On April 21, 2018, the EU and Mexico announced an “agreement in principle” to update the terms of their 2000 Economic Partnership, Political Coordination and Cooperation Agreement. The new agreement advances the EU’s mission to transform the traditional investor-state arbitration in favor of a permanent bilateral investment court (BIC). It also follows similar treaties and free trade agreements between the EU and Canada, Vietnam, and Singapore. This article explores how this recent trend could affect international companies and individuals with investments in the EU.
Background on the Reforms
In today’s global economy, clients are investing and operating in markets that present heightened country risks such as the risk of nationalization, unfair taxes and discriminatory regulation. To offer foreign investors greater confidence in their ability to safely invest overseas, international investment treaties and free trade agreements (FTAs) provide valuable guarantees to foreign investors, and allow them to bring arbitration claims directly against host governments when those guarantees are violated. Today, there are over 3,000 international investment agreements worldwide, signed by over 150 countries.
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