Tagged: CETA

From Conflicts-Rules to Field Preemption: Achmea and the Relationship between EU Law and International Investment Law and Arbitration

By Harm Schepel

Introduction

Investment Tribunals called upon to resolve intra-EU disputes are getting used to the European Commission showing up at their doorstep to try to convince them to decline jurisdiction. Though the range of arguments is wide and varied depending on the circumstances of the case and the underlying Investment Treaties, the overarching theme is simply that EU Law reigns supreme in relations between Member States and overrides all international law commitments that individual Member States- and the EU itself in the case of the Energy Charter Treaty- have entered into.  The Commission has occasionally met with success: in Electrabel, a long learned discussion on the relationship between EU Law and the ECT was concluded with the bombshell that EU law ‘would prevail over the ECT in case of any material inconsistency’  (para. 4.191). Other times, it is summarily dismissed. ‘Should it ever be determined that there existed an inconsistency between the ECT and EU Law’, observed the Tribunal in RREEF Infrastructure, ‘the unqualified obligation in public international law of any arbitration tribunal constituted under the ECT would be to apply the former. This would be the case even were this to be the source of possible detriment to EU law. EU law does not and cannot “trump” public international law.’[i]

The most interesting point about these wide divergences between different Tribunals on rather fundamental points of EU and international law is how little they seem to matter.  In both RREEF and Electrabel and numerous other intra-EU cases, the Tribunals disposed of the matter by pointing out that, in casu, there was no relevant material inconsistency, no conflict, no need to rule on matters of EU law, no incompatibility of obligations under different Treaties, and/or nothing that could not be solved by ‘harmonious interpretation.’ It might make sense to think of this Tribunal practice as devising conflicts-rules.

There are good reasons for the Court of Justice not to want to play this game. A case by case analysis of whether a particular award passes muster through national enforcement proceedings, or a Treaty-by-Treaty analysis of whether a particular dispute settlement or applicable law clause is compatible with EU law, is bound to be time consuming and labor-intensive, and will inevitably be unpredictable and lead to legal uncertainty.    Continue reading

ISDS in EU FTIAs. Yes, No, Maybe? A Domestic Enforcement Perspective

by  Szilárd Gáspár-Szilágyi

I. SETTING THE STAGE

In recent years ISDS has been on the lips of many politicians, academics, NGOs and even laymen, some of whom have recently ‘discovered’ that there is a mechanism through which foreign investors (often large multinationals, but not always) can bring claims against host-states before an international arbitral tribunal. The arguments in favour and against ISDS are plentiful, but one always catches my eyes. According to this argument (page 3), the EU does not need ISDS in its new free trade and investment agreements (FTIAs) with developed states, because the original rationale of this mechanism was to protect foreign investors from host‑state jurisdictions where basic tenets of the rule of law were not observed. However, trading partners such as the US or Canada have well‑functioning judicial systems that protect foreign investors; therefore, ISDS is not needed.

As a novice to the field of EU investment law, I must confess I am not yet fully convinced by the benefits of ISDS. Nevertheless, the afore-mentioned argument resonates with my previous field of research, concerned with the domestic enforcement of EU and US international agreements, and once again illustrates that there is often a disconnect between the international and the domestic enforcement of treaties.

I will not advocate for the ‘greater’ protection of foreign investors. Instead, I want to shed some critical light on the argument according to which foreign investors already enjoy high levels of protection in advanced domestic judicial systems. I will argue that the domestic protection of foreign investors is more complex. On the one hand, foreign investors can bring a claim before a domestic court against the host-state, invoking domestic standards of protection. On the other hand, they could also potentially bring a claim before the same domestic courts, relying on international standards of investment protection. As I will illustrate, the international and domestic levels of enforcement should not be treated as worlds apart and the interplay between the two can shape the strategies of the treaty negotiators and of the investors. Continue reading

Investment Court System in CETA to be judged by the ECJ

By Laurens Ankersmit

Last Thursday, the leaders of the Belgian federal government and the regional and community governments reached a compromise deal  over the EU-Canada Comprehensive Economic and Trade Agreement (CETA). One of the key outcomes is that the Belgian federal government will seek the Opinion of the European Court of Justice on the compatibility of the Investment Court System (ICS) in Chapter Eight of CETA with the Treaties. As soon as the Belgian federal government makes the request for an Opinion, the Court will be able to express itself on this contentious legal issue. In this post, I will provide some background on the origins of the Walloon request before explaining why ICS could potentially pose a legal problem for the EU.


Wallonia’s longstanding resistance against CETA and the resolution of 25 April of 2016

To insiders, the resistance put up by Wallonia in particular should have been no surprise. Over the past few years, the Walloon and Brussels parliaments have had extensive debates on the merits of CETA and have been increasingly critical of the deal. One of the main and more principled sources of opposition was the inclusion of ICS in CETA, a judicial mechanism that allows foreign investors to sue governments over a breach of investor rights contained in the agreement. Continue reading