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).

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Singapore-ITLOS Joint Declaration: A further step towards developing Singapore as an Asian Disputes Hub

At a ceremony in Singapore on 31 August 2015, representatives of the International Tribunal for the Law of the Sea (ITLOS) and the Singaporean Ministry of Law signed a Joint Declaration for Singapore to provide facilities to ITLOS whenever it is desirable for ITLOS or a special chamber of ITLOS to exercise its functions in Singapore. ITLOS announced the arrangements in a joint press release, available here.

Established by the United Nations Convention on the Law of the Sea (UNCLOS or the Convention) in 1982, ITLOS sits to hear any dispute concerning the interpretation or application of the Convention. Currently, there are 167 parties to the Convention, which comprises 166 States and the European Union. Importantly, the United States has not signed or ratified the UNCLOS. Since it was founded in 1996, ITLOS has heard 24 cases (only five of which have been on the merits).

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Singapore signs the Hague Convention on Choice of Court Agreements: a step in the right direction for the Singapore International Commercial Court

In our previous article The New Frontier, we discussed the launch of the Singapore International Commercial Court (“SICC”) and in particular we questioned whether issues of cross border enforceability might impact the effectiveness of the new SICC. Last week, Singapore took a first stride towards addressing the issue by becoming a signatory to the Hague Convention on Choice of Court Agreements (the “Convention”). Continue reading

Repaving the Southeast Asian Silk Road: EU-Singapore Free Trade Agreement negotiations concluded

In the wake of the recent agreement of the EU-Canada Comprehensive Economic and Trade Agreement (EU-Canada CETA) and after just over a year of negotiations, the EU and Singapore have released their free trade Agreement (EUSFTA) to the public.  (See our recent blog post on CETA here). According to a statement released by the European Commission, the EUSFTA aims to ensure a high level of investment protection, whilst preserving the EU and Singapore’s right to regulate.  It will replace the 12 existing Bilateral Investment Agreements (BITs) between Singapore and European Member States.  The text of the EUSFTA can be found here.

Whilst the conclusion of this agreement is highly significant, the reference to the European Court of Justice to which it has given rise could perhaps be even more so.  Please see our recent blog post here, explaining the European Commission’s request for an ECJ Opinion on the EU’s competence to enter into EUSFTA.

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Developments in resolving cross-border disputes

With the increase of global commerce, it also becomes increasingly important to provide for effective and quick dispute resolution mechanisms across state borders. A number of developments in international law recognise this trend and seek to address it. These developments include:

  • The inclusion of Investor-State Dispute Resolution mechanisms in the Trans-Pacific Partnership Agreement and the Transatlantic Trade and Investor Partnership,1
  • Further global acceptance of the importance of the New York Convention, which now has 152 signatories (Bhutan and Guyana being the most recent state to become parties), and
  • The European Union Justice Ministers approval of a decision to ratify The Hague Convention of 30 June 2005 on Choice of Court Agreements.

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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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