Various authors, Author at international litigation blog
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Author:Various authors

Case C-741/19: CJEU Decides That Intra-EU ECT Arbitration Is Incompatible with EU Law and Interprets Definition of “Investment” in ECT

This article has been co-authored by Nicholas Lawn (Partner at Van Bael & Bellis) and Isabelle Van Damme (Partner at Van Bael & Bellis), Quentin Declève (Senior Associate at Van Bael & Bellis) and Rebecca Halbach (Associate at Van Bael & Bellis)

On 2 September 2021, in its judgment in Case C-741/19, Republic of Moldova v. Komstroy LLC, the Court of Justice of the European Union (the CJEU) decided that intra-EU arbitration under the Energy Charter Treaty (the ECT) is incompatible with EU law. It also gave a restrictive interpretation to the definition of “investment” in the ECT.

The CJEU was seized by a request for a preliminary ruling from the Paris Court of Appeal which was hearing an action to annul the arbitral award which had been rendered by an ECT tribunal established to hear a dispute between the Republic of Moldova and Energoalians, a Ukrainian distributor.

Despite the fact that the underlying award involved the application of the ECT to a dispute between an investor from a non-EU country (Ukraine) and another non-EU country (Moldova), the CJEU nonetheless confirmed its jurisdiction to interpret the ECT. Moreover, notwithstanding that the dispute did not involve an investor of one EU Member State acting against another EU Member State regarding an investment made by the former in the latter (an intra-EU dispute), the CJEU found that Article 26(2)(c) of the ECT must be interpreted as being inapplicable to intra-EU disputes. It adopted a reasoning similar to that developed in its 2018 Achmea judgment (see here). In doing so, the CJEU also reached the same conclusion as Advocate General Szpunar in his Opinion and appeared to pre-empt the question of the compatibility of the draft modernised ECT with the EU Treaties, currently pending before the CJEU in Opinion 1/20.

Of the three questions referred by the French court, the CJEU limited its analysis to the first question. It interpreted the term “investment” as excluding “the acquisition, by an undertaking of a Contracting Party to [the ECT], of a claim arising from a contract for the supply of electricity, which is not connected with an investment, held by an undertaking of a third State against a public undertaking of another Contracting Party to that treaty“.READ MORE

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Belgian Data Protection Authority Prohibits Use in Arbitration Proceedings of Personal Data Received in Breach of GDPR

This article has been co-authored by Thibaut D’hulst (Counsel at Van Bael & Bellis) and Justine Van den Bon and Margot Vogels (Associates at Van Bael & Bellis)

By a decision of 29 January 2021, the Litigation Chamber of the Belgian Data Protection Authority (the DPA) prohibited a controller from passing on personal data obtained in breach of data protection rules to its legal counsel. The Litigation Chamber did not issue a fine, but the decision serves as a clear message that further processing of such unlawfully obtained personal data, even in the context of legal proceedings, is prohibited.

The dispute before the DPA involved an individual practising as a notary (the Plaintiff), her accountant (the First Defendant) and her former business partner also practising as a notary (the Second Defendant). The case at hand takes place in the broader context of arbitration proceedings relating to the winding-up of a notary practice due to financial issues and the refusal to submit certain accounting documents and other information.

The First Defendant mistakenly forwarded an e-mail with 32 annexes, which contained personal data relating to the Plaintiff, to the Second Defendant. This resulted in the disclosure of data relating to the Plaintiff’s personal activities, finances, and other personal data to the Second Defendant, without the Plaintiff’s consent. In turn, the Second Defendant forwarded the e-mail and its annexes to his legal counsel, who then used the e-mail and its annexes as an exhibit within the context of the pending arbitration proceedings between the Second Defendant and the Plaintiff.READ MORE

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EU and Canada Adopt Rules for Implementation of Investment Court System in CETA

This article has been co-authored by Quentin Declève together with Nicholas Lawn (Partner at Van Bael & Bellis) and Isabelle Van Damme (Partner at Van Bael & Bellis)

On 29 January 2021, the European Union and Canada adopted four decisions (the Decisions) aimed at further implementing the Investment Court System (the ICS)  in the Comprehensive Economic and Trade Agreement between Canada, of one part, and the European Union and its Member States, of the other part (CETA). The Decisions will enter into force upon ratification of CETA by the EU Member States.

Following certain concerns expressed in relation to older models of investor-State dispute settlement (ISDS), the European Union has designed a new model for resolving disputes between foreign investors and States (or the European Union) which seeks to address such concerns. In particular, in recent years some have argued that the traditional form of ISDS does not guarantee fundamental rights and values relating to the independence of arbitrators, legitimacy, access to courts and transparency. In addition, traditional ISDS has been seen by some as failing to result in a coherent body of case-law regarding the interpretation and application of investment protection standards. The ICS aims to resolve these perceived shortcomings by establishing a permanent tribunal composed of independent and publicly appointed members of a first instance Tribunal and, in case of an appeal, an Appellate Tribunal.

Although the main characteristics of the ICS were already established in CETA (see Chapter 8 on Investment), some specific features and procedural mechanisms still had to be agreed by the EU and Canada. These details were therefore agreed in the Decisions of the CETA Joint Committee which (i) set out rules and procedures regarding the functioning of the Appellate Tribunal (the Decision on the Appellate Tribunal); (ii) establish a code of conduct for mediators and judges (the Decision on the Code of Conduct); (iii) provide rules for mediation (the Decision on Mediation); and (iv) establish rules for adopting binding interpretations of CETA (the Decision on Binding Interpretations).READ MORE

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Investment Protections Implications of Brexit and of EU-UK Trade and Cooperation Agreement

This article has been co-authored by Quentin Declève together with Nicholas Lawn (Partner at Van Bael & Bellis) and Adriana Pérez-Gil (Associate at Van Bael & Bellis)

On 24 December 2020, the European Union (the EU) and the United Kingdom (the UK) agreed a Trade and Cooperation Agreement (the TCA) intended to settle their future relationship, with provisional application from 1 January 2021.

Following the UK’s exit from the EU on 31 January 2020 and the end of the transition period under the Withdrawal Agreement, the UK is no longer a member of the EU single market or the EU customs union. Whilst the TCA does not change this fact, it sets out separate terms for the new on-going relationship between the EU and the UK.

Title II of Part Two, Heading One (Trade) of the TCA includes provisions relating to “services and investment” (“SERVIN“). Yet, as explained below, the provisions are minimal and are limited to dealing with investment liberalisation, establishment, operation, market access and non-discriminatory treatment. In respect of investment protection, the TCA is more notable for what is out than what is in.READ MORE

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EU Plurilateral Agreement on Termination of Intra-EU BITs Enters Into Force – What consequences for Sunset Clauses?

This article has jointly been co-authored by Isabelle Van Damme and Quentin Declève

With some delay, we wanted to discuss the latest developments on intra-EU BITs that took place during the last couple of months[1].

As we already discussed, instead of the EU Member States agreeing, on a bilateral basis, to amend or terminate their respective intra-EU BITs, most of the EU Member States have elected, as envisaged in their declarations of January 2019, to negotiate a single plurilateral agreement that will terminate all of the intra-EU BITs (the Plurilateral Agreement). That agreement received the political consensus of all EU Member States in October 2019. Twenty-three Member States (with the notable exceptions of Austria, Sweden, Finland, the United Kingdom[2] and Ireland)[3] signed the agreement on 5 May 2020[4] which entered into force on 29 August 2020[5].

Purposes of the Plurilateral Agreement

The use of a Plurilateral Agreement to terminate, amend, interpret or complement a series of existing agreements is not novel. This method – which relies on Article 30(3) of the Vienna Convention on the Law of Treaties (the VCLT) (“When all the parties to the earlier treaty are parties also to the later treaty but the earlier treaty is not terminated or suspended in operation under article 59, the earlier treaty applies only to the extent that its provisions are compatible with those of the later treaty“) – has been used in the past to, for example, modify bilateral tax treaties[6] and conclude the United Nations Convention on Transparency in Treaty-based Investor-State Arbitration (the “Mauritius Convention on Transparency”). It is currently being contemplated within the UNCITRAL Working-Group III as a possible method for establishing the Multilateral Investment Court, which is the preferred option of the European Union for ISDS reform. Such a method is typically preferred because, instead of concluding a high number of separate agreements whereby State parties amend or terminate existing agreements between themselves on a bilateral basis, it allows for the conclusion of a single multilateral agreement whereby the parties agree to amend all their respective (bilateral) treaties having the same subject-matter at once.READ MORE

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CETA ISDS Mechanism Compatible with EU Law: What Implications?

This article has jointly been co-authored by Isabelle Van Damme and Quentin Declève

On 30 April 2019, the Court of Justice of the European Union (CJEU) decided in Opinion 1/17 that the chapter on investor-State dispute settlement (ISDS) in the Comprehensive Economic and Trade Agreement between Canada, of one part, and the European Union and its Member States, of the other part (CETA) is compatible with EU primary law. On 29 January 2019, Advocate General Bot had already reached the same conclusion (for an analysis, see here).

Opinion 1/17 removes a significant obstacle to the ratification of CETA by the EU Member States and the ratification of investment protection agreements with, for example, Singapore and Vietnam, which contain similar chapters on ISDS. The Opinion also significantly boosts the European Union negotiating position in the ongoing United Nations Commission on International Trade Law (UNCITRAL) negotiations on ISDS reform. At the same time, the Opinion might, to some extent, tie the hands of the European Union in negotiating in that forum.READ MORE

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Opinion 1/17 on CETA: Advocate General Bot Finds Investment Court System in CETA compatible with EU law

This article has jointly been co-authored by Quentin Declève and Isabelle Van Damme

On 29 January 2019, Advocate General Bot delivered his long-awaited Opinion (the Opinion) on whether the investment court system (ICS) in Chapter Eight, Section F, of the European Union-Canada Comprehensive Economic and Trade Agreement (CETA) is compatible with European Union (EU) law, in particular with the autonomy of the EU legal order and fundamental rights. The next step in the proceedings before the Court of Justice of the European Union (CJEU), initiated by Belgium following complications in its ratification process, is for the CJEU to deliver its Opinion on the same question (see previous post here and report of the hearing before the CJEU here).

This article discusses the key elements of the Opinion and the implications of these CJEU proceedings on the European Union’s common commercial policy and its policy of advocating reform of existing investor-State dispute settlement (ISDS) and the establishment of a multilateral investment court (MIC).READ MORE

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