Advocate General finds that CETA’s “Investment Court System” is compatible with EU law

One of the Advocates General to the Court of Justice of the European Union (“CJEU“), Advocate General Bot, has issued an opinion confirming that the mechanism for the settlement of disputes between investors and states provided for in the Comprehensive Economic and Trade Agreement  between the EU and Canada (the “CETA“) is compatible with European Union (“EU“) law.

If the opinion is adhered to by the CJEU, it confirms the viability of the EU’s mooted Investment Court System (“ICS“) in terms of its co-existence with the EU legal order, and permits the EU to continue to pursue adoption of the ICS on a wider scale across all of the EU’s trade agreements. Continue reading

European Commission formally presents proposed Investment Chapter for TTIP to the US

Yesterday, 12 November, the EU formally presented its proposed language for the Investment Chapter of the TTIP to the US. As discussed in our earlier blog piece here, the EU is suggesting an "Investment Court System" to resolve disputes between investors and states under the TTIP.

The 12 November text is very similar to that seen in the previous draft, with a number of small changes. These changes include (but are not limited to):

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The future of ISDS in the TTIP: European Parliament recommends a “new system” of judicial decision-making

As reported in our previous blog posts (please click here and here), the proposed inclusion of investor-state-dispute settlement (ISDS) provisions in the Transatlantic Trade & Investment Partnership (the TTIP), has caused considerable debate amongst many stakeholders. Against this backdrop of heated public discussion, the European Parliament (the EP) has drawn up recommendations on the TTIP, including on ISDS. Whilst it is the European Commission (the Commission) which is negotiating the TTIP with the US on behalf of the EU, there can be no final agreement without the EP’s approval. The EP’s recommendations are a crucial indication of what it would want to see in the final agreement and will undoubtedly shape the Commission’s negotiating position. Continue reading

EU Commission issues “Concept Paper” on ISDS in the TTIP and beyond: proposals for “profound reform”

Further to its report on the outcome of the consultation on investment protection and investor-state dispute settlement in the TTIP, the EU Commission has issued a “Concept Paper” which envisages a very different future for resolution of investor-state disputes.

The Concept Paper builds on the four key areas which the Commission previously identified as requiring further consideration, explaining that there is opportunity for “profound reform” of the investment protection and ISDS systems. It also elaborates on the steps it has already taken in the EU-Canada FTA (the CETA) and the EU-Singapore FTA to improve the systems, and makes proposals which it considers will offer further progress towards its goal of protecting and encouraging investment without affecting the ability of the EU and its Member States to pursue policy objectives.

The Commission has proposed what it terms “concrete ideas” and a “concrete solution” (as summarised below). The Concept Paper is not binding and the Commission states that the content is without prejudice to its final position. However, the Concept Paper is a clear indication of the evolving thinking of the Commission in these areas. In particular, the Concept Paper contains two clear messages:

  • Despite the outcome of last year’s consultation and the apparent weight of opinion in the European Parliament, the Commission is not minded to remove substantive investment protections or investor-state arbitration from the TTIP.
  • The Commission envisages major changes in the future for ISDS which, if adopted in the TTIP and accepted more broadly in other free trade and investment agreements, would have significant implications for the way in which investors are able to protect their investments and resolve disputes with host states.

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European Commission requests European Court of Justice Opinion on competence to enter into EU-Singapore FTA

On 30 October the European Commission issued a press release announcing its intention to seek an opinion from the European Court of Justice as to the interpretation of the Lisbon Treaty in the context of the EU-Singapore Free Trade Agreement.

There has been a great deal of furore surrounding the negotiation of the Transatlantic Trade and Investment Partnership (TTIP) between the EU and the United States of America and the agreement in principle of the text of the Comprehensive Economic Trade Agreement (CETA) between the EU and Canada, largely focused on the need for investment protection and the use of Investor State Dispute Settlement (ISDS). As a result, the conclusion of the Free Trade Agreement talks between the European Union and Singapore on 17 October 2014 has been overlooked by many. However, the conclusion of these talks has brought one of the many unresolved issues in this area to a head.

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Breach of fair and equitable treatment standard (ICSID)

In Ioan Micula and others v Romania (ICSID Case No. ARB/05/20), an ICSID tribunal considered whether Romania was in breach of the Sweden-Romania bilateral investment treaty.

The majority of an ICSID tribunal (Laurent Lévy and Stanimir Alexandrov) held that Romania breached the fair and equitable treatment standard in the Sweden-Romania bilateral investment treaty by repealing incentives offered regarding investments made in some of the country’s deprived regions. A different majority (Laurent Lévy and Georges Abi-Saab) dismissed the claimants’ allegation that Romania had breached the umbrella clause in the BIT due to lack of evidence. The tribunal also discussed the role of EU law within the context of investment treaty disputes.

The award is of interest as it discusses in detail the FET standard and even proffers a test in respect of the stability aspect often considered to fall within the scope of FET. The award also concludes (departing from other cases) that unilateral declarations made by a state would fall within the scope of an umbrella clause. Finally, the discussion in the award of EU issues is topical, given the number of ongoing disputes where the inter-relation between EU law and investment treaty arbitration is in issue.

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New EU Directive: Reporting by Extractive Companies on Government Payments

The European Parliament and Council of Ministers have agreed the final form of the new EU rules for the disclosure, on a project by project basis, of payments to governments by companies operating in the extractive  industries. The EU’s agreement is part of a suite of transparency initiatives which are designed to promote good governance and improved national development outcomes for developing countries.

All large companies “active” in the oil, gas and minerals industries or the logging of primary forests will be affected and the rules will apply to both EU-incorporated companies and non-EU companies that have a listing in the EU.

We have summarised in a briefing the key aspects of the new requirements, when they will come into force and how they compare with the similar requirements being introduced in the United States under the Dodd-Frank Act.

Please email Fiona Rafla if you would like a copy of this briefing.

EU takes steps towards easing Zimbabwe sanctions

Susannah Cogman and Jeremy Sher comment on the EU’s recent easing of the Zimbabwe sanctions regime.

On 19 February 2013, the European Union (“EU“) took a small step towards easing its sanctions regime in relation to Zimbabwe.  Twenty one individuals and one entity were removed from the EU’s list of designated persons, and the travel ban imposed on six members of the Government was suspended.  These twenty one designated persons had been subject to the EU’s asset freezing regime under Council Regulation (EC) No 314/2004.  These amendments have effect from 21 February 2013.

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