In the event that the investor finds that they have been treated unequally compared to the companies of the host country or that the host country has taken steps that harm their investment, the investor has the opportunity to seek a solution using the options provided in the investment protection agreement. The investment protection agreement does not give large international companies the right to obstruct the law-making process of countries or to override the laws in force in the country.
The European Union and investment protection
Due to a conflict with the law of the European Union, the majority of Member States decided to terminate bilateral investment protection agreements within the Union in a coordinated manner. The original purpose of such agreements was to promote investments by providing mutual guarantees against political risks that could adversely affect investments and thus strengthen investor protection.
After joining the European Union, the need for additional guarantees for the Member States has disappeared, because the same rules of the single market of the European Union apply to all Member States, including those regarding cross-border investments (in particular, freedom of establishment and free movement of capital).
All investors in the European Union are subject to the same protection under Union law (for example, equal treatment on the basis of nationality). Bilateral investment treaties within the European Union, however, granted certain bilateral rights only to investors from some Member States. Pursuant to the established jurisprudence of the European Court of Justice, such unequal treatment is contrary to European Union law.
Bilateral investment protection agreements
In order to ensure the protection of investments with those countries that are located outside the European Union and that have a mutual interest in ensuring the most favourable environment for investors and investments, Estonia has concluded bilateral investment protection agreements, the purpose of which is to ensure the protection of investors, develop economic cooperation between the two countries, and encourage the movement of private capital. The agreements can be found on the Riigi Teataja website.
The future of investment protection
The European Union plans to improve the investment environment within the Union in the coming years, as Member States implement Union legislation differently, and therefore, the need for a clearer investment protection framework has arisen. In addition, the investment facilitation process has also been started at the WTO level, where the first round of negotiations took place in September 2020.
Last updated: 23.08.2022
