The New EU Competence for Foreign Direct Investment. Legal Questions of its Implementation

The aim of this seminar paper will be to firstly give an overview of the role of investment treaties in general, followed by a retrospective on the legal situation of the foreign direct investments (FDI) prior the Treaty of Lisbon (TOL) and an analysis of the current legal framework. Based on primary and secondary sources, the scope of the Union’s exclusive FDI competence of Art. 206/207 TFEU will be inquired as well as questions of legal implementation centred on the issue of financial responsibility within ISDS. By addressing the legal status of the Bilateral Investment Treaties (BIT) concluded by MS the legal basis is set to analyse the Austrian Nigerian Agreement for the Promotion and Protection of Investment which was authorized by the Commission (COM)and concluded by the Republic of Austria in 2013. In this context it will be interesting to assess the potential for the template of this agreement to become a kind of EU-third country model BIT to be concluded by the Union and to which extent the content of the agreement would be covered by the Unions FDI competence.

With the entering into force of the TOL the European Union was massively changed in order to take on the challenges that lie ahead in the future. Among many of those institutional changes, the powers of the Union in the field of investments have been enlarged, with FDI now being part of the Common Commercial Policy (CCP). The motivation for such a an empowerment is manifold, reaching from FDI attraction and facilitation both important for European economic growth, the establishment of a level playing field for investors, to the beneficial effect of an increased negotiation leverage.

Four years have passed since the new FDI competence has been established and on the face of it not much has been achieved. Only one piece of regulation addressing questions of legal implementation has been adopted. Exclusive EU Free Trade Agreements (FTA) containing comprehensive investment provisions are still to be concluded. Nevertheless a lot of preparatory work has been conducted by the COM and the European Parliament (EP). Of course the academic debate regarding the scope of the competence is vivid as well as the other obstacles regarding the legal implementation, mainly in the field of Investor to State Dispute Settlement (ISDS).

Inhaltsverzeichnis (Table of Contents)

• Introduction.
• The role of Investment Treaties and their significance in general
• The situation before TOL and the status quo.
• What does the FDI competence of Art 206/207 really cover and what is outside the exclusive competence?.
• Legal questions and problems of the new FDI competence regarding implementation
• The current status and the future of BITs signed by MS
• Austrian – Nigerian Agreement for Promotion and Protection of Investment
• Conclusion........

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This seminar paper provides a comprehensive overview of the legal framework surrounding the European Union's (EU) new competence for foreign direct investment (FDI) as established by the Treaty of Lisbon (TOL). It examines the significance of investment treaties, the legal situation before TOL, and the scope of the EU's exclusive FDI competence under Art. 206/207 TFEU. The paper also delves into the challenges of implementing this competence, particularly in the context of Investor to State Dispute Settlement (ISDS) and financial responsibility. Finally, it analyzes the Austrian-Nigerian Agreement for Promotion and Protection of Investment as a potential model for future EU-third country BITs.

• The role of investment treaties in facilitating FDI and mitigating risks.
• The evolution of the EU's FDI competence under the TOL.
• The scope and limitations of the EU's exclusive FDI competence under Art. 206/207 TFEU.
• The legal challenges of implementing the new FDI competence, particularly in relation to ISDS.
• The potential for the Austrian-Nigerian Agreement to serve as a model for future EU-third country BITs.

Zusammenfassung der Kapitel (Chapter Summaries)

• Introduction: This chapter introduces the topic of the EU's new FDI competence and its significance for European economic growth. It highlights the motivation for empowering the EU in this area, including FDI attraction, establishment of a level playing field, and increased negotiation leverage. The chapter also discusses the challenges of implementing this competence, particularly in the area of ISDS.
• The role of Investment Treaties and their significance in general: This chapter explores the crucial role of investment treaties in facilitating and protecting FDI. It examines the distinction between trade and investment, the evolution of international investment law, and the various types of investment agreements, including BITs, Preferential Trade and Investment Agreements (PTIA), and Double Taxation Agreements. The chapter also discusses the importance of legal safeguards relating to expropriation, ISDS, and non-discrimination in fostering FDI.
• The situation before TOL and the status quo: This chapter provides a historical overview of the legal situation regarding FDI before the TOL. It highlights the fragmented nature of investment agreements concluded by EU Member States (MS) and the lack of a unified approach. The chapter also discusses the challenges of reconciling the interests of MS with the EU's new FDI competence.
• What does the FDI competence of Art 206/207 really cover and what is outside the exclusive competence?: This chapter examines the scope and limitations of the EU's exclusive FDI competence under Art. 206/207 TFEU. It analyzes the specific areas covered by this competence and clarifies what falls outside its purview. The chapter also addresses the potential conflicts and overlaps with other EU competences, such as the Common Commercial Policy (CCP).
• Legal questions and problems of the new FDI competence regarding implementation: This chapter focuses on the legal challenges of implementing the new FDI competence, particularly in relation to ISDS. It examines the issues of financial responsibility, the role of the European Commission (COM), and the potential for conflicts with existing BITs concluded by MS.
• The current status and the future of BITs signed by MS: This chapter discusses the legal status of BITs concluded by MS in light of the EU's new FDI competence. It explores the potential for harmonization and the future of these agreements. The chapter also addresses the implications for the EU's negotiation strategy for future BITs.
• Austrian – Nigerian Agreement for Promotion and Protection of Investment: This chapter analyzes the Austrian-Nigerian Agreement for Promotion and Protection of Investment, which was authorized by the COM and concluded by Austria in 2013. It assesses the potential for this agreement to serve as a model for future EU-third country BITs and examines the extent to which its content would be covered by the EU's FDI competence.

Schlüsselwörter (Keywords)

The core concepts and themes of this seminar paper revolve around the European Union's (EU) new competence for foreign direct investment (FDI), as established by the Treaty of Lisbon (TOL). Key terms include: investment treaties, Bilateral Investment Treaties (BITs), Preferential Trade and Investment Agreements (PTIAs), Investor to State Dispute Settlement (ISDS), financial responsibility, the Common Commercial Policy (CCP), and the legal implications of the EU's exclusive FDI competence under Art. 206/207 TFEU.

Details

• College: Diplomatic Academy of Vienna - School of International Studies (International Law and EU Law)
• Course: External Economic Relations and Foreign Policy of the European Union
• Grade: 1,0 (A)
• Author: Sebastien Meilinger (Author)
• Publication Year: 2014
• Pages: 25
• Catalog Number: V334924
• ISBN (eBook): 9783668247642
• ISBN (Book): 9783668247659
• Language: English
• Tags: EU Law; Trade; Investment Treaties; Investment Protection; FDI; Foreign Direct Investment; EU; Treaty of Lisbon; BITS;