Skip to main content
SpringerLink
Log in

Investor-State Dispute Settlement: Constitutional Challenges and Pitfalls

  • Chapter
  • First Online:
EU External Action in International Economic Law

Abstract

Policy and practice of EU foreign investment law is utterly divided. On the one hand, the Commission has long advocated against the validity of investment agreements between Member States. Siding with its arguments, the Court of Justice has recently confirmed that intra-EU investment agreements are liable to undermine the autonomy of EU law. On the other hand, in negotiations with Canada, Singapore and Vietnam, the Commission is not prepared to let go of investor-state dispute settlement provisions. Here, the Court of Justice confirmed that reform proposals by the Commission in form of the Investment Court System in fact address shortcomings of traditional investor-state arbitration clauses, and safeguards the conformity of these agreements with the EU Treaties. Discussing remaining challenges in light of recent case law of the Court of Justice, this chapter demonstrates that a differentiation between intra-EU and extra-EU relations is overly artificial. In particular, concerns of incompatibility of investor-state dispute settlement mechanisms with the principles of non-discrimination and the autonomy of the EU legal order transcend such a divide. Yet this is not reflected the Court’s reasoning, which leaves much to be desired.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 149.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 199.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 199.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    Article 207 Treaty on the Functioning of the European Union (hereinafter TFEU).

  2. 2.

    See, for instance, OJ L 357/2, 31.12.1994, Europe Agreement Establishing an Association Between the European Economic Communities and their Member States, of the One Part, and Romania, of the Other Part signed on 21.12.1993, Article 74(2).

  3. 3.

    Potestà 2009, 225–245, 298.

  4. 4.

    Cyprus, The Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia acceded in 2004, whilst Bulgaria and Romania joined the EU in 2007.

  5. 5.

    Söderlund 2007, 455–68.

  6. 6.

    Croatia has intra-EU BITs in force with Austria, the Belgium-Luxembourg Economic Union, Bulgaria, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Latvia, Lithuania, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom (data: UNCTAD, http://investmentpolicyhub.unctad.org).

  7. 7.

    E.g. Electrabel v. Hungary (ICSID Case No. ARB/07/19), AES v. Hungary (ICSID Case No. ARB/07/22), U.S. Steel Global Holdings I B.V. v. The Slovak Republic (PCA Case No. 2013-6), European American Investment Bank AG (EURAM) v. Slovak Republic (UNCITRAL, Award on Jurisdiction, Oct 22nd 2012), 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).

  8. 8.

    The EU institutions were not unaware of the problem, the Economic and Financial Committee concluded in 2006 that these intra-EU BITs, at least partially, overlap with the internal market and recommended a formal review of these agreements by Member States, ECFIN/CEFCPE(2006)REP/56882, Economic and Financial Committee, Annual EFC Report to the Commission and the Council on the Movement of Capital and the Freedom of Payments (2006), p. 7.

  9. 9.

    Commission Press Release, ‘Commission asks Member States to terminate their intra-EU bilateral investment treaties’, Brussels, 18 June 2015, http://europa.eu/rapid/press-release_IP-15-5198_en.htm, accessed on 30 March 2016.

  10. 10.

    For a comprehensive analysis of the Commission’s reasoning, see Dahlquist et al. 2016.

  11. 11.

    Case C-284/16, Slovak Republic v Achmea BV, ECLI:EU:C:2018:158.

  12. 12.

    Not least in response to the European Parliament’s demands, see Minutes of the Plenary, 8 July 2015, pt. 4.1.

  13. 13.

    Commission Press Release, ‘European Commission publishes TTIP legal texts as part of transparency initiative’, Brussels, 7 January 2015, http://trade.ec.europa.eu/doclib/press/index.cfm?id=1231, accessed on 30 March 2016.

  14. 14.

    For the purpose of this chapter ad hoc is meant to include institutionalized arbitration under ICSID.

  15. 15.

    Opinion 1/17, Comprehensive Economic and Trade Agreement (CETA), ECLI:EU:C:2019:341.

  16. 16.

    Hillion 2008, pp. 14–15; Wessel 2000, pp. 1135–71, 1150; Gauttier 2004, pp. 23–41, 26.

  17. 17.

    Intergovernmental Conference 2007 mandate, para 1, emphasis added; the mandate was concluded by the European Council of 21–22 June 2007 and a draft mandate was attached to the Presidency Conclusions of 20 July 2007 (Doc ST 11177/1/07 REV 1).

  18. 18.

    For a comprehensive overview, see Gaspers 2008, pp. 19–53.

  19. 19.

    Achmea B.V. (formerly Eureko) v. The Slovak Republic, UNCITRAL, (PCA Case No. 2008-13), Award on Jurisdiction, 20 May 2014, para 176.

  20. 20.

    Tridimas 2006, p. 119.

  21. 21.

    Ibid., 120.; see also Opinion of Advocate General Jacobs in Joined cases C-92 and 326/92, Phil Collins v Imtrat Handelsgesellschaft mbH and Patricia Im- und Export Verwaltungsgesellschaft mbH and Leif Emanuel Kraul v EMI Electrola GmbH, ECLI:EU:C:1993:276, para 13.

  22. 22.

    Notably, Article 18 TFEU covers legal entities with the corporate nationality of one of the Member States, see Case C-221/89, The Queen/Secretary of State for Transport, ex parte Factortame, ECLI:EU:C:1991:320.

  23. 23.

    Case C-374/04, Test Claimants in Class IV of the ACT Group Litigation, ECLI:EU:C:2006:77, paras 36–38.

  24. 24.

    Formell underrättelse – överträdelse nummer 2013/2207, skrivelse från Europeiska kommissionen, Generalsekretariatet till Sveriges ständiga representation vid Europeiska unionen, 18 June 2015 (on file with the author).

  25. 25.

    Case C-284/16, Achmea BV (n 11).

  26. 26.

    The author has elaborated on this point in more detail in Lenk forthcoming.

  27. 27.

    Case C-307/97, Compagnie de Saint-Gobain, Zweigniederlassung Deutschland v Finanzamt Aachen-Innenstadt, ECLI:EU:C:1999:438, para 64; Case C-55/00, Elide Gottardo v Istituto nazionale della previdenza sociale, ECLI:EU:C:2002:16, para 39; Case C-235/87 Annunziata Matteucci v Communauté française of Belgium and Commissariat général aux relations internationales of the Communauté française of Belgium, ECLI:EU:C:1988:460, para 17; Case C-471/98 Commission v. Belgium, ECLI:EU:C:2002:628, paras 137–142.

  28. 28.

    See to that effect Dimopoulos 2011, pp. 63–93; Wehland 2009, pp. 297–320; see also the conclusions of the CJEU in Case C-284/16, Achmea (n 11), para 42; note also that Advocate General Wathelet argued that the substantive scope of BITs extends in this respect beyond the limited protection under the Treaties, see in particular Opinion of Advocate General Wathelet, Case C-284/16, Slovak Republic v Achmea, ECLI:EU:C:2017:699, paras 183–98 and 213–16.

  29. 29.

    The CJEU in Kadi (Joined cases C-402 and 415/05 P, Yassin Abdullah Kadi and Al Barakaat International Foundation v Council of the European Union and Commission of the European Communities, ECLI:EU:C:2008:461, paras 354 and 355), and before that in Bosphorus (Case C-84/95, Bosphorus Hava Yollari Turizm ve Ticaret AS v Minister for Transport, Energy and Communications and others, ECLI:EU:C:1996:312, paras 19 and 20), acknowledged the recognition of a right to respect for property in EU law, which also finds expression in Article 17 of the Charter of Fundamental Rights of the European Union (OJ 2010 C83/02); see also Dimopoulos 2011, pp. 65–66.

  30. 30.

    Case C-43/95, Data Delecta Aktiebolag and Ronny Forsberg v MSL Dynamics Ltd, ECLI:EU:C:1996:357.

  31. 31.

    Ibid., para 13.

  32. 32.

    Tridimas concludes that “[A]ny rule of national law, whether substantive or procedural, which bears even an indirect effect on trade in goods and services between Member States falls within the Scope of [EU] law for the purposes of the application of [Article 18 TFEU].”

    Tridimas 2006, p. 130; for a detailed analysis of the benefits extended under intra-EU BITs in relation to the Treaty see Dahlquist et al. 2016.

  33. 33.

    C (2017) 7384 final, 10 November 2017, State aid SA.40348 (2015/NN) — Spanish Support for electricity generation from renewable energy sources, cogeneration and waste, para 169.

  34. 34.

    Tietje and Wackernagel 2015, pp. 205–47.

  35. 35.

    Cases T‑624/15, T‑694/15 and T‑704/15, Micula and others v European Commission, ECLI:EU:T:2019:423, para 103.

  36. 36.

    Case C-376/03, D v Inspecteur van de Belastingdienst, ECLI:EU:C:2005:424, para 63; Case C-374/04, ACT Group Litigation (n 23), para 94.

  37. 37.

    Ibid., paras 61–62.

  38. 38.

    Dimopoulos 2011, pp. 81–82; Wehland 2009, pp. 315–317.

  39. 39.

    The CJEU has, on occasion, defined the obligations stemming from Article 18 TFEU to mean that “persons in a situation governed by [EU] law and nationals of the Member State concerned to be treated absolutely equally”, See Case C-323/95 David Charles Hayes and Jeannette Karen Hayes v Kronenberger GmbH, ECLI:EU:C:1997:169, para 18, emphasis added.

  40. 40.

    Opinion of Advocate General Wathelet, Achmea (n 28), paras 66–75.

  41. 41.

    Case C-284/16, Achmea (n 11), para 61.

  42. 42.

    Case C-336/96 Gilly v. Directeur des services fiscaux du Bas-Rhin, ECLI:EU:C:1998:221, para 24; Case C-374/04, ACT Group Litigation (n 23), para 81; Case C-307/97, Saint-Gobain (n 27), para 57; Case C-376/03, D (n 36), para 52; Case C-265/04, Margaretha Bouanich v Skatteverket, ECLI:EU:C:2006:51, para 49.

  43. 43.

    Case C-336/96, Gilly (Ibid.), para 30.

  44. 44.

    Case C-540/11, Daniel Levy and Carine Sebbag v. Belgian State, EU:C:2012:581; see also De Broe 2012, pp. 180–82.

  45. 45.

    Case C‑298/05, Columbus Container Services BVBA & Co. v Finanzamt Bielefeld-Innenstadt, ECLI:EU:C:2007:754, paras 46–47.

  46. 46.

    Case C-374/04, ACT Group Litigation (n 23), para 36; Case C-265/04, Bouanich (n 42), para 50; Case C-307/97, Saint-Gobain (n 27), para 57.

  47. 47.

    Tridimas 2006, p. 123; Schermers and Waelbroeck 1992, p. 121.

  48. 48.

    Case C-43/95, Data Delecta and Forsberg (n 30), para 13.

  49. 49.

    Joined cases C-22/08 and C-23/08, Athanasios Vatsouras and Josif Koupatantze v Arbeitsgemeinschaft (ARGE) Nürnberg 900, ECLI:EU:C:2009:344, para 52.

  50. 50.

    Burgstaller 2006, pp. 857–81; Dimopoulos 2011, p. 83.

  51. 51.

    Case C-221/89, Factortame (n 22), paras 29–33.

  52. 52.

    Ibid., at para 35, the CJEU concluded that “[a provision of domestic law] would not be compatible with [the right of establishment] if it had to be interpreted as precluding registration [of fishing vessels] in the event that a secondary establishment or the centre for directing the operations of the vessel in the Member State in which the vessel was to be registered acted on instructions from a decision-taking centre located in the Member State of the principal establishment” [emphasis added]; Case C-307/97, Saint-Gobain (n 27), para 47.

  53. 53.

    For a contrary opinion, see e.g. Wehland 2009; and Söderlund 2007.

  54. 54.

    Case C-186/87, William Cowan v Le Trésor public, ECLI:EU:C:1989:47, para 17.

  55. 55.

    E.g. Case 245/81, Edeka Zentrale AG v Federal Republic of Germany, ECLI:EU:C:1982:277, para 19.

  56. 56.

    Case C-122/95, Federal Republic of Germany v Council of the European Union, ECLI:EU:C:1998:94, para 56.

  57. 57.

    Schermers and Waelbroeck 2001, para 165.

  58. 58.

    Opinion 1/17, CETA (n 15), ECLI:EU:C:2019:341, para 168–69; Opinion of Advocate General Bot, Opinion 1/17, Comprehensive Economic and Trade Agreement, ECLI:EU:C:2019:72, para 197.

  59. 59.

    Opinion 1/17, CETA (n 15), para 174.

  60. 60.

    Ibid., para 172.

  61. 61.

    Advocate General Bot, CETA (n 58), para 204-06.

  62. 62.

    Opinion 1/17, CETA (n 15), para 180.

  63. 63.

    Advocate General Bot, CETA (n 58), para 203.

  64. 64.

    Opinion 1/17, CETA (n 15), para 181.

  65. 65.

    Arguably, this is changing significantly in light of the new generation of trade agreements with a focus on trade facilitation, regulatory cooperation and other behind-the-border aspects of trade.

  66. 66.

    E.g. Case C-101/12 Herbert Schaible v Land Baden-Württemberg, EU:C:2013:661, para 76, notes that the CJEU in this judgement invokes case law on Article 18 TFEU to develop its understanding of the principle of equality before the law.

  67. 67.

    Opinion 1/17, CETA (n 15), para 182–83.

  68. 68.

    Opinion 1/91, Draft agreement between the Community, on the one hand, and the countries of the European Free Trade Association, ECLI:EU:C:1991:490.

  69. 69.

    Opinion 1/09, European Patents Court, ECLI:EU:C:2011:123.

  70. 70.

    Opinion 2/13, Accession of the European Union to the European Convention for the Protection of Human Rights and Fundamental Freedoms, ECLI:EU:C:2014:2454.

  71. 71.

    Hindelang 2015, pp. 68–89, 72–73.

  72. 72.

    Opinion 1/91, EEA Agreement (n 68), para 45; Opinion 1/00, European Common Aviation Area, ECLI:EU:C:2002:231, paras 11, 13.

  73. 73.

    Opinion 2/13, ECHR (n 70); Opinion 1/00, ECAA (n 72), paras 12, 16, 21.

  74. 74.

    Hindelang 2015, p. 78.

  75. 75.

    Opinion 1/09, European Patents Court (n 69), para 80.

  76. 76.

    Case C-284/16, Achmea (n 11), paras 43–47.

  77. 77.

    Observations of the European Commission in European American Investment Bank AG (EURAM) v. Slovak Republic, UNCITRAL (PCA Case No 2010-17), 13.10.2011, p. 5.

  78. 78.

    Formell underrättelse – överträdelse nummer 2013/2207, skrivelse från Europeiska kommissionen, Generalsekretariatet till Sveriges ständiga representation vid Europeiska unionen, 18 June 2015 (on file with the author).

  79. 79.

    Case C-284/16, Achmea (n 11), paras 58–59.

  80. 80.

    Case C-99/00, Criminal proceedings against Kenny Roland Lyckeskog, EU:C:2002:329, para 14.

  81. 81.

    Opinion 1/09, European Patents Court (n 69), para 83.

  82. 82.

    Hidelang 2013, pp. 187–198, 193–194; Herrmann 2014, pp. 570–84, 582.

  83. 83.

    Case C-284/16, Achmea (n 11), paras 40–42.

  84. 84.

    Hindelang 2015, p. 81.

  85. 85.

    Opinion 1/91, EEA Agreement (n 68), paras 31–36; Opinion 2/13, ECHR (n 70), paras 221–225.

  86. 86.

    OJ L 351/40, Regulation 1219/2012 establishing transitional arrangements for bilateral investment agreements between Member States and third countries.

  87. 87.

    Schill 2015, pp. 379–88.

  88. 88.

    In response to the public consultation on the inclusion of investment protection into TTIP, Prof. Harm Schepel drafted a letter laying out many of the concerns associated with the establishment of a parallel system of investment protection and ISDS. The letter was signed by over 120 scholars and is accessible at https://www.kent.ac.uk/law/isds_treaty_consultation.html. It is notable, however, that the most significant changes have not been adopted until after the European Parliament exerted pressure to strive for a more court-like judicial system in TTIP, see European Parliament resolution of 8 July 2015 containing the European Parliament’s recommendations to the European Commission on the negotiations for the Transatlantic Trade and Investment Partnership (2014/2228(INI), pt. 2.xv.

  89. 89.

    OJ L 11/23, 14 January 2017, Comprehensive Economic and Trade Agreement between Canada, of the one part, and the European Union and its Member States, of the other part (CETA) [hereinafter CETA], Chapter Eight.

  90. 90.

    EU-Singapore Investment Protection Agreement, accessible at http://trade.ec.europa.eu/doclib/press/index.cfm?id=961 [hereinafter EU-Singapore IPA].

  91. 91.

    EU-Vietnam Investment Protection Agreement, accessible at http://trade.ec.europa.eu/doclib/press/index.cfm?id=1437 [hereinafter EU-Vietnam IPA].

  92. 92.

    EU-Mexico FTA, Agreement in principle accessible at http://trade.ec.europa.eu/doclib/press/index.cfm?id=1833 [hereinafter EU-Mexico FTA].

  93. 93.

    Commission Staff Working Document, 'Report on Online public consultation on investment protection and investor-to-state dispute settlement (ISDS) in the Transatlantic Trade and Investment Partnership Agreement' (SWD(2015) 3 final), in particular part 3.1.

  94. 94.

    European Parliament resolution of 8 July 2015 containing the European Parliament’s recommendations to the European Commission on the negotiations for the Transatlantic Trade and Investment Partnership (2014/2228(INI), part 2.xv.

  95. 95.

    Commission Press Release, 'Commission proposes new Investment Court System for TTIP and other EU trade and investment negotiations', Brussels, 16 September 2015, http://trade.ec.europa.eu/doclib/press/index.cfm?id=1364, accessed on 30 March 2016; for a discussion of the proposal see Titi 2015, p. 1.

  96. 96.

    Commission Press Release, 'EU finalises proposal for investment protection and Court System for TTIP', Brussels, 12 November 2015, http://trade.ec.europa.eu/doclib/press/index.cfm?id=1396&title=EU-finalises-proposal-for-investment-protection-and-Court-System-for-TTIP, accessed on 30 March 2016.

  97. 97.

    Article 8.27(2) CETA; Articles 3.9(2) and 3.10(2) of the EU-Singapore IPA; Articles 3.38(2) and 3.39(2) of the EU-Vietnam IPA; Articles 11(2) and 12(2) EU-Mexico FTA (Investment Dispute Settlement).

  98. 98.

    Article 8.27(7) CETA; Articles 3.9(8) and 3.10(8) of the EU-Singapore IPA; Articles 3.38(7) and 3.39(8) of the EU-Vietnam IPA; Articles 11(8) and 12(9) EU-Mexico FTA (Investment Dispute Settlement).

  99. 99.

    Article 8.30(1) CETA; Article 3.11(1) of the EU-Singapore IPA; Article 3.40(1) of the EU-Vietnam IPA; Article 13(1) EU-Mexico FTA (Investment Dispute Settlement).

  100. 100.

    Article 8.27(12) CETA; Articles 3.9(12) and 3.10(11) of the EU-Singapore IPA; Articles 3.38(14) and 3.39(14) of the EU-Vietnam IPA; Articles 11(12) and 12(12) EU-Mexico FTA (Investment Dispute Settlement).

  101. 101.

    Articles 8.28(2)(a) and (b) CETA; Articles 3.19(1)(a) and (b) of the EU-Singapore IPA; Articles 3.54(1)(a) and (b) of the EU-Vietnam IPA; Articles 30(1)(a) and (b) EU-Mexico FTA (Investment Dispute Settlement).

  102. 102.

    Articles 8.36(1) and (4) CETA; Articles 3.46(1), (2) and (4) EU-Vietnam IPA; Article 19(10) EU-Mexico FTA (Investment Dispute Settlement); notably the EU-Singapore makes no reference to the UNCITRAL Mauritius Convention although the UNCITRAL Secretariat is to act as repository for all documents, see Article 5 of Annex 8 to the EU-Singapore IPA.

  103. 103.

    Titi 2015, p. 16.

  104. 104.

    Malmström 2010.

  105. 105.

    Footnote 7 to Article 3.13(2) of the EU-Singapore IPA: “For greater certainty, the domestic law of the Parties shall not be part of the applicable law. Where the Tribunal is required to ascertain the meaning of a provision of the domestic law of one of the Parties as a matter of fact […].”; Article 3.42(2) of the EU-Vietnam IPA; Article 15(3) EU-Mexico FTA (Investment Dispute Resolution).

  106. 106.

    Footnote 10 to Article 8.32(1) of the Canada-Colombia FTA reads: “In accordance with international law, and where relevant and as appropriate, a Tribunal may take into consideration the law of the disputing Party. However, a Tribunal does not have jurisdiction to determine the legality of a measure, alleged to be in breach of this Agreement, under the domestic law of the disputing Party.”.

  107. 107.

    Certain German Interests in Polish Upper Silesia, (Judgment on Merits), 25 May 1926, PCIJ Series A, n°6, p. 20.

  108. 108.

    Opinion 1/17, CETA (n 15), para 122 (regarding the Tribunal) and 133 (regarding Appellate Tribunal).

  109. 109.

    Herrmann 2014.

  110. 110.

    Jenks 1938, pp. 67–103, 68.

  111. 111.

    Ibid., 87–88.

  112. 112.

    This has sometimes been referred to as ‘factual spillover effects’, see Hindelang 2015, pp. 74–76; see for an opinion that these effects might be exaggerated, Herrmann 2014, p. 582.

  113. 113.

    Article 5(2) Treaty on European Union.

  114. 114.

    Case C–246/07, European Commission v Kingdom of Sweden (PFOS), ECLI:EU:C:2010:203, para 71; on the subject dependency of international representation of the EU in international fora, see also Amtenbrink et al., 2015, p. 40.

  115. 115.

    Billiet 2005, pp. 197–214, 199.

  116. 116.

    Article 3(1)(e) TFEU.

  117. 117.

    Delgado Casteleiro 2012, pp. 491–510, 494.

  118. 118.

    UN Convention on the Law of the Sea (adopted 10 December 1982) annex IX, art 6(1).

  119. 119.

    Delgado Casteleiro 2012, p. 498; Paasivirta and Kuijper 2005, p. 176.

  120. 120.

    “No declaration of competence under any treaty regime has thus far been renewed by the EU”, see Heliskoski 2013, pp. 189–212, 206.

  121. 121.

    Kuijper and Paasivirta 2013, pp. 35–71, 57.

  122. 122.

    Ibid., 43.

  123. 123.

    ‘Statement Submitted by the European Communities to the Secretariat of the Energy Charter Treaty Pursuant to Article 26(3)(b)(ii) of the Energy Charter Treaty’ [1998] OJ L69, 115 (footnotes omitted):

    The Communities and the Member States will, if necessary, determine among them who is the respondent party to arbitration proceedings initiated by an Investor of another Contracting Party. In such case, upon the request of the Investor, the Communities and the Member States concerned will make such determination within a period of 30 days.

  124. 124.

    Article 8.21 CETA.

  125. 125.

    Article 3.5(2) of the EU-Singapore IPA.

  126. 126.

    Article 3.32(2) of the EU-Vietnam IPA.

  127. 127.

    Tietje and Wackernagel 2015, p. 239.

  128. 128.

    Article 8.21 CETA after amendments from 29 February 2016, http://trade.ec.europa.eu/doclib/docs/2016/february/tradoc_154329.pdf (emphasis added).

  129. 129.

    Lenk 2016, pp. 1–23; Lenk 2015.

  130. 130.

    In accordance with Article 263(1) and (2) TFEU.

  131. 131.

    Article 8.21(7) CETA, “The Tribunal shall be bound by the determination made pursuant to paragraph 3 and, if no such determination has been communicated to the investor, the application of paragraph 4.”.

  132. 132.

    Article 8.21(6) CETA, “If either the European Union or a Member State is the respondent, pursuant to paragraph 3 or 4, neither the European Union, nor the Member State of the European Union may assert the inadmissibility of the claim, lack of jurisdiction of the Tribunal or otherwise object to the claim or award on the ground that the respondent was not properly determined pursuant to paragraph 3 or identified on the basis of the application of paragraph 4.”.

  133. 133.

    Opinion 1/17, CETA (n 15), para 132.

  134. 134.

    Semertzi 2014; the limitation of private rights can be explicitly incorporated into the agreement or declared by way of a decision of the Council, for an example of the latter see OJ L 127/1, 14 May 2011, Council Decision 2011/265/EU of 16 September 2010 on the signing, on behalf of the European Union, and provisional application of the Free Trade Agreement between the European Union and its Member States, of the one part, and the Republic of Korea, of the other part, Article 8, “The Agreement shall not be construed as conferring rights or imposing obligations which can be directly invoked before Union or Member State courts and tribunals”, 3.

  135. 135.

    Semertzi 2014, p. 1132.

  136. 136.

    Sattorova 2012, p. 223; Hindelang 2016, pp. 60–65.

  137. 137.

    Opinion 1/17, CETA (n 15), para 134.

  138. 138.

    See to that effect Ibid., para 198.

  139. 139.

    Tietje and Wackernagel 2015, pp. 221–223; Hindelang 2015, pp. 74–75.

  140. 140.

    Case C-126/97, Eco Swiss China Time Ltd v Benetton International NV, ECLI:EU:C:1999:269, para 35, emphasis added; for a discussion of the case, see for an EU law perspective Komninos 2000, p. 459; and an international law perspective Von Mehren 2003, pp. 465–70.

  141. 141.

    Tietje and Wackernagel 2015, p. 225.

  142. 142.

    This is only the case in so far as awards are rendered against Member States in either inter se relations or in disputes with third countries. The EU is not currently a Member of ICSID, awards against the EU are currently enforceable under the New York Convention, see Hindelang 2015, particularly footnote 32.

  143. 143.

    Case C-284/16, Achema (11), para 56.

  144. 144.

    Bundesgerichtshof, Beschluss vom 31.10.2018 (I ZB 2/15).

  145. 145.

    Article 2.2(3) EU-Singapore IPA.

  146. 146.

    Note that the EU-Vietnam IPA merely excludes the application of National Treatment and Most-Favoured Nation subsidies, including state aid as defined by EU law (Article 2.1(3)).

  147. 147.

    Opinion 1/17, CETA (n 15), paras 185–87.

  148. 148.

    Ibid., para 187.

  149. 149.

    Opinion 1/09, European Patents Court (n 69), para 80.

  150. 150.

    Opinion 2/13, ECHR (n 70), para 237.

  151. 151.

    Ibid., paras 245–247.

  152. 152.

    Advocate General Wathelet, Case C-284/16, Achmea (n 58), paras 84–131.

  153. 153.

    Opinion 1/17, CETA (n 15), para 49.

  154. 154.

    Case C-54/96, Dorsch Consult Ingenieurgesellschaft mbH v Bundesbaugesellschaft Berlin mbH, ECLI:EU:C:1997:413, para 23.

  155. 155.

    Case 102/81, Nordsee Deutsche Hochseefischerei GmbH v Reederei Mond Hochseefischerei Nordstern AG & Co. KG and Reederei Friedrich Busse Hochseefischerei Nordstern AG & Co. KG., ECLI:EU:C:1982:107.

  156. 156.

    Ibid., para 13.

  157. 157.

    Ibid., para 12.

  158. 158.

    Case C‑377/13, Ascendi Beiras Litoral e Alta, Auto Estradas das Beiras Litoral e Alta SA v Autoridade Tributária e Aduaneira, ECLI:EU:C:2014:1754.

  159. 159.

    Ibid., para 29.

  160. 160.

    Basedow 2015, pp. 367–86, 379–380.

  161. 161.

    Ibid., pp. 378–381; Gaffney 2013, pp. 1–14, pp. 8 et seq.; Von Papp 2013, pp. 1039–81, 1066–1074.

  162. 162.

    Opinion of Advocate General Wathelet, Case C‑567/14 Genentech Inc. v Hoechst GmbH, formerly Hoechst AG, Sanofi-Aventis Deutschland GmbH, ECLI:EU:C:2016:177, footnote 34.

  163. 163.

    Investment tribunals have been resisting to engage with CJEU on questions of interpretation of EU law, dismissing the relevance of EU law for the proceedings at hand. In Oostergetel and Laurentius v. Slovak Republic (UNCITRAL, Decision on Jurisdiction, 30 April 2010) for instance, the tribunal acknowledged that there is “absence of any conclusive position of the [CJEU]” on the relevant issues of EU law, but subsequently rejected the respondent’s request to refer a question to the CJEU with the help of a domestic court (para 109). The investment tribunal in Micula (ICSID Case No. ARB/05/20, Final Award) refused to entertain concerns raised by the Commission to the effect that the award, if rendered, were unenforceable under EU state aid law, thus rejecting the relevance of resulting normative conflict for the arbitration process (para 340).

  164. 164.

    This obligation is subject to the subject to the criteria set out by the CJEU in Case 283/81, Srl CILFIT and Lanificio di Gavardo SpA v Ministry of Health, ECLI:EU:C:1982:335.

  165. 165.

    Case C-99/00, Lyckeskog (n 80), paras 16–17.

  166. 166.

    Ibid.

  167. 167.

    Ibid., para 14.

  168. 168.

    Balaš 2008, pp. 1145–1146.

  169. 169.

    Article 52(1) ICSID reads: “(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: (a) that the Tribunal was not properly constituted; (b) that the Tribunal has manifestly exceeded its powers; (c) that there was corruption on the part of a member of the Tribunal; (d) that there has been a serious departure from a fundamental rule of procedure; or (e) that the award has failed to state the reasons on which it is based.”.

  170. 170.

    Not least because investment awards that have been set aside under domestic law do not escape recognition and enforcement under Article V(1) of the New York Convention, see Paulsson 1998, p. 1, 6–7; for a comprehensive discussion see Wahl 1999, pp. 131–40.

  171. 171.

    Tietje and Wackernagel 2015, p. 225.

  172. 172.

    Opinion 1/91, EEA Agreement (n 68), paras 59 and 61–64; compare the statements of the CJEU acknowledging jurisdiction under international agreements, but outright rejecting any potential adverse effect on the nature of Article 267 TFEU.

  173. 173.

    Eeckhout 2015, p. 955.

  174. 174.

    Hindelang 2015, p. 68.

  175. 175.

    Declaration of the representatives of the governments of the Member States on the legal consequences of the judgment of the Court of Justice in Achmea and on investment protection in the European Union, 15 January 2019 https://ec.europa.eu/info/sites/info/files/business_economy_euro/banking_and_finance/documents/190117-bilateral-investment-treaties_en.pdf; Declaration of the representatives of the governments of the Member States on the enforcement of the judgement of the Court of Justice in Achmea and on investment protection in the European Union, 16 January 2019 https://www.regeringen.se/48ee19/contentassets/d759689c0c804a9ea7af6b2de7320128/achmea-declaration.pdf; Declaration of the representatives of the government of Hungary on the legal consequences of the judgement of the Court of Justice in Achmea and on investment protection in the European Union, 16 January 2019 http://www.kormany.hu/download/5/1b/81000/Hungarys%20Declaration%20on%20Achmea.pdf.

References

  • Amtenbrink F, Blokker N, Van Den Bogaert S, Cuyvers A, Heine K, Hillion C, Kantorowicz J, Lenk H, Repasi R (2015) The European Union’s role in international economic fora: The G20 (European Parliament, Directorate General for Internal Policies, Study for the ECON Committee).

    Google Scholar 

  • Balaš V (2008) Review of awards. In: Muchlinski P, Ortino F, Schreuer C (eds) The Oxford Handbook of International Investment Law. Oxford University Press, Oxford, pp 1125–1153.

    Google Scholar 

  • Basedow J (2015) EU law in international arbitration: Referrals to the European Court of Justice. Journal of International Arbitration 32:367–386.

    Google Scholar 

  • Billiet S (2005) The EC and WTO dispute settlement: The initiation of trade disputes by the EC. European Foreign Affairs Review 10:197–214.

    Google Scholar 

  • Burgstaller M (2006) Nationality of corporate investors and international claims against the investor’s own state. The Journal of World Investment & Trade 7:857–881.

    Article  Google Scholar 

  • Casteleiro A D (2012) EU declarations of competence to multilateral agreements: A useful reference base? European Foreign Affairs Review 17:491–510.

    Google Scholar 

  • Dahlquist J, Lenk H, Rönnelid L (2016) The infringement proceedings over intra-EU investment treaties – an analysis of the case against Sweden. SIEPS, 2016:4epa

    Google Scholar 

  • Delgado Casteleiro A (2012) EU declarations of competence to multilateral agreements: A useful reference base? European Foreign Affairs Review 17(4):491–510.

    Google Scholar 

  • De Broe L (2012) Relief of double taxation of cross-border dividends within the Union and the principle of loyal cooperation. EC Tax Review 21:180–182.

    Google Scholar 

  • Dimopoulos A (2011) The validity and applicatbility of international investment agreements between EU member states under EU and international law. Common Market Law Review 48:63–93.

    Google Scholar 

  • Eeckhout P (2015) Opinion 2/13 on EU accession to the ECHR and judicial dialogue: Autonomy or autarky? Fordham International Law Journal 38:955–992.

    Google Scholar 

  • Gaffney J (2013) Should investment treaty tribunals be permitted to request preliminary rulings from the Court of Justice of the European Union? Transnational Dispute Management 10:1–16.

    Google Scholar 

  • Gaspers J (2008) The quest for European foreign policy consistency and the Treaty of Lisbon. Humanitas Journal of European Studies 19–53.

    Google Scholar 

  • Gauttier P (2004) Horizontal coherence and the external competences of the European Union. European Law Journal 10:23–41.

    Article  Google Scholar 

  • Heliskoski J (2013) EU declarations of competence and international responsibility. In: Evans M D, Koutrakos P (eds) The international responsibility of the European Union: European and international perspectives. HART Publishing, Oxford, pp 213–233.

    Google Scholar 

  • Herrmann C (2014) The role of the Court of Justice of the European Union in the emerging EU investment policy. The Journal of World Investment & Trade 15:570–584.

    Article  Google Scholar 

  • Hillion C (2008) Tous pour un, un pour tous! Coherence in the external relations of the European Union. In: Cremona M (ed) Developments in EU external relations law. Oxford University Press, Oxford, pp 10–36.

    Chapter  Google Scholar 

  • Hindelang S (2013) The autonomy of the European legal order. In: Bungenberg M, Herrmann C (eds) Common commercial policy after Lisbon: Special issue. Springer Verlag, Heidelberg, pp 187–198.

    Chapter  Google Scholar 

  • Hindelang S (2015) Repellent forces: The CJEU and investor-state dispute settlement. Archiv des Völkerrechts 53:68–89.

    Article  Google Scholar 

  • Hindelang S (2016) Study on investor-state dispute settlement (ISDS) and alternatives to dispute resolution in international investment law. Transnational Dispute Management 13:1–93.

    Google Scholar 

  • Jenks C W (1938) The interpretation and application of municipal law by the Permanent Court of International Justice. British Yearbook of International Law 19:67–103.

    Google Scholar 

  • Komninos A P (2000) Case C-126/97, Eco Swiss China Time Ltd. v. Benetton International NV, judgment of 1 June 1999, full court. Common Market Law Review 37:459–478.

    Article  Google Scholar 

  • Kuijper P J, Paasivirta E (2013) EU international responsibility and its attribution: From the inside looking out. In: Evans M D, Koutrakos P (eds) The international responsibility of the European Union: European and international perspectives. HART Publishing, Oxford, pp 49–86.

    Google Scholar 

  • Lenk H (2015) Investor-state arbitration under TTIP: Resolving investment disputes in an (autonomous) EU legal order (SIEPS Report (2015:3)).

    Google Scholar 

  • Lenk H (2016) Issues of attribution: Responsibility of the EU in investment disputes under CETA. Transnational Dispute Management 13:1–23.

    Google Scholar 

  • Lenk H (forthcoming) Constitutional constraints on intra-EU BITs in the Union legal order. In: Schill S W, Tams C J, Hofmann R (eds) International investment law and constitutional law.

    Google Scholar 

  • Malmström C (2010) Investment in TTIP and beyond – the path for reform, Concept Paper. Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions. Towards a Comprehensive European International Investment Policy (COM(2010)343 final).

    Google Scholar 

  • Paasivirta E, Kuijper P J (2005) Does one size fit all?: The European Community and the responsibility of international organizations. Netherlands Yearbook of International Law 36:169–226.

    Article  Google Scholar 

  • Paulsson J (1998) Enforcing arbitral awards notwithstanding local standard annulments. Asia Pacific Law Review 6.II:1–28.

    Google Scholar 

  • Potestà M (2009) Bilateral investment treaties and the European Union. Recent developments in arbitration and before the ECJ. The Law & Practice of International Courts and Tribunals 8:225–245.

    Article  Google Scholar 

  • Sattorova M (2012) Return to the local remedies rule in European BITs? Power (inequalities), dispute settlement, and change in investment treaty law. Legal Issues of Economic Integration 39:223–247.

    Google Scholar 

  • Schermers H G, Waelbroeck D (1992) Judicial protection in the European Communities, 5th edn. Kluwer, Deventer.

    Google Scholar 

  • Schermers H G, Waelbroeck D (2001) Judicial protection in the European Union, 6th edn. Kluwer, The Hague.

    Google Scholar 

  • Schill S W (2015) Editorial: Opinion 2/13 – the end for dispute settlement in EU trade and investment agreements? The Journal of World Investment & Trade 16:379–388.

    Article  Google Scholar 

  • Semertzi A (2014) The preclusion of direct effect in the recently concluded EU free trade agreements. Common Market Law Review 51:1125–1158.

    Google Scholar 

  • Söderlund C (2007) Intra-EUBIT investment protection and the EC Treaty. Journal of International Arbitration 24(5):455–468.

    Google Scholar 

  • Tietje C, Wackernagel C (2015) Enforcement of intra-EU ICSID awards. The Journal of World Investment & Trade 16:205–247.

    Article  Google Scholar 

  • Titi C (2015) The European Commission’s approach to the Transatlantic Trade and Investment Partnership (TTIP): Investment standards and international investment court system - an overview of the European Commission’s draft TTIP text of 16 September 2015. Transnational Dispute Management 12:1–34.

    Google Scholar 

  • Tridimas T (2006) The general principles of EU law, 2nd edn. Oxford University Press, Oxford.

    Google Scholar 

  • Von Mehren R B (2003) The Eco-Swiss case and International Arbitration. Arbitration International 19:465–469.

    Article  Google Scholar 

  • Von Papp K (2013) Clash of ‘autonomous legal orders’: Can EU member state courts bridge the jurisdictional divide between investment tribunals and the ECJ? A plea for direct referral from investment tribunals to the ECJ. Common Market Law Review 50:1039–1081.

    Google Scholar 

  • Wahl P (1999) Enforcement of foreign arbitral awards set aside in their country of origin: The Chromalloy case revisited. Journal of International Arbitration 16.III:131–140.

    Google Scholar 

  • Wehland H (2009) Intra-EU investment agreements and arbitration: Is European Community law an obstacle? International and Comparative Law Quarterly 58:297–320.

    Article  Google Scholar 

  • Wessel R A (2000) The inside looking out: Consistency and delimitation in EU external relations. Common Market Law Review 37:1135–1171.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Aarhus University, Aarhus, Denmark

    Hannes Lenk

Authors
  1. Hannes Lenk
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Hannes Lenk .

Editor information

Editors and Affiliations

  1. Faculty of Law, University of Oslo, Oslo, Norway

    Mads Andenas

  2. Department of Political and Social Sciences, University of Cagliari, Cagliari, Italy

    Luca Pantaleo

  3. Université du Luxembourg, Luxembourg, Luxembourg

    Matthew Happold

  4. Hague University of Applied Sciences, The Hague, The Netherlands

    Cristina Contartese

Rights and permissions

Reprints and permissions

Copyright information

© 2020 T.M.C. Asser Press and the authors

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Lenk, H. (2020). Investor-State Dispute Settlement: Constitutional Challenges and Pitfalls. In: Andenas, M., Pantaleo, L., Happold, M., Contartese, C. (eds) EU External Action in International Economic Law. T.M.C. Asser Press, The Hague. https://doi.org/10.1007/978-94-6265-391-7_6

Download citation

  • DOI: https://doi.org/10.1007/978-94-6265-391-7_6

  • Published:

  • Publisher Name: T.M.C. Asser Press, The Hague

  • Print ISBN: 978-94-6265-390-0

  • Online ISBN: 978-94-6265-391-7

  • eBook Packages: Law and CriminologyLaw and Criminology (R0)

Publish with us

Policies and ethics

Search

Navigation