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The End of the Game: The Autonomy of the EU Legal Order Opposes Arbitral Tribunals under Bilateral Investment Treaties Concluded between Two Member States

Published online by Cambridge University Press:  02 July 2018

Nicolas DE SADELEER
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Type
Case Commentaries
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European Journal of Risk Regulation , Volume 9 , Issue 2 , June 2018 , pp. 355 - 371
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© Cambridge University Press 

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Footnotes

*

Professor Saint-Louis University, Brussels, Jean Monnet Chair. Many thanks to Mrs I Damjanovic for helpful advice and comments.

References

1 UNCTAD investment hub website: <investmentpolicyhub.unctad.org>.

2 United Nations Convention for Recognition and Enforcement of Foreign Arbitral Awards, done at New York, 10 June 1958.

3 Convention on the Settlement of International Investment Disputes between States and Nationals of Other States, done at Washington, 18 March 1965 (also known as the Washington Convention).

4 Treaty for the Promotion and Protection of Investments (with Protocol and exchange of notes), Germany and Pakistan, 25 November 1959, 457 UNTS 24 (entered into force 28 November 1962).

5 Brown, C, “The Development by States of Model Bilateral Investment Treaties” in W Shan (ed.), China and International Investment Law: Twenty Years of ICSID Membership (Brill 2014) 124 Google Scholar.

6 Art 25(1).

7 Council and Commission Decision 98/181/EC, ECSC, Euratom of 23 September 1997 on the conclusion, by the European Communities, of the Energy Charter Treaty and the Energy Charter Protocol on energy efficiency and related environmental aspects (OJ 1998 L 69, p 1).

8 Adopted 17 December 1994, 2080 UNTS 95, entered into force 16 April 1998.

9 The withdrawal took effect only on 1 January 2016.

10 A Rosas, “Mixed Union-Mixed Agreements” and Granvik, L, “Incomplete Mixed Environmental Agreements of the EU and the Principle of Bindingness” in M Koskenniemi (ed.), International Law Aspects of the EU (Den Hague, Kluwer Law International 1998) 125 and 255 Google Scholar; Okowa, P, “The EC and International Environmental Agreements” (1995) 15 Yearbook of European Environmental Law 169 Google Scholar.

11 Case C-213/03 Etang de Berre [2004] ECR I-7357, para. 25.

12 Opinion of AG Jääskinen in Case C-264/09 Commission v Slovakia, para. 60.

13 Case C-61/94 Commission v Germany [1996] ECR I-3898, para. 52.

14 According to the UNCTAD database, of total 102 ISDS cases under the ECT, 65 are intra-EU disputes.

15 Achmea, para. 55.

16 Opinion of AG M Wathelet, para. 206.

17 “The arbitration game”, Economist, 10 October 2014, p 74.

18 Commission Communication, “Towards a Comprehensive European International Investment Policy” COM (2010) 343 final, 7 July 2010.

19 The claim was based on the alleged effect on investments of the enforcement by the Government of the Tobacco Plain Packaging Act 2011. The Australian case was adjudicated under the Australia-Hong Kong BIT from 1993. Philip Morris actually incorporated in Hong Kong to make use of that BIT ISDS when it became obvious that Australia would introduce legislation on plain cigarette packaging. See also Philip Morris Brands Sarl, Philip Morris Products SA and Abal Hermanos SA v Oriental Republic of Uruguay, ICSID Case No ARB/10/7 (formerly FTR Holding SA, Philip Morris Products SA and Abal Hermanos SA v Oriental Republic of Uruguay), Award (8 July 2016).

20 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, OJEU L/351.

21 Strik, P, Shaping the Single European Market in the Field of Foreign Direct Investment (Cambridge, CUP 2014) 218–219 Google Scholar.

22 Roggenkamp, M, Redgwell, C, Ronne, A, and del Guayo, I (eds.), Energy Law in Europe. National, EU and International Regulation, 3rd edn (Oxford, Oxford University Press 2016)Google Scholar.

23 Opinion of AG M Wathelet, para. 35.

24 Opinion of AG M Wathelet, para. 35.

25 Only two BITs have been concluded between the old Member States (EU15): Germany – Greece BIT (1961) and Germany – Portugal BIT (1980).

26 Charanne BV and Construction Investments Sàrl v Kingdom of Spain (SCC Case No 062/2012) Final Award of 21 January 2016, para. 409.

27 Electrabel SA v Hungary (ICSID Case No ARB/07/19) Decision on Jurisdiction, Applicable Law and Liability of 30 November 2012 and Award of 25 November 2015, para. 4.195.

28 Para. 4.196.

29 Opinion of AG M Wathelet, para. 44.

30 Opinion of AG M Wathelet, para. 146.

31 Opinion 2/13 (accession to the ECHR), 18 December 2014, EU:C:2014:2454.

32 Opinion 2/13, paras. 201–214.

33 Achmea, para. 33.

34 Achmea, para. 34.

35 Achmea, para. 37.

36 Achmea, para. 37. See also Opinion 2/13 (Accession of the EU to the ECHR) of 18 December 2014, EU:C:2014:2454, para. 176 and the case law cited therein.

37 Achmea, para. 42.

38 Achmea, para. 40.

39 Achmea, para. 46.

40 Achmea, para. 45.

41 Case C-394/11 Belov EU:C:2013:48, para. 38.

42 Achmea, para. 44.

43 Case C-377/13 Ascendi Beiras Litoral e Alta, Auto Estradas das Beiras Litoral e Alta EU:C:2014:1754.

44 Achmea, para. 44.

45 Achmea, para. 43.

46 Case C-126/97 Eco Swiss EU:C:1999:269, paras. 37, and Case C-168/05 Mostaza Claro EU:C:2006:675, paras. 34–39.

47 Achmea, para. 53.

48 ibid.

49 Achmea, para. 55.

50 Case 66/80 SpA International Chemical Corporation, aff, EU:C:1981:102, para. 13; Case 314/85 Foto-Forst, aff EU:C:1987:452.

51 Broberg, M and Fenger, N, Preliminary References to the European Court of Justice (Oxford, Oxford University Press 2010) 442 Google Scholar.

52 ECJ, 3 May 1981, SpA International Chemical Corporation, aff 66/80, point 11.

53 Only two BITs have been concluded between the old Member States (EU15): Germany – Greece BIT (1961) and Germany – Portugal BIT (1980).

54 Opinion 2/15, EU-Singapore Agreement, para. 83.

55 UNCTAD investment hub website, <investmentpolicyhub.unctad.org>.

56 Belgium-China Bilateral Investment Treaty of 6 June 2005.

57 Preamble, no 5, Regulation no 1219/2012 (footnote 21).

58 The Swedish company Vattenfall objected, pursuant to the ISDS provisions of the ECT, to the decision taken by Germany to phase out nuclear power plants. The challenge, which has been filed with the ICSID in Washington, has not yet been ruled upon. See Vattenfall AB v Federal Republic of Germany (II), ICSID Case No ARB/12/12 (Vattenfall II). See N Bernasconi, Background Paper on Vattenfall v Germany Arbitration, IISD, 2009, p 4–5; N Bernasconi-Osterwalder and RT Hoffmann, “The German Nuclear Phase-Out Put to the Test in International Investment Arbitration? Background to the New Dispute Vattenfall v Germany (II)”, IISD, 2012, p 5; Romanin Jacur, F, “The Vattenfall v. Germany Disputes: Finding a Balance Between Energy Investments and Public Concerns” in J Levashova, T Lambooy and E Dekker (eds), Bridging the Gap between International Investment Law and the Environment (Den Haag, Eleven Publishing 2016) 339 Google Scholar.

59 Case C-126/97 Eco Swiss, EU:C:1999:269.

60 The grounds prescribed in Art V of the New York Convention can be summarised as follows: grounds related to procedural justice, such as incapacity of parties (Art V(1)(a)); lack of proper notice or other inability of the party to present the case (Art V(1)(b)); the award is beyond the scope of arbitration (for example, excess of mandate or power) (Art V(1)(c)); irregularities in the composition of the arbitral tribunal (Art V(1)(d)); the award is suspended under the law of the country in which it was made (Art 1(V)(e)); and grounds related to substantive reasons, such as public policy grounds (Art V(2)). These grounds are also incorporated into the UNCITRAL Model Law on International Commercial Arbitration in Art 36(1).

61 Art 53 of the ICSID Convention.

62 Q Declève and I Van Damme, “Achmea: Potential Consequences for CETA, the Multilateral Investment Court, Brexit and other EU trade and investment agreements”, International Litigation Blog, 13 March 2018.

63 In Electrabel, the Tribunal took the view that: “when it is not applied as international rules under the ECT, EU law must in any event be considered as part of the Respondent’s national legal order, i.e. to be treated as a ‘fact’ before this international tribunal” (4.127). “The importance of rules contained in a national legal order, as a factual element to be taken into account, has long been acknowledged by international tribunals” (4.128). A similar approach was later endorsed by the ICSID tribunal in El Paso v The Argentine Republic (El Paso Energy International Company v The Argentine Republic (ICSID Case No ARB/03/15) (US/Argentina BIT), Award of 31 October 2011, paras. 135 and 141). The Tribunal held that: “where a binding decision of the European Commission is concerned, even when not applied as EU law or international law, EU law may have to be taken into account as a rule to be applied as part of a national legal order, as a fact” (4.129).

64 Art 26(6) ECT.

65 Para. 4.195. See Bonafé, E and Mete, G, “Escalated interactions between EU energy law and the Energy Charter Treaty” (2016) 9(1) The Journal of World Energy Law and Business 174, 177–179 Google Scholar.

66 See the case law quoted in the Opinion of AG M Wathelet, para. 156.

67 Art 30.6.1.

68 Achmea, para. 35.

69 Lavranos, N, “After Achmea: the need for an EU investment protection regulation”, Kluwer Arbitration Blog, 17 March 2018 Google Scholar.

70 So far, the ECtHR dealt with cases amounting to quasi-expropriation. See Zubani of 7 August 1996 confirmed by the judgments of 30 May 2000, Belvedere Alberghiera v Italy and Carbonara and Ventura v Italy.

71 However, this appears to be unlikely as the lack of any grounds for challenge (see Art 53 of the ICSID Convention) or of extensive control represents precisely one of the advantages of international arbitration.

72 Schepel, H, “From Conflicts-Rules to field Preemption: Achmea and the Relationship between EU Law and International Investment Law and arbitration”, European Law Blog, 23 March 2018 Google Scholar.