1 In this article the term European Community (EC) will be used for identifying the legal person concluding UAS and the term European Union (EU) will be used more broadly, referring to broader EU policy objectives, the Member States and their nationals. 2 The possible interactions between BITs and Community law have been indicated in a number of recent disputes, such as the Eastern Sugar award and Cases C-205/06 Commission v. Austria and C-206/06 Commission v. Sweden [2009] ECR 1-0000. For a discussion of these cases see M. Burgstaller, European Law and Investment Treaties, 26 Journal of International Arbitration 181 (2009); T. Eilmansberger, Bilateral Investment Treaties and EU Law, 46 Common Market Law Review 383 (2009); H. Wehland, Intra-EU Investment Agreements and Arbitration: Is European Community law an obstacle?, 58 International and Comparative Law Review 297 (2009). 3 Article 207 on the Treaty on the Functioning of the European Union provides explicitly that the Common Commercial Policy covers foreign direct investment. See also below part m.A.

4 The EU has concluded Stability and Association agreements with Albania, Bosnia and Herzegovina, Croatia, Montenegro, Serbia and the Former Yugoslav Republic of Macedonia. s The EU has concluded Euro-Mediterranean Association Agreements with Algeria, Egypt, Israel, Jordan, Palestine, Morocco, Tunisia and has recently concluded the negotiations with Syria and Partnership and Co-operation Agreements with Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Ukraine and Uzbekistan. 6 Economic Partnership Agreement between the CARIFORUM States, of the one part, and the European Community and its Member States, of the other Part, concluded on December 21st 2007, available at http://ec.europa.eu/trade/issues/bilateral/regions/acp/pr220208_en.htm. The CARIFORUM States are a regional grouping of 15 Caribbean countries, namely Antigua and Barbuda, the Bahamas, Barbados, Belize, Dominica, the Dominican Republic, Grenada, Gyana, Haiti, Jamaica, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Surinam, Trinidad and Tobago. 7 UNCTAD, 11A Monitor No.2 2008, Recent developments in international investment agreements, available at http://www.unctad.org/en/docs/webdiaeia20081_en.pdf (last visited 18th November 2009).

8 A. Guzman, Miy LDCS Sign Treaties That Hurt Them: Explaining the Popularity of Bilateral Investment Treaties, 38 Virginia J Inc'1 L 640 (1998), at 680-684. 9 On the question of whether foreign investment contributes to development see: UNCTAD, Economic Development in Africa, Rethinking the Role of Foreign Direct Investment (New York; Geneva: United Nations Publications, 2006); T. Moran, Does Foreign Investment promnte development? (Washington, DC: Institute for International Economics, 2005); H. Kehal, Foreign Investment in Developing Countries (New York: Palgrave Macmillan, 2004); A. Bende-Nabende, Globalisation, FDI, Regional Integration (Aldershot; Burlington: Ashgate, 2002); K. Sauvant & J. Weber (eds.) International Investment Agreements: Key Issues (New York; Geneva; United Nations Publications, 2005) chapter 27. 10 The existence of controversial empirical evidence does not necessarily question the role of international regulation as an important determinant of foreign investment flows. Without exaggerating the role of international regulation, since other factors, such as the domestic institutional and economic environment or the existence of natural resources and favorable market conditions, are important variables offoreign investment flows, the empirical evidence rather questions the suitability of the provisions ofl!As to achieve the objectives of foreign investment regulation to attract foreign investment and increase benefits from it. On the impact of LAS on FDI flows see in particular L. Sachs & K. Sauvant (eds.), The Impact of Bilateral Investment and Double Taxation Treaties on Foreign Direct Investment Flows (New York: Oup, 2008); J. Salacuse & N. Sullivan, Do BiTs really work: an evaluation of bilateral investment treaties and theirgrand bargain, 46 Harvard Int'l L 67 (2005); UNCTAD, World Investment Report 2003 FDI Policies for Development: National and International Perspectives, at 99-145; J. Tobin & S. Rose-Ackerman, Foreign direct investment and the business environment in developing countries: Tlie impact of bilateral investment deaties, Yale Law School Center for Law, Economics and Public Policy Research Paper No. 293; E. Aisbett, Bilateral Investment Treaties and "Foreign Direct Investment: Correlation versus Causation, MPRA Paper No. 225, March 2007. " S. Griffith-Jones, Global Capital Flows (Basingstoke: Macmillan, 1998), at 158-160, 171-175. 12 On the shift towards services and the regulatory concerns that it raises see: UNCTAD, World Investment Report 2004: The Shift Towards Services (New York; Geneva: United Nations Publications, 2004), at 147-180, 208-212. 13 For example Metaklad Corporation v. United Mexican States, Award, 30 August 2000, ICSID Case No. ARB(AF)/97/1, 6 ICSID Rev.—F'LJ 168 (2001); Aguas del Tunari S.A. v. Republic of Bolivia, Decision on Jurisdiction, 21 October 2005, ICSID Case No. ARB/02/3, 20 ICSID Rev.—F�Lj 450 (2005); Azurix Corp. v. Argentine Republic, Award, 14 July 2006, ICSID Case No. ARrs/O1/12. '4 A. Cosbey et al., Investment and Sustainable Development: A guide to the Use and Potential of International Investment Agreements (Winnipeg, International Institute for Sustainable Development, 2004), at 9-14; L. Peterson & K. Gray, International, Human Rights in Bilateral Investment Treaties and in Investment Treaty Arbitration (Winnipeg, International Institute for Sustainable Development, 2005), at 6.

�s Article 65 of the EPA contains the definition of an 'Investor' and 'commercial presence', indicating that the following provisions relate only to foreign direct investment. In other EC hAS portfolio investment is usually considered under their capital movements provisions, but Article 123(1) of the EPA is clear that free movement of capital provisions concern only movements related to direct investment, thus excluding portfolio investment from the scope of the EPA. �6 Regulation of establishment deals with the way the activity of an investor will take place, considering foreign equity ownership limitations, quantitative restrictions, administrative authorizations and restrictions on the legal form of an investment, whereas portfolio investment does not raise such concerns. I. Gomez-Palacio & P. Muchlinski, 'Admission and Establishment' in Muchlinski, Ortino & Schreuer (eds.) Oxford Handbook of International Investment Law (Oxford; New York: Our. 2008), at 230-232.

' R. Dolzer & C. Schreuer, Principles of International Investment Law (Oxford; New York: Otrn, 2008), at 107; Gomez-Palacio & Muchlinski, supra note 16, at 240-242. �fl Establishment concerns the setting up and management of primary or a dependent undertaking in the host state. On the scope and content ofestablishment regulation in general see UNCTAD, Admission and Establishment (New York; Geneva: UN Publications, 1999), at 1-4; J. Salacuse, 'Towards a Global Treaty on Foreign Investment: the Search for a Grand Bargain' in Horn (ed.) Arbitrating foreign Investment Disputes (The Hague: Kluwer Law International, 2004), at 73. 9 On the scope of Brrs including liberalizing provisions see: T. Pollan, Legal Framework for the Admission of FDi (Utrecht: Eleven International Publishing, 2006), at 77-85. 20 Articles 123 and 124 of the EPA. 21 Articles 67, 69 and Annex 4 of the EPA. Zz See below part IV.B. For a detailed description of the content ofEpA provisions see: P. Sauve & N. Ward, 'Services and Investment in the EC-Cn2�FOtZUM Economic Partnership Agreement Innovation in Rule Design and Implications for Africa' EciPE (2009), at 11-16, 36-44 available at http://www.ecipe.org/the-ec- cariform-economic-partnership-agreement-assessing-the-outcome-on-services-and-investment/PDF (last visited 18th November 2009). z3 Articles 68 and 70 of the EPA.

24 For an enumeration of the different standards of treatment provided in BITS see Dolzer & Schreuer, supra note 17, chapter 7. zs Articles 80-84 of the EPA. 26 For example the US Model BIT of 2004 contains a provision prohibiting only national measures determining the nationality of natural persons having managerial positions. 27 For example Articles 12 and 13 of the US Model BIT. Z8 For an analysis of these provisions see below part IV.C.

z9 Article 71 of the EPA provides that "nothing in this Title shall be taken to limit the rights of investors of the Parties to benefit from any more favourable treatment provided for in any existing arfuture international agreement relating to investment to which a Member State of the European Community and a Signatory CARIFORUM State are Parties". 30 For an overview of the dispute settlement provisions included in EC IlAs and their differences from BITS see I.G. Bercero, 'Dispute Settlement in European Union Free Trade Agrecments: Lesson Learned?' in L. Bartels & F. Ortino (eds), Regional Trade Agreements and the Wro System (Oxford; New York: Oup, 2006), at 389 ff E.R. Robles, Political & Quasi-Adjudicative Dispute Settlement Models in European Union Free Trade Agreements, WTO Economic and Research Statistics Division, Staff Working Paper EIZSD-2006-09 (2006). It It is noteworthy that Article 217 of the EPA explicitly secures the right for private individuals to submit amicus curiae. 3z The term 'investment promotion' is used in this article in a narrow sense, relating only to the measures that affect the institutional capacity and willingness of host states to promote foreign investment and not to all measures that create favourable determinants for foreign investment, as the latter definition would include liberalizing and protection measures as well.

33 Article 121. See also D. teVelde and S. Bilal, 'Foreign Direct Investment in the Cotonou Agreement: Building on Private Sector Initiatives' in Babarinde & Faber (eds.) The European Union and Developing Countries The Cotonou Agreement (Leiden; Boston: Martinus Nijhoff, 2005), at 211-214. aa UNCTAD, Investment Promotion Provisions in International Investment Agreements (New York; Geneva: UN Publications, 2008), at 13-14.

35 According to the principle of attribution, which is enunciated in Article 5 TEC, the EC shall act only within the limits of the competences conferred upon it by the Member States in the Treaty to attain the objectives set out therein. 36 W. Shan, Towards a Common European Community Policy on Investment Issues, 2 Jwrr 603 (2001); L. Mola, Which Role for the EU in the Development of International Investment Law?, Society of International Economic Law, Working Paper 26/08 (2008). For an analysis of EU competence over foreign investment under the current Treaty, the Constitutional Treaty and the Lisbon Treaty see: J. Ceyssens, Towards a Common Foreign Investment Policy? - Foreign Investment in the European Constitution, 32 Legal Issues of Economic Integration 259 (2005); J. Karl, The Competence for Foreign Direct Investment, 4 JW 414 (2003). On the author's perception of the scope of Community competence over foreign investment see A. Dimopoulos, The Common Commercial Policy after Lisbon: Establishing parallelism between internal and external economic policy?, 4 Croatian Yearbook of European Law and Policy 101 (2008). 3s For an analysis of the relevance of Article 56 TEC for foreign investment regulation see indicatively R. Torrent, Derecho comunitario e Inversiones extranjeras directas: Ubre arculacion de los capitales vs. Regulacion no discriminatoria del estableamiento. De la golden share a los nuevos Open Skies, 22 Revista Espanola de derecho europeo 291 (2007). In accordance with the doctrine of implied powers, the existence of EC implied powers in the field of foreign investment requires that regulation of the activity of third country nationals in the EU as well as of EU nationals in third countries is necessary for the attainment of the objectives of the internal market. In that regard, the competence to establish a uniform regulatory framework on the establishment of EU nationals in the EU

encompasses also the competence over the establishment of third country nationals, because otherwise divergent laws in the Member States setting different conditions for third country nationals could impede the effectiveness of the uniform provisions. With regard to the establishment ofEU nationals in third countries, implied Community competence can be derived from the need to secure equal and non-discriminatory treatment of EU nationals in third countries via the conclusion of international agreements, as the latter has been recognized by the Court in the Open Skies cases (indicatively Case C-467/98 Commission v. Denmark [2002] EcR 1-9519). ^° For an overview of the possible legal bases enabling the EC to take action in the field offoreign investment see Dimopoulos, supra note 37, at 109-113. 41 O. Babarinde & G. Faber, From Loaf ? to Cotonou: Business as usual? 9 EFA Review 27 (2004), at 33-35. 4z EC competence in the field of the internal market as well as in the field of the Common Commercial Policy with regard to trade in services is shared with the Member States [M. Cremona, A Policy of BiTs and Pieces? The Common Commercial Policy after Nice, 4 Cambridge Yearbook of European Law Studies 61 (2001), at 84]. It is rendered exclusive only after the EC has adopted common rules in the field and exclusivity is necessary to avoid any effect on the common rules which may result from autonomous action taken by the Member States (Ae'rR- type exclusivity). For an analysis ofAETR-type exclusivity see P. Koutrakos, EU International Relations Law (Oxford; Portland: Hart, 2006), at 84-88. a3 In addition to the infringement proceedings that the EC has initiated against against Austria, Sweden and Finland for having concluded BITS that are incompatible with the EC Treaty (supra note 1), another example indicating the EC's interest in the field presents the Commission's insistence on the renegotiation of the BITS between the Member States that acceded in the EU in 2004 and the US. See Koutrakos, supra note 42, at 321-325; A. Radu, Foreign Investors in the EU- Which "Best Treatment"? Interactions Between Bilateral Investment treaties and EU Law', 14 European Law Journal 237 (2008).

^^ Partnership Agreement between the Members of the ACP Group of he one part, and the European Communities and its Member States of the other part, Cotonou, Benin 23.6.2000, OJ [2000] L317/3. 45 On EU external development policy see Joint Statement by the Council and the Representatives of the Governments of the Member States meeting within the Council, the European Parliament and the Commission on European Union Development Policy, "The European Consensus", OJ C46/1, Brussels 22.11.2005; K. Arts, Ac�-EU relations in a new era: The Cotonou Agreement, 40 Common Market Law Review 95 (2003). ab M. Trebilcock & R. Howse, 7lie Regulation of International Trade (London: Routledge, 2005), at 385-387.

47 Salacuse & Sullivan, supra note 10, at 95-96. 48 B. Hoekman & R. Newfarmer, Preferential Trade Agreements, Investment Disciplines and Investment Flows, 5 Joumal of World Trade 949 (2005), at 949-950. 49 S. Szepesi, Comparing EU Free Trade Agreements: Investment, InBrief 6D of European Centre for Development Policy Management, available at www.ecdpm.org (last visited 18th November 2009).

50 Commission Communication, Global Europe: Competing in the World, Con (2006) 567, Brussels 4.10.2006. Ibid., at para. 3. 1 (ii). 52 R. Williams, Community Development Cooperation Law, Sustainable Development, and the Convention on Europe - From Dislocation to Consistency? 4 Oxford Yearbook of European Environmental Law 303 (2005).

53 Articles 3 and 60 of the EPA. 5^ Article 31(1) of the Vienna Convention on the Law of Treaties (VCLT) states that "[a] treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose".

55 Article 2 provides that the EPA "is based on the Fundamental Principles as well as the Essential and Fundamental Elements of the Cotonou Agreement, as set out in Articles 2 and 9, respectively, of the Cotonou Agreement", thus incorporating these provisions in its text. 56 For an analysis of the obligations established by essential elements clauses see L. Bartels, Human Rights Conditionality in the ELI's International Agreements (New York: Oup, 2005), at 93-106; E. Fierro, The EU's Approach to Human Rights Conditionality in Prartice (The Hague; London: Martinus Nijhoff, 2003), at 213. For an analysis of the suspension mechanism under human rights clauses see: A. Rosas, 'Human Rights in the External Trade Policy of the European Union' in World Trade and the Protection of Human Rights. Human Rights in Face of Global Economic Challenges, Publications de l'Institut International des Droits de I'Homme (2001), at 193; M. Cremona, 'Human Rights and Democracy Clauses in the EC's Trade Agreements' in N. Emiliou and D. O'Keefe (eds.) The European Union and World Trade Law (Chichester; New York: Wiley, 1996), at 62. sa On the clarity of the normative content of sustainable development in international and EU law see M-C. Cordonier-Segger & A. Khalfan, Sustainable Development Law: Priruiples, Practices and Prospects (Oxford; New York: OuP, 2004) chapter 3; Williams, supra note 52.

11 Bartels, supra note 56, at 35-40. 60 See for example the Ennns with Algeria, Morocco and Tunisia; S. Fares, Current Payments and Capital Movements in the EU-Mediterranean Association Agreements, 30 Legal Issues of Economic Integration 15 (2003), at 23-24. b� For an analysis of the policy concerns on outward investment from developing countries see T. Moran, 'What policies should developing country governments adopt toward outward FDI? Lessons from the experience of developed countries', in Sauvant, Mendoza & Ince (eds.) The Rise of Tt�CS from Emerging Markets: Threat or Opportunity? (Cheltenham: Edward Elgar, 2008) chapter 13.

62 Sauve & Ward, supra note 22, at 56; teVelde and Bilal, supra note 33, at 215-216. 63 C. Nwobike, The Emerging Trade Regime under the Cotonou Partnership Agreement: Its Human Rights Implications, 40 Journal of World Trade 291 (2006), at 312-313. 64 The CARIFORUM-EC Trade and Development Committee is assigned with the task to monitor and assess the implementation of the agreement on sustainable development (Article 230.3.(a)), assisting the Joint Cn2�FOaur.t-EC Council in taking binding decisions concerning the operation and implementation of the agreement. bs On the benefits that performance requirements may have on host state development see UNCTAD, Fm and Performance Requirements: New Evidence from Selected Countries (New York; Geneva: UN Publications, 2003). 66 Article 4 of the EPA. 67 G. Faber, 'Economic Partnership Agreements and Regional Integration' in Babarinde & Faber (eds.), The European Union and Developing Countries The Cotonou Agreement (Leiden; Boston: Martinus NijhoB; 2005), at 92-94. 68 Sauve & Ward, supra note 22, at 57; teVelde & Bilal, supra note 33, at 215-216; Faber, supra note 67, at 88-91.

s9 For an overview of the commitments undertaken by the EC and CARIFORUM countries and their comparison to the Parties' GATS commitments see: Sauve & Ward, supra note 22, at 24-33. 70 Voluntary codes of corporate social responsibility present for example the UN Code of Conduct for Transnational Corporations (1986) and the OECD Guidelines for Multinational Corporations (1972 as amended in 2001). For a discussion of voluntary codes see F. McLeay, 'Corporate Codes of Conduct and the Human Rights Accountability of Transnational Corporations: a Small Piece of a Larger Puzzle' in DeSchutter (ed.), Transnational Corporations and Human Rights (Oxford; Portland: Hart, 2006), at 219-241. 71 O. DeSchutter, 'The Challenge of Imposing Human Rights Norms on Corporate Actors' in DeSchutter (ed.), Transnational Corporations and Human Rights (Oxford; Portland: Hart, 2006), at 1-43.

For an overview of the different exception provisions relating to the preservation of public policy interests that are found in B71's see UNCTAD, Bilateral Investment Treaties 1995-2006: Trends in Investment Rulemaking (New York; Geneva: UN Publications, 2007), at 87-90, 93-99. " For an overview of the debate on trade and development in the WTO see: M. Gehring & M.-C. Cordonier Segger (eds.), Sustainable Development m World Trade Law (The Hague: Kluwer Law International, 2005) and in particular chapters 3, 5 and 6.

74 Article 7(3) of the EPA. 75 For an overview of the EDF structure and scheme see Babarinde & Faber, supra note 41, at 33-35, 38-42. For an analysis of its current implementation and allocation of funds see Commission Communication, Regional Integration for Development in Acp Countries SEC (2008) 2538, Brussels 1.10.2008. �6 Article 121. See also Sauve & Ward, supra note 22, at 44-47. 77 For an analysis of the policy implications arising from the inclusion of promotion provisions in IW see UNCTAD, Investment Promotion Provisions in International Investment Agreements (New York; Geneva: UN Publications, 2008), at 7-12 and 65-68. �a Article 230 (3) of the Een. �y For an analysis of the Investment Facility see European Investment Bank, Investment Facility Annual Report (2007).