The EU-UK Investment Regime After Brexit: In Search of an Equilibrium?

Abstract

On 30 December 2020, after eight months of negotiations, the European Union (EU) and the United Kingdom (UK) signed the EU-UK Trade and Cooperation Agreement (TCA). The TCA governs their relationship after Brexit and was provisionally applied from 1 January 2021 until its entry into force on 1 May 2021. It provides for inter alia free trade in goods, limited mutual market access in services, and investment protection. Given the ‘radical shift’ in investment protection at EU level, which materialized in its most recent free trade agreements, foreign investors may have expected clarity as to what type of investment protection would apply post Brexit. This article analyses the investment provisions of the TCA and argues that the UK has embraced the EU ‘new-generation’ approach to international investment protection, by preserving the right to regulate and redefining investment standards and dispute settlement mechanisms. Nevertheless, the TCA remains silent regarding bilateral investment treaties (BITs) between the UK and Member States (former intra-EU BITs), which contain old-generation investment provisions. While some have argued that these BITs may provide the UK with a distinct advantage to structure investments in the EU, their validity remains uncertain, which may potentially generate friction in the EU-UK relations. Brexit, international investment arbitration, WTO dispute settlement system, state-to-state disputes