Abstract
Investment protection is an important, if not essential component of the transatlantic economic and trade agreements that are being concluded between the European Union and its partners. In this chapter we deal with European investment protection under CETA, including how this may be affected by recent case law of the European Court of Justice. Both provide important additions to the growing body of principles of European investment protection. I argue that CETA’s system of the resolution of disputes between investors and states is a legal tool with a useful function, separate from what investors might achieve in domestic courts, and that it is in conformity with EU constitutional law after Opinion 2/13. We will also see that under this mixed agreement, the EU will be able to make a unitary representation, sometimes even in actions for which the Member States are responsible. On the other hand, EU Member States may sometimes have to respond for treatment required by or coming under the remit of the EU. This may include actions before the European Court of Human Rights (ECtHR) under the European Convention of Human Rights (ECHR). I conclude that these particularities do not detract from the usefulness of CETA’s system of the resolution of disputes between investors and states. In view of its innovative features, it is quite possible that the provisions in CETA will be a model for future investment agreements of the EU with other developed economies. They are real proof of the ability of the EU and its Member States to speak with one voice in international relations.
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Notes
- 1.
For reasons of limited space, investment protection in relations between the Member States will be outside the scope of this chapter.
- 2.
Article 207(1) Treaty on the Functioning of the European Union (TFEU).
- 3.
This is so even after CJEU Opinion 2/15 concerning the EU-Singapore Free Trade agreement. ECLI:EU:C:2017:376. See the comments on this opinion elsewhere is this volume.
- 4.
Cf. Schicho 2012.
- 5.
CJEU, judgment of 3 March 2009, joined cases C-249/06 (Commission v. Sweden) and C-205/06 (Commission v. Austria). ECR 2009 I-1335.
- 6.
Regulation (EU) No 1219/2012 of the European Parliament and of the Council of 12 December 2012 establishing transitional arrangements for bilateral investment agreements between Member States and third countries. OJ L 351, 20.12.2012, pp. 40–46.
- 7.
CJEU, Opinion 2/13 of 18 December 2014 on the compatibility of the Draft Accession agreement to the European Convention for the Protection of Human Rights and Fundamental Freedoms—Compatibility of the draft agreement with the EU and FEU Treaties.
- 8.
A 2015 bibliography can be found at the following webpage (accessed 23 March 2016): https://www.citethisforme.com/topicideas/other/TTIP%20and%20CETA%20agreements-6147896.
- 9.
CETA—Technical summary of finally negotiated outcomes, 8 October 2013, http://www.italaw.com/sites/default/files/archive/ceta-final-negotiated-outcomes.pdf (accessed 28 March 2016). Cf. Kiselbach 2014.
- 10.
Janyce McGregor, EU quietly asks Canada to rework trade deal’s thorny investment clause. CBC News, 21 January 2016. Web page at http://www.cbc.ca/news/politics/canada-europe-trade-isds-ceta-1.3412943 (last accessed 23 March 2016); ‘Europe et la Canada modifient leur accord CETA pour faire taire les critiques’, Le Monde. 2 March 2016. Internet page http://transatlantique.blog.lemonde.fr/2016/03/02/leurope-et-le-canada-modifient-leur-accord-ceta-pour-faire-taire-les-critiques/ (last accessed 23 March 2016).
- 11.
The final, consolidated CETA text can be found at the following webpage: http://trade.ec.europa.eu/doclib/docs/2014/september/tradoc_152806.pdf (accessed 27 March 2016).
- 12.
From the arbitration blog by Michael Polkinghorne and Matthew Morantz, Thompson Reuters, 16 March 2016, at http://arbitrationblog.practicallaw.com/on-the-edge-of-your-ceta-new-developments-in-isds-reform/ (accessed 23 March 2016).
- 13.
Nanette Neuwahl, Trade, Trust and Interest Protection after the Comprehensive Economic and Trade Agreement (CETA)—A Citizen’s Perspective’, in 20 Lex Electronica (2015), http://www.lex-electronica.org/ (accessed 25 March 2016). Also, as we shall see below—parties to the agreement reserve their privilege to legislate for the protection of the environment, health, labour and other public interests.
- 14.
Ibid.
- 15.
This can be seen in the example of Central and Eastern Europe, which attracted massive FDI flows in anticipation of EU enlargement, especially in the car industry, one of the more capital-intensive aspects of FDI.
- 16.
Emphasis added.
- 17.
For a comparison to the current proposals for TTIP, see Pantaleo et al. 2016, pp. 77–92.
- 18.
CETA, Annex 8.12: Expropriation and Annex 8-A.
- 19.
CETA, Article 8.9 Investment and regulatory measures.
- 20.
CETA, Article 8.9, para 4.
- 21.
CETA, Article 8.9, para 2.
- 22.
CETA, Article 8.10 Treatment of investors and covered Investments, para 2.
- 23.
CETA, Article 8.23(2) provides: ‘A claim may be submitted under the following rules: (a) the ICSID Convention and Rules of Procedure for Arbitration Proceedings; (b) the ICSID Additional Facility Rules if the conditions for proceedings pursuant to paragraph (a) do not apply; (c) the UNCITRAL Arbitration Rules; or (d) any other rules on agreement of the disputing parties.’.
- 24.
CETA, Articles 8.39 and 8.12.
- 25.
Under CETA, Article 8.12, para 2, valuation criteria shall include going concern value, asset value including the declared tax value of tangible property, and other criteria, as appropriate, to determine fair market value.
- 26.
It would be more accurate to speak about Investor Dispute Settlement (IDS), even if investor dispute settlement seems to suggest that investors can initiate disputes among themselves, whereas this does not appear to be the case under ISDS. Alternatively one could refer to the more cumbersome notion of ‘Investor-State or Investor-EU dispute settlement’.
- 27.
Specifically whom is not specified in Article 8.21, but one may assume it is the European Commission.
- 28.
CETA, Article 8.21, para 3.
- 29.
CETA, Article 8.21, para 4.
- 30.
Section 2.4 below.
- 31.
European Commission, explanatory memorandum to the Regulation establishing a framework for managing financial responsibility linked to investor-state dispute settlement tribunals established by international agreements to which the European Union is party COM(2012) 335 final, Brussels, 21 June 2012, p. 7, http://www.italaw.com/sites/default/files/archive/ita1036.pdf (accessed 21 March 2016).
- 32.
- 33.
Explanatory memorandum, loc.cit., p. 6.
- 34.
Regulation 912/14, Article 19(3).
- 35.
OECD, Directorate for Financial and Enterprise Affairs Investment Committee, Freedom Of Investment Process: Societal benefits and costs of International Investment Agreements—Preliminary findings and a research agenda, 22 September 2015 DAF/INV/WD(2015)1/REV1.
- 36.
Investor State Dispute Settlement, an indispensable element of investment protection. BIAC, the voice of Business at the OECD, 15 January 2015. http://biac.org/wp-content/uploads/2015/02/BIAC-Investor-State-Dispute-Settlement.pdf (accessed 5 May 2019).
- 37.
Why International Investment Agreements matter. BIAC, the voice of Business at the OECD, 15 January 2016 http://biac.org/wp-content/uploads/2016/03/FIN-2016-03-IIA1.pdf (accessed 8 May 2019).
- 38.
Cf., recently, Lejour and Salfi 2015.
- 39.
In some countries there exist also insurances against investment risks, but these can be very costly and are not always available.
- 40.
Why International Investment Agreements matter. BIAC, The voice of Business at the OECD, 15 January 2016 http://biac.org/wp-content/uploads/2016/03/FIN-2016-03-IIA1.pdf (accessed 9 May 2019).
- 41.
Nikolay Nielsen, ‘TTIP investor court illegal, say German judges’, in EU Observer, 4 February 2016 https://euobserver.com/economic/132142 (accessed 16 March 2016).
- 42.
CJEU, judgment of 5 March 1996, joined cases C-46/93 and C-48/93, Brasserie du Pêcheur SA v. Bundesrepublik Deutschland and The Queen v. Secretary of State for Transport, ex parte Factortame Ltd and others. ECR 1996 I-1029.
- 43.
Of course arbitration is not cheap either, so that SMEs in general might prefer to avoid the sketchier countries of the world.
- 44.
On the Canadian side see, e.g., Maude Barlow, Fighting TTIP, CETA and ISDS: Lessons from Canada, 29 October 2015, http://canadians.org/transatlantic-trade-deals (accessed16 March 2016).
- 45.
Leila Lankarani has exhaustively answered the question whether the ISDS mechanism is more a court or an arbitration procedure in an as yet unpublished paper titled «L’AECG et l’arbitrage en matière d’investissement direct étranger» given 1 June 2016 at the International Summer School on Law and Bilateral Trade: North America-Europe organised by Unversità degli Studi de Milano and Université de Montréal, Montreal 30 May-3 June 2016. She rightly concludes that it is «multiforme».
- 46.
This is confirmed by Lejour and Salfi 2015. Cf. section 7, Conclusion.
- 47.
Cf. Benácek et al. 2014.
- 48.
Article 218(11) TFEU provides: ‘A Member State, the European Parliament, the Council or the Commission may obtain the opinion of the Court of Justice as to whether an agreement envisaged is compatible with the Treaties. Where the opinion of the Court is adverse, the agreement envisaged may not enter into force unless it is amended or the Treaties are revised.’.
- 49.
Alternatively, the inapplicability of the agreement under EU law can be invoked after its entry into force if any of its provisions happen to be contrary to EU law (be it that there may then be a conflicting obligation under the agreement itself).
- 50.
CJEU, Opinion 2/13 of the Court (Full Court) of 18 December 2014 on the compatibility of the Draft Accession agreement to the European Convention for the Protection of Human Rights and Fundamental Freedoms—Compatibility of the draft agreement with the EU and FEU Treaties.
- 51.
Editorial comment 2015. Jacqué 2014. Labayle and Sudre 2015. Athanase Popov, «L’avis 2/13 de la CJUE complique l’adhésion de l’Union européenne à la CEDH», La Revue des droits de l’homme, Actualités Droits-Libertés, 24 February 2015, accessed 29 March 2016. http://revdh.revues.org/1065.
- 52.
CJEU, Opinion 1/17 (EU Canada Agreement) [2019]. ECLI:EU:C:2019:341.
- 53.
Article 207 TFEU.
- 54.
A more elaborate presentation can be found in the working paper by Szilárd Gáspár-Szilágyi titled ‘A Standing Investment Tribunal: the Commission Trying to Please the Cabbage and the Goat, but What about the Court?’ (unpublished version dating from January 2016). See also De Witte 2014.
- 55.
CJEU, Opinion 1/91 (EEA Agreement) [1991] ECR I-60709, paras 40–70; Opinion 1/09 (European Patent Court) [2011] ECR I-1137, para 74; Opinion 2/13 (Accession to the ECHR) [2014]. ECLI:EU:C:2014:2454. para 182.
- 56.
CJEU, Opinion 1/76 (Inland Waterways) [1977] ECR 741.
- 57.
CJEU, Opinion 1/91 (EEA Agreement) [1991] ECR I-60709, para 6.
- 58.
CJEU, Opinion 1/09 (European and Community Patent Court) [2012] ECR I-01137.
- 59.
Gáspár-Szilágyi, op.cit.
- 60.
CETA, Article 30.6, para 1.
- 61.
Article 24 and 40 TEU and Article 275 TFEU.
- 62.
For instance CJEU, Case 22/70 (AETR), judgment of 31 March 1971, Commission v. Council, ECR 1971 p. 263. In that case, the Member States were authorised to become parties to the agreement in spite of an exclusive EU competence.
- 63.
CJEU, Opinion 1/17 (EU Canada Agreement) [2019]. ECLI:EU:C:2019:341. For a detailed analysis, see paras 106-161 and the commentary elsewhere in this volume.
- 64.
Cf. CJEU, Case 22/70 (AETR), judgment of 31 March 1971, Commission v. Council, ECR 1971 p. 263.
- 65.
Application (no. 14902/04) lodged by OAO Neftyanaya Kompaniya Yukos on 23 April 2004.
- 66.
In particular, Article 6 of the ECHR (right to a fair trial), Article 1 of Protocol No. 1 (protection of property), taken alone and in conjunction with Arts 1 (obligation to respect human rights), 13 (right to an effective remedy), 14 (prohibition of discrimination) and 18 (limitation on use of restrictions on rights) of the Convention, as well as Article 7 ECHR (no punishment without law).
- 67.
Chamber judgment in the case of Oao Neftyanaya Kompaniya Yukos v. Russia (merits) (application no. 14902/04), http://hudoc.echr.coe.int/eng?i=001-106308 (accessed 29 March 2016). Press release issued by the Registrar of the ECHR on 30 September 2011, ECHR 146 (2011).
- 68.
Chamber judgment in the case of Oao Neftyanaya Kompaniya Yukos v. Russia (Just satisfaction) (application no. 14902/04), adopted 24 June 2014 and delivered 31 July 2014 http://hudoc.echr.coe.int/eng#{%22itemid%22:[%22001-145730%22]} (accessed 29 March 2016).
- 69.
Press release issued by the Registrar of the ECHR on 31 July 2014, ECHR 237.
- 70.
CETA, Article 30.6, para 1: Nothing in this Agreement shall be construed as conferring rights or imposing obligations on persons other than those created between the Parties under public international law, nor as permitting this Agreement to be directly invoked in the domestic legal systems of the Parties.
- 71.
Case 104/81, judgment of 26 October 1982, Hauptzollamt Mainz v. Kupferberg & Cie., ECR 1982 p. 3641.
- 72.
ECHR (Grand Chamber), Application no. 45036/98, judgment of 30 June 2005, Bosphorus Hava Yollari Turizm Ve Ticaret Anonim Şirketi v. Ireland. (2006) 42 European Human Rights Reports 1.
- 73.
Idem, para 154.
- 74.
Idem, para 155, with reference to M. & Co., Application No. 13258/87, Decision of the European Commission of Human Rights, 9 February 1990, Decisions and Reports Vol. 64, 138-146 at p. 145.
- 75.
Idem, para 156.
- 76.
Idem, with reference to Loizidou v. Turkey (preliminary objections), judgment of 23 March 1995, Series A No. 310, pp. 27–28, § 75.
- 77.
Idem, para 166.
- 78.
Judgment of 6 December 2012, Michaud v. France, Application no. 12323/11.
- 79.
The right to respect for one's private and family life, one’s home and correspondence.
- 80.
Michaud v. France, para 111.
- 81.
Cf. Labayle and Sudre 2015.
- 82.
In contrast to the Bosphorus case, which concerned a regulation so that Ireland did not have a discretion, Michaud v. France concerned a directive. Article 288 TFEU provides: […] A directive shall be binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and methods.’ In para 113 the Court finds that since we are dealing with a directive, France had a certain discretion. The Court abstains from an in-depth analysis of the directive and what it requires. Neither does the Court consider whether France might have been in breach of EU law, which could also induce it to reject the application of the Bosphorus doctrine. This aspect is not elaborated in the judgment.
- 83.
Michaud v. France, para 115.
- 84.
Michaud v. France, para 140.
- 85.
Michaud v. France, para 131: ‘ … the Court considers that, regard being had to the legitimate aim pursued and the particular importance of that aim in a democratic society, the obligation for lawyers to report suspicions, as practiced in France, does not constitute disproportionate interference with the professional privilege of lawyers.’
- 86.
Judge Ress, concurring opinion in the Bosphorus case, section 3.
- 87.
With reference to Segi and Gestoras Pro-Amnistía and Others v. Germany, Austria, Belgium, Denmark, Spain, Finland, France, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, the United Kingdom and Sweden (dec. nos. 6422/02 and 9916/02, ECHR 2002-V.
- 88.
See above under Sect. 2.6.
- 89.
See United States Council for International Business, Defending Investor Protections in Trade Agreements, http://www.uscib.org/defending-investor-protections-in-trade-agreements/?zbrandid=4050&zidType=CH&zid=34317979&zsubscriberId=1003692277&zbdom=http://uscib.informz.net&utm_source=USCIB+eNewsletter&utm_medium=Informz%2FnetFORUM&utm_campaign=COMM%2FeNewsletter%2F2016-03-29%2FMarch+29%2C+2016+e-newsletter, accessed 28 March 2016.
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Acknowledgments
The author would like to thank Charles Kovacs, Ejan Mackay, Luca Pantaleo, Frédéric Sudre and Claire Vial for their valuable comments on previous drafts of this chapter. The author alone bears responsibility for any of the shortcomings that may remain.
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Neuwahl, N. (2020). Emerging Principles of European Investment Protection—After the Example of the Comprehensive Economic and Trade Agreement (CETA). In: Andenas, M., Pantaleo, L., Happold, M., Contartese, C. (eds) EU External Action in International Economic Law. T.M.C. Asser Press, The Hague. https://doi.org/10.1007/978-94-6265-391-7_2
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