The future of international investment protection treaties within the EU is coming to a head. Hundreds of bilateral investment treaties crisscross the EU, offering legal protections and guarantees that go beyond those offered under local or EU law. Therein lies the problem in the eyes of the Brussels-based European Commission.

In mid-2014, the European Commission galvanised legal observers when it issued an injunction that forbids Romania from paying out a $250m arbitration verdict that was won in 2013 by a group of Swedish investors before an international tribunal.

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As we reported earlier in 2014, arbitrators at the World Bank ruled that Romania wrongly rolled back incentives that had been offered to the Swedes so as to encourage investment in less-privileged corners of Romania. Romania insisted that the incentives needed to be discontinued, so that the country did not fall afoul of strict EU rules governing 'state aid' to investors. However, arbitrators were unimpressed, and ruled that Romania should compensate the Swedes to the tune of $250m for the lost incentives.

But, when the victorious investors took their verdict this year to a Romanian court in an effort to collect their winnings, the European Commission waded into the dispute.

Brussels insists that the bilateral investment treaty between Sweden and Romania is a vestige of another era, and wholly unnecessary now that both countries are part of the EU family. Moreover, Brussels worries that such bilateral arrangements "discriminate" against other EU countries because they limit their legal protections to the two countries that are party to a given bilateral investment treaty. In other words, Swedes that invest in Romania and later clash with the local authorities may have better legal rights and remedies – particularly access to arbitration at the World Bank – than is offered by Romania to the rest of its EU brethren.

Now that Brussels has forbidden Romania from making good on the international arbitration verdict, the country finds itself hamstrung between the demands of the EU and its long-standing obligations as a party to the World Bank's Washington Convention, which requires signatories to honour arbitration verdicts emanating from the World Bank.

If Brussels has its way, Romania and other eastern European countries will tear up their old treaties – most of them with Western countries – and leave FDI disputes to be resolved by European institutions.

Luke Eric Peterson is the editor of InvestmentArbitrationReporter.com an online reporting service tracking FDI disputes between foreign investors and states.

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