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

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Marc Bungenberg Steffen Hindelang

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Jo¨rn Griebel

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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 This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer. Violations are liable to prosecution under the German Copyright Law. The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Cover design: WMXDesign GmbH, Heidelberg, Germany Printed on acid-free paper Springer is part of Springer Science+Business Media (www.springer.com)

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 problems 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 Commission 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

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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

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

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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

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 international 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 arbitration 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 investments 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

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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 International Investment Law at the International Investment Law Centre Cologne (University 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 comprise constitutional law; European Union law, especially fundamental freedoms; public international and international economic law, especially international investment 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 international 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.

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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 Institute 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 protection 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 organizations. 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 University 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,

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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-Sorbonne/University of Cologne) and an MPA from the E´cole Nationale d‘Administration, 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.