Abstract
Sunset clauses in bilateral investment treaties (“BITs”) extend treaty protections for investments made prior to a BIT’s termination for a certain period thereafter. Although almost all BITs contain sunset clauses, their operation and termination remain unexplored in several respects. Sunset clauses have recently been put into the spotlight as a number of States, including, for example, India, Indonesia, Australia, and the Member States of the European Union, have terminated or renegotiated numerous BITs in the context of the investment treaty reform process. While it is relatively uncontroversial that sunset clauses apply when a contracting State unilaterally terminates a BIT, the application of sunset clauses in the event of mutually agreed BIT terminations raises complex issues and is largely untested. In light of the uncertainties regarding the effects of sunset clauses following consensual BIT termination, several States have sought to expressly terminate or amend sunset clauses. This article explores the operation of sunset clauses in the event of unilateral and mutual BIT terminations. It analyses emerging investment treaty jurisprudence on the application of sunset clauses following mutual BIT terminations or replacements of BITs. The article further examines the question whether under the law of treaties, contracting States may revoke sunset clauses with immediate effect and discusses potential restraints on the revocation of sunset clauses resulting from general principles of law, such as the principles of acquired rights and legal certainty. It also addresses recent State practice that seeks to neutralize the effects of sunset clauses. The article then elaborates on the impact of mutual BIT terminations and revocations of sunset clauses on pending investment treaty arbitrations.
Recommended Citation
Annacker, Claudia Dr.
(2024)
"Operation and Termination of Sunset Clauses in Bilateral Investment Treaties,"
National Law School Business Law Review: Vol. 10:
Iss.
1, Article 3.
Available at:
https://repository.nls.ac.in/nlsblr/vol10/iss1/3