On 29 January 2021, the European Union (“EU”) and Canada adopted four decisions (the “Decisions”), which put in place specific rules elaborating the Investment Court System (“ICS”) agreed in the EU-Canada Comprehensive Economic and Trade Agreement (“CETA”). The Decisions set out detailed rules and procedures regarding the structure of the Appellate Tribunal and the conduct of appeals, adjudicators’ conduct, mediation, as well as the interpretations of the CETA by the CETA Joint Committee (the “Joint Committee”).
As discussed in one of our previous blog posts, the proposals for the Decisions (the “Proposals”) were presented by the European Commission to the Council of the EU (the “Council”) back in October 2019. In May 2020, the EU Member States in the Council unanimously approved the adoption of the Decisions, which largely mirror the relevant Proposals. Now that the Decisions have been agreed between the EU and Canada, they will enter into force upon the ratification of the CETA by all the EU Member States.
In October 2019, the European Commission (the “Commission“) presented four proposals (the “Proposals“) to the Council of the European Union (the “Council“) with specific rules to establish the Investment Court System (“ICS“) envisaged under the EU-Canada Comprehensive Economic and Trade Agreement (“CETA“). If the Council and the EU Member States approve the Proposals, the EU will seek to agree them with Canada. The Proposals would enter into force upon the ratification of the CETA by all EU Member States.
On 30 October 2016, the EU and Canada signed the CETA, which is to be implemented and applied through the CETA Joint Committee. While some of the provisions in the CETA have started applying in advance of the CETA’s ratification, some substantive investor protections and the ICS do not apply yet. Please see our previous PIL Notes posts for further information about the negotiations and background of the CETA, as well as the compatibility of the CETA’s ICS provisions with EU law (read more here and here).
In advance of the next meeting of UNCITRAL Working Group III (WG III) in April 2019, the European Union and its Member States have made a submission on “Establishing a standing mechanism for the settlement of international investment disputes” (the Submission), as well as a possible work plan for achieving this aim. As described in our blog post here, WG III has identified a number of concerns in relation to the resolution of investor-state disputes by ad hoc tribunals. In the Report of the 36th Session, WG III encouraged governments to submit proposals as to how the concerns about ISDS identified in the 36th Session should be addressed by way of reform.
The Submission advocates systemic structural change, proposing a two tier “standing mechanism” as “the only available option that effectively responds to all the concerns identified in the working Group” and “the only option that captures the intertwined nature of those concerns“. The features of the “standing mechanism” proposed in the Submission are unsurprising given the previously published views of the EU’s institutions, in particular the European Commission (the Commission). The rhetoric in the Submission differs from the previous articulations coming out of the EU institutions which refer overtly to an “investment court system“. However, the Commission’s news page makes clear that the “standing mechanism” described in the Submission is a “multilateral investment court“. In addition, whilst the Submission makes reference to “adjudicators” rather than judges, the characteristics of the “adjudicators” are those described in the EU’s previous papers on this topic (see here).
The Commission has historically been the flag-bearer for the EU’s reform of ISDS. In the Submission however, it is emphasised that the proposal represents the views of the EU “and its Member States“. This proposition may be tested if the proposed standing mechanism ultimately finds support: further to CJEU Opinion 2/15 on the European Union–Singapore Free Trade Agreement (FTA) on May 16, 2017, the instrument establishing a standing mechanism will need to be ratified by each of the Member States.
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
The European Federation for Investment Law and Arbitration (EFILA) will be holding its third Annual Conference on 5 February 2018 at the Senate House in London. The conference will focus on four topics:
- non-disputing third parties and their influence on arbitration;
- investment regulation and arbitration;
- human rights, environment and arbitration; and
- the proposed Investment Court System.
For more information and details on how to reserve a place, please see the conference flyer here. Continue reading