Designing an International Investor-to-State Arbitration System After Opinion 1/09

Lavranos, Nikolaos

doi:10.1007/978-3-642-34255-4_12

Nikolaos Lavranos³

Part of the book series: European Yearbook of International Economic Law ((Spec. Issue))

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Abstract

Almost 2 years into the Lisbon Treaty, it has by now become general knowledge that the EU has obtained explicit exclusive external competence in the area of Foreign Direct Investment (FDI) (Article 207 (1) TFEU). This transfer of competence from the Member States to the EU has created a host of major problems and raised many complex legal, institutional, economic and political questions, which will keep many of us busy for a long time.

The views expressed in this contribution are of the author alone and cannot in any way be attributed to the Dutch Ministry of Economic Affairs, Agriculture and Innovation. The usual disclaimer applies.

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Notes

1.
See generally: Lavranos, Member States’ BITs: Lost in Transition?, Hague Yearbook of International Law (24), p. 281.
2.
ECJ, Case C-459/03, Commission v Ireland [2006] ECR I-4635; see further Ramano, Commission of the European Communities v. Ireland. Case C-459/03. Judgment, American Journal of International Law 101 (2007) 1, p. 171 (Case note on MOX Plant).
3.
ECJ, Opinion 1/09, Patent Court, [2011] ECR, n.y.p.
4.
ECJ, Opinion 1/91, EEA Agreement, [1991] ECR I-6079.
5.
ECJ, Case C-459/03, Commission v Ireland, [2006] ECR I-4635.
6.
See an interesting comparative analysis by the Swedish National Board of Trade entitled “Securing High Investment Protection for EU Investors”, published in May 2011, available at: http://www.kommers.se/Documents/dokumentarkiv/publikationer/2011/rapporter/report-securing-high-investment-protection.pdf.
7.
The ICSID rules are available at: http://icsid.worldbank.org/ICSID/FrontServlet?requestType=CasesRH&actionVal=ShowHome&pageName=Rules_Home.
8.
The UNCITRAL rules are available at: http://www.uncitral.org/uncitral/en/uncitral_texts.html.
9.
The ICC rules are available at: http://www.iccwbo.org/court/arbitration/id4424/index.html.
10.
The SCC rules are available at: http://www.sccinstitute.com/?id=23718.
11.
On file with the author.
12.
However, a very extensive empirical analysis by Susan Franck has found no significant differences between ICSID and UNCITRAL proceedings, The ICSID Effect? Considering Potential Variations in Arbitration Awards, Virginia Journal of International Law 51 (2011) 4, available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1842164.
13.
The text of the New York Convention is available at: http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention.html.
14.
Article 34 of the UNCITRAL Model Law 1985 (as amended in 2006) reads as follows:
Art. 34 Application for setting aside as exclusive recourse against arbitral award
1. (1)
  Recourse to a court against an arbitral award may be made only by an application for setting aside in accordance with paragraphs (2) and (3) of this article.
2. (2)
  An arbitral award may be set aside by the court specified in article 6 only if:
  1. (a)
    the party making the application furnishes proof that:
    1. (i)
      a party to the arbitration agreement referred to in article 7 was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of this State; or
    2. (ii)
      the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
    3. (iii)
      the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside; or
    4. (iv)
      the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Law from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Law; or
  2. (b)
    the court finds that:
    1. (i)
      the subject-matter of the dispute is not capable of settlement by arbitration under the law of this State; or
    2. (ii)
      the award is in conflict with the public policy of this State.
3. (3)
  An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the award or, if a request had been made under article 33, from the date on which that request had been disposed of by the arbitral tribunal.
4. (4)
  The court, when asked to set aside an award, may, where appropriate and so requested by a party, suspend the setting aside proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal’s opinion will eliminate the grounds for setting aside.
The text of the UNCITRAL Model Law is available at: http://www.uncitral.org/pdf/english/texts/arbitration/ml-arb/07-86998_Ebook.pdf.
15.
Article 52 of the ICSID rules reads as follows:
Article 52
1. (1)
  Either party may request annulment of the award by an application in writing addressed to the Secretary-General on one or more of the following grounds:
  1. (a)
    that the Tribunal was not properly constituted;
  2. (b)
    that the Tribunal has manifestly exceeded its powers;
  3. (c)
    that there was corruption on the part of a member of the Tribunal;
  4. (d)
    that there has been a serious departure from a fundamental rule of procedure; or
  5. (e)
    that the award has failed to state the reasons on which it is based.
2. (2)
  The application shall be made within 120 days after the date on which the award was rendered except that when annulment is requested on the ground of corruption such application shall be made within 120 days after discovery of the corruption and in any event within three years after the date on which the award was rendered.
3. (3)
  On receipt of the request the Chairman shall forthwith appoint from the Panel of Arbitrators an ad hoc Committee of three persons.
  - None of the members of the Committee shall have been a member of the Tribunal which rendered the award, shall be of the same nationality as any such member, shall be a national of the State party to the dispute or of the State whose national is a party to the dispute, shall have been designated to the Panel of Arbitrators by either of those States, or shall have acted as a conciliator in the same dispute. The Committee shall have the authority to annul the award or any part thereof on any of the grounds set forth in paragraph (1).
4. (4)
  The provisions of Articles 41-45, 48, 49, 53 and 54, and of Chapters VI and VII shall apply mutatis mutandis to proceedings before the Committee.
5. (5)
  The Committee may, if it considers that the circumstances so require, stay enforcement of the award pending its decision. If the applicant requests a stay of enforcement of the award in his application, enforcement shall be stayed provisionally until the Committee rules on such request.
6. (6)
  If the award is annulled the dispute shall, at the request of either party, be submitted to a new Tribunal constituted in accordance with Section 2 of this Chapter.
16.
See for the most recent statistics: Latest developments in investor-to-state dispute settlement, IIA issue note 1, March 2011, available at: http://www.unctad.org/en/docs/webdiaeia20113_en.pdf.
17.
See: EC Communication on the future European Investment policy, COM (2010) 343 final, 7 July 2010, available at: http://trade.ec.europa.eu/doclib/docs/2011/may/tradoc_147884.pdf.
18.
See: EC Communication on the future European Investment policy, COM (2010) 343 final, 7 July 2010, available at: http://trade.ec.europa.eu/doclib/docs/2011/may/tradoc_147884.pdf.
19.
See generally: Craig & De Búrca, EU Law, 2011 (5th ed.), pp. 338 et seqq. de Witte, Direct effect, Primacy and the nature of the Legal order, in: Craig & De Búrca, The Evolution of EU law, 2011 (2nd ed.), pp. 323 et seqq. Lavranos, Decisions of International Organizations in the European and Domestic Legal orders of selected EU Member States, 2004.
20.
ECJ, Case 26/62, Van Gend & Loos, [1963] ECR 95; ECJ, Case 6/64, Costa v. ENEL, [1964] ECR 1141.
21.
See: Craig & De Búrca, EU Law, 2011 (5th ed.), pp. 442 et seqq.
22.
Craig & De Búrca, EU Law, 2011 (5th ed.), pp. 442 et seq., where they discuss the extensive ECJ jurisprudence on this point.
23.
Craig & De Búrca, EU Law, 2011 (5th ed.), pp. 442 et seqq.
24.
Craig & De Búrca, EU Law, 2011 (5th ed.), pp. 442 et seqq.
25.
See eg.: ECJ, Case 314/85, Foto-Frost, [1987] ECR 4199; ECJ, Case C-68/95, T.Port, [1996] ECR I-6065.
26.
ECJ, Opinion 1/09, Patent Court, [2011] ECR, n.y.p.; ECJ, Opinion 1/91, EEA Agreement, [1991] ECR I-6079; ECJ, Opinion 2/94, Accession by the EC to the ECHR, [1996] ECR I-1759.
27.
See generally: Lavranos, Jurisdictional Competition, 2009.
28.
ECJ, Opinion 1/91, EEA Agreement, [1991] ECR I-6079.
29.
ECJ, Opinion 1/91, EEA Agreement, [1991] ECR I-6079, paras. 39-40.
30.
The revised EEA treaty was accepted by the ECJ in Opinion 2/91, EEA Agreement II, [1992] ECR I-2821.
31.
ECJ, Opinion 2/94, Accession of the EC to the ECHR, [1996] ECR I-1759, paras. 35-36.
32.
See eg: Joined cases ECJ, C-402/05 P and C-415/05 P, Kadi and Al Barakaat v Council and Commission [2008] ECR I-6351, para. 284, with reference to its longstanding jurisprudence.
33.
ECrtHR, Matthews v. UK, application no. 24833/94, available at: http://cmiskp.echr.coe.int/tkp197/view.asp?item=1&portal=hbkm&action=html&highlight=matthews&sessionid=80834874&skin=hudoc-en.
34.
ECrtHR, Bosphorus v. Ireland, application no. 45036/98, available at: http://cmiskp.echr.coe.int/tkp197/view.asp?item=1&portal=hbkm&action=html&highlight=bosphorus&sessionid=80835005&skin=hudoc-en.
35.
The word “solange” means in German “as long as”.
36.
German Constitutional Court judgment on the Maastricht Treaty, BVerfGE 89, 155, available at: http://www.servat.unibe.ch/dfr/bv089155.html.
37.
See Lavranos, Das Solange-Prinizip im Verhältnis von EGMR und EuGH, Europarecht 41 (2006) 1, p. 79.
38.
See further: Report to the Committee of Ministers on the elaboration of legal instruments for the accession of the EU to the ECHR, CDDH(2011)009, 14 October 2011, available at: http://www.coe.int/t/dghl/standardsetting/hrpolicy/Accession/Meeting_reports/CDDH_2011_009_en.pdf. See further: Jacqué, The Accession of the EU to the ECHR, Common Market Law Review 48 (2011) 4, p. 995; Lock, Walking on a tightrope: The draft ECHR Accession Agreement and the autonomy of the EU legal order, Common Market Law Review 48 (2011) 4, p. 1025.
39.
Lavranos, Das Solange-Prinizip im Verhältnis von EGMR und EuGH, Europarecht 41 (2006) 1, p. 79.
40.
See for a detailed analysis: Lavranos, Die Rechtswirkung von WTO panel reports im Europäischen Gemeinschaftsrecht sowie im deutschen Verfassungsrecht, Europarecht 34 (1999) 3, p. 289; Lavranos, Die EG darf WTO-Recht weiterhin ignorieren, Europäisches Wirtschafts-und Steuerrecht 15 (2004) 7, p. 293.
41.
See in particular: Snyder, The gatekeepers: The European courts and WTO law, Common Market Law Review 40 (2003) 2, p. 313.
42.
See: Bronckers, From ‘Direct effect’ to ‘muted dialogue’: Recent developments in the ECJ’s case law on the WTO and beyond, Journal of International Economic Law 11 (2008) 4, p. 885.
43.
ECJ, Case C-459/03 Commission v. Ireland [2006] ECR I-4635.
44.
See extensively: Lavranos, The epilogue in the MOX plant dispute: An end without findings, European Energy and Environmental Law Review 18 (2009) 3, p. 180; Lavranos, The MOX plant-judgment of the ECJ: How exclusive is the jurisdiction of the ECJ?, European Environmental Law Review 15 (2006) 10, p. 291.
45.
It still remains unclear why the EC did not include the OSPAR proceedings in its infringement claim against Ireland.
46.
ECJ, Case C-459/03 Commission v. Ireland [2006] ECR I-4635, paras. 123 et seq.
47.
See in particular: Romano, The Proliferation of International Judicial Bodies: The Pieces of the Puzzle, NYU Journal of International Law 31 (1999) 4, p. 709.
48.
See further: Lavranos, Protecting European Law from International Law, European Foreign Affairs Review 15 (2010) 1, p. 265.
49.
ECJ, Opinion 1/09, Patent Court, [2011] ECR, n.y.p., paras. 61-63.
50.
ECJ, Opinion 1/09, Patent Court, [2011] ECR, n.y.p., para. 64.
51.
ECJ, Opinion 1/09, Patent Court, [2011] ECR, n.y.p., para. 65.
52.
ECJ, Opinion 1/09, Patent Court, [2011] ECR, n.y.p., para. 66.
53.
ECJ, Opinion 1/09, Patent Court, [2011] ECR, n.y.p., para. 67.
54.
ECJ, Opinion 1/09, Patent Court, [2011] ECR, n.y.p., paras. 68-69.
55.
ECJ, Opinion 1/09, Patent Court, [2011] ECR, n.y.p., para. 70.
56.
ECJ, Opinion 1/09, Patent Court, [2011] ECR, n.y.p., para. 71.
57.
ECJ, Opinion 1/09, Patent Court, [2011] ECR, n.y.p., para. 71.
58.
ECJ, Opinion 1/09, Patent Court, [2011] ECR, n.y.p., para. 72.
59.
ECJ, Opinion 1/09, Patent Court, [2011] ECR, n.y.p., para. 73.
60.
ECJ, Opinion 1/09, Patent Court, [2011] ECR, n.y.p., para. 74.
61.
ECJ, Opinion 1/09, Patent Court, [2011] ECR, n.y.p., para. 75.
62.
ECJ, Opinion 1/09, Patent Court, [2011] ECR, n.y.p., para. 76.
63.
ECJ, Opinion 1/09, Patent Court, [2011] ECR, n.y.p., paras. 80-81.
64.
ECJ, Opinion 1/09, Patent Court, [2011] ECR, n.y.p., para. 83.
65.
ECJ, Opinion 1/09, Patent Court, [2011] ECR, n.y.p., para. 85.
66.
ECJ, Opinion 1/09, Patent Court, [2011] ECR, n.y.p., paras. 87-89.
67.
See generally: Baratta, National Courts as ‘Guardians’ and ‘Ordinary Courts’ of EU Law: Opinion 1/09 of the ECJ, Legal Issues of Economic Integration 38 (2011) 4, p. 297; Hindelang, Der primärrechtliche Rahmen einer EU-Investitionsschutzpolitiek: Zulässigkeit und Grenzen von Investor-Staat-Schiedsverfahren aufgrund künftiger EU-Abkommen, in: Bungenberg / Herrmann (eds.), Die gemeinsame Handelspolitiek der EU nach Lissabon, 2010, pp. 157–184.
68.
In case C-125/04 Denuit&Cordenier v. Transorient [2005] ECR I-923 the ECJ argued that: “12. In order to determine whether a body making a reference is a court or tribunal of a Member State for the purposes of Article 234 EC, the Court takes account of a number of factors, such as whether the body is established by law, whether it is permanent, whether its jurisdiction is compulsory, whether its procedure is inter partes, whether it applies rules of law and whether it is independent (see, in particular, Case C-54/96 Dorsch Consult [1997] ECR I-4961, paragraph 23, and the case-law there cited, and Case C-516/99 Schmid [2002] ECR I-4573, paragraph 34). 13. Under the Court’s case-law, an arbitration tribunal is not a ‘court or tribunal of a Member State’ within the meaning of Article 234 EC where the parties are under no obligation, in law or in fact, to refer their disputes to arbitration and the public authorities of the Member State concerned are not involved in the decision to opt for arbitration nor required to intervene of their own accord in the proceedings before the arbitrator (Case 102/81 ‘Nordsee’ Deutsche Hochseefischerei [1982] ECR 1095, paragraphs 10 to 12, and Case C-126/97 Eco Swiss [1999] ECR I-3055, paragraph 34)”.
69.
Bronckers, From ‘Direct effect’ to ‘muted dialogue’: Recent developments in the ECJ’s case law on the WTO and beyond, Journal of International Economic Law 11 (2008) 4, p. 885.
70.
See for a detailed analysis: Lavranos, The epilogue in the MOX plant case: An end without findings, European Energy and Environmental Law Review 18 (2009) 3, p. 180.
71.
An active player in this regard is the network of NGOs called “Seattle to Brussels”, http://www.s2bnetwork.org/.

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Nikolaos Lavranos

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Marc Bungenberg
Chair for Constitutional and Administrat, European Law, European and, University of Passau, Innstraße 39, Passau, 94032, Germany
Christoph Herrmann

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Lavranos, N. (2013). Designing an International Investor-to-State Arbitration System After Opinion 1/09. In: Bungenberg, M., Herrmann, C. (eds) Common Commercial Policy after Lisbon. European Yearbook of International Economic Law(). Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-34255-4_12

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