Category: International Investment Law

A Parallel Universe: Advocate General Bot in Opinion 1/17

By Harm Schepel

Introduction

All is clear, then: CETA’s Investment Chapter is perfectly compatible with EU Law. According to Advocate General Bot, the agreement is wholly separate from the normative (as opposed to the factual) universe of EU law, and merely protects readily identifiable ‘foreigners’ investing in the EU in the same way as it protects readily identifiable ‘European’ investors in foreign lands. From what we know of the hearing, the Advocate General provides not much more than a useful summary of the talking points offered by the Council, the Commission and the vast majority of the 12 intervening Member States, remarkably united in a bid to save the EU’s new external trade and investment policy. Clearly, the pressure on the Court to follow suit will be enormous. And yet. It is true, CETA builds strong fences to make good neighbors. But let spring be the mischief in me: CETA cannot wall out what EU Law walls in.[i]

Continue reading →

AG Bot in Opinion 1/17. The autonomy of the EU legal order v. the reasons why the CETA ICS might be needed

By Szilárd Gáspár-Szilágyi

  1. Background

The EU’s exercise of its post-Lisbon competences over foreign direct investment (FDI) has been anything but smooth. In Opinion 2/15 the CJEU clarified the EU and Member State competences over the EU’s new generation free trade and investment agreements, resulting in the splitting of the EU‑Singapore agreement into a separate trade and investment agreement. Then, in Achmea the Court found investor-state arbitration (ITA) clauses under intra-EU BITs to be incompatible with EU law, which will result in the termination of almost 200 intra-EU BITs and the non-enforcement of ITA awards rendered under them within the EU. Now, everyone is anxiously awaiting the outcome of Opinion 1/17 – requested by Belgium under the insistencies of Wallonia – and whether the Investment Court System (ICS) under CETA is compatible with EU law. This opinion will not only affect the entry into force and conclusion of the trade and investment agreements with Canada, Singapore, Vietnam and Mexico, but it will have broader implications for the multilateral ISDS reform process and the EU’s investment policy.

Therefore, Advocate General Bot’s extensive opinion delivered on 29 January 2019 (first commentaries here and here) in which it found the CETA ICS to be compatible with EU law deserves scrutiny. I will only focus on the AG’s arguments concerning the exclusive jurisdiction of the Court of Justice over the definitive interpretation of EU Law. In a separate post, Harm Schepel will focus on the AG’s arguments on non‑discrimination. Continue reading →

Neues aus dem Elfenbeinturm: November 2018

RENFORCE Conference “Regulation and Enforcement in the EU: Challenges, Trends and Prospects”

University of Utrecht, 22-23 November 2018. (Free) registration necessary.

Call for Papers: Journal of International Economic Law Special Issue on Trade Wars

Deadline for proposal submissions: 30 November 2018.

Conference «Die Krise des demokratischen Rechtsstaats im 21. Jahrhundert»

University of Salzburg, 24-26 April 2019. Deadline for abstract submissions: 1 December 2018.

10th Anniversary CLEER Conference – EU external relations: Tackling global challenges?

T.M.C. Asser Instituut, 6-7 December 2018. Registration necessary.

Seminar “Assessing European Union Better Regulation”

Radboud University, 18 December 2018. (Free) registration necessary.

Conference “It takes two to tango. The preliminary reference dance between the Court of Justice of the European Union and national courts”

Radboud University, 14 June 2019. Deadline for abstract submissions: 1 January 2019.

Call for Papers: Trade, Law and Development Special Issue on Trade Facilitation

Deadline for submissions:15 February 2019.

Workshop “Law and Language in EU and International Law”

University of Fribourg, 17 May 2019. (Free) registration necessary.

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 →

Achmea – A Perspective from International (Investment) Law

By Pekka Niemelä

A week has passed since the European Court of Justice (ECJ) rendered the landmark Achmea judgment. A number of posts analyzing the judgment have already appeared in the legal blogosphere (see e.g. here, here, here and here). Much of this commentary has focused on describing the Court’s reasoning and on analyzing the judgment’s broader implications. Most commentators agree that there was nothing unexpected in the Court’s conclusion that the arbitration clauses in the less than two hundred intra-EU BITs have, as the Court put it, an ‘adverse effect on the autonomy of EU law’ (para. 59).

The judgment’s reception has also varied in accordance with the view one has of the underlying purposes of investment treaties – do they promote the international rule of law or narrow corporate interests at the expense of the public interest? Accordingly, those critical of investment treaties and arbitration have welcomed the judgment, whereas the proponents of investment treaties have argued that the judgment leads to less ‘rule of law within the EU’.[1] On a higher level of abstraction, the plausibility of the Court’s reasoning also depends on the view one has of the EU in general: is it an autonomous constitutional order based on the protection of fundamental rights and certain foundational values? Or should the EU demonstrate more openness towards other international law regimes, as it is just one such regime among others? Depending on the view one has over these two intertwined general questions, Achmea can either appear as a logical corollary of EU constitutionalism or as a breach of the EU’s commitment to the international rule of law.

What this blogpost strives to do is to take issue with the Court’s understanding that arbitral tribunals interpret and apply EU law in ways that pose a threat to its autonomy. The point is not to argue that the Court’s reasoning and conclusions are incorrect, but to shed light on the ways in which arbitral tribunals have actually ‘used’ EU law, and to show that the Court’s understanding (with which most commentators sympathize) that investment arbitration poses a threat to the autonomy of EU law is somewhat inflated. Continue reading →

Don’t Lead with Your Chin! If Member States continue with the ratification of CETA, they violate European Union law

By Christina Eckes

 After last week’s Achmea ruling of the Court of Justice (CJEU) Member States can no longer legally go ahead with ratifying CETA – the mixed Free Trade Agreement that the EU and its Member States agreed with Canada. Achmea casts serious doubts on the legality of CETA’s investment chapter, which allows investors from one Party to submit to an arbitral tribunal a claim that the other Party has breached an obligation under CETA. By simply going ahead with the ratification, they violate the principle of loyalty under European Union law.

On 6 March, the CJEU declared in its Achmea ruling that the investor-state-dispute-settlement (ISDS) mechanism in the bilateral investment treaty between the Netherlands and Slovakia (NL-SK-BIT) as incompatible with EU law. A request by Belgium is pending before the CJEU asking for clarification on the legality of the new Investor Court System in CETA (Opinion 1/17). Achmea is a clear indication that the CJEU in Opinion 1/17 is likely to find also the Investor Court System in CETA problematic for the autonomy of EU law.

No general obligation exists for Member States to halt national ratification of mixed agreements when their compatibility with EU is questioned before the CJEU. Yet, CETA is different. The clear indication of incompatibility in Achmea imposes an obligation on national Parliaments to halt the CETA ratification process and wait for Opinion 1/17. Continue reading →

AG Wathelet in C-284/16 Achmea: Saving ISDS?

By Andrea Carta and Laurens Ankersmit

A few months ago, AG Wathelet delivered a remarkable defence of investor-state dispute settlement (ISDS) in international investment agreements between Member States in his Opinion in C-284/16 Achmea. The case concerned a preliminary reference by a German court (the Federal Court of Justice, or Bundesgerichtshof) regarding the validity of an award rendered by an ISDS tribunal under the Dutch-Slovak bilateral investment treaty (BIT). This monetary award against the Slovak government was  the result of the partial reversal of the privatisation of the Slovak health care system. The Opinion is the latest development in the legal controversies surrounding ISDS and EU law after the Micula cases and, of course, the recent Request for an Opinion by Belgium (Opinion 1/17) on the compatibility of CETA with the EU Treaties. Although many aspects of this Opinion merit critical commentary, this post will focus on two issues:

  1. the question whether ISDS tribunals set up under intra-EU BITs should be seen as courts common to the Member States and are therefore fully part of the EU’s judicial system.
  2. whether  the discrimatory access to ISDS in the Dutch-Slovak BIT is compatible with Article 18 TFEU and justified under EU internal market law.  Continue reading →

Neues aus dem Elfenbeinturm: December 2017

Conference “Constitutional Challenges in the EMU: the New Instruments of European Economic Governance”

Brussels, 29-30 March 2018. Deadline for abstract submissions: 15 January 2018.

International Electoral Observers Training

European Inter-University Centre for Human Rights and Democratisation, Venice, 19-24 March 2018. Deadline for registration: 15 February 2018.

Conference “Economic Constitutionalism: Mapping its Contours in European and Global Governance”

European University Institute, 14-15 June 2018. Deadline for abstract submissions: 28 February 2018.

Conference “Upgrading Trade and Services in EU and International Economic Law”

Radboud University, Nijmegen, 15 June 2018. Deadline for abstract submissions: 16 March 2018.

Call for papers: Utrecht Journal of International and European Law

Deadline for submissions: 9 April 2018.

Case C-600/14, Germany v Council (OTIF). More Clarity over Facultative ‘Mixity’?

By Hannes Lenk and Szilárd Gáspár-Szilágyi

  1. Setting the context

Opinion 2/15 on the division of requisite competences between the Union and its Member States for the conclusion of the EU-Singapore FTA has most certainly caused a flurry of academic discussions. Amongst the various topics discussed, two come to mind that are important for this short analysis. First, did the CJEU intend with its reasoning to effectively abolish ‘facultative mixity’ and ‘facultative EU-only’ agreements? (see here, here and here). Second, by placing almost all aspects of the EU-Singapore FTA under exclusive EU competences, with the exception of ISDS and non-direct foreign investment, did the Court of Justice implicitly determine the future of EU trade and investment policy? (see here, here and here). In other words, with a Commission that is determined to prioritize EU-only agreements, is the conclusion of mixed investment agreements in parallel to exclusive trade agreements a logical consequence of Opinion 2/15? Continue reading →

Case C 142/16 Commission v Germany: the Habitats Directive meets ISDS?

By Laurens Ankersmit

Recently, the ECJ has found Germany in breach of its obligations under the Habitats Directive for authorising the operation of a coal-fired power plant near Hamburg, Germany without an appropriate environmental impact assessment. The case is the latest addition to a series of legal battles surrounding the environmental impact of the plant. On the one hand, the negative environmental impact, in particular for fish species in the Elbe river, has led to litigation opposing the authorisation of the plant, including these infringement proceedings before the ECJ. On the other, Swedish power company Vattenfall has opposed the environmental conditions attached to its water use permit before a national court and before an ISDS tribunal which in its view would make the project ‘uneconomical’. This post will discuss the general legal background of the case, the ECJ judgment, and comment on the wider implications of these legal battles for the relationship between investment law and EU law. Continue reading →

Opinion 2/15: Maybe it is time for the EU to conclude separate trade and investment agreements

By Szilárd Gáspár-Szilágyi

Opinion 2/15 is already causing quite a stir in legal academia. While some take an EU law perspective, others look at it from the perspective of investment law or public international law. In this short post I will not focus on purely legal issues. Instead, I will look at the Opinion’s effects on the EU’s investment policy and propose a change in the Commission’s approach to the negotiation of international economic agreements. Continue reading →

Opinion 2/15 and the future of mixity and ISDS

By Laurens Ankersmit

Opinion 2/15 on the EU’s powers to conclude the EU-Singapore Free Trade Agreement (EUSFTA) delivered Tuesday received considerable attention from the press. This comes as no surprise as the Court’s Opinion has consequences for future EU trade deals such as CETA and potentially a future UK-EU FTA. Despite the fact that the ECJ concluded that the agreement should be concluded jointly with the Member States, the Financial Times jubilantly claimed victory for the European Union, belittling Wallonia in the process. This victory claim calls for three initial comments as there are aspects of the Opinion that might merit a different conclusion. Continue reading →

Neues aus dem Elfenbeinturm: January 2017

Conference “How deep is your law? Brexit. Technologies. Modern conflicts”

Vilnius, 27-28 April 2017. Deadline for abstract submission: 1 February 2017.

Call for Papers: German Law Journal Special Issue “Constitutional Identity in the Age of Global Immigration”

Deadline for abstract submissions: 15 February 2017.

Conference: ” Post-Brexit Britain in A World of Preferential Trade Agreements “

University of Birmingham, 24 February 2017. (Free) registration necessary.

Call for Papers: Austrian Review of International and European Law

Deadline for submissions: 1 March 2017.

Workshop “European Standardisation for Internal Market and its Constitutional Challenges”

Lund University, 6-7 April 2017. (Free) registration necessary.

The power to conclude the EU’s new generation of FTA’s: AG Sharpston in Opinion 2/15

By Laurens Ankersmit

To say that the EU’s new generation of trade agreements (such as CETA and TTIP) is politically controversial is becoming somewhat of an understatement. These free trade agreements (FTA), going beyond mere tariff reduction and facilitating hyperglobalization, have faced widespread criticism from civil society, trade unions, and academics. It may come as no surprise therefore that the legal issue over who is competent to conclude such agreements (the EU alone, or the EU together with the Member States) has received considerable public attention, ensuring that the Advocate General Sharpston’s response to the Commission’s request for an Opinion (Opinion 2/15) on the conclusion of the EU-Singapore FTA (EUSFTA)  has made the headlines of several European newspapers.

The Opinion of Advocate General Sharpston in Opinion 2/15, delivered on 21 December, is partly sympathetic to the Commission’s arguments on EU powers, but ultimately refutes the most outlandish of the Commission’s claims to EU power vis-à-vis that of its constituent Member States. The Opinion is of exceptional length (570 paragraphs, to my knowledge the longest Opinion ever written), and contains an elaborate discussion on the nature of the division of powers between the EU and the Member States and detailed reasoning on specific aspects of the EUSFTA such as transport services, investment protection, procurement, sustainable development, and dispute settlement.

Given the breadth of the AG’s conclusions, the aim of this post is to discuss the Opinion only in relation to investment protection and to reflect upon some of the consequences for the Commission’s investment policy, perhaps the most controversial aspect of this new generation of trade agreements. Continue reading →

Neues aus dem Elfenbeinturm: December 2016

Conference « EU Civil Procedure Law and Third Countries: Which Way Forward? »

University of Kiel, 2-3 February 2017. Deadline for abstract submissions : 19 December 2016.

Workshop « International Law in a Dark Time »

University of Helsinki, 22-23 May 2017. Deadline for abstract submissions : 30 December 2017.

Conference « EU Policy on International Investments : Uncertainties, Challenges, and Opportunities »

University of Zaragoza, 20-21 March 2017. Deadline for proposal submissions : 31 December 2017.

IntLawGrrls! 10th Birthday Conference

University of Georgia Law School, 3 March 2017. Deadline for abstract submissions : 1 January 2017.

Workshop « New Challenges for European Solidarity »

University of Cambridge, 9-10 March 2017. Deadline for abstract submissions : 13 January 2017.

Call for papers Jean Monnet Seminar « The EU and Trust in the Online Environment »

Inter University Center, Dubrovnik, 23-29 April 2017. Deadline for abstract submissions : 31 January 2017.

ESIL Annual Conference 2017 : Global Public Goods , Global Commons, and Fundamental Values : The Responses of International Law

University of Naples, 7-9 September 2017. Deadline for abstract submissions : 31 January 2017.

Call for submissions : Trade, Law and Development Special Issue on Recent Regionalism

Deadline for submissions : 15 February 2017.

Call for papers : « Human Dignity and the Constitutional Crisis in Europe : Humanity, Democracy, Social Europe »

European University Institute, Florence, 15-16 June 2017. Deadline for abstract submissions : 28 February 2017.

European Environmental Law Forum 2017 Conference : « Sustainable Management of Natural Resources – Legal Approaches and Instruments »

Copenhagen, 30 August – 1 September 2017. Deadline for abstract submissions : 17 March 2017.

Neues aus dem Elfenbeinturm: November 2016

Call for papers : The Cambridge International and European Law Conference 2017 «Transforming Institutions»

University of Cambridge, 23-24 March 2017. Deadline for abstract submission : 25 November 2016.

Call for submissions : European Journal of Legal Studies New Voices Prize

Deadline for paper submissions : 15 December 2016.

Call for papers : 6th Conference of the Postgraduate and Early Professionals/Academics Network of the Society of International Economic Law

Tilburg University, 20-21 April 2017. Deadline for abstract submissions : 30 November 2016.

Call for papers : Conference « Post-Conflict Justice in Ukraine »

Kyiv, 26-27 May 2017. Deadline for abstract submissions : 15 December 2016.

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 →