Financial News

New European Union safeguards for foreign investors

Foreign investors will pick up extra protection to safeguard their money as part of a new European Union legal and financial network.

Financial protection for investors will be written in to all EU free trade and investment agreements.

The new safeguards will ease resolution of disputes between investors, the EU and EU countries and help simplify more than 1,000 existing investment agreements between the EU and foreign investors.

Once investment agreements are signed at EU level, foreign businesses investing in the EU may, for the first time, bring claims against the EU alleging that investment protection obligations have been breached.

The new framework clarifies who would bear the financial responsibility when compensation has to be paid by member states or the EU, while ensuring foreign investors do not lose out by any shift of responsibility.

The EU attracted €225 billion from foreign investors in 2011.

“The proposed regulation will give these investors legal certainty and predictability for foreign investors, which will help keeping the EU open for investment and create jobs,” said EU Trade Commissioner Karel De Gucht.

“Investment is a driver of growth so it’s essential that we have the right rules in place. Just as we expect EU investors to be duly compensated when the rules are broken, we have to make sure we have a system at the EU-level to help foreign investors.

“The proposal makes it clear who pays. This is one step in an overall strategy to ensure Europe remains an attractive investment environment.”

The proposal is due for discussion by the Council of Ministers and by the European Parliament.

New regulations should be in place before any new free trade agreements that contain new EU-level investment protection provisions come into force.

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