The Uncertain Future of the Intra EU Investment Protection

The Uncertain Future of the Intra-EU Investment Protection Date: December 2, 2023 So... What is going on in Europe? Issue 1: Growing Role of European Commission - Treaty of Rome (1957): EU not provided competence to deal with the regulation of foreign investment. - Maastricht Treaty (1992): The European Commission unsuccessful in its attempt to assert competences over international investment regulation but acquired competence in relation to investment liberalization. - BE - Lisbon Treaty (2007): It provided the EU with a firm legal competence to regulate FDI flows. Issue 2: Growing Public Awareness in Europe 1. Vattenfall vs Germany 2. Cluster of renewable cases (28 and growing) involving:  Spain  Italy  Czech Republic 3. Housing crisis arising out of the removal of caps of Swiss Francs:  Croatia  Montenegro 4. Negotiations of mega treaties: CETA and TTIP. Issue 3: The MIC Proposal (CETA/TTIP) Replace ISDS with a Court Structure Proposal: 1. Creation of a "Tribunal of First Instance" a. 15 Judges (5 EU, 5 US, 5 "third countries") b. 6 years terms renewable once c. Hear cases in divisions of 3 judges d. Paid a retainer (approx. € 2000 PM) 2. Creation of "Appeal Tribunal" a. 6 Members (2 EU, 2 US, 2 "third countries b. 6 years terms renewable once c. Hear appeals in divisions of 3 judges d. Paid a retainer (approx. € 7000 PM) Issue 4: Enter ACHMEA 1. UNCITRAL Tribunal concluded it had jurisdiction in a dispute under the Netherlands-Slovakia BIT. Ultimately concluded in favor of ACHMEA. 2. Slovakia challenged the decision at the seat (Germany). 3. German Constitutional Court referred the matter to the CJEU to assess compatibility of the dispute resolution clause (Art. 8 of BIT) with the EU law. 4. Court concluded that since the Tribunal may have to apply/interpret EU law without input from European Courts, ISDS is incompatible with EU law [58] In the present case, however, apart from the fact that the disputes falling within the jurisdiction of the arbitral tribunal referred to in Article 8 of the BIT may relate to the interpretation both of that agreement and of EU law, the possibility of submitting those disputes to a body which is not part of the judicial system of the EU is provided for by an agreement which was concluded not by the EU but by Member States. Article 8 of the BIT is such as to call into question not only the principle of mutual trust between the Member States but also the preservation of the particular nature of the law established by the Treaties, endured by the preliminary ruling procedure provided for in Article 267 TFEU, and is not therefore compatible with the principle of sincere cooperation referred to in paragraph 34 above. [59] In those circumstances, Article & of the BIT has an advent effect on the autonomy of EU law. Curiously, the Court said the ruling does not apply to commercial arbitration? Issue 5: Let's Terminate - Declarations of Member States, Jan. 2019 "All investor-state arbitration clauses contained in bilateral investment treaties... Are contrary to Union law and thus inapplicable." - - Agreement on a Plurilateral Treaty for Termination of Intra-EU BITS, Oct. 2019:  All intra-EU BITS terminated  Sunset clause terminated  All intra-EU arbitrations before ACHMEA remain untouched  Intra-EU ECT cases not expressly covered 23 Member (of 27) states signed the agreement on May 5, 2020. Austria, Finland, Ireland and Sweden abstained. Conclusions  Stop Press: Komstroy v. Moldova (Sept. 2021): ECJ concluded ECT cannot be used to resolve intra-EU BITS.  Stop Press: PL Holdings v. Poland (Oct. 2021): ad hoc arbitration  agreements not compatible with EU law. Tribunal dismissed ACHMEA challenge as being "belated" and hence concluded there was an arbitration agreement with the investor.  Swedish Supreme Court requested a preliminary ruling from ECJ. ECJ concluded that such ad hoc agreements are not compatible with EU law.  Judicial interference?  Exclusion of commercial arbitration from EU scope not clear (or logical).  Turbulent time for intra-EU ISDS.