Introduction

Since 1 December 2009, the European Union has exclusive competence in the area of foreign direct investment. The landscape of protection of foreign investment not only in Europe, but at least to a certain extent worldwide, changed with this shift of competence from the Member States to the EU that was made effective by the Treaty of Lisbon. Evidently, this development surprised many people. However, the necessity to grant the EU competence in the area of foreign direct investment within the common commercial policy of the Union has been discussed for a long time. After several proposals by the EU Commission to include foreign investment in the competence of the common commercial policy, during previous treaty revisions, the draft constitutional treaty of 2004 included this important area of international economic law in the catalog of exclusive competences of the European Union. Few took notice of this development. Thus, the fundamental importance and the far-reaching effects of this development were not initially recognized prior to the Treaty of Lisbon changes.

Since the change in competence, important legal and political developments with regard to encouragement and protection of foreign investment by and within the EU have occurred. The European Parliament and the Commission elaborated on and made public their perspectives on the future development of EU investment policy, and after long-lasting negotiations a Regulation on transitional arrangements for existing bilateral investment treaties of Member States was enacted. In addition, a Regulation on the responsibility of the EU and Member States in dispute settlement procedures under future EU investment treaties was proposed and is currently under discussion. Furthermore, the EU started to negotiate free trade agreements with extensive investment chapters with third countries. As it seems, the EU Commission also drafted a model dispute settlement chapter for future EU investment treaties and free trade agreements with investment provisions, although unfortunately not publicly available. Overall, the developments of the last years have thus brought forward some clarity on the complex legal and political challenges that were caused by the shift of competences within the European Union by the Treaty of Lisbon.

This special edition takes stock of the mentioned developments. Moreover, it tries to reflect on the remaining challenges and possible solutions for open questions. The special edition starts with a contribution by Nikos Lavranos on the new regulation on the transitional regime for existing extra EU BITs, in which he analyzes the negotiating history and the content of the new regulation and draws attention to the remaining challenges in this regard.

The European Union's negotiation of free trade agreements which include investment chapters and other international investment agreements is addressed in three contributions in this special edition. In the first paper, Sergey Ripinsky and Diana Rosert give a broad overview of existing EU international investment agreements in comparison to existing Member States' BITs. They also discuss possible directions for future EU investment policies, not only with regard to investment in a narrow sense, but also with regard to issues such as human rights, environmental protection and sustainable development. Emanuel Castellarin also takes up this topic in his paper and analyzes the challenges of current and future investment protection agreements negotiated by the EU. His focus is, next to a sharp analysis of the new regulation on transitional arrangements, on concrete negotiations of investment chapters currently undertaken by the European Union. The third paper in this section is a study written for the EU Parliament by Christian Tietje, Emily Sipiorski and Grit Töpfer which analyzes the draft proposal on the sharing of financial responsibility between the EU and/or a Member State. This contribution considers how the proposal addresses conflicts that may arise between the EU/Commission and the respective Member States and also assesses the distribution of representation in arbitral proceedings between the EU and the Member State. The acceptance of the proposal will have an important impact on future investment arbitrations to which the EU and/or Member States of the EU will be a party.

Even though the EU, with the exception of the Energy Charter Treaty, is not yet a party to an international investment agreement with a comprehensive dispute settlement chapter, the EU is already an active participant in dispute settlement procedures. The EU participates through submission of amicus curiae. The paper by Boris Kasolowsky and Caroline Harvey takes up the existing amicus curiae practice and extends this topic to the possible future role of the EU in investment dispute settlement.

One of the big challenges concerning international arbitration in investment matters and the role of the EU concerns the question whether any such international dispute settlement procedure is in compliance with the role of the European Court of Justice as laid down in the Treaty on European Union and the Treaty on the Functioning of the European Union. Stephan Schill gives this topic a detailed analysis in his paper. This topic is closely linked to the issue discussed by John Gaffney in his contribution. He is interested in the question of whether investment treaty tribunals should be permitted to request preliminary rulings from the European Court of Justice. The challenge of this topic certainly lies in the fact that the Court of Justice is currently not allowing arbitral tribunals to make any such request for a preliminary ruling.

Even though the competence of the EU for foreign direct investment is only applicable with regard to economic relations to third (non-EU) countries, so-called intra-EU BITs have also become an important topic for discussion in the debate that was kicked off by the Treaty of Lisbon. Thus, the remaining papers of this special edition deal with BITs concluded between EU Member States. The first contribution in this section by Christian Tietje gives a detailed account on the legal questions concerning intra-EU BITs in the context of international investment law and arbitration and EU law. This is followed by a paper by Moritz Keller and Smaranda Miron who discuss the recent decision by the higher regional court of Frankfurt dealing with the validity of an arbitration agreement deriving from an intra-EU BIT. The authors demonstrate the fundamental importance of this judgment for the future discussion on intra EU BITs.

The final paper of this special issue is a report on a conference held in Vienna on 18 June 2012 on "EU and Investment Agreements: Open Questions and Remaining Challenges" written by Catharine Titi.