Enforcement (deficits) of substantive investment standards under EU law

Abstract

The protection of foreign investment under EU law is systemically different from that under international investment law, both in substance and in enforcement. With the CJEU having closed the door to investor-state arbitration in intra-EU disputes, fundamental freedoms, the EU Charter of Fundamental Rights and their enforcement by Member State courts are gaining importance. In theory, EU law is capable of providing adequate investment protection. However, substantive and procedural prerequisites under EU and national law render protection difficult to obtain. The stringent requirements for state liability as established in Francovich create greater barriers for claiming monetary compensation before national courts compared to international tribunals. Even if an investor successfully pursues their case before a national court—whose independence from political interference is perceived unevenly across Europe—there is no system for the recognition of domestic judgments in other Member States comparable to the enforcement of international awards. As a result, investors will only be satisfactorily protected if all national courts apply the Francovich conditions adequately and consistently, if they interpret the legal margins left for domestic laws on procedure and compensation strictly and if other Member States were to accept the enforcement of the judgments. Current practice still shows deficits to this ideal.