European Court of Justice - infringement of article 307 - failure of member states to adopt appropriate measures to eliminate incompatibilities between the Treaty Establishing the European Community and bilateral investment treaties entered into with third countries prior to accession to the European Union

Taken together, two cases before the European Court of Justice (ECJ)--Commission v. Austria and Commission v. Sweden, both decided Mar 3, 2009--allowed the Court to review the compatibility of pre-accession bilateral investment treaties (BITs), concluded by member states of the European Community (EC) before their accession to the European Union, with Article 307 of the Treaty Establishing the European Community. In these two decisions, the ECJ clarified three vital issues, including its confirmation that, while pre-accession treaties remain in principle unaffected by subsequent EC law obligations, any incompatibilities between pre-accession treaties and EC law obligations must be eliminated in favor of EC law. In both cases, the Court concluded that Austria and Sweden violated their obligations arising out of Article 307 by failing to eliminate the incompatibility between their pre-accession BITs and EC law.