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Investment Court System

Opinion 1/17 on CETA: Hearing Report

On 26 June 2018, the Court of Justice of the European Union (the CJEU) heard the legal arguments raised by the institutions of the European Union and by some EU Member States in Opinion 1/17 on the compatibility of the Investment Court System (ICS) provided for in the EU-Canada Comprehensive Economic and Trade Agreement (CETA).

As we discussed before, the CJEU is requested to provide an opinion regarding the compatibility of the ICS contained in CETA with respect to: (i) the exclusive competence of the CJEU, pursuant to Article 267 of the Treaty on the Functioning of the European Union (TFEU), to give a binding interpretation of EU law; (ii) the general principle of equality and the practical effect (‘effet utile‘) of EU law; (iii) the right of access to courts; and (iv) the right to an independent and impartial judiciary.

I was unfortunately unable to attend this hearing. However, my friend José Rafael Mata Dona attended the hearing and has kindly provided us with a summary of the main points which were raised.READ MORE

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EU Commission Holds Second Stakeholder Meeting on Multilateral Investment Court

As you certainly know, international discussions are being held within UNCITRAL Working Group III (Working Group III) regarding the establishment of a multilateral investment court (Multilateral Investment Court).

As discussed before (here, here, here, here and here) the establishment of such a Multilateral Investment Court aims to address the numerous criticisms concerning existing investor-State dispute resolution (ISDS) mechanisms.

The first round of discussions took place in November 2017 in Vienna and the second round is scheduled to take place next week in New York City (23-27 April 2018).

As it did prior to the first round of negotiations in November 2017 (see our report), the European Commission (the Commission) held, on 13 April 2018, its second stakeholder meeting in order to discuss and share with civil society the key aspects of the negotiations  and the expectations regarding next week’s discussions in New York.

I was unfortunately not able to attend this stakeholder meeting. However, my colleague Benedict Blunnie has taken part in those discussions and has provided us with a summary of the points which have being raised.READ MORE

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Achmea: Potential Consequences for CETA, the Multilateral Investment Court, Brexit and other EU trade and investment agreements

This article has jointly been co-authored with Isabelle Van Damme

On 6 March 2018, the Court of Justice of the European Union (the CJEU) delivered its long-awaited judgment in Case C-284/16 Achmea. This case raised the issue of whether an arbitration clause in a bilateral investment treaty (BIT) concluded between two EU Member States (intra-EU BIT) is compatible with European Union (EU) law and, in particular, with the autonomy of the EU legal order.

As discussed in two previous posts (here and here), Advocate General Wathelet delivered, on 19 September 2017, an Opinion in strong support of international arbitration. He found that an arbitration clause such as that at issue in Achmea was not incompatible with EU law. The CJEU disagrees.

In this article, we summarise the key findings of the CJEU’s judgment and analyse its potential consequences for the EU-Canada Comprehensive Economic and Trade Agreement (CETA), for the proposed Multilateral Investment Court and for future EU trade and investment agreements (including the future agreement between the European Union and the United Kingdom).READ MORE

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Latest Developments on Multilateral Investment Court – EU Commission Holds Stakeholder Meeting

As I have already discussed in previous articles, the European Commission (the Commission) has been pushing forward a proposal for the establishment of a multilateral investment court (the Multilateral Investment Court) in order to address the numerous criticisms concerning existing investor-State dispute resolution (ISDS) mechanisms.

In essence, the Commission’s proposal aims at dealing with procedural issues arising in the context of ISDS. In this vein the Commission proposes:

(i) The creation of a Multilateral Investment Court which would have exclusive jurisdiction to rule on investment claims and would therefore render forum-shopping and multiple parallel proceedings impossible;

(ii) That this Multilateral Investment Court would consist of a First Instance Tribunal and an Appellate Tribunal;

(iii) That judgments would be made by publicly appointed judges; and

(iv) That proceedings would be transparent; and

(v) That all interested parties would have a right to intervene.READ MORE

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Multilateral Investment Court – Belgium Seeks Opinion to CJEU while EU Commission Requests Authorisation to Open Multilateral Negotiations

As we already discussed in several posts before (here, here, here and here), the European Commission (the Commission) has been pushing forward the establishment of a multilateral investment court (Multilateral Investment Court) in order to address the numerous criticisms concerning the existing investor-State dispute resolution (ISDS) mechanisms.

In essence, the Commission’s proposal aims at dealing with procedural issues arising in the context of ISDS. In this vein the Commission proposes:

(i) The creation of a permanent investment court which would have exclusive jurisdiction to rule on investment claims and would therefore render forum-shopping and multiple parallel proceedings impossible;

(ii) That this permanent court would be composed of a First Instance Tribunal and an Appellate Tribunal;

(iii) That judgments would be made by publicly appointed judges; and

(iv) That proceedings would be transparent and a right to intervene for all interested countries would be provided.

The original idea of the Commission was to institutionalise the system for the resolution of investment disputes within each bilateral investment treaty concluded by the European Union (the EU). Such a system (called the Investment Court System (ICS)) was the method followed during the negotiations for the EU-Canada Comprehensive Economic and Trade Agreement (CETA). The Commission, however, has since realised that, in the long run, this approach would lead to a duplication of the system (since there would be one ICS for each of the different investment treaties entered into by the EU) as well as further administrative and budgetary complexities. In order to address this issue, the EU decided to push its proposal one step further and suggested that, instead of negotiating bilateral ICS, it would seek the establishment of an international court which would have jurisdiction to hear investment disputes.

The idea has received a positive echo from the United Nations Commission on International Trade Law (UNCITRAL) in July 2017. Indeed, UNCITRAL has agreed to consider a possible reform of the existing ISDS mechanisms and to act as a forum for negotiations in order to consider a reform of the existing systems.

In anticipation of those negotiations (which are scheduled to begin shortly), the Commission published, on 13 September 2017, a Recommendation (the Recommendation) for a Council Decision authorising the opening of negotiations for a Convention establishing a Multilateral Investment Court.

This Recommendation (adopted pursuant to Article 218 of the Treaty on the Functioning of the EU) aims (i) at allowing the Council of the EU to authorise the opening of negotiations for the establishment of a Multilateral Investment Court; and (ii) at appointing the Commission as EU representative during those negotiations.READ MORE

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Investment Court System – Three Ways to Avoid State-Partiality by Judges

Since September 2015, the European Commission has been pushing forward a proposal for a new investment court system (ICS) aimed at addressing the numerous criticisms expressed about the existing investor-State dispute resolution (ISDS) mechanisms (see here, here and here for previous posts on this topic).

ISDS is a very sensitive topic since such disputes always place States in the position of respondents. Furthermore, they are seen by many as placing restrictions on a State’s right to sovereignty and right to regulate. In addition, the outcome of these disputes may profoundly impact the financial situation of a State. On top of those concerns, investor-State disputes are generally solved by recourse to international arbitration, a mechanism which is seen by many as lacking consistency, transparency and legitimacy.

In order to address those concerns, the key aspects of the proposal brought forward by the European Union are the following:

– The creation of a permanent investment court which would have exclusive jurisdiction to rule on investment claims and would therefore render forum-shopping and multiple parallel proceedings impossible;

– This permanent court would be composed of a First Instance Tribunal and an Appeal Tribunal;

– Judgements would be made by publicly appointed judges;

– Proceedings would be transparent and a right to intervene for all interested countries would be provided.

While I personally think that the ICS presents a step in the right direction, as it offers possible solutions to the main concerns raised about classical ISDS mechanisms, I do not think, nor pretend, that this proposal is free from any potential flaws.

Indeed, one of the main doubts expressed by many commentators against the ICS relates to the methodology for appointing judges to the First Instance Tribunal and to the Appeal Tribunal. For instance, in respect of the EU-Canada free trade agreement (CETA), it is currently contemplated that judges of the new investment court will be appointed by States and they should only serve a limited term of 5 years renewable once (Article 8.27 of the CETA).

If this appointment procedure is ever adopted, it will certainly not take long before the credibility, legitimacy, independence and neutrality of the whole system starts to be contested by the perception that the judges are biased in favour of States. It is indeed very likely that such a suspicion will quickly arise since those judges will be appointed (even if indirectly) by the States and because their term in office will be subject to re-appointment by those same States (meaning that the judges might be tempted to render decisions more favourable to States in order to be re-appointed).

While it remains to be seen whether the ICS will ever see the light of day, and if so under which form, I hereby suggest three possible alternatives/solutions in order to address the risk of State-partiality by judges.READ MORE

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CJEU’s Opinion 2/15: Consequences on ISDS and Investment Court System

On 16 May 2017, the Court of Justice of the European Union (the CJEU) delivered its long-awaited opinion (the Opinion 2/15) on the allocation of competences between the European Union (the EU) and its Member States for the conclusion of the EU-Singapore Free Trade Agreement (the EUSFTA).

As you may know, the core issue in this Opinion was whether the EU had an exclusive competence to conclude the EUSFTA and similar free trade agreements (FTAs) (meaning that the EU could act unilaterally on this issue) or whether the EU shared this competence with the European Member States.

Although the objective of this article is not to provide an in-depth analysis of Opinion 2/15 (for those interested, Van Bael & Bellis recently published a detailed memorandum on this topic), I wanted to share with you some thoughts on the impact of Opinion 2/15 on investor-State dispute resolution and on the Investment Court System (ICS).READ MORE

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