opened on 6 March 2018 or later). Despite this categorical language, the internal ISDS in the EU is not dead. It is interesting to note that the whistleblowing agreement only requires the ratification of two Member States to enter into force. In addition, the provisional application of the termination agreement is provided for. The agreement is a response to two developments.
First, the disputed judgment Achmea/Slovak Republic (C-284/16) (“Achmea”), in which the European Court of Justice has concluded that the investor-state arbitration clauses contained in the EU`s internal bit violate the fundamental principles of autonomy and are incompatible with UNION law (notably articles 267 and 344 of the Treaty on the Functioning of the European Union) (see previous reports on the blog here). Secondly, the declarations of 15 and 16 January 2019, in which several Member States pledged to end their intra-EU bit as a result of this judgment. To this end, the agreement has the effect of destroying the internal bit of the EU after it enters into force, by ratification or provisional adoption (Article 17) by the signatories.