Abstract
This chapter picks up on the discussion carried out in Part I concerning model dispute settlements by presenting the main characteristics of the internalisation model adopted under EU investment agreements. The analysis deals with some of the thorniest issues that arise in connection with the settlement of international disputes against the EU. In particular, the examination focuses on the allocation of international responsibility and of financial responsibility between the EU and the Member States. Secondly, it turns to the partially related question concerning the representation of the EU and the Member States in investment disputes. Finally, it carries out an assessment of the decisions of the ICS, focusing on their nature, enforcement and effects. The chapter reaches a number of important conclusions that will be further developed in Chap. 6 in order to assess the ability of EU investment agreements to serve as a general model for the settlement of disputes against the EU.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
See Regulation (EU) No 912/2014 of the European Parliament and of the Council establishing a framework for managing financial responsibility linked to investor-to-state dispute settlement tribunals established by international agreements to which the European Union is a party.
- 2.
It would be probably impossible, and surely unnecessary, to provide an exhaustive list of scholarly writings devoted to this question. To name but a few, see Heliskoski 2001; Hoffmeister 2010; Nollkaemper 2012; Kuijper and Paasivirta 2013; Cannizzaro 2013; d’Aspremont 2014; Dimopoulos 2014; Delgado Casteleiro 2016; Palchetti 2017.
- 3.
See, among others, UN doc. A/CN.4/637, where the views of the EU are expressed in full details in the comments given by the European Commission to the ILC .
- 4.
See Delgado Casteleiro 2016.
- 5.
See, in particular, Delgado Casteleiro 2016, pp. 227–235.
- 6.
As is well known, in the Micula case Romania was ordered by an arbitral tribunal to pay compensation to a foreign investor for discontinuing business incentives that were found incompatible with EU state aid law. For an analysis of the case and its implications see Titje and Wackernagel 2015.
- 7.
It seems worth noting that while ARIO does indeed establish different forms of international responsibility, it does not seem to impose an obligation to invoke all of them in the context of the same dispute.
- 8.
Emphasis added.
- 9.
See Article 8.19(7).
- 10.
See Dimopoulos 2014, p. 1683.
- 11.
See Waibel 2014, pp. 67–68.
- 12.
See International Court of Justice, Case of the Monetary Gold Removed from Rome in 1943 (Italy v. France, United Kingdom of Britain and Northern Ireland and United States of America), judgment of 15 June 1954.
- 13.
See, ex plurimis, International Court of Justice, Legality of Use of Force (Serbia and Montenegro v. Portugal), judgment of 15 December 2004.
- 14.
See, in particular, International Court of Justice, Legality of Use of Force (Serbia and Montenegro v. Portugal), paras 38 et seq.
- 15.
For example, one could think of an action for damages brought before EU courts in accordance with Article 340(2) TFEU. The conditions set out in the well-settled case law of the ECJ in order for such an action to be successful are quite strict. In very short terms, the following three requirements must be satisfied: (a) there is a sufficiently serious violation of an EU law rule intended to confer rights, (b) damages have actually occurred, and (c) there exist a causal link between the violation and the injury suffered by the claimant. Without dwelling on the details of this question, it cannot be excluded a priori that an investor will succeed in fulfilling the strict conditions required by the ECJ. For a thorough discussion of the action for damages see Gutman 2011.
- 16.
See Lenk 2016, p. 21.
- 17.
See Lenk 2016, pp. 20–21.
- 18.
This view is delightfully expressed by Cannizzaro 2013, pp. 308–312.
- 19.
See Cannizzaro 2013, p. 312.
- 20.
See Palchetti 2017, p. 84.
- 21.
It is worth mentioning that the determination of the respondent made under EU investment agreements could also be understood as ‘acknowledgement and adoption’ of a conduct within the meaning of Article 11 ASR and Article 9 ARIO . The EU practice in the context of the WTO might perhaps militate in favour of this interpretation. See Kuijper and Paasivirta 2013, pp. 60–61. See also the ILC in the Report of the International Law Commission, A/66/10, p. 97.
- 22.
This is, in reality, also not very likely. As we shall see below, the power to determine the respondent belongs to the Commission and is part and parcel of the general executive role attributed to this institution. Only an internal failure within the Commission would, therefore, result in the determination not being made on time.
- 23.
The EU-Singapore Agreement replicates CETA’s text with only some minor differences. See Article 3.5(3) of the Investment Protection Agreement.
- 24.
See, in particular, ICSID Arbitral Tribunal, Ioan Micula, Viorel Micula, S.C. European Food S.A, S.C. Starmill S.R.L. and S.C. Multipack S.R.L. v. Romania, ICSID Case No. ARB/05/20, paras 665 et seq.
- 25.
See supra, note 7.
- 26.
See Article 8.6(4) of Section 3.
- 27.
On which see Hoffmeister 2010, pp. 745–747.
- 28.
This is clearly stated, for example, by Article 8.31(2) CETA. The meaning of this provision and its broader implications will be discussed in Chap. 6, to which the reader is therefore referred.
- 29.
The Union could decide, for example, that the entity to which the policy measures that have given rise to the claim are eventually attributable is the one that should take part in the dispute even in a Micula scenario.
- 30.
See Lenk 2016, p. 17.
- 31.
It also seems to be at variance with the normative control doctrine.
- 32.
A similar provision is contained in the EU-Singapore Agreement. See Article 3.3(6) of the Investment Protection Agreement.
- 33.
What is more, the proposal presented by the Commission dates back to June 2012, at a time when the ECJ’s Opinion had not even been asked. See Proposal for a Regulation of the European Parliament and the Council establishing a framework for managing financial responsibility linked to investor-state dispute settlement tribunals established by international agreements to which the European Union is a party, COM(2012) 335 final.
- 34.
See, in particular, Dimopoulos 2014, p. 1676, who rightly emphasizes the risks connected with the possibility that the Member States consciously or unconsciously rely on the EU appearing as respondent and paying compensation that is ultimately (although indirectly) shared by all Member States.
- 35.
See Allen and Soave 2014.
- 36.
On which see Sect. 4.2 and footnotes.
- 37.
See Australia—Certain Measures Concerning Trademarks, Geographical Indications and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging, WT/DS435/R, WT/DS441/R, WT/DS458/R, WT/DS467/R (28 June 2018).
- 38.
On the wrongful implementation of Directive see the thoughtful analysis carried out by Falkner et al. 2004.
- 39.
After all, the incorrect transposition of a Directive can only be considered certain, in essence, if it has been confirmed by the CJEU in an infringement procedure or, at least indirectly, in a preliminary ruling. See also Report from the Commission—Monitoring the Application of European Union Law 2016 Annual Report, COM(2017) 370 final, in particular, pp. 17 et seq.
- 40.
For an overview on the different techniques used by the EU in order to harmonise the Member States’ legislation see Barnard 2016, pp. 580 et seq.
- 41.
See Regulation (EU) No 1219/2012 of the European Parliament and of the Council of 12 December 2012 establishing transitional arrangements for bilateral investment agreements between Member States and third countries, OJ L 351, 20.12.2012, pp. 40–46.
- 42.
See Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by Member States of the Commission’s exercise of implementing powers, OJ L 55, 28.2.2011, pp. 13–18.
- 43.
In this sense, it seems appropriate that the provision in question imposes on the Commission the obligation to provide the Member State concerned with a “full and balanced factual analysis and legal reasoning” underlying its decisions.
- 44.
This is explicitly confirmed by Recital 20 of the Regulation.
- 45.
See Titje, Sipiorski and Töpfer 2012, pp. 15–17.
- 46.
The fact that it is the Commission that will represent the EU in investment disputes cannot, in fact, be put into question. The Commission derives this power from Article 335 TFEU, which states that the Union shall be represented by the Commission in legal proceedings initiated before Member States’ courts. The ECJ has interpreted this provision as being the expression of a general principle covering the representation of the EU in legal proceedings in general terms. See European Court of Justice, Reynolds Tobacco and Others v Commission, Judgment of 12 September 2006, Case C-131/03, ECLI:EU:C:2006:541, para 94.
- 47.
European Court of Justice, R. & V. Haegeman v Belgian State, Judgment of 30 April 1974, Case 181/73, ECLI:EU:C:1974:41.
- 48.
See Rosas 2017, p. 21.
- 49.
See European Court of Justice, Council of the European Union v European Commission, Judgment of 6 October 2015, Case C-73/14, ECLI:EU:C:2015:663, paras 41–50.
- 50.
Emphasis added.
- 51.
See European Court of Justice, Council of the European Union v European Commission, supra note 151, para 70.
- 52.
See Sect. 2.3.
- 53.
See Engbrink 2017, p. 39.
- 54.
See Engbrink 2017, p. 38.
- 55.
See Hoffmeister 2017, p. 15.
- 56.
E.g. if a degree of fault is required, and what kind of fault.
- 57.
See Crawford 2002.
- 58.
See Aust 2010, pp. 377–379.
- 59.
See Article 36(2)(d) of the Statute of the International Court of Justice.
- 60.
In reality, as a result of a recent decision of the ECJ, the EU has exclusive competence in relation to all matters covered by EU comprehensive FTAs except foreign indirect investment. This is the only field in which shared competence is retained by the Member States. See European Court of Justice, Free Trade Agreement between the European Union and the Republic of Singapore, Opinion of 16 May 2017, Opinion 2/15, ECLI:EU:C:2017:376, paras 225–256.
- 61.
For additional details on this matter, see Sect. 5.4.
- 62.
This practice is reported and commented upon by Hoffmeister 2017, pp. 12–13.
- 63.
This is the case of Germany, Ireland, Portugal, the United Kingdom, the Netherlands, France and Spain. Their respective submissions can be found on the website of ITLOS at the following address: https://www.itlos.org/cases/list-of-cases/case-no-21/ (accessed on 16 April 2018).
- 64.
The matter is now governed by Regulation (EU) 2015/1843 of the European Parliament and of the Council of 6 October 2015 laying down Union procedures in the field of the common commercial policy in order to ensure the exercise of the Union’s rights under international trade rules, in particular those established under the auspices of the World Trade Organization.
- 65.
For an overview of the pre-Lisbon practice, see Rosas 2002, pp. 64–70.
- 66.
See Rosas 2017, pp. 23–24.
- 67.
See, for example, Article 10(1)(c).
- 68.
See supra, note 60.
- 69.
See, in particular, the considerations made by the ECJ in Opinion 2/15, supra note 60.
- 70.
See Heliskoski 2001, p. 68.
- 71.
For a critical appraisal of this practice, see Schütze 2010, pp. 82 et seq.
- 72.
See ECJ in Opinion 2/15, paras 282 and 304.
- 73.
See European Court of Justice, Federal Republic of Germany v Council of the European Union, Judgment of 5 December 2017, Case C-600/14, ECLI:EU:C:2017:935, para 68.
- 74.
See, in particular, Article 1128 NAFTA .
- 75.
For a comprehensive analysis of the NAFTA practice and case law, see Kinnear et al. 2006, pp. 1128-1–1128-5.
- 76.
See Kinnear et al. 2006, p. 1128-3.
- 77.
See Article 8.38(2) CETA.
- 78.
See UNCITRAL Tribunal, Ethyl Corp. (U.S.) v. Canada, Award on Jurisdiction, 24 June 1998, paras 35–48.
- 79.
See Hoffmeister 2017, p. 13.
- 80.
See Article 8.1 CETA.
- 81.
See Hoffmeister 2017, p. 15.
- 82.
European Court of Justice, Council of the European Union v European Commission, paras 84–88.
- 83.
See Hoffmeister 2017, p. 15.
- 84.
See Articles 3(2), 4(2), 7(4), 8(1) and (3), 9(7), 10(3), 11(2), and 19(3).
- 85.
The Committee for Investment Agreements referred to in Article 22 is in fact only composed of representatives of the Member States. The Council is technically not involved in its works.
- 86.
See Amerasinghe 2003, pp. 19–33.
- 87.
See the considerations made by Reinisch 2016, p. 765.
- 88.
A thorough account of this debate and of the main questions connected with the Tribunal’s hybrid nature is carried out by Caron 1990.
- 89.
This practice is mentioned by Reinisch 2016, p. 767.
- 90.
See Article 1(1)—UNCITRAL Secretariat Guide on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, p. 12.
- 91.
See Bagner 2010, p. 21.
- 92.
See Article 1(2)—UNCITRAL Secretariat Guide on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, pp. 28–29.
- 93.
See Reinisch 2016, pp. 767–768.
- 94.
- 95.
See Article 8.41(5) CETA.
- 96.
See the case law referred to in Article 1(1)—UNCITRAL Secretariat Guide on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, p. 12, footnote 36.
- 97.
See Caron 1990, p. 154.
- 98.
See, for example, Article 8.41(6) CETA, stating that where ICSID is chosen by the disputing parties as the applicable arbitration regime, “a final award issued pursuant to this section shall qualify as an award under Chapter IV, Section 6 of the ICSID Convention”.
- 99.
But see Titi 2017, pp. 24–25, according to whom it cannot be affirmed with certainty that the intention of the parties to EU investment agreements is to modify the ICSID Convention.
- 100.
- 101.
This is correctly pointed out by Reinisch 2016, p. 781.
- 102.
- 103.
See Gaja and Adinolfi 2008, p. 171.
- 104.
Whether this leads to the primacy of international agreements vis-à-vis EU secondary law is a different matter. See the thoughtful analysis of Delgado Casteleiro 2017, pp. 207–211.
- 105.
See, among others, European Court of Justice, Draft Agreement between the Community, on the one hand, and the countries of the European Free Trade Association, on the other, relating to the Creation of the European Economic Area, paras 37–40.
- 106.
See European Court of Justice, Fabbrica italiana accumulatori motocarri Montecchio SpA (FIAMM), Judgment of 9 September 2008, Joined Cases C-120/06 P and C-121/06 P, ECLI:EU:C:2008:476, para 128.
- 107.
See, for example, Article 30.6 CETA.
- 108.
See Article 4.11 of the EU-Singapore Investment Protection Agreement.
- 109.
This is also the opinion of Delgado Casteleiro 2017, pp. 201–202.
- 110.
See Hoffmeister 2010, pp. 735–736.
References
Allen B, Soave T (2014) Jurisdictional Overlap in WTO Dispute Settlement and Investment Arbitration. Arbitration International 30:1–58.
Amerasinghe CF (2003) Jurisdiction of International Tribunals. Kluwer Law International, The Hague.
Aust A (2010) Handbook of International Law. Cambridge University Press, Cambridge.
Bagner H (2010) ‘Article I’. In: Konke H, Nacimiento P, Port NC, Otto D (eds) Recognition and Enforcement of Foreign Arbitral Awards: A Global Commentary on the New York Convention. Kluwer Law International, Alphen aan den Rijn, pp. 19–38.
Barnard C (2016) The Substantive Law of the EU. Oxford University Press, Oxford.
Cannizzaro E (2012) The Neo-Monism of the European Legal Order. In: Cannizzaro E, Palchetti P, Wessel R (eds) International Law as the Law of the European Union. Martinus Nijhoff, Leiden, pp. 35–58.
Cannizzaro E (2013) Beyond the Either/Or: Dual Attribution to the European Union and to the Member State for Breach of the ECHR. In: Evans MD, Koutrakos P (eds) The International Responsibility of the European Union. Hart Publishing, Oxford/Portland, OR, pp. 295–312.
Caron D (1990) The Nature of the Iran-United States Claims Tribunal and the Evolving Structure of International Dispute Resolution. American Journal of International Law 84:104–156.
Crawford J (2002) The International Law Commission’s Articles on State Responsibility: Introduction, Text and Commentaries. Cambridge University Press, Cambridge.
d’Aspremont J (2014) A European Law of International Responsibility? The Articles on the Responsibility of International Organisations and the EU. In: Kosta V, Skoutaris N, Tzevelekos V (eds) The EU Accession to the ECHR. Hart Publishing, Oxford/Portland, OR, pp. 75–85.
Delgado Casteleiro A (2016) The International Responsibility of the European Union. From Competence to Normative Control. Cambridge University Press, Cambridge.
Delgado Casteleiro A (2017) The Effects of International Dispute Settlement Decisions in EU Law. In: Cremona C, Thies A, Wessel R (eds) The European Union and International Dispute Settlement. Hart Publishing, Oxford/Portland, OR, pp. 191–211.
Dimopoulos A (2014) The Involvement of the EU in Investor-State Dispute Settlement: A Question of Responsibilities. Common Market Law Review 51:1671–1720.
Engbrink D (2017) The European Union’s External Action: Coherence in European Union Foreign Policy Despite Separate Legal Orders? Legal Issues of Economic Integration 44:5–48.
Falkner G, Hartlapp M, Leiber S, Treib O (2004) Non-Compliance with EU Directives in the Member States: Opposition through the Backdoor? West European Politics 27:452–473.
Gaja G, Adinolfi A (2008) Introduzione al diritto comunitario. Edizioni Laterza, Rome/Bari.
Gutman K (2011) The Evolution of the Action of Damages against the European Union and its Place in the System of Judicial Protection. Common Market Law Review 48:695–750.
Heliskoski J (2001) Mixed Agreements as a Technique for Organizing the International Relations of the European Community and its Member States. Kluwer Law International, The Hague.
Hoffmeister F (2010) Litigating against the European Union and Its Member States. Who Responds under the ILC’s Draft Articles on International Responsibility of International Organizations? European Journal of International Law 21:723–747.
Hoffmeister F (2017) Of Presidents, High Representatives and European Commissioners – The External Representation of the European Union Seven Years After Lisbon Making Transnational Markets: The Institutional Politics behind the TTIP. Europe and the World 1:1–46.
Kinnear M, Bjorklund AK, Hannaford J (2006) Article 1128 - Participation by a Party. In: Kinnear M, Bjorklund AK, Hannaford J (eds) Investment Disputes under NAFTA: An Annotated Guide to NAFTA Chapter 11, Supplement No. 1. Kluwer Law International, Alphen aan den Rijn, pp. 1128-1–1128-5.
Kuijper PJ, Paasivirta E (2013) EU International Responsibility and its Attribution: From the Inside Looking Out. In: Evans M, Koutrakos P (eds) The International Responsibility of the European Union. Hart Publishing, Oxford/Portland, OR, pp. 35–71.
Lenk H (2016) Issues of Attribution: Responsibility of the EU in Investment Disputes under CETA. Transnational Dispute Management 13:1–23.
Nappert S (2015) Escaping from Freedom? The Dilemma of an Improved ISDS Mechanism. The 2015 EFILA Inaugural Lecture, available at https://efila.org/wp-content/uploads/2015/11/Annual_lecture_Sophie_Nappert_full_text.pdf.
Nollkaemper A (2012) Joint Responsibility between the EU and Member States for non-performance of obligations under multilateral environmental agreements. In: Morgera E (ed) The External Environmental Policy of the European Union: EU and International Law Perspectives. Cambridge University Press, Cambridge, pp. 304–346.
Palchetti P (2017) The Allocation of International Responsibility in the Context of Investor-State Dispute Settlement Mechanism Established by EU International Agreements. European Business Law Review 28:185–195.
Pantaleo L (2016) Lights and Shadows of the TTIP Investment Court System. In: Pantaleo L, Douma W, Takács T (eds) Tiptoeing to TTIP: What Kind of Agreement for What Kind of Partnership. CLEER Paper 1/2016, T.M.C. Asser Institute The Hague, pp 77–92.
Reinisch A (2016) Will the EU’s Proposal Concerning an Investment Court System for CETA and TTIP Lead to Enforceable Awards? - The Limits of Modifying the ICSID Convention and the Nature of Investment Arbitration. Journal of International Economic Law 19:761–786.
Rosas A (2002) The European Union and International Dispute Settlement. In: Boisson de Chazournes L, Romano C, Mackenzie R (eds) International Organizations and International Dispute Settlement. Transnational Publishers, Ardsley, pp. 49–71.
Rosas A (2017) The EU and International Dispute Settlement. Europe and the World: A Law Review, available at https://www.scienceopen.com/document_file/7935ce61-a969-48a4-9c1d-ec6c388121df/ScienceOpen/Article3.pdf.
Schütze R (2010) Federalism and Foreign Affairs: Mixity as a (Inter)National Phenomenon. In: Hillion C, Koutrakos P (eds) Mixed Agreements Revisited. Hart Publishing, Oxford/Portland, OR, pp. 57–86.
Titi C (2017) The European Union’s Proposal for an International Investment Court: Significance, Innovations and Challenges Ahead. Transnational Dispute Management 14:1–35.
Titje C, Sipiorski E, Töpfer G (2012) Responsibility in Investor-State Arbitration in the EU. Directorate General for External Policies of the Union.
Titje C, Wackernagel C (2015) Enforcement of Intra-EU ICSID Awards: Multilevel Governance, Investment Tribunals and the Lost Opportunity of the “Micula” Arbitration. The Journal of World Investment and Trade 16:205–247.
Van Vooren B, Wessel R (2014) EU External Relations Law: Text, Cases and Materials. Cambridge University Press, Cambridge.
Von Bogdandy A (2008) Pluralism, Direct Effect, and the Ultimate Say: On the Relationship between International and Domestic Constitutional Law. International Journal of Constitutional Law 3-4: 397–413.
Waibel M (2014) Investment Arbitration: Jurisdiction and Admissibility. Legal Studies Research Paper Series, Paper no. 9/2014, University of Cambridge, available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2391789.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
Copyright information
© 2019 T.M.C. Asser Press and the author
About this chapter
Cite this chapter
Pantaleo, L. (2019). Presenting the Internalisation Model of EU Investment Agreements and Related Issues. In: The Participation of the EU in International Dispute Settlement. T.M.C. Asser Press, The Hague. https://doi.org/10.1007/978-94-6265-270-5_5
Download citation
DOI: https://doi.org/10.1007/978-94-6265-270-5_5
Published:
Publisher Name: T.M.C. Asser Press, The Hague
Print ISBN: 978-94-6265-269-9
Online ISBN: 978-94-6265-270-5
eBook Packages: Law and CriminologyLaw and Criminology (R0)