Judgment — ECLI:EU:C:2009:715
Date: 2009-11-19
Language of the case: Finnish
Court formation: Second Chamber
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: External relations;Free movement of capital
Concepts: Rights of non-member countries under prior agreements;General
Procedure: Action for failure to fulfil obligations - successful
Origin: Finland

Summary of the Judgment International agreements – Agreements concluded by the Member States – Agreements predating the EC Treaty (Arts 57(2) EC, 59 EC, 60(1) EC and 307, second para., EC) A Member State which fails to take appropriate steps to eliminate incompatibilities with the Treaty concerning the provisions on transfer of capital contained in bilateral investment agreements on the mutual promotion and protection of investments entered into by it with third countries fails to fulfil its obligations under the second paragraph of Article 307 EC. The second paragraph of Article 307 EC obliges the Member States to take all appropriate steps to eliminate incompatibilities with Community law which have been established in agreements concluded prior to their accession. The provisions of Articles 57(2) EC, 59 EC and 60(1) EC confer on the Council the power to restrict, in certain specific circumstances, movements of capital and payments between the Member States and third countries. In order to ensure the effectiveness of those provisions, it must be possible for measures restricting the free movement of capital, where adopted by the Council, to be applied immediately with regard to the States to which they relate. Where an agreement does not contain a provision allowing the Member State concerned to exercise its rights and to fulfil its obligations as a member of the Community and there is no international-law mechanism either to make that possible and that Member State has taken no steps, with respect to the third country concerned, to eliminate the risk of conflict to which the application of the agreement concerned may give rise with measures liable to be adopted by the Council pursuant to Articles 57(2) EC, 59 EC and 60(1) EC, and it does not put forward any mechanism which would enable it to fulfil its Community obligations, the exercise of the powers conferred on the Council in relation to the movement of capital might be hindered by the very existence of the bilateral agreements at issue and by the terms in which they are drafted. (see paras 28-33, 49-50, operative part)