On 6 July 2017 the EU and Japan announced an agreement in principle on their Economic Partnership Agreement (“EPA“). The scale of this agreement is eye-popping: once in effect the EPA will cover nearly 40 percent of all goods exports, 10 percent of the Earth’s population, and about 30 percent of global GDP. The breadth of goods covered by the EPA will be similarly substantial and includes agricultural and food products, the forestry sector, industrial products, the automotive sector, electronics, and services. While some tariffs, such as those on wine, will disappear from the moment the EPA enters into force, other tariffs – including those on imports of Japanese automobiles to Europe and imports of European chocolates to Japan – will disappear over a number of years. The net effect will be to remove tariffs from 99 per cent of all goods traded between the EU and Japan with one study suggesting consequent increases in EU exports to Japan of 34% and Japanese exports to the EU of 29%. Continue reading
Prior to the next round of Brexit negotiations, on 13 July 2017 the Government published a position paper on the privileges and immunities enjoyed by the EU institutions, agencies and representatives in the UK in the context of Brexit.
The paper recognises that, even after the UK's withdrawal from the EU scheduled for 2019, some EU institutions and agencies will remain in the UK. For some this will be temporary, while they wind down their activities. But the paper also acknowledges the expectation of a continued future EU presence in the UK, including for example in the form of an EU delegation.
Privileges and immunities which currently exist under EU law (namely, Protocol 7 to the Treaty on the Functioning of the European Union), will no longer apply after UK exit when the UK is no longer party to the EU treaties. With this in mind – and consistent with the UK's desire to enter a "new, deep and special partnership" with the EU – the Government recognises that some privileges and immunities will need to be granted to the EU to facilitate that partnership, and expects that this should be reciprocal, covering also UK activity within the EU.
HSF Consultant Antonio Pastor’s book published: “The economic relevance of the settlement of maritime boundaries between States. The role of insular formations”
Herbert Smith Freehills' consultant Antonio Pastor is pleased to announced the release of his book 'Delimitation of maritime boundaries between states. Insular formations and low-tide elevations' (TIRANT LO BLANCH, Valencia, 2017).
Commenting on the book, Antonio said: "There is an economic dimension of this subject matter. The settlement of maritime boundaries can have a significant impact on the economic decisions of States as well as of commercial actors. Businesses need to know which State exercises sovereignty or jurisdiction over an insular formation, and therefore to grant commercial concessions in relation to that territory."
ICSID tribunal rules that it is neither necessary nor urgent to grant security for costs from a claimant with the benefit of third-party funding
An ICSID tribunal has rejected a State's application for security for costs in circumstances in which the other party had third-party funding in the form of ATE insurance which specifically provided for cover of the State's costs.
Italy's request for security for costs
The application formed part of arbitral proceedings brought by Eskosol S.p.A. in liquidazione ("Eskosol") under the Energy Charter Treaty and the ICSID Convention against the Italian Republic ("Italy"). Italy sought security for costs in support of its ICSID Arbitration Rule 41(5) application for summary dismissal of Eskosol's claims on the basis that they are manifestly without legal merit.
As formal Brexit negotiations have now started, Herbert Smith Freehills is pleased to announce the launch of its new Brexit Notes blog, where you will find articles and updates on the latest Brexit developments.
As well as reporting on new developments going forward, Brexit Notes has been pre-populated with a selection of articles and posts. You can subscribe to the blog to receive notifications by e-mail as soon as items are posted, or you can visit the site whenever you choose.
Is the recently signed Morocco-Nigeria BIT a step towards a more balanced form of intra-African investor protection?
On 3 December 2016, Morocco and Nigeria signed a new bilateral investment treaty (the "BIT"), with the overarching aim of strengthening "the bonds of friendship and cooperation" between the two States. The BIT (available here) is yet to be ratified and to enter into force.
The BIT takes an interesting and in some ways innovative approach to the balance of rights and obligations as between investors and the respective host States, placing emphasis on the promotion of sustainable development and expressly safe-guarding the State's discretion to take measures to meet policy objectives. As compared to traditional investment treaties, the BIT imposes additional obligations on investors and appears to seek to address, to a degree, the criticism that such investment treaties have been too heavily geared towards protecting investor interests.
We explore below some of the more unusual aspects of the BIT, and consider the innovative nature of the BIT by comparison to other intra and extra-African treaties concluded in recent years.
The European Court of Justice renders its opinion on the EU-Singapore free trade agreement: investment chapter is not within EU’s exclusive competence
On 16 May, 2017 the European Court of Justice (the Court) rendered its Opinion on the competence of the European Union to conclude the Free Trade Agreement (FTA) with Singapore. The Opinion recognises exclusive EU competence over most of the agreement and largely settles a long-standing dispute between the Commission and the Member States on the division of competences under the Lisbon Treaty.
Importantly, in the context of investor-state dispute resolution, the Court's Opinion is likely to render any agreement including protection for non-direct foreign investments or investor-state dispute settlement (ISDS) provisions a so-called "mixed agreement" which requires each of the Member States as well as the EU itself to become party, unless certain aspects commonly found in such agreements are removed or the Member States otherwise agree (discussed further below).
The Opinion will have a major impact on the negotiation of future EU trade agreements, whether pending or anticipated (including the potential FTA between the UK and the EU following Brexit).
The two year process of the UK’s exit from the EU formally began on 29 March 2017 with notice being given under Article 50 of the Treaty on the European Union of the UK’s intention to leave the EU. One of the many legal issues to be determined will be the way in which the UK approaches its international sanctions framework post-Brexit, since the vast majority of the sanctions currently in force in the UK have directly applicable EU Regulations as their basis.
The Government has recently launched a public consultation into the question of the legal powers needed to impose sanctions after Brexit, while a House of Lords enquiry into UK sanctions policy is also underway. What do these two processes tell us about the UK’s future sanctions regime?
Following invitations to ICSID member States and the public to submit topics for potential review, ICSID has published a paper on the Rules Amendment Process. The paper lists sixteen topics which are to be canvassed in the next stage of the review. The topics include areas of arbitral practice which have been subject to much broader discussion – such as the disclosure of third party funding (a point picked up in the SIAC Investment Arbitration Rules which took effect earlier this year), and the possible introduction of a code of conduct for arbitrators. Also included for review are aspects of the procedure, such as consolidation, the annulment mechanism, the preliminary objections process and the possible publication of decisions and orders. Further, ICSID will consider security for costs and allocation of costs.
Each of the sixteen topics will be addressed by ICSID in background papers to be published in early 2018. The goal of the amendments is to (i) incorporate lessons learnt from case law; (ii) to make the process increasingly time and cost effective whilst maintaining due process and a balance between investors and States, and (iii) make the procedure less paper-intensive.
Herbert Smith Freehills’ Response to EU Consultation: the Future of Investor-State Dispute Settlement
As discussed in our blog post here, on 21 December 2016 the EU Commission launched a public consultation on the multilateral reform of the investment dispute settlement system. The consultation closed on 15 March 2017 with a full report of the responses anticipated later this year. Herbert Smith Freehills has submitted a position paper to the Commission in response to the consultation.