by the Arbitration Association

France in the world of investor-state dispute settlement

Апрель 4, 2019

France has always played an important role in promoting the global development of international investments. Since the middle of the twentieth century, France has expanded its regional investment outreach to all of the world’s continents. Currently, France is a party to 115 Bilateral Investment Treaties (“BITs”) with 94 of them in force and 56 Treaties with Investment Provisions (“TIPs”).[1]It is also a party to a number of multilateral agreements containing provisions on investment protection and Investor-State Dispute Resolution, including the Energy Charter Treaty (“ECT”). These agreements encompass a diverse variety of states and serve as effective investment protection tools. 

France is quite open to foreign investors and has a stable economic climate that attracts investments from around the globe. Main sectors with key investment opportunities are traditionally healthcare, food, robotics, automotive, aerospace, IT, financial services, logistics and chemicals.[2]

The French government commits significant resources to attract foreign investments through overseas trade promotion initiatives and investor support mechanisms. Those efforts seem to have been effective in return if we assume a correlation with the following statistics: France was the ninth largest global market with a year-on-year increase of 16% for foreign direct investments (“FDIs”) inflow in 2017.[3]Currently, there are approximately 30,000 foreign-owned companies conducting business in France and it is the home state of 29 of the world’s 500 largest companies.[4]

In addition, based on the 2018 World Investment Report published by UNCTAD, France has recently been attracting a large amount of FDIs while FDIs amounts have experienced an overall decline globally. Notably, FDIs flows into France increased by 42% (from USD 35 billion to approximately 50 billion)[5]in 2018. 

Bearing these numbers in mind, this brief overview purports to summarily answer the following: (1) what shall investors know about France and its investor-state dispute resolution framework; and (2) why shall investors feel safe in choosing France as the host state for their investments? 


The end of the BIT erafor France?

Historically, France has been among the first states to support investment development through intergovernmental agreements for the protection and promotion of direct investment. It signed the first treaty of this kind on 25 November 1959. This was the Convention of Establishment entered into with the United States, the preamble of which contained language on the encouragement of a closer economic relationship between the countries.[6]

The next important period of development for French investment policy was the 1960s-1970s, when it concluded the majority of the BITs it is a party to, the first one being the France-Tunisia BIT of 1963.[7]The main purpose of those first BITs was to create some sort of legal framework for the protection of investments as the economic relations between the countries started to flourish again. 

BITs have long served France as an effective tool for fostering investments. The structure of the majority of the French BITs is largely similar to many of other European analogues, namely: a short preamble followed by a section on definitions (defining protected investments and investors), substantive provisions including the fair and equitable treatment standard (“FET”), provisions on national and most favored nation treatment (“MFN”), protection against expropriation and nationalization, and rules on protection of investments and transfer of capitals. 

Dispute resolution clauses in BITs with France are commonly multi-tier (amicable solution followed by arbitration). The majority of BITs follow the Model BIT, which does not provide for any other option beyond ICSID Convention arbitration.

The majority of BITs signed by France are based on its Model BIT, which has been modified on a number of occasions. Although the official publication of the French Model BIT was postponed up until 2006, “French treaty practice clearly shows the trends and consistency achieved over the years by the French negotiators”.[8]

Notwithstanding the fact that BITs have been quite an effective tool for investor-state dispute resolution, the situation of their applicability in France and other European Union Member States has recently changed. Since in 2009 the European Union enforced the Treaty of Lisbon,[9]the EU Member States, including France, are no longer in a position to sign investment agreements on their own as such treaties can only be entered into by the European Union. 

Moreover, the Lisbon Treaty provides that the European Commission, which would ensure their compatibility with the laws of the European Union, must approve all the treaties on promotion and protection of investments that are binding upon Member States. France notified 94 treaties to the European Commission, which were approved by the European Commission in May 2013 and are still binding on France until the European Union enters into replacement agreements.[10]

Further, in March 2018, the Court of Justice of the European Union decided in Achmea v. Slovak Republic(Case C-284/16, Achmea, EU:C:2018:158) that investment arbitration based on intra-EU BITs (in this case Netherlands-Slovakia BIT) is incompatible with EU law, in particular Articles 267 and 344 of the Treaty on the Functioning of the European Union (TFEU).[11]

Long debates and other cases based on Achmealead Member States of the European Union to issue in January 2019 declarations stating their position regarding intra-EU BITs.

On 15 January 2019, EU Member States filed 3 separate declarations: one signed by 5 States (Finland, Luxembourg, Malta, Slovenia and Sweden), another one by Hungary alone, and the third one by the majority of the Member States (22 out of 28, including France).[12]  

The main takeaways of January declarations are the following:

·     Intra-EU investment arbitration is no longer possible after Achmea(with a debate between Member States whether arbitrations between Member States are still possible under the ECT);

·     Intra-EU BITs should be reported (multilaterally or bilaterally, whichever is more appropriate);

·     National courts (including those in third countries) must not enforce awards issued pursuant to intra-EU BITs;

·     The ongoing arbitrations under such BITs must be stopped and no new arbitrations of that kind should be commenced; and

·     The answer to the question of an enforcement of final awards (no possibility to set aside or review) issued prior to the official publication of those declarations seems to be unclear.

Notably, the majority declaration provided that "[b]y the present declaration,Member States inform investment arbitration tribunalsabout the legal consequences of the Achmea judgment". It also provides that "[i]n cooperation with a defending Member State, the Member State, in which an investor that has brought such an action is established, will take the necessary measuresto inform the investment arbitration tribunals concerned of those consequences". This Declaration does not indicate whether the requirement to inform an arbitral tribunal is obligatory. However, from the plain language of the Declaration it seems that the undersigned states are taking an obligation to inform the tribunals of the Achmeaoutcomes, preventing them from further determination of the on-going arbitrations.

Thus, before investing into France, foreign investors shall bear in mind that the dispute resolution mechanism provided by certain BITs might no longer be legally binding on France. Notwithstanding the fact that BITs have long served a purpose of promoting international investment in France, the situation might substantially change in the nearest future in connection with intra-EU BITs. This is especially important for companies structuring their investments into France through third countries located in the EU. Notably, France is a party to a number of BITs with the other EU Member States, including Bulgaria, Hungary, Latvia and Malta.

Moreover, it still remains to see if the scope of the Achmeaextends to the ECT. The varying approaches of the EU Member States in their January declarations as to Achmeaapplicability to arbitrations under ECT shows that the debate on the future of arbitrations under multilateral agreements is still open. One of such multilateral treaties is the ICSID Convention and arbitrations under this instrument with France/French investors as a party are to continue unquestionably.

Long Live the ICSID Convention!

France has been a signatory of the ICSID Convention since 22 December 1965.[13]France is a party to 192 BITs and TIPs, the majority of which provides for arbitration under the ICSID Convention as one of the dispute resolution options. In total, there have been 48 cases with French investors involved, 29 of which filed with ICSID. 

Moreover, in conformity with Article 54(2) of the ICSID Convention,[14]France authorized its courts of first instance (Tribunaux de Grande Instance) as competent courts for the purpose of enforcing investment arbitration awards rendered pursuant to the Convention.[15]In general, the recognition and enforcement of investment arbitral awards does not differ from the recognition and enforcement of commercial arbitration awards. The process is described in detail in article by “Interpretation of arbitration clauses by the French courts” by Ekaterina Grivnova in the Russian section of this issue, with a review of corresponding case law by Alice Clavière-Schiele et al. in the English section of the magazine. 

The ICSID Convention seems to have brought clarity and stability to investor-state relations and have helped the French capital to become a leader of investment arbitration development. Notwithstanding the fact that ICSID hearings can be held worldwide at any venue agreed upon by the parties, disputing parties elect to hold hearings and sessions in Paris in roughly half of all the cases under the ICSID Convention. The World Bank Centre has three hearing rooms and has recently renovated the main hearing room (Room A) at the World Bank Group Conference Centre in Paris. According to the ICSID, the hearing facility in Paris can now accommodate complex hearings in terms of size and technicity. [16]

Paris is also quite a popular place for arbitration in Additional Facility cases. For example, 13 out of the 47 cases currently managed by ICSID will be heard in Paris.[17]Moreover, France is one of the leading states for the nationality of arbitrators appointed in ICSID arbitrations: there were more than 30 arbitrators of French nationality appointed in 2018.[18]

Interpretation of investment treaties by the French judiciary

Prospective investors should also be aware of the following development in French jurisprudence. Although case law previously suggested multiple possible outcomes, a recent decision under the ECT by the Court de Cassation (France's highest court) indicates a return to a “literal interpretation by the French courts of international treaties”.[19]

The dispute at issue arose under the Ukraine-Moldova BIT of 1996 and ECT. In the proceedings (the seat was in Paris) the tribunal concluded that Moldova was at breach of the ECT’s FET standard, declined the jurisdiction under the BIT and awarded the investor compensation in the amount of USD 49,000,000. 

Two years after the award against Moldova was set aside by the Paris Court of Appeal on jurisdictional grounds, the Court de Cassation reinstated the award indicating that, in case a host state wishes to limit the treaty’s application, it shall do so by explicitly defining the type of investments to be protected.  

Russian Investment in France

Notwithstanding the rapid Achmeadevelopments in the sphere of investment arbitration, France is still an attractive place for foreign investors from the EU Member States. But how attractive is France for the third countries outside of the EU? This question can be answered by using the example of Russian investors in France. 

Right before the EU’s imposition of economic sanctions on Russia and Russian retaliatory measures, France had been a growing destination for Russian investors. According to the Banque de France, the reserve of Russian investment in France rapidly developed, increasing from €342 million in 2011 to €745 million in 2014.[20]According to Business France’s annual report on the state of foreign investment in France, there were 40 Russian companies with a presence in France in 2014. The same year, a total of 8 new Russian investments were established.

Surprisingly, sanctions do not seem to be a big obstacle to Russian-French economic relations as trade between Russia and France has increased significantly in the last year and the first three months of 2018, according to Alexei Mehkov, Russian ambassador to France. "Currently, we are at a fairly favorable stage of development of our bilateral relations (...). Moscow's development dynamics regarding relations with France follow the general trend. Our trade increased by 16.5% last year and by 25% in the first three months of 2018. In principle, this index is higher than our economic relations with the countries of the European Union." said the ambassador.[21]

Nowadays, Russian companies are investing more broadly in the real estate sector – new investment sector for investors from the CIS. For example, Hermitage (the French subsidiary of the Russian real estate group Stroymontazh) is currently supplying 300 residential homes in Montévrain (Seine-et-Marne),[22]and even intends to "take a major position on the French market, alongside Nexity and Kaufman & Broad".[23]

Still, modern investment relations between France and Russia are the result of a number of factors that have emerged over the last years and are predominantly negative in nature, namely: economic crisis and mutual sanctions. Otherwise, the situation with Russian FDI in France is still developing. 

Among the largest Russian investors in the French economy are some 40 companies whose activities were somehow affected by the sanctions imposed. At the same time, only one Russian investor with French assets - Uralvagonzavod[24]- was included in the sanctions lists. 

The French assets of Russian companies are covered by a bilateral agreement on investment promotion and protection concluded in 1989 between the USSR and France[25]. This BIT was, for example, invoked in the recent investment arbitration case initiated by a Russian investor (Roscosmos v. France, 2016).


In November 2015, the EU decided to reform its investment dispute settlement mechanism by, inter alia, potentially creating the Investment Court System. The overall objective for creating such a court is to set up a permanent body for investment disputes. The main idea is that the Multilateral Investment Court would replace the BIT signed by EU Member States and arbitration agreements would be included in EU trade and investment agreements. At the moment, however, only the EU-Canada Comprehensive Economic Trade Agreement (CETA) and the EU-Vietnam Free Trade Agreement mention the setting up of such a court.  

The European Commission suggests that such a court will modernize the approach to investment dispute resolution.[26]The Court would have a court of first instance and an appeal tribunal acting as a permanent body. It would have jurisdiction only in case there is already an investment treaty explicitly allowing an investor to commence a dispute against a State. It would be opened to all the countries interested in joining and would provide for rules on ethics and transparency.

In August of 2016, the EU launched an impact assessment process to review the various options that could help reform the current of investment dispute settlement framework. One of the options identified was to establish a permanent investment court[27]. France had a big role in the process and Paris became the place for academic conferences organized by the OECD in October 2016. Following discussions, on 20 March 2018 the Council of the European Union adopted and published negotiating directives for a Convention establishing a multilateral court for the settlement of investment disputes.[28]

Moreover, on 5 March 2019 the Council of the EU approved a new framework to screen foreign direct investments coming into the EU,[29]which would come into force in April.[30]This new framework is aimed to, among others, (i) create a cooperation mechanism where Member States and the Commission will be able to exchange information and raise concerns related to specific investments; (ii) allow the Commission to issue opinions when an investment poses a threat to the security or public order of more than one Member State; (iii) set certain requirements for Member States who wish to maintain or adopt a screening mechanism at national level. 

France is among the first fourteen EU Member States that have already implemented the investment screening rules, so that it does not seem that the new framework will affect the country substantially. However, it will give the other EU Member States and the European Commission a power to influence investment-making process in the territory of France. 

Izabella Prusskaya, New York Bar Attorney (currently located in Paris)


[1]    Data retrieved from the Investment Policy Hub portal of the United Nations Conference on Trade and Development available at:

[2]    Information retrieved from the Business France website (national agency supporting the international development of the French economy and fostering export growth by French businesses) available at:

[3]   Ibid. 

[4]   Ibid.

[5]  Data retrievedfrom the World Investment Report 2018 of UNCTAD p. 4 available at

[6]    Convention of Establishment between the United States of American and France, full text available at:

[7]   Decree No. 65-797 of 15 September 1965, available at:

[8]    Commentaries on Selected Model Investment Treaties (Chapter on France), Yas Banifatemi and Andre von Walter, p. 245. available at:

[9]   Treaty of Lisbon amending the Treaty on European Union and the Treaty establishing the European Community, signed at Lisbon, 13 December 2007 available at:

[10]  List of the bilateral investment agreements referred to in Article 4(1) of Regulation (EU) No 1219/2012 of the European Parliament and of the Council establishing transitional arrangements for bilateral investment agreements between Member States and third countries available at:

[11]  The case, its development and influence on the investment arbitration in the European Union are discussed in the previous issues of the Journal available here:

[12]  Declaration of the representatives of the governments of the member states of 15 January 2019 on the legal consequences of the judgment of the Court  of Justice in Achmea and on investment protection in the European Union, available at:

[13]   France ratified the ICSID on 21 August 1967 (entered into force on 20 September 1967) through Loi No. 67-551 du 8 juillet 1967 autorisant la ratification de la Convention pour le règlement des différends relatifs aux investissements entre Etats et ressortissants d'autres Etats, du 18 mars 1965. (Off. Gaz. July 11, 1967, p. 6931) available at:

[14]   Article 54(2) of the ICSID Convention reads as follows: “A party seeking recognition or enforcement in the territories of a Contracting State shall furnish to a competent court or other authority which such State shall have designated for this purpose a copy of the award certified by the Secretary-General. Each Contracting State shall notify the Secretary-General of the designation of the competent court or other authority for this purpose and of any subsequent change in such designation.”

[15]   There are 173 courts of first instance (at least one per department), including 164 in mainland France, 2 in Corsica and 7 in the overseas departments. 

[16]   Paris ICSID Hearing Facility Reopens After Renovation, available at:

[17]   Place of Arbitration in Additional Facility Cases, available at:

[18]   ICSID 2018 Annual Report, p. 33. available at:

[19]French court upholds literal interpretation of investment treaty, Pinsent Masons, available at:  

[20]   Russian Investment in France: the stakes for the winners, Rusina Shikhatova, The Moscow Times #8 (61) 2015 P. 19:

[21]   Russie-France: les échanges commerciaux se portent bien, Sputnik France, available at:

[22]   Russian developer bets on “Manhattan sur Seine”, Reuters, available at:

[23]   Avocats Picovschi. Investissements russes en France. Available at :

[24]   A timeline of all Russia-related sanctions, available at :

     [25]   Available at:

[26]   The Multilateral Investment Court Project, available at:

[27]   Impact assessment on the Establishment of a Multilateral Investment Court for investment dispute resolution:

[28]   Negotiating directives for a Convention establishing a multilateral court for the settlement of investment disputes, available at:

[29]   Foreign Investment Screening: new European framework to enter into force in April 2019, available at:

[30]   The framework will enter into force 20 days after publication in the Official Journal. Member States and the Commission will subsequently have 18 months to make the necessary arrangements for the application of the new rules.