1. EC infringement proceedings Presentation by James Flynn QC to BIICL conference “European Law and BITs: Exploring the Grey Areas” London, 4 th December 2008

2. Incidence of EC law on MS BITs with third countries  Not considering  Intra-EU BITS  Lex ferenda (Lisbon)

3. Respective competences of EU/EC and member states in international agreements  Basic principles (in a very complex area!):  Where EC has exclusive competence (explicit in Treaty or to be inferred), MS may not legislate or enter into international agreements  Where competence shared, MS may legislate until such time as EC has occupied (that part of the) field (e.g. because international agreement secures better realisation of “internal” objectives – over which EC has exclusive competence e.g. internal market)  Where each of EC and MS have exclusive competence over certain topics, a “mixed” agreement may be necessary

4. Relevant Articles of the Treaty: restrictions on capital movements Council may adopt:  57(2): measures restricting free movement of capital between MS and 3 rd countries inc. direct investment  59: safeguard measures for up to six months in exceptional circumstances, where 3 rd country capital movements create serious difficulties for EMU  60(1): urgent measures where needed in CFSP context, interrupting or down- scaling economic relations with 3 rd countries

5. Relevant Articles of the Treaty: MS obligations  10: “loyal co-operation”: MS to ensure fulfilment of obligations, to facilitate the EC’s tasks and to abstain from any measure that may jeopardise the attainment of the Treaty objectives  307:pre-accession international obligations of Member States not affected by entry into EC Treaty BUT MS must take all necessary steps to eliminate incompatibilities between such obligations and their obligations under the EC Treaty (adjustment or denunciation per ECJ case-law)

6. Relevant Articles of the Treaty: EC Commission powers  226: Commission may seek declaration from ECJ that MS has failed to fulfil obligation flowing from Treaty  Nb discretion: Commission cannot be obliged to do this and can opt not to  Art 226 is the basis of the cases against Austria and Sweden awaiting judgment, and pending case against Finland

7. Cases C-205 and C-249/06  Art 226 proceedings brought by EC Commission against Austria and Sweden  Alleging breach of EC Treaty obligations by provisions in various 3 rd country BITs re transfer of capital that potentially impeded adoption by EC of measures under Arts 57(2), 59 and 60(1) (no relevant such measure either adopted or envisaged!)