Sunset Clauses in International Law and their Consequences for EU Law
PE 703.592
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For instance, the recent BIT between the EU and Vietnam which includes a 15-year sunset clause in
Article 4.15 provides that ‘In the event that this Agreement is terminated pursuant to Article 4.10
(Duration), the provisions of Chapter 1 (Objectives and General Definitions), Articles 2.1 (Scope), 2.2
(Investment and Regulatory Measures and Objectives) and 2.5 (Treatment of Investment) to 2.9
(Subrogation), the relevant provisions of Chapter 4 and the provisions of Section B (Resolution of
Disputes between Investors and Parties) of Chapter 3 (Resolution of Disputes between Investors and
Parties) shall continue to be effective for a further period of 15 years from the date of termination, with
respect to investments made before the date of termination of the
present Agreement, […].’
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Here the sunset clause creates a transitional period following the denunciation of the investment treaty
between the period during which investments already made are protected,
and the period during
which they are not protected anymore.
In relation to the ECT, when Italy withdrew, it remained liable for legal actions impacting investments
made during its membership in the ECT, and multiple cases were brought before investment
tribunals.
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The case
Greentech and NovEnergia v. Italy
exemplified the uncontested entrenchment
effect of sunset clauses. Italy, which ratified the ECT on 5 December 1997, notified of its withdrawal
from the ECT with effect in January 2016. Given the effect of the twenty=year sunset clause in the ECT,
the tribunal held that the ‘withdrawal does not affect the Tribunal’s jurisdiction in the present
arbitration in light of the ECT’s sunset clause, providing that the ECT continues to apply for twenty years
from the date when such notice takes effect’.
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