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

The new draft Dutch BIT: what does it mean for investor mailbox companies?

The Netherlands has released a new draft investment treaty for public comment (“Draft BIT“).  If adopted, the Draft BIT may raise questions about the Kingdom’s attractiveness for foreign investors who have long taken advantage of Dutch treaty protections by structuring their investment via companies in the Netherlands.  The Netherlands proposes to use the new model as a basis for renegotiating its existing BITs with non-EU states, and, as such, the new draft’s more restrictive provisions may be significant for existing investors with protection under existing BITs, as well as those considering future investments. Key features of the Draft BIT are considered below.

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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. 

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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.

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Brexit—the future of state-to-state, investor-state and domestic dispute resolution

The Brexit White Paper

The much-anticipated Brexit White Paper, ‘The United Kingdom’s exit from and new partnership with the European Union’, was published on 2 February 2017. This post focuses on a subject that has to date received relatively little attention—what it has to say about the future of dispute resolution. In its Chapter 2 (‘Taking control of our own laws’), and Annex A, the White Paper contains perhaps a surprising amount on dispute resolution, in comparison to the text devoted to the other eleven of the UK government’s 12 stated principles.

In this blog post we review the White Paper with the aim of discerning so far as possible the potential future of dispute resolution for the UK. In particular, we consider how the UK government envisages, at this relatively early stage, that disputes will be resolved under new post-Brexit UK-EU agreements, and if and how UK businesses will be able to enforce their provisions. We also consider certain implications of the end to the Court of Justice of the European Union (CJEU)’s jurisdiction in the UK and the adoption of the acquis under the Great Repeal Bill.

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EU trade agreement enters into effect with five southern African countries

On 10 June 2016 the EU signed an Economic Partnership Agreement (EPA) with the Southern Africa Development Community EPA Group comprising Botswana, Lesotho, Mozambique, Namibia, South Africa and Swaziland (the SADC EPA).

On 10 October 2016 that agreement entered into effect between the EU and five of those countries: with Mozambique in the process of ratifying the agreement and due to join immediately thereafter.

The SADC EPA represents the latest agreement in a scheme to create a free trade area between the EU and the African, Caribbean and Pacific Group of States (ACP).  Like previous EPAs, a key objective is to support the conditions for increasing investment and economic growth in the SADC EPA states. The EU is the SADC EPA Group’s largest trading partner. Export products from the SADC region include, notably, diamonds (from South Africa, Botswana, Lesotho and Namibia) as well as agricultural products, oil and metals. Manufactured goods, wine and food products are exported from South Africa, the largest EU trading partner in the region. EU imports to the SADC EPA Group include vehicles, machinery, electrical equipment, pharmaceuticals and processed food.

The key provisions of the SADC EPA are discussed below.

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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

The changing landscape of Investment Treaty arbitration – Herbert Smith Freehills comments on recent developments and the future of investment arbitration

As the US Senate is poised to pass legislation granting President Obama the trade promotion authority which will facilitate the passing of the Trans-Pacific Partnership Agreement (TPP), the future of the most controversial parts of the TPP and many other recent trade agreements – investment protection and investor-state dispute settlement (or ISDS) – remains uncertain.

In our 23 June 2015 webinar, “The changing landscape of Investment Treaty arbitration”, four of our Investment Treaty arbitration specialists looked at the ongoing debate surrounding investment protection and ISDS, focusing on the TTIP and TPP and the current approaches being adopted in their negotiation. They considered what the future looks like for ISDS if these two treaties form a “blueprint” for the future of investment protection. The webinar also provides an update on recent developments in the sphere of investment arbitration, including the EU’s developing position on Intra-EU claims, provisional measures, arbitrator challenges and the annulment process.

To access a recording of this webinar, please contact Jane Webber.

Speakers:

Isabelle Michou, Partner, International Arbitration, Paris (Chair)

Christian Leathley, Partner, International Arbitration, London

Andrew Cannon, Partner, International Arbitration, Paris

Iain Maxwell, Of Counsel, International Arbitration, London

Isabelle Michou
Isabelle Michou
Partner
+33 1 53 57 74 04
Christian Leathley
Christian Leathley
Partner
+44 20 7466 2532
Andrew Cannon
Andrew Cannon
Partner
+33 1 53 57 65 52
Iain Maxwell
Iain Maxwell
Of Counsel

 

China-Australia Free Trade Agreement signed

Australian Trade Minister Andrew Robb and Chinese Commerce Minister Gao Hucheng today signed the China-Australia Free Trade Agreement (ChAFTA) in Canberra, following the signing of a Declaration of Intent in November 2014 during Chinese President Xi Jinping’s visit to Australia (see our articles: Australia and China conclude free trade agreement and Australia China FTA to be concluded by year end).

The full text of ChAFTA was also released today and can be found here. The implications are discussed below.

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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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