The governments of Austria, Finland and Sweden have refused to revise or annul some of their bilateral investment treaties (BITs) which are the subject of infringement proceedings by the European Commission (EC).

In 2004, the EC notified Austria, Finland, Sweden and Denmark that some of their pre-accession BITs with non-EU countries may be in conflict with certain powers reserved to the EU Council of Ministers. The EC Treaty permits wide-ranging freedom for movement of capital and payments but allows the Council of Ministers, in exceptional circumstances, to take certain restrictive measures in relation to movements of capital to or from non-EU countries. The EC considered that the BITs in question may hinder the application of these restrictive measures. Although, by virtue of article 307 of the EC Treaty, community law does not automatically prevail over international agreements concluded by member states prior to their accession, member states are obliged to take all appropriate steps to eliminate possible incompatibilities contained in such prior international agreements.

The EC case against Denmark was closed following Denmark's notification that it would terminate the BIT in question. However, the infringement proceedings against the other three governments are continuing. Austria and Sweden have recently filed written responses with the Court of Justice and await a hearing date, while Finland has until 16 April to file its written response.

Source: Investment Treaty News