Investment Flows
We conclude our series on investment protection between Serbia and major economies with a post on France. According to the Development Agency of Serbia, France is third country of origin of foreign investments in Serbia, with a 9.7% market share, in terms of the value of projects, and fifth country of origin, with a 5.4% market share, in terms of the number of projects. The most famous recent French investments in Serbia are Vinci’s concession for Nikola Tesla airport in Belgrade and Suez’s participation with Itochu in the public-private partnership contract for the treatment and disposal of municipal waste at Vinča landfill.
Investment Protection Regime
France and Serbia have an old bilateral investment treaty concluded in 1974 (available in French only), which entered into force in 1975 (“BIT“). Following the dissolution of the former Socialist Federal Republic of Yugoslavia, the validity of the BIT between Serbia and France was confirmed in 2003 by virtue of a treaty on the succession of bilateral treaties (available in Serbian only).
The BIT follows an unusual structure for the contemporary standards. It does not define “investment” or “investor”. It states in the preamble that it observes French investments in Yugoslavia and protects them from non-commercial risks. The normative part opens by providing the possibility for the French government to issue guarantees to French investors investing in Yugoslavia. It then states that Yugoslav authorities will admit such investments and undertake special duties, including access to ICSID, in case amicable settlement is not reached within three months. The BIT includes several traditional investment protections, such as fair and equitable treatment, protection against discriminatory treatment, most-favoured nation treatment, protection against expropriation, and freedom of transfers regarding compensation for expropriation. There is no umbrella clause.
The BIT does not contain an investor-state dispute settlement provision in the contemporary form, but the mentioned reference to ICSID can be interpreted as providing advance state consent, and therefore investor access, to international arbitration.
Recognition and Enforcement of Judicial and Arbitral Decisions
The former SFRY and France signed the treaty on recognition and enforcement of court decisions in civil and commercial matters in 1972. The treaty is not listed in the 2003 succession treaty, but Serbia continues to consider it in force.
To qualify for recognition/enforcement, a decision must be final and binding and enforceable in the home state, as well as rendered by a competent court according to the law of the recipient state or a treaty. Recognition/enforcement can be denied on the grounds of public policy, due process, lis pendens, res judicata, or arbitral competence.
Despite the existence of the treaty, the practice of Serbian courts demonstrate that, when engaged with a motion for recognition/enforcement of a French judgment, they do engage in examining the local law requirement of reciprocity (see our initial post) and conclude that reciprocity exists.
Both Serbia and France are members of the New York Convention on recognition and enforcement of arbitral decisions. Serbia still reserves the application of that convention to commercial matters.
Conclusion of the Series
French investors in Serbia are covered by a very old BIT, which does not offer wide protections, unambiguous access to international arbitration, or a choice among several arbitral forums, as BITs now usually do. In contrast, recognition/enforcement in Serbia of decisions and arbitral decisions rendered in France in Serbia should be smooth, due to treaty regimes in both areas.
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This ends our series on investment protection between Serbia and major economies. We have covered the regimes applicable in Serbia’s investment relations with the investors from the United States, China, Russia, Germany, Italy, and France, respectively.
As our series shows, the existing treaty regimes on investment protection vary significantly: from quasi-investment-protection treaties (United States), to an ancient type of BITs (France), to usual type of BITs with more or less restrictive provisions (China, Russia, Germany), to BITs that have never entered into force (Italy). Investors from the United States and Italy currently do not have access to international arbitration, those from China do but only regarding disputes “involving the amount of compensation for expropriation” (which is open to several interpretations), while investors from Russia and Germany can refer all investment disputes to arbitration. Presumably, investors from France can also refer all investment disputes to arbitration, however given the ambiguous formulation used in that BIT, it remains to be tested whether it contains advance state consent.
The regimes applicable to recognition and enforcement of court decisions are less diverse: most countries analysed do not have judgment recognition and enforcement treaty with Serbia (United States, China, Germany, Italy). There are such treaties with Russia and France, making recognition/enforcement of their court decisions significantly easier than if the judgment creditors had to rely on Serbian national law.
Recognition and enforcement of foreign arbitral decisions should not be problematic, considering that all these states are members of the New York Convention.
Photo by Léonard Cotte on Unsplash
