Proposal for a Regulation of the European Parliament and of the Council establishing transitional arrangements for bilateral investment agreements between Member States and third countries
Date: 2010-07-07
Institutions: European Commission
Subjects: bilateral agreement, common commercial policy, competitiveness, foreign investment, investment policy, third country, trade restriction

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EUROPEAN COMMISSION 

Brussels, 7.7.2010 
COM(2010)344 final 

2010/0197 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

establishing transitional arrangements for bilateral investment agreements between 
Member States and third countries 

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EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

The Treaty on the Functioning of the European Union (hereafter: "the TFEU") establishes the 
European Union's exclusive competence on foreign direct investment, as part of the common 
commercial policy (Article 207(1) and Article 3(1)(e). In accordance with Article 2(1) of the 
TFEU, only the Union may legislate and adopt legally binding acts in an area where exclusive 
competence is conferred upon the Union.  

Prior to the entry into force of the TFEU, Member States concluded more than 1000 bilateral 
agreements relating to investment with third countries, which relate in part or in full to foreign 
direct  investment.  Such  agreements  include  Bilateral  Investment  Treaties  (BITs)  which 
provide inter alia guarantees on the conditions of investment in Member States and in third 
countries, in the form of specific commitments that are binding under international law.  

Although agreements remain binding on the Member States as a matter of public international 
law,  in  the  light  of  the  entry  into  force  of  the  TFEU  the  existence  of  Member  States' 
agreements  relating  to  investment  and  the  commitments  undertaken  therein  should  be 
addressed  from  the  perspective  of  the  EU's  exclusive  competence  on  foreign  direct 
investment.  

In the absence of an explicit transitional regime in the TFEU clarifying the status of Member 
States'  agreements,  the  present  proposal  for  a  Council  and  Parliament  Regulation  will 
authorise  the  continued  existence  of  all  investment  agreements  currently  in  force  between 
Member States and third countries. As such, this proposal provides for an explicit guarantee 
of legal certainty as regards the conditions under which investors operate.  

This approach, which reflects an evolutionary handling of the entry into force of the TFEU, 
much  like  the  introduction  of  the  common  commercial  policy  in  the  1960s,1  allows  for  the 
gradual  formulation  and  elaboration  of  an  EU  investment  policy,  which  is  to  serve  all 
investors and investments equally. 

In  recognition  of  the  fact  that  Member  States  may  be  required  or  may  find  it  necessary  to 
amend  or  modify  investment  agreements,  in  particular  to  bring  them  in  compliance  with 
Treaty  obligations,  this  proposal  also  establishes  a  framework  and  conditions  to  empower 
Member  States  to  enter  into  negotiations  with  a  third  country  with  a  view  to  modifying  an 
existing  bilateral  agreement  relating  to  investment.  This  framework  is  equally  available  to 
allow  Member  States  to  negotiate  and  conclude,  under  certain  conditions  set  out  by  this 
proposal, a new bilateral agreement with third countries relating to investment. Given that the 
Union  is  exclusively  competent  for  foreign  direct  investment,  and  that  an  EU  investment 
policy  will  be  gradually  developed,  the  procedure  established  by  this  proposal  must  be 
regarded as an exceptional transitional measure. 

1 

Council  Decision  of  9  October  1961  on  the  standardisation  of  the  duration  of  trade  agreements  with 
third  countries  and  Council  Decision  of  16  December  1969  on  the  progressive  standardisation  of 
agreements  concerning  commercial  relations  between  Member  States  and  third  countries  and  on  the 
negotiation of Community agreements. 

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This  Regulation  only  addresses  the  transitional  aspects  of  the  management  of  the  new  EU 
competence  on  investment.  The  objectives,  criteria  and  content  of  the  new  EU  investment 
policy,  to  be  developed  on  the  basis  of  the  newly-gained  exclusive  competence  on  foreign 
direct  investment,  is  not  addressed  by  this  Regulation  and  is  addressed  in  a  separate 
Communication from the Commission to the European Parliament and the Council, adopted 
simultaneously with this proposal for a Regulation. 

2. 

POLICY OPTIONS AND CONSULTATIONS WITH INTERESTED PARTIES  

Taking into account the particular nature of the subject, the Commission evaluated a number 
of options to achieve the objective described above, although  without carrying out a  formal 
impact assessment. A meeting with experts from the Member States was held in Brussels on 
25  January  2010  to  discuss  the  status  of  bilateral  agreements  concluded  between  Member 
States and third countries relating to investment. 

The extent to which investment agreements of Member States are incompatible with EU law 
can be the subject of discussions. The Commission is of the view that any legal uncertainty on 
the status and validity of these agreements, which could be detrimental for the activities of EU 
investments and investors abroad or foreign investments and investors in Member States, is to 
be avoided. Indeed, such uncertainty goes against the core rationale of investment protection, 
i.e. to provide legal certainty on the behaviour of host countries. In view of the situation that 
has arisen since the entry into force of the TFEU, swift and decisive action is therefore to be 
preferred over inaction or a delayed re-action.  

Soft-law instruments, such as a declaration or statement by the Commission services or by the 
College on the status and validity of bilateral investment agreements, would not establish the 
legal  certainty  that  is  required  to  guarantee  the  agreements  concerned.  This  is  why  a  legal 
instrument is the preferred option. 

This  proposal  maintains  the  status  quo  and  offers  a  transitory  solution  by  authorising  the 
continued  existence  of  bilateral  agreements  relating  to  investment  concluded  between 
Member  States  and  third  countries.  The  main  impact  of  this  proposal  is  to  avoid  a  very 
negative  result,  i.e.  the  potential  erosion  of  rights  and  benefits  available  to  investors  and 
investments under international investment agreements. In this respect, the impact of inaction 
is considered to be much higher than the impact of this action, which is neutral given that it 
preserves the status quo.  

The  authorisation  provided  in  this  proposal  neither  prejudges  the  contours  of  a  future  EU 
investment  policy,  nor  allows  the  agreements  covered  to  undermine  the  exercise  of  Union 
competence.  In  this  respect,  the  authorisation  granted  pursuant  to  this  proposal  may  be 
withdrawn,  in  accordance  with  the  procedures  specified  therein.  This  procedure  also  takes 
account of the obligation of Member States to eliminate any incompatibilities with the TFEU 
that  may  exist  in  their  existing  agreements,  as  identified  by  the  Court  of  Justice  of  the 
European Union. 

3. 

LEGAL ELEMENTS OF THE PROPOSAL  

The  objective  of  this  proposal  is  to  authorise  the  continuation  in  force  of  international 
agreements relating to investment concluded between Member States and third countries and 

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to  establish  conditions  and  a  procedural  framework  for  the  negotiation  and  conclusion  by 
Member States of such agreements.  

Chapter I sets out the subject matter and scope of the Regulation. Article 1 provides that the 
Regulation  covers  agreements  between  Member  States  and  third  countries  relating  to 
investment. 

Chapter  II  provides  for  authorisation  for  existing  bilateral  agreements  that  Member  States 
have concluded with third countries to remain in force.  

Article 2 requires Member States to notify to the Commission of all agreements that they wish 
to maintain under the terms and conditions of the Regulation. Agreements which have been 
concluded but not entered into force would equally fall under Article 2. 

Article  3  authorises  the  maintenance  in  force  of  all  existing  agreements  between  Member 
States  and  third  countries  relating  to  investment  that  have  been  notified  by  Member  States, 
starting upon the entry into force of this Regulation. This authorisation is without prejudice to 
the obligations of Member States under the law of the Union.2 

Article 4 provides for the annual publication of all notified agreements in the Official Journal, 
to ensure that the exact scope of the legal coverage provided by the Regulation is known by 
all stakeholders. 

Article  5  provides  for  the  review  of  agreements  which  have  been  notified.  The  review  will 
identify quantitative and qualitative aspects of the agreements in place, as well as the possible 
obstacles  the  agreements  could  present  to  the  implementation  of  the  common  commercial 
policy. In particular, the Commission will assess whether the agreements or provisions thereof 
conflict  with  the  law  of  the  Union,  undermine  negotiations  or  agreements  relating  to 
investment between the Union and third countries, or undermine the Union's policies relating 
to investment, including in particular the common commercial policy. No later than five years 
after the entry into force of this Regulation, the Commission will present a report based on the 
review of the agreements and any possible recommendations to discontinue the application of 
the provisions of Chapter II or to modify these provisions. 

Article  6  details  the  possible  withdrawal  of  the  authorisation  granted  under  this  Chapter.  A 
withdrawal of authorisation may be necessary for one or more agreements with a given third 
country  when  these  agreements  conflict  with  the  law  of  the  Union.  Secondly,  authorisation 
could be withdrawn where an agreement overlaps, in part or in full, with an agreement of the 
Union in force with that third country and this specific overlap is not addressed in the latter 
agreement.  For  example,  reference  is  made  to  a  scenario  where  the  Union  concludes  a  free 
trade agreement with a third country with provisions concerning investment and six Member 
States  have  an  agreement  in  place  with  similar  provisions  concerning  investment.  If  the 
agreement concluded by the EU with the third country does not provide for the replacement of 

2 

For recent case law, see judgments C-205/06 and C-249/06 of 3 March 2009 and judgement C-118/07 
of  19  November  2009,  in  which  the  Court  of  Justice  of  the  European  Union  found  that  specific 
provisions  of  Bilateral  Investment  Treaties  concluded  by  Austria,  Sweden  and  Finland  were 
incompatible with the EC Treaty and that the Member States concerned had not taken the appropriate 
steps  to  eliminate  those  incompatibilities.  The  same  or  similar  clauses  exist  in  other  BITs  concluded 
either  before  or  after  accession  to  the  Union.  In  its  judgements,  the  Court  has  called  upon  the 
Commission to engage in the role of facilitator on these matters.  

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the  six  agreements  of  the  Member  States  with  the  third  country,  then  Article  6  would  be 
applicable.  The  Commission  has  set  out  in  a  Communication  adopted  in  parallel  with  this 
proposal its views on the international investment policy that it intends to pursue, including 
the  countries  with  which  it  contemplates,  in  an  initial  phase,  to  negotiate  agreements 
concerning  investment.  Finally,  the  authorisation  of  one  or  more  agreements  could  be 
withdrawn  where  an  agreement  undermines  the  Union's  policies  relating  to  investment, 
including  in  particular  the  common  commercial  policy  (e.g.  where  the  existence  of 
agreements  undermines  the  willingness  of  a  third  country  to  negotiate  with  the  Union),  or 
where  the  Council  has  not  taken  a  decision  on  the  authorisation  to  open  negotiations 
concerning  investment  within  one  year  of  the  submission  of  a  recommendation  by  the 
Commission  pursuant  to  Article  218(3)  of  the  Treaty.  Article  6  provides  for  consultation 
between the Commission and Member State(s) concerned through which the concerns giving 
rise to a possible withdrawal of authorisation are to be addressed. 

Chapter III provides for the modification of existing agreements and the conclusion of new 
agreements. The procedural framework proposed is inspired by the empowerment mechanism 
set by Regulation No 662/2009 of 13 July 2009 establishing a procedure for the negotiation 
and  conclusion  of  agreements  between  Member  States  and  third  countries  on  particular 
matters  concerning  the  law  applicable  to  contractual  and  non-  contractual  obligations  and 
Regulation  No 664/2009  of  7 July  2009  establishing  a  procedure  for  the  negotiation  and 
conclusion of agreements between Member States and third countries concerning jurisdiction, 
recognition  and  enforcement  of  judgments  and  decisions  in  matrimonial  matters,  matters  of 
parental  responsibility  and  matters  relating  to  maintenance  obligations,  and  the  law 
applicable to matters relating to maintenance obligations.3 

Article  7  provides  for  the  general  framework  under  which  Member  States  may  conclude  or 
modify bilateral agreements relating to investment.  

Article 8 requires the notification to the Commission of a Member States' intent to modify an 
existing  or  to  conclude  a  new  bilateral  agreement  with  a  third  country.  Member  States  are 
requested to provide all relevant documentation relating to the re-negotiation or negotiation of 
an  agreement,  which  can  be  made  available  to  other  Member  States  and  the  European 
Parliament subject to the requirements of confidentiality. 

Article  9  details  the  substantive  grounds  on  the  basis  of  which  the  Commission  would  not 
authorise  the  opening  of  formal  negotiations  by  Member  States,  which  include  notably  the 
ground that a Member State initiative could undermine the objectives of EU negotiations or 
EU  policy.  The  Commission  may  require  a  Member  State  to  include  in  a  negotiation 
appropriate  clauses,  for  example  with  respect  to  (a)  the  termination  of  the  agreement  in  the 
event of the conclusion of a subsequent agreement between the Union, or the Union and its 
Member  States,  on  the  one  hand,  with  the  same  third  country  on  the  other  hand  (see  for 
example the denunciation or replacement clauses set forth in Regulation 662/2009, Article 5), 
(b)  transfer  provisions  or  (c)  most-favored  nation  treatment  with  a  view  to  ensuring  equal 
treatment of all EU investors in the relevant third country. 

Article  10  requires  that  Member  States  keep  the  Commission  informed  of  (re-)negotiations 
that  have  been  authorised.  In  addition,  the  Commission  may  request  to  participate  as  an 

3 

OJ L 200/52 of 31 July 2009, p. 25 and p. 46.  

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observer in the negotiations concerning investment between the Member State and the third 
country, to ensure full transparency and consistency with the Union's investment policy. 

Article 11 deals with the end of the negotiating process  and provides for the procedure and 
conditions under which Member States can be authorised to sign and conclude an agreement. 
Further  to  the  notification  of  the  agreement,  which  is  to  be  submitted  to  the  Commission 
before  it  is  signed,  the  Commission  assesses  whether  the  agreement  does  not  undermine 
imminent or ongoing EU investment negotiations or conflict with the obligations of EU law, 
including those under Part Three, Chapter 4 of Title V of the TFEU. 

Article 12 provides for the review of authorisations that would be made pursuant to Chapter 
III of this Regulation. By reviewing the quantitative and qualitative aspects of the negotiations 
and agreements authorised, the Commission will assess the appropriateness of continuing the 
application of the provisions of Chapter III. The report and any possible recommendation to 
discontinue the application of the provisions of this Chapter or to modify these provisions will 
be presented no later than five years after the entry into force of the Regulation.  

Chapter IV sets out certain requirements regarding the conduct of Member States with regard 
to agreements covered by this Regulation.  

Article 13 requests Member States to provide information with respect to meetings which take 
place under the auspices of covered agreements. Furthermore, Member States are requested to 
inform the Commission of any request for dispute settlement lodged against themselves under 
the  auspices  of  their  agreements  as  soon  as  they  become  aware  of  such  request  and  to  co-
operate  with  the  Commission  as  regards  the  activation  of  dispute  –  which  they  would  be 
allowed  to  lodge  against  another  third  country  party  to  such  agreement  –  or  consultation 
mechanisms under an agreement.  

Article  14  provides  that  Member  States  may  indicate  whether  any  of  the  information  they 
provide in accordance with Articles 8 and 11 is to be considered confidential and whether it 
can be shared with other Member States. 

Article 15 creates a new committee which shall assist the Commission in the management of 
the Regulation and stipulates the procedures under which this committee shall operate. This 
provision  can  be  revised  to  bring  it  in  line  with  the  future  regulation  adopted  pursuant  to 
Article 291 TFEU on the control of the Commission's exercise of implementing powers.4 In 
the  event  that  the  present  proposal  is  adopted  before  the  regulation  on  the  control  of  the 
Commission's exercise of implementing powers enters into force the Commission envisages 
that it will be automatically updated to refer to the regulation adopted pursuant to Article 291 
by operation of that proposal.5 

4 

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See Proposal for a regulation of the European Parliament and of the Council laying down the rules and 
general principles concerning mechanism for control by Member States of the Commission's exercise of 
implementing powers, COM(2010) 83 final of 9 March 2010.  
See Article 10 of the abovementioned Commission proposal. 

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Article  16  provides  that  this  Regulation  enters  into  force  20  days  following  the  day  of  its 
publication, which means that Chapter II applies to agreements in force before that date. 

4. 

BUDGETARY IMPLICATION 

The proposal has no implication for the EU Budget. 

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2010/0197 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

establishing transitional arrangements for bilateral investment agreements between 
Member States and third countries 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 207(2) thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national Parliaments, 

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

Following  the  entry  into  force  of  the  Treaty  of  Lisbon,  foreign  direct  investment  is 
included  in  the  list  of  matters  falling  under  the  common  commercial  policy.  In 
accordance  with  Article  3(1)  (e)  of  the  Treaty  on  the  Functioning  of  the  European 
Union (hereinafter "the Treaty"), the Union has exclusive competence with respect to 
the common commercial policy. Accordingly, only the Union may legislate and adopt 
legally  binding  acts  within  that  area.  The  Member  States  are  able  to  do  so  only  if 
empowered by the Union, in accordance with Article 2(1) of the Treaty.  

In addition, Part Three, Chapter 4 of Title IV of the Treaty lays down common rules 
on the movement of capital between Member States and third countries, including in 
respect  of  capital  movements  involving  investments.  Those  rules  can  be  affected  by 
international agreements relating to foreign investment concluded by Member States. 

At the time of the entry into force of the Treaty of Lisbon, Member States of the Union 
maintained a significant number of bilateral agreements with third countries relating to 
investment.  The  Treaty  does  not  contain  any  explicit  transitional  provisions  for  such 
agreements  which  have  now  come  under  exclusive  Union  competence.  Furthermore, 
some  of  those  agreements  may  include  provisions  affecting  the  common  rules  on 
capital movements laid down in Part Three Chapter 4 of Title IV of the Treaty. 

Although  bilateral  agreements  remain  binding  on  the  Member  States  under  public 
international law and will be progressively replaced by future agreements of the Union 
relating  to  the  same  subject  matter,  the  conditions  for  their  continuing  existence  and 
their  relationship  with  the  Union's  policies  relating  to  investment,  including  in 
particular  the  common  commercial  policy,  require  appropriate  management.  That 
relationship will develop further as the Union exercises its competence.  

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(5) 

(6) 

(7) 

(8) 

In the interest of EU investors and their investments in third countries, and of Member 
States hosting foreign investors and investments, bilateral agreements that specify and 
guarantee the conditions of investment should be maintained in force.  

This  Regulation  lays  down  the  conditions  under  which  Member  States  should  be 
authorised to maintain in force or to permit to enter into force international agreements 
relating to investment.  

This Regulation lays down the conditions under which Member States are empowered 
to amend or conclude international agreements relating to investment. 

As  the  authorisation  to  maintain,  amend  or  conclude  agreements  covered  by  this 
Regulation is granted in an area of exclusive Union competence, it must be regarded as 
an  exceptional  measure.  The  authorisation  is  without  prejudice  to  the  application  of 
Article 258 of the Treaty with respect to failures of Member States to fulfil obligations 
under  the  Treaties  other  than  those  concerning  incompatibilities  arising  from  the 
allocation of competences between the Union and its Member States.  

(9)  Member  States  are  required6 

to  eliminate 
incompatibilities,  where  they  exist,  with  the  law  of  the  Union  contained  in  Bilateral 
Investment Treaties concluded between them and third countries. 

the  necessary  measures 

take 

to 

(10)  The  Commission  should  be  able  to  withdraw  the  authorisation  if  an  agreement 
conflicts  with  the  law  of  the  Union  other  than  the  incompatibilities  arising  from  the 
allocation of competence between the Union and its Member States. The authorisation 
may  also  be  withdrawn  if  an  agreement  of  the  Union  in  force  with  a  third  country 
contains investment provisions similar to those of a Member State agreement. In order 
to  ensure  that  agreements  of  Member  States  do  not  undermine  the  development  and 
implementation  of the Union's policies  relating to investment, including in particular 
of  autonomous  measures  of  common  commercial  policy,  authorisation  may  be 
withdrawn. Finally, should the Council not take a decision on the authorisation to open 
negotiations  concerning  investment  within  one  year  of  the  submission  of  a 
recommendation  by  the  Commission  pursuant  to  Article  218(3)  of  the  Treaty,  the 
possibility would exist to withdraw the authorisation. 

(11)  The  authorisation  to  amend  or  conclude  agreements  provided  for  by  this  Regulation 
notably  allows  Member  States  to  address  any  incompatibilities  between  their 
international  agreements  relating  to  investment  and  the  law  of  the  Union,  other  than 
incompatibilities arising from the allocation of competences between the Union and its 
Member States, which are addressed in this Regulation. 

(12)  No later than five years after the entry into force of this Regulation, the Commission 
should present to the European Parliament and the Council a report on the application 
of Chapters II and III of this Regulation. This report should, inter alia, review the need 
for  the  continued  application  of  these  chapters.  Where  the  report  recommends  to 
discontinue  the  application  of  the  provisions  of  these  Chapters  or  where  it  would 
propose  to  modify  these  provisions,  it  should  be  accompanied  by  an  appropriate 
legislative  proposal.  Unless  replaced  by  an  agreement  of  the  Union  concerning 

6 

For  recent  case  law  see  judgments  of  the  Court  of  Justice  of  the  European  Union  in  cases  C-205/06, 
Commission v. Austria, C-249/06, Commission v. Sweden, and C-118/07, Commission v. Finland. 

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investment, or otherwise terminated, bilateral agreements concluded by Member States 
with third countries remain binding on the parties under public international law.  

(13)  Agreements authorised under this Regulation or authorisations to open negotiations to 
amend  an  existing  or  to  conclude  a  new  bilateral  agreement  with  a  third  country 
should not in any case be allowed to constitute an obstacle to the implementation of 
the Union's policies relating to investment, in particular common commercial policy.  

(14)  The  European  Parliament,  the  Council  and  the  Commission  should  ensure  that  any 
information  identified  as  confidential  is  treated  in  accordance  with  Regulation  (EC) 
No  1049/2001  of  the  European  Parliament  and  of  the  Council  of  30  May  2001 
regarding  public  access 
to  European  Parliament,  Council  and  Commission 
documents.7  

(15)  Agreements between Member States relating to investment should not be covered by 

this Regulation. 

(16) 

It  is  necessary  to  provide  certain  arrangements  to  ensure  that  agreements  maintained 
pursuant  to  this  Regulation  remain  operational,  including  as  regards  dispute 
settlement, while at the same time respecting the Union's exclusive competence. 

(17)  The measures necessary for the implementation of this Regulation should be adopted 
in accordance with Council Decision 1999/468/EC of 28 June 1999 laying down the 
procedures for the exercise of implementing powers conferred on the Commission8, 

HAVE ADOPTED THIS REGULATION: 

CHAPTER I 

Scope 

Article 1 

Subject matter and scope 

This  Regulation  establishes  the  terms,  conditions  and  the  procedure  under  which  Member 
States are authorised to maintain in force, amend or conclude bilateral agreements with third 
countries relating to investment. 

CHAPTER II 

Authorisation to maintain agreements in force  

Article 2 

Notification to the Commission 

Within thirty days from the entry into force of this Regulation, the Member States shall notify 
the  Commission  of  all  bilateral  agreements  with  third  countries  relating  to  investment 

7 
8 

OJ L 145, 31.5.2001, p. 43. 
OJ L 184, 17.7.1999, p. 23. 

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concluded before the entry into force of this Regulation that they either wish to maintain in 
force or permit to enter into force under this Chapter. The notification shall include a copy of 
those bilateral agreements. 

Article 3 

Authorisation to maintain agreements in force  

Notwithstanding  the  Union's  competences  relating  to  investment  and  without  prejudice  to 
other obligations of Member States under the law of the Union, Member States are authorised 
in accordance with Article 2(1) of the Treaty to maintain in force bilateral agreements relating 
to investment that have been notified in accordance with Article 2 of this Regulation.  

Article 4 

Publication 

1. 

2. 

Every  twelve  months  the  Commission  shall  publish  in  the  Official  Journal  of  the 
European  Union  a  list  of  the  agreements  notified  pursuant  to  Article  2  or  Article 
11(7). 

The  first  publication  of  the  list  of  agreements  referred  to  in  paragraph  1  shall  take 
place  no  later  than  three  months  after  the  deadline  for  notifications  pursuant  to 
Article 2. 

Article 5 

Review  

1. 

The  Commission  shall  review  the  agreements  notified  pursuant  to  Article  2, 
including by assessing, in particular, whether the agreements: 

(a) 

conflict with the law of the Union other than the incompatibilities arising from 
the allocation of competences between the Union and its Member States, or 

(b)  overlap,  in  part  or  in  full,  with  an  agreement  of  the  Union  in  force  with  that 
third country and this specific overlap is not addressed in the latter agreement, 
or  

(c) 

constitute  an  obstacle  to  the  development  and  the  implementation  of  the 
Union's  policies  relating  to  investment,  including  in  particular  the  common 
commercial policy.  

Consultation  may  take  place  between  the  Commission  and  the  notifying  Member 
State,  either  at  the  request  of  the  Member  State  or  on  the  initiative  of  the 
Commission, to facilitate the review referred to in paragraph 1.  

No later than five years after the entry into force of this Regulation, the Commission 
shall present to the European Parliament and the Council a report on the application 
of  this  Chapter  which  shall  review  the  need  for  the  continued  application  of  this 
chapter, based on the review referred to in paragraph 1. 

2. 

3. 

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4. 

Where  the  report  referred  to  in  paragraph  3  recommends  to  discontinue  the 
application of the provisions of this Chapter or to modify these provisions, it shall be 
accompanied by an appropriate legislative proposal.  

Article 6 

Withdrawal of authorisation 

1. 

The authorisation provided for in Article 3 may be withdrawn where:  

(a) 

(b) 

an  agreement  conflicts  with 
the 
incompatibilities arising from the allocation of competence between the Union 
and its Member States, or 

the  Union  other 

law  of 

than 

the 

an  agreement  overlaps,  in  part  or  in  full,  with  an  agreement  of  the  Union  in 
force  with  that  third  country  and  this  specific  overlap  is  not  addressed  in  the 
latter agreement, or  

an agreement constitutes an obstacle to the development and the implementation of the 

(c) 
Union's policies relating to investment, including in particular the common commercial 
policy, or 

2. 

3. 

(d) 

the Council has not taken a decision on the authorisation to open negotiations 
on an agreement which overlaps, in part or in full, with an agreement notified 
under Article 2, within one year of the submission of a recommendation by the 
Commission pursuant to Article 218(3) of the Treaty. 

When the Commission considers that there are grounds to withdraw the authorisation 
provided  for  in  Article  3,  it  shall  deliver  a  reasoned  opinion  to  the  Member  State 
concerned  on  the  necessary  steps  to  be  taken  to  comply  with  the  requirements 
referred  to  in  paragraph  1.  Consultations  shall  take  place  between  the  Commission 
and the Member State concerned.  

Where  the  consultations  referred  to  in  paragraph  2  fail  to  resolve  the  matter,  the 
Commission  shall  withdraw  the  authorisation  for  the  agreement  concerned.  The 
Commission  shall  take  a  decision  on  the  withdrawal  of  the  authorisation  in 
accordance  with  the  procedure  referred  to  in  Article  15(2).  It  shall  include  a 
requirement  that  the  Member  State  takes  appropriate  action,  and  where  necessary 
terminate the relevant agreement.  

4. 

Where  an  authorisation  is  withdrawn,  the  Commission  shall  remove  the  agreement 
from the list referred to in Article 4.  

CHAPTER III 

Authorisation to amend or conclude agreements  

Article 7 

Authorisation to amend or conclude agreements  

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Subject to the conditions laid down in Articles 8 to12, a Member State shall be authorised to 
enter  into  negotiations  to  amend  an  existing  or  to  conclude  a  new  agreement  relating  to 
investment with a third country. 

Article 8 

Notification to the Commission 

1. 

2. 

3. 

4. 

5. 

Where  a  Member  State  intends  to  enter  into  negotiations  in  order  to  amend  an 
existing or to conclude a new agreement with a third country relating to investment, 
it shall notify the Commission of its intentions in writing.  

The  notification  shall  include  relevant  documentation  and  an  indication  of  the 
provisions to be addressed in the negotiations, the objectives of the negotiations and 
any other relevant information. In the case of amendments to an existing agreement, 
the notification shall indicate the provisions that are to be renegotiated. 

The  Commission  shall  make  the  notification  and,  on  request,  the  accompanying 
documentation,  available  to  other  Member  States  subject  to  the  requirements  of 
confidentiality laid down in Article 14.  

The notification referred to in paragraph 1 shall be transmitted at least five calendar 
months  before  formal  negotiations  are  to  commence  with  the  third  country 
concerned. 

Where  the  information  transmitted  by  the  Member  State  is  not  sufficient  for  the 
purposes  of  authorising  the  opening  of  formal  negotiations  in  accordance  with 
Article 9, the Commission may request additional information. 

Article 9 

Authorisation to open formal negotiations 

1. 

The  Commission  shall  authorise  the  opening  of  formal  negotiations  unless  it 
concludes that the opening of negotiations would:  

(a) 

be in conflict with the law of the Union other than the incompatibilities arising 
from the allocation of competence between the Union and its Member States, 
or 

(b)  undermine  the  objectives  of  negotiations  underway  or  imminent  between  the 

Union and the third country concerned, or  

(c) 

constitute  an  obstacle  to  the  development  and  the  implementation  of  the 
Union's  policies  relating  to  investment,  including  in  particular  the  common 
commercial policy.  

As part of the authorisation referred to in paragraph 1, the Commission may require 
the Member State to include in such negotiation any appropriate clauses.  

Decisions on the authorisation referred to in paragraph 1 shall be taken in accordance 
with  the  procedure  referred  to  in  Article  15(2).  The  Commission  shall  take  its 

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2. 

3. 

EN 

 
decision within 90 days of receipt of the notification referred to in Article 8. Where 
additional  information  is  needed  to  take  a  decision,  the  90  days  shall  run  from  the 
date of receipt of the additional information.  

Article 10 

Participation of the Commission in negotiations 

The Commission shall be kept informed of the progress and results throughout the different 
stages of negotiations and may request to participate in the negotiations between the Member 
State and the third country concerning investment. 

1. 

2. 

3. 

4. 

5. 

6. 

Article 11 

Authorisation to sign and conclude an agreement 

Before  signing  an  agreement,  the  Member  State  concerned  shall  notify  the 
Commission  of  the  outcome  of  negotiations  and  shall  transmit  the  text  of  the 
agreement to the Commission. 

The  notification  duty  provided  for  in  paragraph  1  shall  include  agreements  which 
were negotiated prior to the entry into force of this Regulation but not concluded and 
therefore not subject to the notification duty provided for in Article 2.  

Upon  notification  the  Commission  shall  make  an  assessment  as  to  whether  the 
negotiated agreement does not: 

(a) 

conflict with the law of the Union other than the incompatibilities arising from 
the allocation of competences between the Union and its Member States, or 

(b)  undermine  the  objectives  of  negotiations  underway  or  imminent  between  the 

Union and the third country concerned, or  

(c) 

constitute  an  obstacle  to  the  development  and  the  implementation  of  the 
Union's  policies  relating  to  investment,  including  in  particular  the  common 
commercial policy, or 

(d) 

conflict with the requirement of Article 9(2), where applicable.  

Where  the  Commission  finds  that  the  negotiations  have  resulted  in  an  agreement 
which does not fulfil the requirements referred to in paragraphs 3, the Member State 
shall not be authorised to sign and conclude the agreement.  

Where  the  Commission  finds  that  the  negotiations  have  resulted  in  an  agreement 
which fulfils the requirements referred to in paragraphs 3, the Member State shall be 
authorised to sign and conclude the agreement.  

Decisions  pursuant  to  paragraphs  4  and  5  shall  be  taken  in  accordance  with  the 
procedure referred to in Article 15(2). The Commission shall take the decision within 
90  days  of  receipt  of  the  notifications  referred  to  in  paragraphs  1  and  2.  Where 
additional information is needed to take the decision, the 90 days shall run from the 
date of receipt of the additional information. 

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7. 

1. 

2. 

3. 

1. 

2. 

3. 

Where  an  authorisation  has  been  granted  in  accordance  with  paragraph  5,  the 
Member  State  concerned  shall  notify  the  Commission  of  the  conclusion  and  entry 
into force of the agreement.  

Article 12 

Review 

No later than five years after the entry into force of this Regulation, the Commission 
shall present to the European Parliament and the Council a report on the application 
of  this  Chapter  which  shall  review  the  need  for  a  continued  application  of  the 
Chapter. 

The  report  referred  to  in  paragraph  1  shall  include  an  overview  of  authorisations 
requested and granted under this Chapter. 

Where  the  report  referred  to  in  paragraph  1  recommends  to  discontinue  the 
application  of  this  Chapter  or  to  modify  the  provisions  of  this  Chapter,  it  shall  be 
accompanied by an appropriate legislative proposal. 

CHAPTER IV 

Final provisions 

Article 13 

Conduct of Member States with regard to agreements with a third country  

For  all  agreements  falling  within  the  scope  of  this  Regulation,  the  Member  State 
concerned shall inform the Commission without undue delay of all meetings which 
take place under the provisions of the agreement. The Commission shall be provided 
with  the  agenda  and  all  relevant  information  permitting  an  understanding  of  the 
topics  to  be  discussed.  The  Commission  may  request  further  information  from  the 
Member  State  concerned.  Where  an  issue  to  be  discussed  might  affect  the 
implementation of the Union's policies relating to investment, including in particular 
the  common  commercial  policy,  the  Commission  can  require  the  Member  State 
concerned to take a particular position. 

For  all  agreements  falling  within  the  scope  of  this  Regulation,  the  Member  State 
concerned shall inform the Commission without undue delay of any representations 
made to it that a particular measure is inconsistent with the agreement. The Member 
State  shall  also  immediately  inform  the  Commission  of  any  request  for  dispute 
settlement lodged under the auspices of the agreement as soon as the Member State 
becomes  aware  of  the  request.  The  Member  State  and  the  Commission  shall  fully 
cooperate and take all necessary measures to ensure an effective defence which may 
include, where appropriate, that the Commission participates in the procedure.  

For  all  agreements  falling  within  the  scope  of  this  Regulation,  the  Member  State 
concerned shall seek the agreement of the Commission before activating any relevant 
mechanisms  for  dispute  settlement  included  in  the  agreement  and  shall,  where 
requested  by  the  Commission,  activate  such  mechanisms.  Such  mechanisms  shall 
include  consultations  with  the  other  party  to  the  agreement  and  dispute  settlement 

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where provided for in the agreement. The Member State and the Commission shall 
fully cooperate in the conduct of procedures within the relevant mechanisms, which 
may  include,  where  appropriate,  that  the  Commission  participates  in  the  relevant 
procedures.  

Article 14 

Confidentiality 

In notifying the Commission of negotiations and their outcome in accordance with Articles 8 
and  11,  Member  States  may  indicate  whether  any  of  the  information  provided  is  to  be 
considered confidential and whether it can be shared with other Member States.  

Article 15 

Committee 

1. 

2. 

The Commission shall be assisted by the Advisory Committee for the Management 
of Transitional Arrangements on International Investment Agreements. 

Where  reference  is  made  to  this  paragraph,  Articles  3  and  7  of  Decision 
1999/468/EC shall apply.  

Article 16 

Entry into force 

This Regulation shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels, […] 

For the European Parliament 
The President 

For the Council 
The President 

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