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CETA Opinion – Setting Conditions for the Future of ISDS

Published on June 5, 2019        Author:  and
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The April 2019 New York UNCITRAL Meeting of Working Group III did not discuss the then forthcoming Opinion 1/17 (CETA Opinion) on the compatibility of CETA’s investment court system with EU law. For some the dangers this Opinion could pose to ISDS were altogether non-existent – the Court of Justice of the European Union (CJEU) might as well have considered ISDS in CETA as incompatible with EU law. To others ISDS reform negotiations without the EU, and probably without its Member States, might have seemed a more appealing prospect. The CETA Opinion was rendered on 30 April 2019 and confirmed that the treaty’s investment court system is compatible with EU law. Reaction to it has been immediate, but the real consequences of this (probably explosive or even implosive) opinion will take time to absorb, and a lot of in-depth analysis will certainly follow.

In the past years the CJEU was seemingly headed down a narrow one-way street: its Opinions on a Patent Court, the EU accession to the ECHR or even the Achmea Judgement questioned the participation of the EU and its Member States in international dispute settlement placed outside the control of the EU judicial system. With the CETA Opinion the Court took a U-turn out of the one-way street, back into the path of international dispute settlement. But as the Court managed to turn – and immense pressure was brought to bear – it drafted the conditions for the new multilateral court system that the EU is currently pursuing in international fora. In the remainder of this short contribution we will not canvass the possible contradictions between the Opinion and previous CJEU decisions – although there might be some. We focus on the future instead. In light of the EU’s role as a major investment treaty negotiator and its push for the creation of an MIC, we ask two questions: what this Opinion might mean for the future of ISDS and what open questions remain.

  1. Conditions for the Future of ISDS

Although the CJEU only dealt with the narrow question of whether CETA’s investment court system is compatible with EU primary law, its Opinion will likely have consequences well beyond this context, including notably in relation to a future Multilateral Investment Court (MIC). When the CJEU was deciding, the MIC was the invisible elephant in the room: first, because in CETA the EU commits to pursuing the establishment of an MIC; second, because the European Commission in its contributions to UNCITRAL’s WGIII promotes this option as at least at this time the only possible future for ISDS involving the EU. Read the rest of this entry…

Filed under: EJIL Analysis
 
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The Post-TTIP Transatlantic Cooperation on Trade: Stepping up Conformity Assessment

Published on February 25, 2019        Author: 
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On 18th January 2019, the European Commission published the draft negotiating mandates for its trade talks with the United States, which followed the US-EU Joint Statement on stepping up the bilateral cooperation summing up the Trump and Juncker’s meeting in July 2018. Putting the idea of an ambitious trade deal to the side, the mandates cover two areas where the prospects of the agreement seem less contentious – eliminating tariffs on industrial goods and stepping up conformity assessment (CA) cooperation. The latter is chosen to serve one of the main negotiating objectives of both sides to remove non-tariff barriers (NTBs) that are estimated to have even a more profound effect on trade than tariffs in some areas and thus being of particular concern to the bilateral trade relations. Stepping up CA is also listed as one of the US Negotiating Objectives recently published by the USTR, since the US identifies European CA among main trade barriers to the EU market in its 2018 Foreign Trade Barriers report.

The CA cooperation, however, as this blog clarifies, does not imply cooperation on the content of regulatory disciplines and does not go further than recognition of certificates/ testing/ approvals issued by each Party’s regulatory authorities, making it a less ambitious mechanism than as had been initially intended under the TTIP (“Regulatory cooperation chapter”). However, despite being a “low hanging fruit” in comparison to regulatory cooperation, it still might be difficult to accomplish as the previous efforts on mutual recognition between the US and EU demonstrated. Over the years, though, the CA cooperation models have been stepped up, which is very well manifested in the recently negotiated CETA that might serve as a positive example for the future US-EU cooperation in the area of CA. Read the rest of this entry…

 

Excessive Multilingualism in EU Trade Agreements

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The legal protection of multilingualism is an important principle and an indispensable guarantee for the functioning of the institutions of the European Union (EU) as well as for their relationships with EU citizens. This is not only evidenced by Article 22 of the Charter of Fundamental Rights, which obligates the Union to respect linguistic diversity. Beyond that, legally protecting multilingualism is, as the European Parliament stated, “not a matter of communication only, but also a question of democratic legitimacy towards citizens and respect for the cultural diversity of the Member States. It affects the way in which EU legislation is drafted and interpreted”.

Multilingualism is also well established in the EU Treaties themselves, concluded between the Member States in 24 equally authentic languages (Article 55 TEU), which can be interpreted authoritatively by the Court of Justice of the European Union (CJEU) whenever necessary.

The practice of the European Union is quite similar with regard to treaties concluded with non-Member States. In particular, several free trade agreements (FTAs) concluded or negotiated with such states have been drawn up in no less than 23 or 24 equally authentic languages. Read the rest of this entry…

 
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CETA’s New Domestic Law Clause

Published on March 17, 2016        Author: 
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The recent, widely-reported ‘legal scrub’ of the Canada-EU Comprehensive Economic and Trade Agreement (CETA) has drawn attention for its endorsement of a radical shift away from the model of investor-state dispute settlement that has prevailed in investment agreements to date. The new text indicates that Canada has agreed to the EU’s proposals on an investment court system, with a permanent roster of arbitrators appointed by Canada and the EU, rather than ad hoc tribunals whose members are appointed by the disputing parties themselves. In another innovation, CETA will also include an appeals mechanism, which will have power to review the merits of first-instance rulings, going beyond the limited grounds for annulment of awards in the existing ICSID system.

Alongside these revolutions, the new CETA text also contains another change from the earlier text. Under the heading of ‘Applicable law and interpretation’, Article 8.31(2) of the new text provides:

The Tribunal shall not have jurisdiction to determine the legality of a measure, alleged to constitute a breach of this Agreement, under the domestic law of the disputing Party. For greater certainty, in determining the consistency of a measure with this Agreement, the Tribunal may consider, as appropriate, the domestic law of the disputing Party as a matter of fact. In doing so, the Tribunal shall follow the prevailing interpretation given to the domestic law by the courts or authorities of that Party and any meaning given to domestic law by the Tribunal shall not be binding upon the courts or the authorities of that Party.

Although the provision is new in CETA, it has also recently appeared in the EU-Vietnam FTA and in similar language in the EU’s November 2015 TTIP proposals. While this might suggest that the provision is a recent invention of the EU, its inspiration in CETA could equally have come from Canada, which included a similar provision in its 2008 FTA with Colombia. In fact, Colombia itself appears to have first spearheaded the provision, including language on domestic law broadly similar to the provision’s first sentence in its 2007 Model BIT and in agreements signed as far back as 2006 with Japan, the UK, India, Belgium, China, Peru and Switzerland. Read the rest of this entry…