COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Protection of intra-EU investment
Date: 2018-07-19
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: EU Member State, EU law, free movement of capital, free movement of goods, freedom to provide services, fundamental rights, investment promotion, investment protection, right of establishment, single market

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 19.7.2018 COM(2018) 547 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL    Protection of intra-EU investment   
 
 
I. 

Introduction   

Encouraging and protecting investment in the EU 

The  European  Union's  single  market  is  a  unique  area  of  investment  opportunities.  A  key 
objective in the Investment Plan for Europe1 is to create a more predictable, stable and clear 
regulatory  environment  to  promote  investments.  As  part  of  this  strand  of  work,  the  Capital 
Markets  Union  (‘CMU’)  Action  Plan 2 and  its  Mid-term  review 3 emphasised  that  a  stable 
business environment is crucial for encouraging more investment within the European Union. 

The  Commission  is  committed  to  preserving  and  improving  both  a  predictable,  stable  and 

clear  regulatory  environment  and  the  effective  enforcement  of  investors'  rights.  This 

Communication  aims  to  provide  guidance  on  existing  EU  rules  for  the  treatment  of  cross-

border EU investments. 

EU  law,  as  progressively  developed  over  decades,  provides  investors  with  a  high  level  of 

protection,  even  though  it  may  not  solve  all  problems  investors  may  face  in  their  activities. 

EU law has been the basis for the development of the single market as an area where investors 

enjoy freedom to establish a business, to invest in companies, to import and export goods and 

to  provide  services  across  borders  and  benefit  from  equal  and  non-discriminatory  treatment 

across  borders.  The  free  movement  of  capital  underpins  any  investment  and  the  Treaty 

prohibits  measures  unduly  preventing  or  discouraging  cross-border  capital  movements  and 

payments.  

At  the  same  time,  EU  laws  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 consequences also for investments. Public 

authorities  of  the  EU  and  of  the  Member  States  have  a  duty  and  a  responsibility  both  to 

protect  investment  and  to  regulate  markets.  Therefore,  the  EU  and  Member  States  may 

legitimately  take  measures  to  protect  those  interests,  which  may  have  a  negative  impact  on 

investments.  However,  they  can  do  so  only  in  certain  circumstances  and  under  certain 

conditions, and in compliance with EU law.  

Cross-border  investors  in  the  EU  may  invoke  directly  applicable  EU  rights  which  have 

supremacy  over  national  law.  National  judges  have  a  special  role  and  responsibility  in 

protecting  investment.  Together  with  the  Court  of  Justice  of  the  EU  ("CJEU"  or  "Court  of 
Justice")  through  the  preliminary  reference  procedure 4 ,  national  judges  must  ensure  in 

1

https://ec.europa.eu/commission/priorities/jobs-growth-and-investment/investment-plan-europe-juncker-

plan_en 
2 COM(2015)0468 final. 
3 COM(2017)292 final. 
4 Article 267 TFEU. 

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complete independence the full application of EU law and judicial protection of the rights of 

individuals in all Member States. Moreover, cross-border investors' rights are protected in the 

EU  also  through  a  number  of  public  mechanisms  aiming  at  preventing  infringements  and 

solving difficulties that investors may experience with national authorities.  

In  the  last  decades,  governments  have  encouraged  cross-border  investments  by  concluding 

bilateral  investment  treaties  (BITs).  These  BITs  typically  include  the  right  to  national 

treatment  and  most  favourable  nation  treatment,  to  a  fair  and  equitable  treatment,  to  the 

protection  against  expropriation  and  to  the  free  transfer  of  funds.  Investors  can  claim 

violations  of  those  provisions  before  investor-State  arbitration  tribunals.  Similar  provisions 

are to be found in the Energy Charter Treaty, a plurilateral investment treaty initiated by the 
EU  to  stimulate  investments  in  the  energy  sector. 5 The  EU  has  embarked  on  substantial 
reform of these agreements in the EU external context. 

Some  countries  with  which  EU  Member  States  had  previously  concluded  BITs  have  since 

joined  the  EU.  As  a  result  of  accession,  the  substantive  rules  of  BITs,  as  applied  between 

Member  States  ("intra-EU  BITs"),  became  a  parallel  treaty  system  overlapping  with  single 

market rules, thereby preventing the full application of EU law. This is the case, for example, 

when intra-EU BITs are interpreted in such a way that they constitute the basis for the award 

of unlawful state aid in violation of the level playing field in the single market. 

Intra-EU BITs confer rights only in respect of investors from one of the two Member States 

concerned, in conflict with the principle of non-discrimination among EU investors within the 

single  market  under  EU  law.  In  addition,  by  setting  up  an  alternative  system  of  dispute 

resolution, intra-EU BITs take away from the national judiciary litigation concerning national 

measures and involving EU law. They entrust this litigation to private arbitrators, who cannot 

properly apply EU law, in the absence of the indispensable judicial dialogue with the Court of 

Justice.  

For  these  reasons,  the  European  Commission  has  consistently  taken  the  view  that  intra-EU 

BITs are incompatible with Union law. Through its reasoned opinions of 23 September 2016, 

the  Commission  sent  a  formal  request  to  Austria,  the  Netherlands,  Romania,  Slovakia  and 

Sweden to terminate their intra-EU BITs. 

In the recent preliminary ruling concerning the Achmea case6, the Court of Justice confirmed 
that investor-State arbitration clauses in intra-EU BITs are unlawful. 

Following  the  Achmea  judgment,  the  Commission  has  intensified  its  dialogue  with  all 

Member  States,  calling  on  them  to  take  action  to  terminate  the  intra-EU  BITs,  given  their 

incontestable incompatibility with EU law. The Commission will monitor the progress in this 

5 The Energy Charter Treaty was signed by the EU, its Member States and a number of third countries.  
6 C-284/16 Achmea, ECLI:EU:C:2018:158, paras 56 and 58. 

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respect and, if necessary, may decide to further pursue the infringement procedures. 

In  the  aftermath  of  the  Achmea  judgment,  the  unlawfulness  of  intra-EU  investor-State 

arbitration may result in the perception that EU law does not provide for adequate substantive 

and  procedural  safeguards  for  intra-EU  investors.  However,  the  EU  legal  system  protects 

cross-border investors in the single market, while ensuring that other legitimate interests are 

duly  taken  into  account.  When  investors  exercise  one  of  the  fundamental  freedoms,  they 

benefit from the protection granted by: i) the Treaty rules establishing those freedoms; ii) the 

Charter of Fundamental Rights of the European Union ("Charter"); iii) the general principles 

of  Union  law;  and  iv)  extensive  sector-specific  legislation  covering  areas  such  as  financial 

services, 
qualifications, intellectual property or company law.7  

transport,  energy, 

telecommunications,  public  procurement,  professional 

Without  being  exhaustive,  this  Communication  recalls  the  most  relevant  substantive  and 

procedural  standards  in  EU  law  for  the  treatment  of  cross-border  investments  in  the  EU.  It 

shows that EU law protects all forms of EU cross-border investments throughout their entire 

life  cycle.  It  recalls  the  obligation  on  Member  States  to  ensure  that  national  measures  they 

may take to protect legitimate public interests do not unduly restrict investments. It draws the 

attention of investors to the EU rights they may invoke before administrations and courts.  

The Achmea judgment and its consequences  

In  the  Achmea  judgment  the  Court  of  Justice  ruled  that  the  investor-to-State  arbitration 

clauses laid down in intra-EU BITs undermine the system of legal remedies provided for in 

the EU Treaties and thus jeopardise the autonomy, effectiveness, primacy and direct effect of 

Union  law  and  the  principle  of  mutual  trust  between  the  Member  States.  Recourse  to  such 

clauses undermines the preliminary ruling procedure provided for in Article 267 TFEU, and is 

not compatible with the principle of sincere cooperation. This implies that all investor-State 

arbitration  clauses  in  intra-EU  BITS  are  inapplicable  and  that  any  arbitration  tribunal 

established  on  the  basis  of  such  clauses  lacks  jurisdiction  due  to  the  absence  of  a  valid 

arbitration agreement. As a consequence, national courts are under the obligation to annul any 

arbitral award rendered on that basis and to refuse to enforce it. Member States that are parties 

to pending cases, in whatever capacity, must also draw all necessary consequences from the 

Achmea judgment. Moreover, pursuant to the principle of legal certainty, they are bound to 

formally terminate their intra-EU BITs. 

The  Achmea  judgment  is  also  relevant  for  the  investor-State  arbitration  mechanism 

established  in  Article  26  of  the  Energy  Charter  Treaty  as  regards  intra-EU  relations.  This 

provision,  if  interpreted  correctly,  does  not  provide  for  an  investor-State  arbitration  clause 

7 While this Communication mentions some examples drawn from sector-specific legislation, a detailed analysis 
of such legislation would go much beyond its remit. 

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applicable between investors from a Member States of the EU and another Member States of 

the EU. Given the primacy of Union law, that clause, if interpreted as applying intra-EU, is 

incompatible with EU primary law and thus inapplicable. Indeed, the reasoning of the Court 

in  Achmea  applies  equally  to  the  intra-EU  application  of  such  a  clause  which,  just  like  the 

clauses of intra-EU BITs, opens the possibility of submitting those disputes to a body which is 

not part of the judicial system of the EU. The fact that the EU is also a party to the Energy 

Charter Treaty does not affect this conclusion: the participation of the EU in that Treaty has 

only created rights and obligations between the EU and third countries and has not affected 

the relations between the EU Member States.  

Scope of this Communication 

This Communication focuses on intra-EU investment and thus does not concern investments 

made by EU investors in third countries or investments made by third country investors in the 
EU.8 Treaty rules on free movement apply to situations with a cross-border element or when 
cross-border  movement  is  at  least  possible9.  However,  some  EU  directives  and  regulations 
which specify and further develop the fundamental freedoms may apply also to purely internal 

situations, thus benefiting all investors including national ones. This Communication focuses 

on the protection of investors against national measures and not against measures adopted by 

the EU institutions and bodies. 

The  fundamental  freedoms  and  the  majority  of  related  EU  secondary  law  also  apply  in 

substance  to  Iceland,  Liechtenstein  and  Norway,  through  the  Agreement  on  European 
Economic  Area  (‘EEA  Agreement’),  which  forms  part  of  EU  law.10 As  a  result,  the  single 
market by and large includes these three countries.11 

8 The Treaty also protects capital movements to and from third countries. However, under Article 64(3) TFEU, 
the Council may unanimously adopt measures which constitute a step backwards as regards the liberalisation of 

movement of capital to and from third countries. In addition, in the context of the common commercial policy, 

on  14  September  2017  the  Commission  proposed  a  European  framework  for  screening  of  foreign  direct 

investments  from  third  countries  by  Member  States  on  grounds  of  security  or  public  order:  Proposal  for  a 

Regulation  of  the  European  Parliament  and  of  the  Council  establishing  a  framework  for  screening  of  foreign 

direct 

investments 

into 

the  European  Union,  COM/2017/0487 

final:  https://eur-lex.europa.eu/legal-

content/EN/TXT/?uri=COM:2017:487:FIN 
9 C-67/08  Block  ECLI:EU:C:2009:92,  para.  21;  C-98/15  Berlington  Hungary,  ECLI:EU:C:2015:386,  para.  28; 
Joined  Cases  C-197/11  and  C-203/11  Libert  ECLI:EU:C:2013:288,  para.  34;  Joined  Cases  C-570/07  and  C-
571/07  Blanco  Pérez  and  Chao  Gómez  ECLI:EU:C:2010:300,  para.  40;  Joined  Cases  C-51/96  and  C-191/97 
Deliège, ECLI:EU:C:2000:199, para. 58. 
10 The CJEU clarified that, in light of the objective of the EEA Agreement to interpret and apply in a uniform 
manner  its  provisions  that  are  substantially  identical  to  those  in  EU  legislation,  fundamental  freedoms  for 
investment protection apply  mutatis mutandis to investments between the EU and the above-mentioned EFTA 
States.  See  C-476/10  Pepic,  ECLI:EU:C:2011:422,  para.  33-35  C-72/09  Établissements  Rimbaud, 
ECLI:EU:C:2010:645, para. 20-22. 
11 C-452/01 Ospelt, ECLI:EU:C:2003:493, para. 29,  

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II.  EU law protects all EU cross-border investments throughout their lifecycle 

Investments in the single market may take many forms, reflecting a multi-faceted economic 

reality.  EU  law  covers  and  protects  any  form  of  investment.  Indeed,  any  economic  activity 
falls within the scope of at least one of the fundamental freedoms12 and fundamental freedoms 
apply even if the purpose of the activity is not profit-making13. 

Unlike  international  investment  law,  EU  law  tends  not  to  use  the  terms  'investment'  and 

'investor' in the context of the single market, and economic operators are usually referred to as 
'nationals' (private individuals or companies) 14, or 'resident' or 'non-resident'. 

In  particular,  EU  law  covers  and  protects  investments  implying  capital  movements  and 

establishment. These terms refer to: 

 
 
 
 
 
 

 

the acts of investing in, acquiring and setting up companies;  

the right to acquire, use or dispose of immovable property;  

the repurchase of shares and bonds dealt in and quoted on a stock exchange;  

the receipt of dividends and interest;  

the commercial grant of credits (including consumer credits);  
the  acquisition  of  units  of  an  investment  fund;  mortgages,  legacies  and  loans,  etc.15 
and 
the acquisition of patents, trademarks and other intellectual property rights.16 

EU law protects access to the market, operations on the market and retreat from the market. 

i) Access to the market 

The creation of a new economic activity is protected mainly by EU market freedoms. These 

are:  the  right  of  investors  to  transfer  capital  to  other  Member  States  (Article  63  TFEU), 

including both financial and physical capital (such as machinery, factories or other production 

factors);  and  the  right  to  establish  in  other  Member  States,  set  up  agencies,  branches  or 
subsidiaries  (Article  49  TFEU)17.  Secondary  legislation  sets  limits  to  authorisation  schemes 

12 C-452/04 Fidium-Finanz, ECLI:EU:C:2006:631, para. 32 . 
13 C-281/06 Jundt, ECLI:EU:C:2007:816, para. 33 .  
14 Any  legal  person  incorporated  in  conformity  with  the  company  law  in  force  in  a  Member  State  is  a  legal 
person  under  Article  54  TFEU  and  thus  enjoys  the  fundamental  freedoms  laid  down  in  the  Treaty  (see  for 
example, C-6/16 Eqiom, ECLI:EU:C:2017:641, paras. 48-49). 
15 It is settled case-law that Directive 88/361/EEC, together with the nomenclature annexed to it, may be used to 
define a capital movement, see C-483/99 Commission v France, ECLI:EU:C:2002:327 para. 36; Joined Cases C-
578/10 to C-580/10 Van Putten, ECLI:EU:C:2012:246, paras. 28 to 36. 
16 C-255/97 Pfeiffer, ECLI:EU:C:1999:240. 
17 Investment in a company can take the form of control (direct investment) or can be done for profit purposes, 
without any intention of controlling or influencing the decisions (portfolio investment). 

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which can be imposed by Member States18 and prohibits certain types of requirements.19 

'Establishment'  means  in  particular  the  taking  up  and  pursuit  of  a  business  with  a  view  to 

participating, on a stable and continuous basis, in the economic life of a Member State other 
than the State of origin.20  

For  investors  willing  to  invest  cross-border  in  the  EU,  access  to  public  procurement  is  an 

important element of the European investment ecosystem where equal opportunities of access 

to the market are granted. Certain types of tenders are subject to harmonised rules on  public 
procurement 21.  In  addition,  EU  law  provides  that  public  concessions  and  public  tenders 
presenting a cross-border  interest  must  be awarded  through an  open and non-discriminatory 
procedure based on objective, non-discriminatory and proportionate criteria22. 

Example 1 – Means for exercising effective competition for new entrants from other Member 

States 

C-442/02 - Caixa Bank  

France prohibited banks to offer remuneration on current accounts. The Court of Justice observed 

that  such  prohibition  constituted,  for  companies  from  Member  States  other  than  France,  a  serious 

obstacle  affecting  their  effective  access  to  the  French  market.  That  prohibition  made  it  more 

difficult for credit institutions which are subsidiaries of foreign companies to raise capital from the 

public,  by  depriving  them  of  the  possibility  of  competing  more  effectively  with  the  credit 

institutions traditionally established in the domestic market.  

While the prohibition of remuneration on current accounts pursued a legitimate public interest such 

as  encouraging  medium  and  long-term  saving,  it  went  beyond  what  was  necessary  to  attain  that 

objective. Thus, the Court of Justice considered it to infringe the freedom of establishment. 

18 See  for  example  Articles  5-13  Directive  2006/123/EC of  the  European  Parliament  and  of  the  Council  of  12 
December 2006 on services in the internal market (OJ L 376, 27.12.2006, p. 36) ("Services Directive"). 
19 For example economic tests have been prohibited under Article 14 Services Directive. 
20 C-221/89 Factortame, ECLI:EU:C:1991:320 para. 20. 
21  Directive  2014/24/EU  of  the  European  Parliament  and  of  the  Council  of  26  February  2014  on  public 
procurement  and  repealing  Directive  2004/18/EC  (OJ  L  94,  28.3.2014,  p.  65);  Directive  2014/25/EU  of  the 
European Parliament and of the Council of 26 February 2014 on procurement by entities operating in the water, 
energy, transport and postal services sectors and repealing Directive 2004/17/EC (OJ L 94, 28.3.2014, p. 243); 
Directive  2014/23/EU  of  the  European  Parliament  and  of  the  Council  of  26  February  2014  on  the  award  of 
concession contracts (OJ L 094, 28.3.2014, p. 1); Council Directive 89/665/EEC of 21 December 1989 on the 
coordination  of  the  laws,  regulations  and  administrative  provisions  relating  to  the  application  of  review 
procedures  to  the  award  of  public  supply  and  public  works  contracts  (OJ  L  395  ,  30.12.1989,  p.  0033)  as 
subsequently amended. 
22 C-458/03 Parking Brixen, ECLI:EU:C:2005:605, para. 72; C-380/05, Centro Europa 7, ECLI:EU:C:2008:59, 
para. 120; Joined Cases C-458/14 and C-67/15 Promoimpresa, ECLI:EU:C:2016:558, paras. 64-65. 

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ii) Operating on the market  

Once  EU  investors  start  operating  a  business  in  another  Member  State  or  carry  out  another 

type  of  investment,  EU  law,  as  interpreted  by  the  Court  of  Justice  of  the  European  Union, 

continues  to  apply.  It  protects  them,  in  general,  against  public  measures  that  would  deprive 

the investors of the use of their property or that would limit the business activity in which they 
have engaged, even where such measures equally apply to national operators23. 

Investors  are  free  to  incorporate  a  company  in  a  Member  State  of  their  choice  and  set  up a 

secondary  establishment  in  another  Member  State,  irrespective  of  where  the  main  or  entire 
business  is  to  be  conducted24.  Member  States  have  to  recognise  companies  validly  formed 
under  the  law  of  another  Member  State,  in  particular  with  respect  to  the  company's  legal 
capacity to bring proceedings in a legal dispute25.  

If  a  European  company  wishes  to  move  and  convert  itself  into  a  company  governed  by  the 

law  of  another  Member  State,  it  benefits  from  the  freedom  of  establishment.  In  that  regard, 

the  Member  State  of  origin  may  not  impose  any  restrictions  on  the  move  and  conversion 
except for overriding reasons of public interest and in a proportionate manner.26 For instance, 
the  mandatory  liquidation  of  the  company  in  the  state  of  origin  as  a  pre-condition  for  its 
transfer  to  another  Member  State  is  disproportionate  and  therefore  contrary  to  EU  law. 27 
Member States may prevent or penalise fraud in compliance with EU law. However, the fact 

of establishing the registered office or real head office of a company in another Member State 
for the purpose of enjoying more favourable legislation does not, in itself, constitute abuse.28  

The Commission has recently proposed a framework allowing companies to easily operate in 

the  Single  Market,  including  when  they  grow  and  restructure  across  borders  to  adapt  to 
changing  market  conditions 29.  The  initiative  includes  common  EU  procedures  for  cross-
border conversions and divisions and it updates existing rules on cross-border mergers. It sets 

up strong safeguards to protect the legitimate rights and interests of employees, shareholders 

and  creditors,  and  to  prevent  the  use  of  these  procedures  to  set  up  artificial  arrangements 

aimed in particular at obtaining undue tax advantages, in conformity with the case law.  

An EU company which wants to provide services on a temporary basis instead of establishing 

itself in  another Member State is entitled  to  equip  itself with the necessary infrastructure in 

23 Joined  Cases  C‑52/16  and  C‑113/16  SEGRO,  ECLI:EU:C:2018:157,  para.  65;  C-179/14  Commission  v 
Hungary, ECLI:EU:C:2016:108. 
24 C-212/97 Centros, ECLI:EU:C:1999:126; C-167/01 Inspire Art, ECLI:EU:C:2003:512, para. 105. 
25 C-208/00 Überseering, ECLI:EU:C:2002:632, para. 9. 
26 C-210/06 Cartesio, ECLI:EU:C:2008:723, para. 113. 
27 C-106/16 Polbud, ECLI:EU:C:2017:804, para. 65. 
28 C-106/16 Polbud ECLI:EU:C:2017:804, para. 62. 
29 See  the  Commission  proposals  for  a  directive  of  the  European  Parliament  and  of  the  Council  amending 
Directive  (EU)  2017/1132  as  regards  cross-border  conversions,  mergers  and  divisions:  https://eur-
lex.europa.eu/legal-content/EN/TXT/?uri=COM%3A2018%3A241%3AFIN 

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the  host  Member  State30.  Member  States  may  not  make  the  provision  of  services  in  their 
territory  subject  to  compliance  with  all  the  conditions  required  for  establishment,  which 
would  render  freedom  to  provide  services  ineffective 31 .  This  applies  for  example  to 
professional  qualifications 32 ,  social  benefits  for  employees 33 ,  operating  licences 34 , 
comprehensive reporting obligations for service providers35, or comprehensive obligations for 
the translation of supporting documentation36. 

Moreover, investors engaged in production are also protected as goods that are legally present 

on  the  market  in  one  Member  State  can,  in  principle,  be  traded  freely  in  the  single  market 
thanks  to  the  free  movement  of  goods37.  A  number  of  EU  rules  have  harmonised  relevant 
matters  and  set  out  mechanisms  to  render  workable  in  practice  the  principle  of  mutual 
recognition among Member States for the free movement of goods.38  

When  investing  cross-border,  investors  can  also  hire  a  workforce  in  the  host  State39.  EU 
workers equally have the right to move freely (Article 45 TFEU). For providers temporarily 

offering  their  services  in  another  Member  State,  the  host  Member  State  cannot  make  the 

movement  of  staff,  including  workers  from  third  countries,  subject  to  unjustified  or 
disproportionate restrictions such as an obligation to obtain a work permit40. With a view to 
reconciling the free movement in the single market and the protection of workers, the labour 

law of the host country applies to posted workers with respect to those matters listed in the 
Directive 96/71/EC on Posted Workers.41 

EU  law  on  the  single  market  also  extends  to  tax  rules,  which  are  of  crucial  importance  for 

investors.  For  example,  VAT,  excise  duties  and  energy  taxation  are  regulated  by  EU 

directives. Furthermore, even if, in the current state of EU law, direct taxation falls within the 

scope of the Member States' competence, they must nevertheless exercise this competence in 

30 C-55/94 Gebhard, ECLI:EU:C:1995:411, para. 27. 
31 C-76/90 Säger, ECLI:EU:C:1991:331, para. 13. 
32 C-342/14 X-Steuerberatungsgesellschaft, ECLI:EU:C:2015:827; C-76/90 Säger, ECLI:EU:C:1991:331, para. 
21. 
33 C-272/94 Guiot, ECLI:EU:C:1996:147, paras 14 and 15. 
34 C-496/01 Commission v. France, ECLI:EU:C:2004:137, para. 65.  
35 C-577/10 Commission v Belgium ("Limosa"), ECLI:EU:C:2012:814, para. 47; C-490/04 Commission v 
Germany, ECLI:EU:C:2007:430, para. 89. 
36 C-490/04 Commission v Germany, ECLI:EU:C:2007:430, paras. 68 and 69. 
37 Articles 28 and 29 TFEU. 
38 See in particular Commission Communication "The Goods Package: Reinforcing trust in the single market" of 
19 December 2017 (COM/2017/0787 final). 
39 C-201/15 AGET Iraklis, ECLI:EU:C:2016:972, para. 52. 
40 C-113/89 Rush Portuguesa, ECLI:EU:C:1990:142, para. 12. 
41 Directive  96/71/EC  of  the  European  Parliament  and  of  the  Council  of  16  December  1996  concerning  the 
posting of workers in the framework of the provision of services (OJ L 18, 21.1.1997, p.1). See also Directive 
2014/67/EU  of  the  European  Parliament  and  of  the  Council  of  15  May  2014  on  the  enforcement  of  Directive 
96/71/EC  concerning  the  posting  of  workers  in  the  framework  of  the  provision  of  services  and  amending 
Regulation (EU) No 1024/2012 on administrative cooperation through the Internal Market Information System 
(‘the IMI Regulation’) (OJ L 159, 28.5.2014, p. 11). 

8 

 
 
                                                           
compliance  with  EU  law,  including  the  fundamental  freedoms.42 In  addition,  EU  secondary 
law also sets some limits to that national competence. For example, in order to ensure fiscal 
neutrality, the Parent-Subsidiary Directive43  exempts profits which a subsidiary distributes to 
its parent company from withholding tax. Thus, Member States cannot unilaterally introduce 

restrictive  measures  and  subject  the  right  to  exemption  from  withholding  tax  under  Article 
5(1) of that Directive to various conditions.44 

Example  2  –  Pension  funds  resident  in  other  Member  States  have  the  right  to  the  same  tax 

treatment as domestic pension funds 

C-493/09 - Commission v Portugal  

Under Portuguese law, dividends received by Portuguese pension funds were exempt from tax on 

condition that the shares were kept for at least one year; by contrast, a withholding tax (in principle 

of  20%)  was  raised  on  dividends  paid  to  pension  funds  established  in  other  Member  States  in 

respect  of  income  obtained  in  Portuguese  territory.  The  Court  of  Justice  confirmed  that  the 

Portuguese legislation was contrary to the free movement of capital enshrined in the Treaty. It held 

that  Portugal  had  failed  to  justify  the  discriminatory  treatment  of  dividends  paid  to  pension  funds 

established  in  other  Member  States.  Moreover,  the  fact  that  non-resident  pension  funds  cannot  in 

any circumstances benefit from the exemption granted to pension funds resident in Portugal was not 

proportionate  with  regard  to  the  difficulties  pleaded  by  Portugal  in  relation  to  the  collection  of 

information and recovery of tax debts. 

iii) Exit from the market 

Investors' rights under EU law include the freedom to determine the nature and extent of their 

economic activity. Hence, the Court of Justice also recognised the right of economic operators 

to  decide  the  size  of  their  investment  and  the  freedom  to  subsequently  scale  down  their 
activity or even to give it up45. Such freedom can be impaired only for duly justified reasons 
and in a proportionate manner.  

III.  EU law protects investors against unjustified restrictions 

42 C-319/02 Manninen, ECLI:EU:C:2004:484, para. 19. 
43  Article  5  of  Council  Directive  2011/96/EU  of  30  November  2011  on  the  common  system  of  taxation 
applicable in the case of parent companies and subsidiaries of different Member States (OJ L 345, 29.12.2011, p. 
8) as amended. 
44 Joined Cases C-504/16 and 613/16 Deister Holding, ECLI:EU:C:2017:1009, paras. 51-52 . 
45 C-201/15 AGET Iraklis, ECLI:EU:C:2016:972, para. 53 

9 

 
 
 
 
 
 
                                                           
Restrictions on investments can take many forms. They include:  

  a ban on acquiring holdings in the capital of a company in another Member State46;  
  a  ban  on  selling  shares  in  the  electricity  and  gas  distribution  system  to  private 

investors (i.e. a privatisation ban);  

  a ban on pension funds investing more than 5 % of their assets abroad 47;  
 

rules providing for the compulsory deposit of securities issued or payable abroad with 
an approved bank or a foreign bank chosen by an approved bank48;  

  special  rights  retained  by  Member  States  in  certain  undertakings  after  their 

privatisation (“golden shares”)49; and 

  prior authorisation schemes for investment in real estate (for example in farmland)50.  

However,  when  restricting  EU  investors'  rights,  public  authorities  have  to  comply  with  the 

limitations set out in EU law. 

1.  Discrimination  and  national  restrictions  of  investors'  rights  are  in  principle 

prohibited 

According to the Treaty, discrimination on the basis of nationality as well as other forms of 

discrimination is in principle prohibited and is lawful only in exceptional circumstances. This 

prohibition covers indirect discrimination and thus extends to measures that use criteria which 
are apparently neutral but lead in practice to a result equivalent to discrimination51. 

The EU legislator has outlawed completely any form of discrimination based on nationality, 

of a direct or indirect nature, in certain areas which are exhaustively or partially harmonised, 
for example in the Services Directive or in the directives in the telecoms sector.52 

Going  beyond  discrimination,  the  Treaty  also  provides  that  a  restriction  is  also  any 

46 C-148/91 Veronica, ECLI:EU:C:1993:45 para. 8 et seq. 
47 C-271/09 Commission v Poland, ECLI:EU:C:2011:855 para. 51 (restrictions on pension funds). 
48 C-157/85 Brugnoni, ECLI:EU:C:1986:258 para. 21. 
49 These actions started following the “Communication of the Commission on certain legal aspects concerning 
intra-EU investment”, 19 July 1997: http://eurlex.europa.eu/legalcontent/DE/TXT/HTML/?uri=CELEX: 
31997Y0719(03)&from = en. 
50 See Commission Interpretative Communication on Acquisition of Farmland and European Union Law: 
 http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=OJ:C:2017:350:TOC 
51  C-83/14  CHEZ  Bulgaria,  ECLI:EU:C:2015:480,  para.  94.  Discrimination  does  not  presuppose  that  only 
nationals  are  privileged  or  that  only  foreigners  are  placed  at  a  disadvantage  (C-388/01  Commission  v  Italy, 
ECLI:EU:C:2003:30, para. 14). 
52 Directive 2002/20/EC of the European Parliament and of the Council of 7 March 2002 on the authorisation of 
electronic communications networks and services (Authorisation Directive) (OJ 2002 L 108, 24.4.2002, p. 21), 
as amended by Directive 2009/140/EC of the European Parliament and of the Council of 25 November 2009 (OJ 
2009 L 337, 18.12.2009, p. 37); Directive 2002/21/EC of the European Parliament and of the Council of 7 March 
2002  on  a  common  regulatory  framework  for  electronic  communications  networks  and  services  (Framework 
Directive)  (OJ  2002  L 108,  24.4.2002,  p. 33),  as  amended  by  Directive  2009/140/EC;  Commission  Directive 
2002/77/EC of 16 September 2002 on competition in the markets for electronic communications networks and 
services (OJ 2002 L 249, 17.9.2002, p. 21). 

10 

 
 
                                                           
indistinctly  applicable53 measure  that  is  liable  to  prohibit,  deter  or  make  less  attractive  the 
exercise of one of the fundamental freedoms, even if indirectly and potentially.  

Such restriction is prohibited unless duly justified and compliant with the general principles of 
EU law and the fundamental rights,54 even if it is of limited scope or minor importance,55 and 
also  if  taken  by  the  home  Member  State  of  the  investor. 56 This  prohibition  concerns  in 
particular  national  laws,  other  generally  applicable  measures,  and  individual  administrative 

decisions.  

Example 3 – A notification obligation for investors may also constitute an unlawful restriction  

C-577/10 – Commission v Belgium ("Limosa") 

Under  Belgian  legislation,  service  providers  from  abroad  must  send  to  the  competent  national 

authorities a prior declaration detailing their activity in Belgium. The Commission challenged this 

legislation as regards its application to self-employed service providers.  

The Court of Justice found that the action was well-founded. It first held that the measure at issue 

constituted  a  restriction  to  the  free  provision  of  services.  The  Court  of  Justice  accepted  that  the 

protection  of  workers,  invoked  by  Belgium,  is  a  legitimate  public  interest.  The  Court  of  Justice 

ruled  however  that  Belgium  failed  to  give  a  sufficiently  convincing  justification  as  to  how  the 

provision of that very detailed information is necessary in order to achieve the objectives of public 

interest on which it relies and how the obligation to give that information in advance does not go 

beyond what is necessary to achieve those objectives, despite the fact that it should have done so. 

The  Court  of  Justice  recalled  in  that  context  that  any  presumption  of  abuse  by  foreign  economic 

operators is incompatible with the Treaty.  

2.  National restrictions have to be justified 

Market freedoms and fundamental rights are  not absolute but need to be balanced by public 

authorities with other public policy objectives.  

a. Certain restrictions can never be justified 

Certain types of restrictions are per se incompatible with the Treaty, for example conditions 
of  reciprocity  vis-à-vis  other  Member  States 57 or  a  presumption  of  fraud  with  regard  to 

53 I.e. equally applicable to both nationals and foreigners. 
54 C-492/14 Essent Belgium, ECLI:EU:C:2016:732, para. 96-97.  
55 C-315/13 De Clercq, ECLI:EU:C:2014:2408, para. 61. 
56 C-384/93 Alpine Investments, ECLI:EU:C:1995:126, paras. 29 to 31.  
57 C-5/94  Hedley  Lomas,  ECLI:EU:C:1996:205,  paras.  19-20;  C-266/03  Commission  v  Luxembourg, 
ECLI:EU:C:2005:341, para. 35. 

11 

 
 
 
 
 
                                                           
foreigners.58  

Furthermore,  some  serious  types  of  restriction  have  been  completely  outlawed  by  the  EU 

legislator (for example the "black list" set out in Article 14 of the Services Directive bans the 
obligation to have a primary establishment)59.  

Moreover, for matters which are not fully harmonised, EU rules reduce the discretion of EU 

or national authorities, for instance by setting out the criteria for the prudential assessment of 
qualified holdings in financial institutions60.  

b.  

Certain restrictions can be justified by legitimate public objectives 

EU  law  allows  for  restrictions  to  fundamental  freedoms,  as  long  as  they  are  justified  by 

objectives  expressly  listed  in  the  Treaty.  For  example,  Article  52  of  the  Treaty  allows 

restrictions of freedom of establishment and free provision of services on grounds of public 

policy, public security and public health. 

Restrictions that do not discriminate based on nationality can also be justified by overriding 

reasons in the public interest as recognised by Court of Justice case-law. These include:  

  environmental protection61, 
 
 
  keeping  an  agricultural  community 

the cohesion of the tax system,62  
the fight against tax evasion,63  

in  place  and  combating  excessive 

land 

speculation,64  
land-use planning (for example limitations on secondary residences)65,  

 
  consumer protection66,  
 

the protection of workers67, and  

58 C-577/10  Commission  v  Belgium  ("Limosa"),  ECLI:EU:C:2012:814,  para.  53;  C-106/16  Polbud, 
ECLI:EU:C:2017:804, para. 63. 
59 C-593/13  Rina  Services,  ECLI:EU:C:2015:399;  C-179/14  Commission  v  Hungary,  ECLI:EU:C:2016:108, 
para 47. 
60 Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity 
of  credit  institutions  and  the  prudential  supervision  of  credit  institutions  and  investment  firms,  amending 
Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (CRD IV) (OJ L 176, 27.6.2013, p. 
338);  Directive  2014/65/EU  of  the  European  Parliament  and  of  the  Council  of  15 May  2014  on  markets  in 
financial  instruments  and  amending  Directive  2002/92/EC  and  Directive  2011/61/EU  (MiFID  II)  (OJ  L  173, 
12.6.2014, p. 349); Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 
on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335, 17.12.2009, 
p. 1). 
61 C-400/08  Commission  v  Spain  ("shopping  centers  in  Catalonia"),  ECLI:EU:C:2011:172  para.  74.  See  also 
article 3(3) TEU and articles 11 and 191 TFEU. 
62 C-204/90 Bachmann, ECLI:EU:C:1992:35 para. 28. 
63 C-72/09 Etablissements Rimbaud, ECLI:EU:C:2010:645 para. 33 et seq. 
64 C-370/05 Festersen, ECLI:EU:C:2007:59 para. 27. 
65 C-213/04 Ewald Burtscher v Josef Stauderer, ECLI:EU:C:2005:731 para. 46. 
66 C-342/14 X-Steuerberatungsgesellschaft, ECLI:EU:C:2015:827 para. 53. 
67 C-341/05 Laval, ECLI:EU:C:2007:809 para. 103. 

12 

 
 
 
                                                           
 

the protection of creditors and minority shareholders68.  

The list of overriding reasons in the public interest  has evolved as the Court's jurisprudence 

has recognised the ever changing interests of our societies. However, EU law does not allow 

national  measures  to  restrict  fundamental  freedoms  for  administrative  or  purely  economic 
reasons69.  Moreover,  the  legitimate  public  interests  admitted  in  the  Treaty  and  the  case  law 
must be interpreted strictly.70 

3.  All  restrictions  need 

to  comply  with  general  principles  of  EU 

law 

(proportionality, legal certainty and legitimate expectations) 

Any national measure adopted by a Member State within the scope of EU Law and affecting 

EU  investors'  rights  has  to  comply  with  the  applicable  general  principles  of  EU  law,  which 
may be further specified in EU legislation71. 

First,  national  restrictions  have  to  be  proportionate,  which  means  that  the  restrictive 

provisions are suitable for achieving the intended objective, including the fact that they must 
serve the legitimate public objective in a consistent and systematic manner72. They should not 
go  beyond  what  is  necessary  to  achieve  the  public  interest.73A  restrictive  measure  is  not 
proportionate if there is a possible alternative measure which could pursue the public interest 
at stake in a manner that is less restrictive to the free movement.74  

In practice the principle of proportionality plays a central role. The Court of Justice exercises 

an in-depth scrutiny when it comes to the proportionality of the national measures restricting 

fundamental  freedoms.  When  assessing  the  proportionality,  all  the  factual  and  legal 

circumstances  of  the  case  should  be  taken  into  account.  It  is  for  the  national  authorities  to 

demonstrate  that  their  legislation  is  consistent  with  the  principle  of  proportionality.  In  that 

regard, the reasons which may be invoked by a Member State as justification must be backed 

up with appropriate evidence or an analysis of the appropriateness and proportionality of the 
restrictive measure.75  

68 C-106/16 Polbud, ECLI:EU:C:2017:804 para. 53. 
69 C-367/98 Commission v Portugal, ECLI:EU:C:2002:326 para. 52; C-174/04 Commission v Italy, 
ECLI:EU:C:2005:350 para. 37. 
70 See among others Joined Cases C-52/16 and C-113/16 SEGRO and Horváth, ECLI:EU:C:2018:157, para. 96. 
71 See, to this effect, C-17/03 VEMW, ECLI:EU:C:2005:362, para. 57 et seq. Cf. also in this context C-195/12 
Industrie du bois, ECLI:EU:C:2013:598. 
72 C-243/01 Gambelli, ECLI:EU:C:2003:597, para. 67; C-169/07 Hartlauer, ECLI:EU:C:2009:141, para. 55 and 
case law cited therein. 
73 Joined Cases C-52/16 and C-113/16 SEGRO and Horváth , ECLI:EU:C:2018:157, para. 76. 
74 C-452/01 Ospelt, ECLI:EU:C:2003:493, para. 41. 
75 C-333/14 Scotch Whisky, ECLI:EU:C:2015:845, para. 53; Joined Cases C‑52/16 and C‑113/16 SEGRO and 
Horváth , ECLI:EU:C:2018:157, para. 85 

13 

 
 
 
                                                           
Example  4  –  Indirect  expropriation  as  disproportionate  restriction  of  the  free  movement  of 

capital 

Joined Cases C‑52/16 and C‑113/16 – SEGRO and Horváth 

A  Hungarian  company  (owned  by  natural  persons  resident  in  Germany)  and  an  Austrian  citizen 

acquired,  before  30 April  2014,  usufructuary  rights  in  agricultural  land  in  Hungary,  which  were 

entered in the property register. Amendments to the relevant Hungarian law in 2013 extinguished all 

usufructuary rights on arable land, unless it could be proven that they were created between members 

of the same family. Consequently, the rights of the EU foreigners concerned were cancelled from the 

property register. 

The  Court  of  Justice  ruled  that  the  above-mentioned  2013  law  amendments  restricted  the  free 

movement  of  capital  as  they  deprived  the  claimants  of  enjoyment  of  the  property  in  which  they 

invested  capital  and  were  discriminatory  in  that  the  amendments  de  facto  targeted  foreigners.  The 

measures  were  not  suitable  to  attain  legitimate  public  policy  objectives  (for  example,  preserving 

viable agricultural communities), went beyond what was necessary and could have been replaced by 

less restrictive means.  

Second, legal certainty is a general principle of EU law which is also relevant for investors. It 

requires that EU or national rules are clear, precise and predictable as regards their effects, in 

particular  where  they  may  have  unfavourable  consequences  for  private  individuals  and 
undertakings76. That requirement must be observed all the more strictly where rules may have 
negative consequences for private individuals and undertakings77 or where the rules are liable 
to  entail  financial  consequences  for  the  persons  concerned78.  When  public  authorities  act 
within the scope of EU law, they must exercise their discretion on the basis of objective, non-
discriminatory, sufficiently specific and clear criteria known in advance.79 

Furthermore,  legal  certainty  also  includes  the  protection  of  legitimate  expectations. 80 
However,  only  in  certain  circumstances  may  EU  investors  challenge  the  amendment  of 

existing rules or the adoption of new rules which fall within the scope of EU law, on the basis 
of the protection of their legitimate expectations.  

In  order  to  be  able  to  rely  on  the  protection  of  legitimate  expectations,  economic  operators 

76 C-318/10 SIAT, ECLI:EU:C:2012:415, para. 58. 
77 C-17/03 VEMW, ECLI:EU:C:2005:362, para. 80; C-347/06 ASM Brescia, ECLI:EU:C:2008:416, para. 69; C-
362/12 Test Claimants in the Franked Investment Income Group Litigation, ECLI:EU:C:2013:834, para. 44. 
78 C-17/01 Sudholz, ECLI:EU:C:2004:242, para. 34. 
79 C-169/07  Hartlauer,  ECLI:EU:C:2009:141,  para.  64;  C-54/99  Association  Église  de  Scientologie  de  Paris, 
ECLI:EU:C:2000:124, para. 22; C-483/99 Commission v France ("Elf Aquitaine"), ECLI:EU:C:2002:327, para. 
50. 
80 C-17/03 VEMW, ECLI:EU:C:2005:362, para. 73-74. 

14 

 
 
 
                                                           
must  act  in  good  faith81 and  in  a  prudent  and  circumspect  manner82.  This  means  that  if  an 
investor  knew  or  should  reasonably  have  known  that  the  source  of  their  claim,  the  rules  on 

which they based their claim, the behaviour of the public authority implementing those rules 

or  the  procedure  followed  by  this  public  authority  were  contrary  to  EU  law,  they  cannot 
invoke the principle of legitimate expectations.83  

Economic operators cannot expect that an existing legal regime will always be maintained84. 
On  the  other  hand,  when  the  EU  or  a  Member  State  takes  a  new  measure  in  a  way  that 

negatively affects the interests of investors, they must provide, where appropriate, adaptations 

to the new rules that would take account of the particular situation of the affected investors, 

unless  an  overriding  reason  of  public  interest  prevents  them  from  providing  such 
adaptations85. 

Example 5 – The protection of legitimate expectations 

C-201/08 – Plantanol GmbH & Co 

German tax law provided for a tax exemption for a certain type of blended biofuel until the end of 

2009. The tax exemption was withdrawn on 18 December 2006, with effect from 1 January 2007, i.e. 

2 full years before the expiry date.  

The  Court  of  Justice  recalled  the  content  of  the  principles  of  legal  certainty  and  the  protection  of 

legitimate expectations. However, it also underlined that, where a prudent and circumspect investor 

could have foreseen that the adoption of a measure was likely to affect his interests, he cannot plead 

that  principle  if  the  measure  is  adopted.  The  Court  of  Justice  concluded  that  this  is  a  factual 

appreciation to be made by the national court, but it confirmed that legal certainty and the protection 

of  legitimate  expectations  do  not  in  principle  preclude  a  Member  State  from  withdrawing  a  tax 

exemption scheme before the expiry date. 

In principle, EU investors should only occasionally need to invoke the protection of legitimate 
expectations  because  they  can  usually  rely  on  the  application  of  the  fundamental  freedoms 

enshrined  in  the  Treaty  (including  proportionality  and  non-discrimination)  and  on  EU 

secondary  law.  Indeed,  EU  rules  produce  legal  effects  from  the  moment  of  their  entry  into 

81

 C-316/88  Krücken,  ECLI:EU:C:1988:201,  paras.  23-24,  C-5/89  Commission  v  Germany, 

ECLI:EU:C:1990:320, para. 14. 
82 C-310/04 Spain v Council, ECLI:EU:C:2006:521, para. 81. 
83 C-24/95 Land Rheinland-Pfalz v Alcan Deutschland, ECLI:EU: 1997:163, paras. 25 and 49; C-169/95 Spain v 
Commission ECLI:EU:C:1997:10, para 51. 
84 C-17/03 VEMW, ECLI:EU:C:2005:362, para. 81; C-201/08 Plantanol, ECLI:EU:C:2009:539, para. 53. 
85 C-17/03 VEMW, ECLI:EU:C:2005:362, para. 81; C-201/08 Plantanol, ECLI:EU:C:2009:539, para. 49;  

15 

 
 
 
 
                                                           
force.86 They are also immediately applicable and binding on a new Member State from the 
date of its accession, with the result that they apply to the future effects of situations arising 
prior to that new Member State's accession to the EU.87  

4.  All national restrictions have to comply with fundamental rights 

Cross-border investors can also invoke, within the scope of EU law, fundamental rights, such 

as the freedom to conduct a business, the right to property and the right to an effective judicial 
protection  when  acting  in  the  scope  of  EU  law. 88 Where  a  Member  State  (including  the 
national  legislator)  takes  a  measure  that  derogates  from  one  of  the  fundamental  freedoms 

guaranteed  by  EU  law,  that  measure  falls  within  the  scope  of  EU  law.  Therefore,  the 

protection granted by EU law, including the fundamental rights enshrined in the Charter, fully 
applies89. 

The freedom to conduct a business can be successfully invoked against serious restrictions of 
the  investor's  contractual  freedom90.  The  right  to  property  (i.e.  to  own,  use  and  dispose  of 
one’s lawfully acquired possessions) is of essential importance to every investment protection 

regime.  Under European law, the fundamental right to property  extends to  "property"  in the 
broadest sense of the word91 and equally covers the peaceful enjoyment of the right. It directly 
entails  a  right  to  compensation  for  the  deprivation  of  property  in  the  general  interest92.  The 
protection  granted  on  this  basis  is  particularly  important  in  the  case  of  expropriation  or 

equivalent measures. 

Such rights are not absolute and their exercise may be subject to restrictions, insofar as these 

restrictions  are  justified  by  objectives  of  general  interest  recognised  by  EU  law  and  are 

proportionate.  The  importance  of  the  aims  pursued  by  the  restrictive  measures  may  justify 

negative  consequences,  even  of  a  substantial  nature,  for  some  operators.  However,  the 

restrictions  may  not  constitute,  with  regard  to  the  aim  pursued,  a  disproportionate  and 
intolerable interference, impairing the very substance of those rights93. 

86 Joined Cases C-10/97 and C-22/97 IN.CO.GE.'90, ECLI:EU:C:1998:498, para. 23.  
87 C-122/96 Saldanha, ECLI:EU:C:1997:458, para. 14. 
88 Articles  16,  17  and  47  of  the  Charter.  Under  Article  52(3)  of  the  Charter,  in  so  far  as  this  Charter  contains 
rights  which  correspond  to  rights  guaranteed  by  the  Convention  for  the  Protection  of  Human  Rights  and 
Fundamental Freedoms, the meaning and scope of those rights shall be the same as those laid down by the said 
Convention; this provision shall not prevent Union law providing more extensive protection.  
89 C-685/15 Online Games Handels, ECLI:EU:C:2017:452, para. 56. 
90 C-426/11 Alemo-Herron a.O. ECLI:EU:C:2013:521, para. 35. 
91 The  European  Court  of  Human  Rights  has  on  several  occasions  ruled  that  rights  similar  to  property  are 
covered by Article 1 Protocol 1 of the European Convention of Human Rights, on the ground that the notion of 
"possession"  has  an  autonomous  meaning  which  is  not  limited  to  ownership  of  physical  goods; hence,  certain 
other rights and interests constituting assets can also be regarded as “property rights”, and thus as “possessions”, 
for the purposes of this provision (see for example judgments Handyside v UK, judgment of 7 December 1976; 
James v. UK of 21 February 1986 regarding a leasehold; Wittek v. Germany of 12 December 2002 regarding a 
transferable usufruct over a piece of land; Bruncrona v. Finland of 16 February 2005 regarding a lease). 
92 Joined Cases C-78/16 and C-79/16 Pesce a.O., ECLI:EU:C:2016:428, para. 86. 
93 C-44/79 Hauer, ECLI:EU:C:1979:290, paras. 15 et seq; C-5/88, Wachauf, ECLI:EU:C:1989:321, para. 18. 

16 

 
 
                                                           
5.  Investors may invoke EU competition rules against national measures 

Undistorted competition and a level playing field among undertakings must be ensured in the 

EU single market. Therefore, Member  States are not  allowed to  award State aid  unless  it is 
compatible with the internal market.94 Moreover, Member States are not allowed to require or 
to favour the adoption of agreements, decisions or concerted practices contrary to Articles 101 

or  102  TFEU  or  to  reinforce  their  effects,  or  to  divest  their  own  rules  of  the  character  of 

legislation by delegating responsibility for taking decisions affecting the economic sphere to 
private economic operators95. Articles 102 TFEU and 106(1) TFEU are also infringed where a 
measure imputable to a Member State, and in particular a measure by which a Member State 

confers  special  or  exclusive  rights  within  the  meaning  of  Article  106(1)  EC,  gives  rise  to  a 
risk of an abuse of a dominant position.96  

IV.  Enforcement of investors' rights under EU law 

While international investment law (for example bilateral investment treaties) focuses mainly 

on compensating investors after the violation has taken place, EU law enables the protection 

of  cross-border  investors  in  the  EU  through  multiple  ways  and  at  different  levels.  Cross-

border  investors  are  protected  in  the  EU  through  a  number  of  mechanisms  aiming  at  the 

prevention  or  resolution  of  violations  of  their  rights  committed  by  the  legislator,  the 

administration or the judiciary. The judicial enforcement of rights ensuing from EU law is one 

of  several  possible  solutions.  Where  judicial  enforcement  is  considered  to  be  the  most 

appropriate avenue or where other possibilities have been exhausted, an individual can rely on 

a fully-fledged and complete system of judicial remedies under EU law.   

1.  Mechanisms for the prevention of violations and out-of-court solutions 

Prior  scrutiny  of  national  measures  which  could  impair  an  individual's  rights  under  EU 

law  

The prevention of violations of an individual's rights under EU law is of particular value for 

investors,  who  have  a  particular  need  to  plan  and  execute  their  economic  decisions  in  a 

predictable and stable regulatory environment.  

With a view to ensuring a level playing field among undertakings in the single market, Article 

108 TFEU has laid down a system of prior notification which aims at allowing the European 

Commission to ensure the compatibility of State aid measures (including national legislation) 

94 See in particular Articles 107 to 109 TFEU. 
95 C-198/01 CIF, ECLI:EU:C:2003:430, para. 46. 
96 C-49/07  MOTOE,  ECLI:EU:C:2008:376,  para.  50;  C-553/12 P,  C-553/12 P  Commission  v  Greece  ("DEI"), 
paras. 41-43. 

17 

 
 
 
 
                                                           
with the Single Market before their entry into force. 

As  regards  the  EU  rules  on  free  movement,  the  legislator  has  established  an  obligation  for 

Member  States  to  notify  certain  measures  of  a  legislative  or  administrative  nature  prior  to 

their adoption and to submit them to scrutiny by the European Commission and, as the case 

may  be,  by  the  other  Member  States.  Whereas  in  some  instances  the  Commission  is  only 
empowered  to  issue  a  recommendation  to  the  Member  State  concerned,97 in  other  instances 
the Commission is empowered by the legislator to issue decisions under Article 288 TFEU, 
which  are  binding  on  the  Member  State  concerned.98 This  decision-making  power  for  the 
Commission  is  different  and  separate  from  the  Court  of  Justice's  power  to  rule  on 
infringements committed by Member States.99 For example, the Services Directive100 confers 
justification  and 
upon 

the  Commission  a  decision-making  power  as  regards 

the 

proportionality of certain new national barriers identified by the EU legislator as particularly 

harmful  for  the  attainment  of  a  single  market  for  certain  services.  In  order  to  make  the 

notification  procedure  effective  in  practice,  the  Commission  has  recently  proposed  a 
"Notification Directive".101 

Example 6 – Measure imposing the transfer of certain flights from Linate to Malpensa airport  

Case C-361/98 – Italy v Commission ("Malpensa") 

Regulation  2408/92  aims  at  rendering  the  free  provision  of  services  applicable  in  the  air  transport 

sector. Italy adopted, in July 1996 and October 1997 respectively, two decrees whereby all air traffic 

would  be  transferred  from  the  Linate  airport,  close  to  the  centre  of  Milan,  to  other  more  distant 

97 Directive (EU) 2015/1535 of the European Parliament and of the Council of 9 September 2015 laying down a 
procedure  for  the  provision  of  information  in  the  field  of  technical  regulations  and  of  rules  on  Information 
Society  services  (OJ  L  241,  17.9.2015,  p.  1).  Member  States  must  notify  to  the  Commission  certain  technical 
regulations before their adoption, is designed, by means of preventive control, to protect the free movement of 
goods and services, which are one of the foundations of the Union and, in order for such control to be effective, 
all draft technical regulations covered by that directive must be notified and, save for exceptional cases justified 
by urgency, their adoption or entry into force must be suspended during the periods laid down in the directive 
(see, as regards free movement of goods, C-443/98 Unilever, ECLI:EU:C:2000:496, paras. 40 et seq.). See also, 
as  an  example,  Regulation  of  the  European  Parliament  and  of  the  Council  concerning  measures  to  safeguard 
security of gas supply and repealing Directive 2004/67/EC.  
98 See, for instance, Article 9 of Council Directive 96/67/EC of 15 October 1996 on access to the groundhandling 
market at Community airports (OJ L 272, 25.10.1996, p. 36). On the basis of that Regulation the Commission 
has taken a decision in at least 10 concrete cases, and has occasionally issued a negative decision with regard to 
the proposed restrictive measure. See also Art. 3(2) of Directive 2010/13/EU of the European Parliament and of 
the  Council  of  10  March  2010  on  the  coordination  of  certain  provisions  laid  down  by  law,  regulation  or 
administrative  action  in  Member  States  concerning  the  provision  of  audiovisual  media  services  (Audiovisual 
Media Services Directive) (OJ L 95,15.4.2010, p. 1). 
99 Joined Cases C-15/76 and C-16/76 France v Commission, ECLI:EU:C:1979:29, paras. 26-28; C-325/94 P An 
Taisce, ECLI:EU:C:1996:293, para. 25.  
100 See Article 15(7) of the Services Directive. 
101 Proposal for a Directive on the enforcement of the Directive on services in the internal market, laying down a 
notification procedure for authorisation schemes and requirements related to services (COM(2016) 821 final). 

18 

 
 
 
                                                           
airports, subject to an exception that concerned, in practice, only the Milan-Rome route. 

Following complaints by international air carriers, the Commission adopted on 16 September 1998 a 

decision  prohibiting  the  Italian  measures  at  issue.  That  decision  was  adopted  under  Art.  8  Reg. 

2408/92 which empowers the Commission to take decisions regarding national measures governing 

the  distribution  of  traffic  to  the  detriment  of  service  providers  in  the  air  transport  sector.  The 

Commission considered in its decision that the Italian measure at issue was indirectly discriminatory 

and disproportionate. Italy  challenged that  measure  before the Court of Justice raising a number  of 

pleas both as regards the Commission power and the assessment carried out. 

In its judgment the Court of Justice rejected Italy's challenge. The Court ruled that the Commission 

was  fully  entitled  to  examine,  first,  whether  the  national  measures  enacted  in  the  decrees  at  issue 

impose  restrictions  which  are  ostensibly  applicable  without  distinction  and,  second,  whether  those 

restrictions are such as to achieve the objective which they envisage, without going beyond what is 

necessary to achieve it. It examined the assessment regarding justification and proportionality made 

by the Commission is its Decision and found that none of the numerous pleas put forward by Italy 

was well founded.  

Application by the administration of rules in conformity with EU law  

National  administrations  are  usually  the  first  and  most  common  interlocutor  that  investors 

face in a Member State when starting an investment or in the course of running their business. 

National  administrative  authorities  must  apply  EU  law  effectively,  interpret  national  law  in 

accordance  with  EU  law,  set  aside  national  rules  contrary  to  EU  law  and  undo  the 

consequences  of  EU  law  violations  (e.g.  repayment  of  undue  charges).  These  principles, 

which  follow  from  the  Member  States'  duty  of  sincere  cooperation  under  Article  4(3)  TEU 
and  the  primacy  of  EU  law,102 allow  for  the  correct  and  effective  application  of  the  rights 
ensuing  from  EU  law  without  the  need  to  have  resort  to  judicial  means.  They  must  be 
followed, even where national procedural rules do not provide for them expressly.103  

Example 7 – Disapplication of national rules by administrative bodies 

Case C‑476/10 – Pepic 

Two  nationals  of  Liechtenstein  were  refused  an  authorisation  required  by  Austrian  law  for  the 

purchase of secondary residences by foreign nationals. 

The Court interpreted the case in light of the free movement of capital provisions of Article 40 of the 

102

 See,  among  others,  C-103/88  Costanzo,  ECLI:EU:C:1989:256,  para.  32;  C-224/97  Ciola, 

ECLI:EU:C:1999:212, para. 30; C-341/08 Petersen, ECLI:EU:C:2010:4, para. 80.  
103 See, to that effect, C-349/07 Sopropé, ECLI EU:C:2008:746, para. 38. 

19 

 
 
 
 
                                                           
EEA Agreement, which it found to have the same legal scope as Article 63 TFEU. The Court found, 

first, that the authorisation requirement constituted discrimination on the grounds of nationality. The 

Court then stated that all national administrative bodies must respect the primacy of Union law and, 

therefore, must disregard such discriminatory national legislation. 

Any  person  has  the  right  to  be  heard  when  the  authorities  of  the  Member  States  take 

individual  measures  which  come  within  the  scope  of  EU  law  and  which  could  affect  that 
person.104 The  administration  must  apply  rules  impartially,  taking  into  account  all  relevant 
information  and  without  any  discrimination, 105 and  must  provide  a  proper  reasoning  for  its 
decisions106. Where a Member State has levied charges in breach of rules of EU law, it is in 
principle required to repay the relevant amounts, with interest.107  

Recognising  the  need  for  speedy  out-of-court  solutions  for  cross-border  problems  of 

application  of  EU  law,  the  Commission  and  the  Member  States  set  up  SOLVIT  in  2002. 

SOLVIT aims at providing pragmatic solutions to EU/EEA citizens and businesses when they 

face  difficulties  with  their  EU  rights  being  complied  with  by  public  authorities.  In  its 

Communication  Action  plan  on  the  Reinforcement  of  SOLVIT:  Bringing  the  benefits  of  the 
Single  Market  to  citizens  and  businesses,108 the  Commission  committed  to  taking,  together 
with Member States, further steps to strengthen SOLVIT’s strategic role to make the Single 

Market work better in practice for citizens and businesses. 

2.  Effective judicial protection for investors' rights under EU law 

A complete system of judicial remedies at EU and Member State level  

Pursuant to Article 19 (1) TEU Member States are obliged to provide remedies sufficient to 
ensure effective legal protection in the fields covered by Union law.109 Under Article 47 of the 
Charter, which is directly applicable, everyone has the right to an effective remedy and to a 
fair  trial.110 National  justice  systems  in  the  Union  are  subject  to  standards  of  independence, 
quality  and  efficiency,  spelled  out  in  extensive  case-law  of  the  Court  of  Justice  and  of  the 
European Court of Human Rights (ECtHR).111  

104 C-349/07 Sopropé, ECLI EU:C:2008:746, para. 36. 
105  C-55/94  Gebhard,  ECLI:EU:C:1995:411,  para.  37;  C-269/90  Technische  Universität  München, 
EU:C:1991:438, para. 14. 
106 C-19/92 Dieter Kraus, ECLI:EU:C:1993:125, para. 40; C-34/17 Donnellan, ECLI:EU:C:2018:282, para. 55.  
107 Joined  Cases  C-10/97  to  C-22/97  IN.CO.GE.'90,  ECLI:EU:C:1998:498,  para.  24;  C-591/10  Littlewoods 
Retail a.O., ECLI:EU:C:2012:478, paras. 25-26; C-69/14 Dragoş, ECLI:EU:C:2015:662, para. 24 and case-law 
cited therein 
108 http://ec.europa.eu/solvit/_docs/2017/com-2017-255_en.pdf 
109 C-64/16 Associação Sindical dos Juízes Portugueses, ECLI:EU:C:2018:117, para. 29. 
110 C-414/16 Vera Egenberger, ECLI:EU:C:2018:257, para. 78.  
111 See Articles 6 and 13 of the European Convention on for the Protection of Human Rights and Fundamental 
Freedoms. The case-law of the European Court of Human Rights is relevant in the interpretation of fundamental 

20 

 
 
 
                                                           
 
A multitude of remedies are available to individuals before national courts 

A  number  of  judicial  remedies  are  available  to  individuals  before  national  courts,  which 

consist in particular of:  

o  provisional measures (interim relief),112  
o 

the  obligation  to  interpret  national  law  in  a  way  that  is  consistent  with  EU 
law,113 
the  obligation  for  the  judge  to  set  aside  of  its  own  motion  any  act  (even  of 
constitutional nature) which is in conflict with EU law,114  
the elimination of the consequences of a violation of EU law,115 
the award of damages for violations of EU law (including for judicial wrong-
doing).116 

o 

o 
o 

Those  remedies  find  a  direct  legal  basis  in  EU  law.  Therefore,  when  the  conditions  are 

fulfilled,  national  courts  must  provide  them  regardless  of  whether  they  are  laid  down  in 

national  law  or  not.  At  the  same  time,  national  judgments  can  be  enforced  through  all  the 

tools provided for in national law.  

Example 8 – Judicial remedies based on EU law despite national constitutional law  

Case C-213/89 – Factortame and Joined Cases C-46/93 and C-48/93, Brasserie du Pêcheur and Factortame 

A number of companies, owners or operators of fishing vessels, were deprived of their fishing rights after the 

UK  authorities  adopted  new  and  discriminatory  rules.  The  companies  applied  for  judicial  review  and  for  the 

grant of interim relief. The House of Lords acknowledged that the applicants would suffer irreparable damage 

if  the  interim  relief  which  they  sought  were  not  granted  and  they  were  successful  in  the  main  proceedings. 

However,  under  national  law,  the  English  courts  had  no  power  to  grant  interim  relief  in  such  a  case.  More 

specifically, the grant of such relief was precluded by the old common-law rule that an interim injunction may 

not be granted against the Crown, that is to say against the government, in conjunction with the presumption 

that an Act of Parliament is in conformity with Union law until such time as a decision on its compatibility with 

that law has been given. The House of Lords referred the question to the Court. The latter replied that a national 

court which, in a case before it concerning Union law, considers that the sole obstacle which precludes it from 

rights, as Article 52 (3) of the Charter states that, when rights under the Charter correspond to rights guaranteed 
by  the  Convention  for  the  Protection  of  Human  Rights  and  Fundamental  Freedoms,  their  meaning  and  scope 
shall be the same, unless the EU right grants a higher protection. 
112  C-213/89  Factortame,  ECLI:EU:C:1990:257;  Joined  Cases  C-143/88  and  C-92/89  Zuckerfabrik, 
Süderdithmarschen ECLI:EU:C:1991:65.  
113 C-106/89 Marleasing ECLI:EU:C:1990:395; C-91/92 Faccini Dori, ECLI:EU:C:1994:292. 
114 Joined  Cases  C-188/10  and  189/10  Melki  and  Abdeli,  ECLI:EU:C:2010:363,  paras.  43-44.  That  obligation 
extends to setting aside conflicting case-law: see C-689/13 Puligienica, ECLI:EU:C:2016:199, para. 38. 
115  C-  503/04  Commission  v  Germany,  ECLI:EU:C:2007/432,  paras.  33  et  seq.;  C-276/07  Delay, 
ECLI:EU:C:2008:282, para. 23. See also below as regards the repayment of charges unlawfully levied.  
116  See  ex  multis  Joined  Cases  C-6/90  and  C-9/90  Francovich,  ECLI:EU:C:1991:428;  C-224/01  Köbler, 
ECLI:EU:C:2003:513. 

21 

 
 
                                                                                                                                                                                     
granting interim relief is a rule of national law, must disapply that rule. 

In a further reference from another UK Court, concerning the same investors, the Court found that the principle 

that  Member  States  are  obliged  to  make  good  damage  caused  to  individuals  by  breaches  of  Union  law 

attributable to the State is applicable where the national legislature was responsible for the breach in question. 

Furthermore, reparation of loss or damage cannot be made conditional upon fault (intentional or negligent) on 

the part of the organ of the State responsible for the breach, going beyond that of a sufficiently serious breach 

of Union law. 

Member  States  have  an  obligation,  under  EU  law,  to  put  in  place  effective  procedures  that 

enable  citizens  and  businesses,  including  investors,  to  claim  damages  for  breaches  of  their 

rights  under  EU  law  by  Member  States.  The  Commission  recognises  that  cross-border 

investors  might  face  difficulties  in  claiming  State  liability  due  to  the  diversity  of  national 

procedural laws. However, the case-law of the Court does not only establish the principle of 

such liability, but also sets out a number of minimum requirements for extra-contractual State 
liability for violation of EU law117. 

EU  requirements  and  support  concerning  the  independence,  quality  and  efficiency  of  the 

national judiciary  

The  independence  of  the  national  judiciary  is  a  common  principle  of  the  constitutional 
traditions of the Member States and of EU law118, and it is recognised as essential to ensure 
effective judicial protection119. Guarantees of independence and impartiality require rules on 
the composition of the judicial body and the appointment, length of service and the grounds 

for abstention, rejection and dismissal of its members. This is to dismiss any reasonable doubt 

in  the minds  of individuals as to the imperviousness of that body to external factors and its 
neutrality with respect to the interests before it120. 

As announced in the Communication EU law: Better results through better application121, the 
Commission  encourages  and  helps  Member  States  to  improve  their  capacity  to  enforce  EU 

law  and  to  provide  remedies  to  ensure  that  the  end-users  of  EU  law,  whether  private 
individuals or businesses can fully enjoy their rights.  

117 In principle, the conditions for the liability of Member States for damage caused to individuals by a breach of 
EU law does not differ from the conditions governing the liability of the EU and its institutions for such damage 
in accordance with Article 340 (2) TFEU; Joined Cases C-46/93 and C-48/93 Brasserie du Pêcheur and 
Factortame, ECLI:EU:C:1996:79 paras. 40 to 42. 
118 Article 47 (2) of the Charter and Article 19 Treaty on European Union. 
119 C-64/16 Associação Sindical dos Juízes Portugueses, ECLI:EU:C:2018:117, para. 41. 
120 C-506/04 Wilson, ECLI:EU:C:2006:587, paras. 50-53.  
121 Communication  -  EU  law:  Better  results  through  better  application  (2017/C18/02)  available  at  https://eur-
lex.europa.eu/legal-
content/EN/TXT/?uri=uriserv%3AOJ.C_.2017.018.01.0010.01.ENG&toc=OJ%3AC%3A2017%3A018%3ATO
C 

22 

 
 
 
                                                           
The  Commission  encourages  the  modernisation  of  enforcement  authorities  through  the 

European  Semester,  and  when  necessary  through  specific  legislation.  The  Commission  has 

worked with Member States to further improve the effectiveness of justice systems, including 

their independence, quality and efficiency. Improving the effectiveness of judicial systems is 

a  priority  in  the  European  Semester  and  the  Council  regularly  adopts  country-specific 

recommendations  on  improving  national  justice  systems  on  the  basis  of  Commission 

proposals.  

The  EU  financially  supports  certain  justice  reforms  through  the  European  Structural  and 

Investment Funds. Between 2007 and 2023 16 Member States will have spent more than EUR 
900 million to increase quality and efficiency of their justice systems122. EU funds have for 
instance  facilitated  the  introduction  of  new  case-management  systems  and  user-friendly  e-

services in courts. 

National  procedures  must  ensure  effective  enforcement  of  an  individual's  rights  ensuing 

from EU law 

Except for Regulation 1215/2012123 which seeks to facilitate access to justice, in particular by 
providing rules on the jurisdiction of the EU courts in cross-border cases and on a rapid and 
simple recognition and enforcement of judgments in civil and commercial matters124, EU law 
usually  leaves  procedural  rules  to  be  determined  by  national  law 125.  There  are  however 
exceptions, for example the Remedies Directives which harmonises procedural aspects related 
to enforcement and remedies in the field of public procurement.126  

Even  where  EU  law  does  not  harmonise  procedures,  it  does  in  any  event  set  out  minimum 

requirements in relation to those. For example, procedures for the enforcement of EU rights 

should  be  no  less  favourable  than  those  governing  similar  domestic  situations  (principle  of 

equivalence)  and  they  should  not  in  practice  render  impossible  or  excessively  difficult  the 
exercise of these rights (principle of effectiveness)127. The cost of a procedure should not be 

122

 The 

2018 

EU 

Justice 

Scoreboard, 

available 

at 

https://ec.europa.eu/info/sites/info/files/justice_scoreboard_2018_en.pdf, figures 2 and 3. 
123 Regulation  (EU)  No  1215/2012  of  the  European  Parliament  and  of  the  Council  of  12  December  2012  on 
jurisdiction  and  the  recognition  and  enforcement  of  judgments  in  civil  and  commercial  matters,  OJ  L  351, 
20.12.2012, p. 1–32. 
124 Regulation  1215/2012  applies only  in disputes relating to  'civil and  commercial  matters'.  Therefore,  it  does 
not apply in disputes involving a party (e.g. State authority) exercising public powers. In the realm of civil and 
commercial matters, there are also several Regulations establishing specific European procedures that could be 
used  by  investors,  such  as  the  European  Payment  Order  Regulation  (18796/2006)  or  the  European  Account 
Preservation Order Regulation (655/2014). 
125 C‑362/12,Test  Claimants  in  the  Franked  Investment  Income  Group  Litigation,  ECLI:EU:C:2013:834,  para. 
31. 
126 Directive  2007/66/EC  of  the  European  Parliament  and  of  the  Council  of  11  December  2007  amending 
Council Directives 89/665/EEC and 92/13/EEC with regard to improving the effectiveness of review procedures 
concerning the award of public contracts (OJ L 335, 20.12.2007, p. 31).  
127 C‑169/14 Sánchez Morcillo, ECLI:EU:C:2014:2099, para. 31. 

23 

 
 
                                                           
prohibitively  expensive  and  legal  aid  shall  be  made  available  to  those  who  lack  sufficient 

resources  in  so  far  as  such  aid  is  necessary  to  ensure  effective  access  to  justice,  including, 
when justified, to legal persons.128 Furthermore, individuals have the right to have their case 
adjudicated and enforced in a reasonable time.129  

Example  9  –  Disapplication  of  national  rules  on  limitation  periods  in  view  of  misleading 

conduct by national authorities 

Case C-327/00 – Santex 

An  Italian  company  was  prevented  from  participating  in  a  tender  procedure  because  of  non-

compliance with one of the tender clauses included in the notice for tender. Following the publication 

of  the  notice,  the  contracting  authority  had  indicated  to  the  applicant  that,  given  the  arguments 

against  the  compliance  of  that  clause  with  EU  law,  it  would  interpret  it  so  as  to  allow  them  to 

participate; however, it later took the opposed view and decided to exclude it from the tender. The 

national time limits for challenging notices for tender had expired by the time the case was lodged 

with the court.  

The  Court  found  that  in  general  the  time-limit  set  by  national  legislation  was  reasonable  and  thus 

ensuring, in principle, legal certainty for tender participants. However, the Court considered that the 

circumstances  of  each  case  need  to  be  considered  to  determine  if  the  effectiveness  of  EU  law 

provisions has not been jeopardised. In this case, the Court found that the conduct of the contracting 

authority had created a state of uncertainty and that only at the stage of the exclusion decision was 

that  uncertainty  dispelled.  The  authority  has  thus  rendered  excessively  difficult  the  exercise  by  the 

harmed  tenderer  of  the  rights  conferred  on  him  by  EU  law.  Thus,  the  Court  concluded  that  in  the 

specific circumstances of the case at hand the national court, in order to allow the plaintiff to raise the 

plea  of  incompatibility  of  the  tender  clause  with  applicable  EU  law,  should  interpret  the  national 

rules  on  limitation  periods  in  compliance  with  the  EU  principle  of  effectiveness  or,  if  that 

interpretation were not possible, disapply them. 

Referral to the Court of Justice of the European Union 

National courts act as 'EU courts' and are under an obligation to disapply of their own motion 

national  provisions  that  are  contrary  to  directly  effective  provisions  of  EU  law.  Where  the 

enforcement  of  EU  rights  relies  on  a  question  of  interpretation  of  EU  law  before  a national 

court,  that  court  may  request  the  Court  of  Justice  for  a  preliminary  ruling.  Where  such 

question  is  raised  before  a  court  or  tribunal  against  whose  decisions  there  is  no  judicial 

128 C-279/09 DEB, ECLI:EU:C:2010:811, para. 59. 
129 C-612/15 Kolev, ECLI:EU:C:2018:392, paras. 70-72. 

24 

 
 
 
 
                                                           
remedy  under  national  law,  that  court  or  tribunal  must  bring  the  matter  before  the  Court  of 
Justice130.  Preliminary  questions  can  also  pertain  to  the  validity  of  EU  rules:  where  such 
questions are relevant, a national court or tribunal must refer it to the Court of Justice, which 
has  the  exclusive  competence  to  review  the  validity  of  EU  acts.131 In  order  to  qualify  as  a 
"court or tribunal of a Member State" under Article 267 TFEU, and thus to be able to make a 
reference  to  the  Court  of  Justice,  an  organ  must  fulfil  a  number  of  criteria. 132  Private 
arbitrators  and  the  arbitral  tribunals  set  up  in  intra-EU  BITs  do  not  fulfil  these  criteria  and 
therefore cannot be considered to be "courts of tribunals" under Article 267 TFEU.133  

The  interpretation  given  in  a  Court  of  Justice  preliminary  ruling  is  binding  on  the  national 
court,  for  the  purposes  of  the  decision  to  be  given  in  the  main  proceedings134.  All  national 
authorities are obliged to take any measure, be it general or particular, in order to comply with 
a preliminary ruling as soon as possible.135 It is not necessary for the national judge to request 
or  await  the  prior  setting  aside  of  provisions  contrary  to  EU  law  by  legislative  or  other 
constitutional means136. 

Under Article 19 TEU the Court of Justice has the authority to ensure observance of EU law, 

and thus plays a central role in ensuring the effectiveness and uniformity of EU rules granting 

rights to cross-border investors.  

3.  Commission's role as guardian of the Treaty 

Article  17(1)  of  the  Treaty  on  European  Union  entrusts  the  Commission  with  the 

responsibility  for  the  effective  application,  implementation  and  enforcement  of  EU  law.  In 

this role, the Commission can review national measures and act to ensure compliance with EU 

safeguards protecting investors. The primary purpose of the infringement process is to ensure 

that  Member  States  actions  or  omissions  are  brought  in  line  with  EU  law  (for  example  by 

amending  national  law),  as  a  general  interest  objective.  Actions  by  individual  investors 

seeking  the  annulment  of  national  measures  or  claiming  financial  compensation  for  the 

damage caused by such measures are in the competence of national courts.  

Member States are obliged to take all the necessary measures to comply with a ruling of the 

Court of Justice finding an infringement. In case of failure, the Commission is empowered to 

130 Article 267 TFEU. 
131 C-314/85 Foto-Frost, ECLI:EU:C:1987:452. 
132 For that purpose, the Court takes account of a number of factors, such as whether the body is established by 
law,  whether  it  is  permanent,  whether  its  jurisdiction  is  compulsory,  whether  its  procedure  is  inter  partes, 
whether it applies rules of law and whether it is independent (C-54/96 Dorsch Consult,  ECLI:EU:C:1997:413, 
para. 23). 
133  See,  respectively,  C-102/81  Nordsee,  ECLI:EU:C:1982:107,  paras.  10  to  13,  and  C-284/16  Achmea, 
ECLI:EU:C:2018:158, paras. 43 et seq. 
134 C‑689/13 Puligienica, ECLI:EU:C:2016:199, para. 38. 
135 Joined Cases C-231/06 to C-233/06 Jonkman, ECLI:EU:C:2007:373, para. 38.  
136 C‑689/13 Puligienica, ECLI:EU:C:2016:199, para. 40.  

25 

 
 
                                                           
ask the Court of Justice to impose financial penalties on the non-compliant Member State.137  

The  Commission  is  committed  to  act  firmly  on  infringements  which  obstruct  the 

implementation  of  important  EU  policy  objectives  or  which  risk  undermining  the  four 
fundamental  freedoms  138,  which  are  essential  for  investors.  The  Commission  gives  high 
priority  to  infringements  that  reveal  systemic  weaknesses  and  in  particular  to  those  which 

affect  the capacity  of  national  judicial  systems  to  contribute  to  the  effective  enforcement  of 

EU law. It should be noted that a number of infringement cases are solved before the referral 

to  the  Court  of  Justice  as  the  Member  State  concerned  amends  or  repeals  its  legislation  at 

stake or takes positive measures to remedy the infringement.  

V.  Conclusion  

Enabling,  encouraging  and  protecting  investments  are  among  the  main  EU  priorities  in  the 

single  market.  EU  law,  as  interpreted  by  the  Court  of  Justice,  strikes  a  balance  between 

investment protection and other legitimate public interests objectives serving the wellbeing of 

its citizens. This balancing of different public interests should also take place when Member 

States act at national level within the scope of EU law. 

EU  law  does  not  solve  all  problems  investors  may  face  in  their  activities.  However,  in  the 

single market, EU investors' rights are protected by EU law, which allows for the pursuit and 

development  of  economic  activities  in  all  Member  States.  Investors  can  enforce  their  rights 

before national administrations and courts, according to national procedural rules which are to 

ensure that these rights are effectively protected. 

EU  investors  cannot  invoke  intra-EU  BITs,  which  are  incompatible  with  Union  law  and  no 

longer  necessary  in  the  single  market.  They  cannot  have  recourse  to  arbitration  tribunals 

established  by  such  intra-EU  BITs  or,  for  intra-EU  litigation,  to  arbitration  tribunals 

established under the Energy Charter Treaty. However, the EU legal system offers adequate 

and  effective  protection  for  cross-border  investors  in  the  single  market,  while  ensuring  that 

other  legitimate  interests  are  duly  and  lawfully  taken  into  account.  When  investors  exercise 

one of the fundamental freedoms such as the freedom of establishment or the free movement 

of  capital,  they  act  within  the  scope  of  application  of  Union  law  and  therefore  enjoy  the 

protection granted by that law.  

137 Article 260(2) TFEU.  
138 Communication  -  EU  law:  Better  results  through  better  application  (2017/C18/02)  available  at  https://eur-
lex.europa.eu/legal-
content/EN/TXT/?uri=uriserv%3AOJ.C_.2017.018.01.0010.01.ENG&toc=OJ%3AC%3A2017%3A018%3ATO
C 

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Member States  have the responsibility  and the power to  enforce EU law in  general  and EU 

investors'  rights,  in  particular.  The  Commission  strives  to  increase  the  effectiveness  of  the 

enforcement system in the EU, including actions to support administrative capacity building 

or to strengthen justice systems, and to tackle breaches of EU law by national authorities. 

27