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Investment Court System

February 23, 2021 In Investment Court System, Investment Law By Various authors

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

January 27, 2020 In Investment Court System, Investment Law, Uncategorized By Julian Arato

ISDS Reform: Designing Permanent Institutions at Working Group III

Last week, the United Nations Commission on International Trade Law (UNCITRAL) Working Group III (WGIII) turned squarely to designing permanent adjudicative institutions for the resolution of investment disputes. As readers of this blog may be aware, WGIII is charged with developing multilateral reforms to the current ad hoc system of investor-state dispute resolution (ISDS). This government-led process involves delegations from around a hundred States, with active participation by dozens of observer delegations from international organizations, arbitral institutions, NGOs, business associations, and learned societies. Beginning in WGIII’s 34^th Session in 2017, this work has continued through biannual sessions in Vienna and New York. From 2017 to 2018, delegations registered substantial concerns with ISDS, relating to fragmented arbitral outcomes; arbitrator independence, impartiality, and diversity; duration and cost; multiple proceedings; and third-party funding (Phase 1). In the fall of 2018, WGIII decided to work multilaterally to reform such concerns within UNCITRAL (Phase 2). As of its 37^th Session in 2019, WGIII has moved firmly into working on concrete reform options (Phase 3) (discussed here).

WGIII’s 38^th Session in Vienna marked a key transition into detailed discussion of reform options. Meeting initially in October 2019, the WGIII held discussions on a series of reform options according to a pre-determined project schedule. This work was grounded in proposals by over forty-five governments, across twenty-three submissions (here); complemented by several Secretariat papers; submissions by observer delegations (here); and concept papers by the Academic Forum on ISDS Reform (here). In this initial meeting, WGIII focused on (i) developing a multilateral advisory center; (ii) a code of conduct; and (iii) reforms to third-party funding (discussed here). Discussions centered on high level values, trade-offs and prioritization, with the goal of guiding the Secretariat as it turns to developing more concrete reform options.

Resuming its 38^th Session in Vienna last week (January 2020), WGIII turned squarely to designing permanent institutions: (iv) a standing appellate mechanism; and (v) a multilateral investment court (MIC); as well as the cross-cutting question of (vi) selecting and appointing adjudicators. As with the discussions last fall, the goal was to discuss each reform option at a high level, to provide guidance to the Secretariat. The Working Group is not yet taking firm decisions on the desirability or ultimate form of any reforms, although some States are already revealing their preferences. Later this year, WGIII will develop a new project schedule and begin circling back to each topic, seriatim, with the benefit of new responsive work by the Secretariat, the Academic Forum, and other organizations (such as the OECD, ICSID, the PCA, and several NGOs).READ MORE

October 30, 2019 In Intra-EU BIT, Investment Court System By Quentin Decleve

EU Commission Presents Proposals for Investment Court System in CETA and Announces Plurilateral Treaty to Terminate Intra-EU BITs

A couple of days before Working Group III of the United Nations Commission on International Trade Law (UNCITRAL) held its 38^th session on the reform of investment arbitration, the European Commission (the Commission) presented four proposals (the Proposal(s)) to the Council of the European Union (the EU) for specific rules to put into place the Investment Court System (the ICS) provisions in the EU-Canada Comprehensive Economic and Trade Agreement (the Agreement or CETA).

The ICS included in CETA represents a new approach by the EU in relation to investment-related disputes and is the same approach taken in the agreements the EU has negotiated with Singapore, Viet Nam and Mexico, while also being on the table in all on-going investment negotiations.

The foundation of the ICS is already established in CETA (as discussed here, here and here), however it remains to be applied pending ratification of the Agreement by all of the EU Member States. The Joint Interpretative Instrument on CETA agreed by the EU and Canada in October 2016 includes a commitment to make the system operational as soon as the Agreement enters into force. The Proposals are thus necessary to deliver on this commitment and these rules complete the putting together of the reformed approach to investment dispute settlement under CETA.READ MORE

October 22, 2019 In Investment Court System, Investment Law By Julian Arato

ISDS Reform: Working Group III Gets Down to Brass Tacks

Last week, multilateral efforts to reform investor-state dispute resolution (ISDS) entered a new phase, with substantive discussions of reform options beginning in earnest. As readers of this blog are aware, delegations from around a hundred States have been working multilaterally toward reforming ISDS in the United Nations Commission on International Trade Law (UNCITRAL), Working Group III (WGIII) over the last two years.

This work began in earnest in WGIII’s 34^th Session in Vienna (2017) and has continued through biannual Sessions in Vienna and New York. From 2017–2018, Delegations registered substantial concerns with ISDS, relating to fragmented arbitral outcomes; the arbitrators charged with adjudicating disputes; matters of duration and cost; the lack of a framework to address multiple proceedings; and third-party funding (Phase 1). In Vienna last year, WGIII decided to work multilaterally to reform such concerns within UNCITRAL (Phase 2) – discussed further here. Last week proved to be a key hinge in the process. WGIII has now moved firmly into working on concrete reform options (Phase 3).

WGIII’s 37^th Session in New York this past Spring 2019 appeared as something of a lull in the process, but it culminated in a key compromise on working methods that preserved consensus for the time being. WGIII spent much of that week debating working procedures, ultimately adopting a compromise plan to divide working time between developing “structural reforms” (i.e., large scale institutional reform options like a standing investment court or a standalone appellate body), and “functional reforms” (i.e., specific targeted reforms on problematic aspects of ISDS, like the lack of code of conduct, the lack of a mechanism to address multiple claims and shareholder claims more generally, third party funding, and security for costs). But it deferred actually developing a concrete project schedule until the fall.

WGIII’s 38^th Session in Vienna last week marked the fruition of that compromise, and a transition into detailed discussions on reform options.READ MORE

May 7, 2019 In Investment Court System, Investment Law By Various authors

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

January 31, 2019 In Investment Court System, Investment Law By Various authors

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

January 22, 2019 In Intra-EU BIT, Investment Court System, Investment Law By Quentin Decleve

ISDS Reform, Intra-EU BITs and CETA: New and Upcoming Developments

On 19 January 2019, the European Union submitted new proposals to the United Nations Commission on International Trade Law (UNCITRAL) Working Group III (WGIII) tasked with examining the reform of investor-State dispute settlement (ISDS).

As we have reported before (see here, here, here and here), discussions are currently being held within WGIII on a possible reform of ISDS mechanisms. Those rounds of discussions take place twice a year (in April and in November) and were initiated in November 2017. The discussions are divided into three distinct phases: identifying concerns about ISDS (Phase I); considering whether reform of the current system is desirable in the light of any identified concerns (Phase II); and designing options for reform responding to any such concerns (Phase III).

After its 36^th Session (which took place in Vienna in October-November 2018), WGIII has now almost completed Phase II of its mandate.

In order to move into Phase III and start discussing concrete reform options, the Chairman of WGIII has invited countries involved in the discussions to submit proposals regarding the content of such reform as well as the roadmap to achieve those reforms. Those proposals would then be discussed during the next meeting of WGIII in April 2019.

In light of this invitation, the EU has now submitted two papers to the WGIII Secretariat.READ MORE