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The power of sunset clauses put to the test : Can intra-EU BITs be back from the dead ?

DLA Piper | 31 May 2024

The power of sunset clauses put to the test : Can intra-EU BITs be back from the dead ?

by Dávid KőhegyiAndrás NemescsóiZsófia Deli

The beginning of May 2020 marked a tectonic shift in the field of investment arbitration. On 5 May 2020, 23 EU Member States signed a plurilateral agreement to terminate the nearly 130 intra-EU bilateral investment treaties (intra-EU BITs) in force between them (Termination Agreement).1

The Termination Agreement was prompted by the landmark 2018 Achmea decision (C-284/16) of the European Court of Justice (ECJ), declaring arbitration clauses in intra-EU BITs incompatible with EU law.

Beside putting an end to intra-EU investment arbitrations, the Termination Agreement also abrogated so-called sunset clauses included in numerous intra-EU BITs. Sunset clauses or survival clauses would have otherwise extended the protections enjoyed by existing investments for 5, 10 or even 20 years following the termination of all intra-EU BITs.

Entering into force on 29 August 2020 and ratified by all its signatories by August 20222, the Termination Agreement sounded the death knell for intra-EU BITs, or so it seemed.

However, the news broke recently that a Bulgarian financial services group Eurohold and its insurance arm Euroins Insurance Group (EIG) had lodged a request for arbitration against Romania at the International Centre for Settlement of Investment Disputes (ICSID) on 21 May 20243. The claimants allegedly rely on the sunset clause found in the Bulgaria-Romania BIT to overcome the Termination Agreement and extend the effect of the BIT. The dispute arose when in March 2023, Romania’s financial regulator ASF revoked the operating licence of EIG’s subsidiary Euroins Romania – a Romanian car insurer – “noting indications that the company is in a state of insolvency”.4 ASF also initiated bankruptcy proceedings against the car insurer company before Romanian courts. According to press information, Eurohold and EIG served a notice of dispute on Romania already in October 20235, and they have now followed up on their threat to bring the matter before ICSID.

The case will undoubtedly attract considerable attention as it raises the issue of whether EU Member States’ purported termination of sunset clauses in intra-EU BITs is effective or not. It has been a matter of debate even before the adoption of the Termination Agreement, whether States may abolish the legal effect of sunset clauses by mutual termination of intra-EU BITs.

On the one hand, the view supporting the power of States to extinguish sunset clauses has been based on the general principle of treaty law that States are the “masters” of their treaties. This principle is expressed in Article 54(b) of the Vienna Convention on the Law of Treaties (VCLT), which provides that the termination of a treaty may take place “at any time by consent of all the parties after consultation with the other contracting States”6. It follows that States are arguably free to amend, suspend and even completely terminate a treaty with immediate effect (including the sunset clause in such a treaty), if they so agree by mutual consent. The idea that sunset clauses may be renegotiated, modified, or even abolished just like any other treaty clause has been at least prima facie endorsed by some arbitration tribunals7.

On the other hand, others support the view that the possibility of abrogating sunset clauses would undermine the very purpose of such clauses, which is to provide stability and protect investors’ expectations against a sudden termination of the BIT. It has also been argued that BITs confer rights directly upon investors at the time of making their investments. It follows that investors cannot be retroactively deprived of rights which have been “vested” or “directly acquired” under the BIT even by the mutual consent of the contracting States. The idea of “directly acquired” rights has for example found support in the tribunal’s recent decision in Adria Group v. Croatia8.

The arbitral tribunal in Eurohold and EIG v. Romania, if constituted, will most probably face some of the above arguments in deciding whether it has jurisdiction based on the sunset clause of the Bulgaria-Romania BIT despite the Termination Agreement.

Also, much may depend on the interpretation of the terms of the sunset clause in the Bulgaria-Romania BIT. Arguably, Article 12 of the Bulgaria-Romania BIT is similar to most sunset clauses that appear to limit their applicability to unilateral termination, referring to the “notice of denunciation” of the BIT provided by one contracting party to the other9. If this interpretation were correct, arguably the sunset clause would not be triggered by mutual termination and investors would not benefit from protection under the Bulgaria-Romania BIT after the mutual termination of the latter.

As for now, it remains to be seen whether Eurohold and EIG’s claim passes the first muster and gets registered by the Secretary-General of ICSID10. The Secretary-General conducts a preliminary review of the claim and registers the request for arbitration unless she finds that the dispute is manifestly outside the jurisdiction of ICSID11.

If ICSID registers the claim, this may open the door for other investors to try their luck based on sunset clauses in intra-EU BITs. After all, the mere possibility of a successful arbitration appears to be the last ray of hope for many, given that investors’ possibilities for asserting their intra-EU claims have been rather limited since the entry into force of the Termination Agreement. In any event, sunset clauses may only postpone the end of intra-EU BIT based arbitration by 5, 10 or 20 years based on their respective terms. Therefore, while the fate of Eurohold and EIG’s claim will be closely watched, there appears to remain a growing demand from investors for the creation of a new European investor-State dispute settlement regime, which would provide a permanent neutral forum for the adjudication of their intra-EU claims.


1 Agreement for the Termination of Bilateral Investment Treaties between the Member States of the European Union, 29 May 2020, L 169/1, at : (last visited : 23 May 2023).
2 European Council : Agreement for the Termination of Bilateral Investment Treaties between the Member States of the European Union, at : (last visited : 23 May 2023).
3 Global Arbitration Review, ’Bulgarian Insurer Relies on Sunset Clause for Intra-EU Claim’, 22 May 2024, at : Bulgarian insurer relies on sunset clause for intra-EU claim - Global Arbitration Review (last visited : 23 May 2023).
4 ASF : The Financial Supervisory Authority Withdraws Euroins Romania’s Operating Licence And Finds The Company Insolvent, 17 March 2023, at : (last visited : 24 May 2023).
5 Global Arbitration Review, ’Bulgarian Insurance Investor Threatens Claim Against Romania’, 26 October 2023, at : Bulgarian insurance investor threatens claim against Romania - Global Arbitration Review (last visited : 23 May 2023).
6 Vienna Convention on the Law of Treaties, Vienna, 23 May 1969, 1155 UNTS 331, at : (last visited : 23 May 2023).
7 See, for instance, Le Chèque Déjeuner v. Hungary, where the tribunal noted that “neither Hungary nor France has made any attempt to renegotiate, modify, or shorten the relevant “survival” period”. See, UP (formerly Le Chèque Déjeuner) and C.D Holding Internationale v. Hungary, ICSID Case No. ARB/13/35, Award, 9 October 2018, para. 265, at : (last visited : 23 May 2023).
8 In Adria Group v. Croatia the tribunal stated that : “The BIT was, therefore, far more than just an exchange of rights and obligations at the inter-State level. It conferred rights directly upon those who qualified as investors of one of the BIT States with investments in the territory of the other. The Tribunal does not agree with the notion that investors were merely the recipients of benefits, control of which remained with the BIT States. That approach belongs to an earlier era of international law in which States were considered to be the only “subjects” of international law. […]” See, Adria Group B.V. and Adria Group Holding B.V. v. Republic of Croatia, ICSID Case No. ARB/20/6, Decision on Intra-EU Jurisdictional Objection, 31 October 2023, para. 240, at : (last visited : 23 May 2023).
9 Agreement between the Government of the Republic of Bulgaria and the Government of Romania on Mutual Promotion and Protection of Investments, 1 June 1994, Article 12(2)-(3), at (last visited : 23 May 2024) : “2. The present Agreement shall be in force for a period of fifteen years. Its validity shall be extended automatically for every following period of five years unless either Contracting Party notifies in writing at least 6 months prior to its expiry the other Contracting Party of its decision to terminate the Agreement. 3. With respect to investments made prior to the date when the notice of denunciation of this Agreement is received by the other Contracting Party, the provisions of Articles 1 to 11 shall remain in force for a further period of fifteen years from that date.”
10 See, ICSID Institution Rules (2022), Rule 6.
11 See, ICSID Convention, Article 36(3).

 source: DLA Piper