Today, the European Commission decided to refer the United Kingdom to the Court of Justice of the European Union for failing to terminate the Bilateral Investment Treaties (BITs) that it still has in force with Bulgaria, Czechia, Croatia, Lithuania, Poland and Slovenia. The BITs are agreements between two countries designed to protect and promote foreign investment by providing guarantees such as fair treatment or protection against expropriation.
It has been the Commission’s long-standing position that BITs between EU Member States overlap and conflict with EU law. On 6 March 2018, the Court of Justice of the EU confirmed that position in case C-284/16 Achmea. The court ruled that investor-to-State arbitration under bilateral investment treaties between EU Member States is incompatible with EU law, as it calls into question the principle of mutual trust between Member States.
All Member States, including the United Kingdom, committed – in their Declarations of 15 and 16 January 2019 – to terminate the BITs concluded between them in a coordinated manner by means of a plurilateral treaty, unless bilateral terminations were considered mutually more expedient.
Although the plurilateral treaty agreed between Member States on 5 May 2020 was open for the United Kingdom’s signature, the latter did not sign it and failed to proceed with the bilateral termination of these BITs with Bulgaria, Czechia, Croatia, Lithuania, Poland and Slovenia. These BITs are considered as intra-EU BITs as they were concluded while the UK was an EU Member State. In view of the Achmea judgment, any Member State maintaining an intra-EU bilateral investment treaty violates EU law. Therefore, the BITs that the United Kingdom still has in place are against EU law.
The Commission sent a letter of formal notice to the United Kingdom on 15 May 2020, followed by a reasoned opinion on 30 October 2020, to which the United Kingdom did not reply. According to Article 87 of the Withdrawal Agreement, the Commission can refer the case to the Court of Justice of the EU until 31 December 2024. After having issued the reasoned opinion, the Commission liaised with both the United Kingdom and Member States which still had BITs in force with it, in order to facilitate the termination of those BITs in an orderly manner. The United Kingdom, however, failed to terminate the BITs in question until today.
More information
- Infringements database
- EU infringements procedure
- December 2024 infringement package: key decisions
- Infringement decision United Kingdom (INFR(2016)2150)
Source – EU Commission