July 19, 2018

EC published its communication, to the European Parliament and the Council, to provide guidance on the existing EU rules for treatment of cross-border EU investments. The EC communication will help to prevent member states from adopting measures that infringe EU rules and assist investors in invoking their rights before administrations and national courts. It will also help legal practitioners to apply the EU rules. Additionally, EC published questions and answers (Q&A) on the communication issued by EC.

The communication aims to strengthen the business environment for EU investors. This is a crucial element in supporting more investment in the EU Single Market. EU investors can no longer rely on intra-EU bilateral investment treaties (intra-EU BITs). As EC has consistently stated, these treaties are illegal because they overlap with the EU single market rules and discriminate between EU investors. The communication provides the following clarifications:

  • The free movement of capital, services, goods, and workers in the EU Single Market are fundamental freedoms for EU individuals. They give companies and citizens the right to establish a business, invest in a company, and provide services and goods across European borders. EU investors are also protected by general principles of non-discrimination, proportionality, legal certainty, and protection of legitimate expectations. 
  • Investor-State arbitration between a member state and an investor from another member state is incompatible with the EU law, including through intra-EU BITs. EU law already offers a comprehensive and effective legal framework, including remedies, to intra-EU investors when they invest in another member state.
  • The EU law allows for markets to be regulated to pursue legitimate public interests such as public security, public health, social rights, consumer protection, or the preservation of the environment, which may have negative consequences for investors. Public authorities of EU and the member states have a duty and a responsibility to protect investments and to regulate markets. Therefore, EU and member states may take legitimate measures to protect those interests.


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Keywords: Europe, EU, Securities, Cross-border Investments, Capital Markets Union, Q&A, Guidance, EC