Introduction

This opinion addresses the possible conflict between European Law and the obligations of the EU Member States under their bilateral investment treaties (BITs) with the People's Republic of China, specifically in the context of the Cybersecurity Act (CSA) proposed by the European Commission (Commission).

Executive Summary

Part I of the opinion provides a brief introduction.

Part II of the opinion provides an overview of the draft CSA proposed by the Commission on 20 January 2026, noting in particular that:

(i) The draft CSA provides for far-reaching competences of the European Commission in the area of information and communication technology, including the power to exclude `high risk suppliers' from European markets.

(ii) Under the present proposal, the CSA is to be enacted through an EU regulation and will be binding and directly applicable in all EU Member States.

(iii) At the same time, each of these Member States (with the exception of Ireland) has BIT in force with the People's Republic of China. Under these treaties, the States Parties undertake to guarantee far-reaching protections to investors and investments from the respective countries.

Part III of the opinion concerns the relationship between European Law and International Law. In this regard, the opinion notes that European Law may be considered (i) domestic law, or (ii) international law, specifically treaty law. Under either perspective, any potential obligations under the CSA would not exculpate Member States from violations of their BITs with the People's Republic of China. Under European Law, BITs of Member States with Third States, such as the People's Republic of China, are presently maintained in force.

If there is a conflict between obligations under European Law and those BITs, the Member State concerned remains bound by both.

Part IV of the opinion outlines some common features of BITs, noting in particular that:

(i) Provisions in several BITs between EU Member States and the People's Republic of China exclude the application of their most favoured-nation clauses to privileges granted to regional economic integration organizations. This does not mean that the BIT as a whole is subordinate to European Law. These provisions merely ensure that additional rights guaranteed under the regional economic integration organizations are not transferred over to a Third State under a BIT. Therefore, these provisions do not eliminate the possibility of a conflict between obligations under European Law and under the relevant BITs.

(ii) Individual BITs should not be interpreted in isolation, but within the broader context of international law. At the same time, transactions among third parties cannot affect the legal position of a party not privy to the transaction. Accordingly, it is not possible to harmonize China's BITs with European Law.

(iii) Although BITs may be unilaterally terminated, they typically contain so-called "sunset clauses", which provide that investments existing at the time of the BIT's termination would continue to be protected by the terms of the BITs.

Accordingly, the termination of BITs between EU Member States and the People's Republic of China would not constitute an effective strategy for avoiding conflicts between obligations under European Law and those arising under the Member States' BITs. This is likely to be true even in the improbable case that the Member States are able to secure China's agreement to terminate the BITs in question.

Part V of the opinion explains that while investors are not privy to BITs and have no say in their making, they nevertheless are beneficiaries of those treaties. All BITs between EU Member States and the People's Republic of China provide for arbitration between a Chinese investor and a European Member State in the event of an investment dispute, although the scope of the consent to arbitration varies considerably between treaties. In investment arbitration, if a tribunal determines that a breach of a treaty obligation has occurred, the remedy usually consists of monetary compensation. BITs thus provide effective mechanisms for ensuring compliance.

Part VI of the opinion provides a conclusion reiterating the key points set out in this document.

4 May 2026

Republished on TDM with kind permission.