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C-205/06 and C-249/06 Commission v Austria and Sweden

C-205/06 and C-249/06 Commission v Austria and Sweden. Presentation by Anna Falk, Ministry for Foreign Affairs of Sweden European Law and Investment Treaties: Exploring the Grey Areas London, 4th December 2008. C-205/06 and C-249/06 Commission v Austria and Sweden. Commission:

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C-205/06 and C-249/06 Commission v Austria and Sweden

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  1. C-205/06 and C-249/06 Commission v Austria and Sweden Presentation by Anna Falk, Ministry for Foreign Affairs of Sweden European Law and Investment Treaties: Exploring the Grey Areas London, 4th December 2008

  2. C-205/06 and C-249/06 Commission v Austria and Sweden Commission: • The transfer clauses in the pre-accession BITs do not provide for restrictions on free movement of capital to and from third countries that the EC may adopt under Articles 57.2, 59 and 60.1 EC. • Austria and Sweden have not acted in order to rectify that situation and are therefore in breach of Article 307.2 EC.

  3. C-205/06 and C-249/06 Commission v Austria and Sweden Austria and Sweden: • No actual incompatibility between the transfer clauses and EC law has been proved to exist • The risk of a future incompatibility in itself does not suffice to trigger an application of Article 307.2 EC • No such risk has been proved to exist (interpretation of the BITs, application of international law – clausula rebus sic stantibus)

  4. C-205/06 and C-249/06 Commission v Austria and Sweden AG Maduro proposes that “the Court should declare that by not taking all appropriate steps to eliminate the incompatibility between the pre-accession bilateral investment agreements and Article 10 EC in conjunction with Articles 57.2, 59, 60.1 EC Austria and Sweden have failed to fulfil their obligation under Article 307 EC.”

  5. C-205/06 and C-249/06 Commission v Austria and Sweden Article 307 EC 1st and 2nd paragraphs “The rights and obligations arising from agreements concluded before 1 January 1958 or, for acceding States, before the date of their accession, between one or more Member States on the one hand, and one or more third countries on the other, shall not be affected by the provisions of this Treaty. To the extent that such agreements are not compatible with this Treaty, the Member States or States concerned shall take all appropriate steps to eliminate the incompatibilities established. Member States shall, where necessary, assist each other to this end and shall where appropriate adopt a common attitude.”

  6. C-205/06and C-249/06 Commission v Austria and Sweden Interpreting the duty of loyal co-operation (para 42) “an obligation of the MS to refrain from any measures liable seriously to compromise the exercise of Community competence. In particular, Member States are obliged to take all necessary steps to prevent their pre-existing international obligations from jeopardising the exercise of Community competence.”

  7. C-205/06 and C-249/06 Commission v Austria and Sweden Interpreting Article 307.2 EC (para 49) “The Court has stated that Article 307 applies to any international agreement capable of affecting the application of the Treaty. This establishes the level of inquiry to be made… …it suffices that, based on its wording, the agreement is capable of being incompatible with the Treaty.”

  8. C-205/06 and C-249/06 Commission v Austria and Sweden AG Maduro's opinion implies • a strict view regarding the duty of loyal co-operation on the part of the MS • a low level of inquiry regarding the incompatibility of MS agreements with EC law Result: Less room to manoeuvre for the MS when it comes to keeping and negotiating BITs. BITs must provide for possible EC law restrictions on movement of capital.

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