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Investment Arbitration and EU Law

  • Juliane KOKOTT (a1) and Christoph SOBOTTA (a1)
Abstract
Abstract

Investment arbitration is based on international agreements and operates in parallel to the EU legal and judicial system. Therefore conflicts between EU law and investment protection are possible. These may result from the substantial investment protection standards, but also from the operation of a parallel system of judicial protection. The EU law position on such conflicts will depend on whether the investment agreement was concluded between Member States, between Member States and other countries, or between the EU and other countries.

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This paper is a revised version of the Mackenzie-Stuart Lecture given by Advocate General Kokott at the Centre for European Legal Studies, University of Cambridge, 26 February 2016. The authors are grateful to Katharina Diel-Gligor and Stephanie-Marleen Raach who provided invaluable support in the preparation of this lecture.

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1 According to, eg TietjeC, ‘EU-Investitionsschutz und -förderung zwischen Übergangsregelungen und umfassender europäischer Auslandsinvestitionspolitik’ (2010) 21 (17) Europäische Zeitschrift für Wirtschaftsrecht 647 , note 36, the first treaty providing for investment arbitration was the Treaty between the Federal Republic of Germany and Pakistan for the Promotion and Protection of Investments, concluded at Bonn on 25 November 1959, Bundesgesetzblatt 1961, Teil II, p 794 ff.

2 Cf CaixaBank France, C-442/02, EU:C:2004:586, concerning a prohibition on banks to pay interests on certain deposits.

3 International Centre for Settlement of Investment Disputes.

4 United Nations Commission on International Trade Law.

5 Stockholm Chamber of Commerce.

6 International Chamber of Commerce.

7 For example, in ICSID cases, the ICSID annulment mechanism under Art 52 ICSID Convention is limited to procedural issues and does not include a review on the merits. Under other arbitration regimes, eg UNCITRAL, the review of awards in set-aside proceedings or in enforcement proceedings before ordinary courts may allow for a control based on the ‘public policy’ exception of Art V(2)(b) New York Convention.

8 Investor-State-Dispute Settlement: An Information Note on the United States and the European Union (UNCTAD, June 2014), Issues Note 2, p 3.

9 Vattenfall AB and others v Germany, ICSID Case No ARB/12/12.

10 Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora [1992] OJ L206/7.

11 Vattenfall AB, Vattenfall Europe AG, Vattenfall Europe Generation AG v Germany, ICSID Case No ARB/09/6, Award of 11 March 2011.

12 Press release IP-15-4669 of 26 March 2015. Case C-142/16, application lodged at the Court [2016] OJ C165/13.

13 EilmansbergerT, ‘Bilateral Investment Treaties and EU Law’ (2009) 46 (2) Common Market Law Review 383 , p 410.

14 But see TietjeC and WackernagelC, ‘Outlawing Compliance? – The Enforcement of Intra-EU Investment Awards and EU State Aid Law’ (2014) 41 Policy Papers on Transnational Economic Law .

15 Cf Micula v Romania, ICSID Case No ARB/05/20 and subsequently in the General Court Cases Micula v Commission, T-694/15, application [2016] OJ C38/69 and Micula and Others v Commission, T-704/15, application [2016] OJ C68/30; see also Tietje and Wackernagel, note 14 above, p 7 ff.

16 See eg Electrabel SA v Republic of Hungary, ICSID Case No ARB/07/19 (ECT Belgium – Hungary) of 30 November 2012, 4.112.

17 Further elaborations in WehlandH, ‘Intra-EU Investment Agreements and Arbitration: Is European Community Law an Obstacle?’ (2009) 58 (2) International and Comparative Law Quarterly 297 , p 303 ff.

18 See Commission v Italy, 10/61, EU:C:1962:2 and Matteucci v Communauté française de Belgique, 235/87, EU:C:1988:460, para 22.

19 See Ravil, C-469-00, EU:C:2003:295, para 37.

20 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, [1998] OJ L69/1.

21 Intertanko and Others, C-308/06, EU:C:2008:312, paras 42, 53.

22 See note 16 above, 4.109, 4.110.

23 Ibid, 4.112.

24 Cf ibid, 4.130 ff.

25 Commission Press Release IP 15/5198 of 18 June 2015.

26 Cf the presentation of the Commission’s position in Eastern Sugar BV (Netherlands) v The Czech Republic, UNCITRAL, SCC Case No 088/2004, Partial Award of 27 March 2007, para 126, and subsequently European Commission, Staff Working Document on the Free Movement of Capital in the EU of 15 April 2013 (SWD (2013) 146 final, p 11 [Council Document ST 13023 2013 INIT]) as well as Staff Working Document on the Free Movement of Capital and the Freedom of Payments of 30 March 2016 (SWD (2016) 105 final, pp 29, 30 [Council Document ST 8123 2016 INIT]).

27 This is the position of Eilmansberger (see note 13 above), pp 402, 403.

28 D, C-376/03, EU:C:2005:424, para 62.

29 Damseaux, C-128/08, EU:C:2009:471, paras 26 and 27 with further references.

30 Cf Opinion 2/13 (Accession to the European Convention on Human Rights), EU:C:2014:2454, paras 168, 191–194; and Allianz, C-185/07, EU:C:2009:69, para 30.

31 See Art 1(6) Energy Charter Treaty, para 3.

32 Nordsee v Reederei Mond, C-102/81, EU:C:1982:107 and Eco Swiss, C-126/97, EU:C:1999:269.

33 Eco Swiss, ibid, para 35.

34 Art 54(1) ICSID Convention. Cf Eilmansberger, see note 13 above, p 427.

35 See note 16 above, 4.162. See also Eilmansberger, note 13 above, p 406.

36 Opinion, C-1/09, EU:C:2011:123, para 88.

37 Nordsee, see note 32 above; see also Denuit and Cordenier, C-125/04, EU:C:2005:69.

38 Cf BasedowJ, ‘EU Law in International Arbitration: Referrals to the European Court of Justice’ (2015) 32 (4) Journal of International Arbitration 367 .

39 Handels- og Kontorfunktionærernes Forbund i Danmark v Dansk Arbejdsgiverforening, 109/88, EU:C:1989:383, paras 7–9; and Ascendi Beiras Litoral e Alta, Auto Estradas das Beiras Litoral e Alta, C-377/13, EU:C:2014:1754, paras 22–35; as well as order in Merck Canada, C-555/13, EU:C:2014:92, paras 15–25.

40 Judgments in Nordsee, see note 32 above, paras 14, 15; and in Eco Swiss, see note 32 above, paras 32, 33, 40.

41 SandsP, ‘Developments in Geopolitics – The End(s) of Judicialization?’, 2015 ESIL Annual Conference Final Lecture, http://www.ejiltalk.org/2015-esil-annual-conference-final-lecture-developments-in-geopolitics-the-ends-of-judicialization/ .

42 See Art 8.18 et seq of the Comprehensive Economic and Trade Agreement between Canada and the EU, http://trade.ec.europa.eu/doclib/docs/2016/february/tradoc_154329.pdf, and Ch 13 of the EU-Vietnam Free Trade Agreement, http://trade.ec.europa.eu/doclib/press/index.cfm?id=1437; for earlier discussions within the Commission see HoffmeisterF and AlexandruG, ‘A first glimpse of light on the emerging invisible EU Model BIT’ (2014) 15 (3–4) The Journal of World Investment & Trade 379 ; on inconsistency in investment arbitration see Diel-GligorK, Towards Consistency in International Investment Jurisprudence: A Preliminary Rulings System for ICSID Arbitration (Nomos, forthcoming), ch 2 .

43 Achmea BV (formerly Eureko) v Slovak Republic, UNCITRAL, PCA Case No 2008-13, Award of 7 December 2012.

44 OLG Frankfurt, 26 Sch 3/13, Order of 18 December 2014.

45 BGH, I ZB 2/15, registered as case C-284/16 Achmea.

46 Micula v Commission and Micula and Others v Commission, see note 15 above.

47 Micula v Romania, see note 15 above.

48 Commission Decision (EU) 2015/1470 of 30 March 2015 on State aid SA.38517 (2014/C) (ex 2014/NN) implemented by Romania — Arbitral award Micula v Romania of 11 December 2013, [2015] OJ L232/43.

49 Bundesgesetzblatt 2005 Teil II, 733 ff.

50 Commission v Slovakia, C‐264/09, EU:C:2011:580.

51 See the List of the bilateral investment agreements referred to in Art 4 (1) of 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 2015 C135, p 1.

52 See the Opinion of Advocate General Kokott in Commune de Mesquer, C-188/07, EU:C:2008:174, para 95.

53 Commission v Austria, C-203/03, EU:C:2005:76, para 61.

54 Commission v Austria, C-205/06, EU:C:2009:118; Commission v Sweden I, C-249/06, EU:C:2009:119; Commission v Finland I, C-118/07, EU:C:2009:715.

55 Cf the submissions by certain Member States, reproduced in Commission v Sweden I, EU:C:2009:119, para 23.

56 Joined judgments Kadi v Council and Commission, C-402/05 P and Al Barakaat International Foundation v Council and Commission, C-415/05 P, EU:C:2008:461.

57 Cf van AakenA, ‘International Investment Law and Targeted Sanctions: An Uneasy Relationship’ (2015) 9 (1) Bucerius Law Journal 1 .

58 KleinheisterkampJ, ‘Investment Protection and EU Law: The Intra- and Extra-EU Dimension of the Energy Charter Treaty’ (2012) 15 (1) Journal of International Economic Law 85 , pp 89–91, mentions performance requirements, that is quotas for intra-EU production, and, less convincingly, the public policy exceptions of the fundamental freedoms.

59 See Faust v Commission, 52/81, EU:C:1982:369, para 25; Germany v Council, C-122/95, EU:C:1998:94, para 56; as well as Vatsouras and Koupatantze, C-22/08 and C-23/08, EU:C:2009:344, para 52.

60 Haribo Lakritzen Hans Riegel, C-436/08 and C-437/08, EU:C:2011:61, para 35.

61 Regulation (EU) No 1219/2012 of the European Parliament and the Council establishing Transitional Arrangements for Bilateral Investment Agreements between Member States and Third Countries [2012] OJ L351/40.

62 Art 3 Regulation (EU) No 1219/2012.

63 Ibid, Rec 11.

64 Application for Opinion 2/15, [2015] OJ C363/18.

65 Opinion 1/91 (European Economic Area I), EU:C:1991:490, paras 40, 70; Opinion 1/09 (European Patent Court), EU:C:2011:123, para 74; and Opinion 2/13, see note 30 above, para 182.

66 Opinion 2/13, see note 30 above.

67 Cf HindelangS, ‘Repellent Forces: The CJEU and Investor-State Dispute Settlement’ (2015) 53 (1) Archiv des Völkerrechts 68, p 84 ff.

68 Opinion 2/13, see note 30 above, para 236.

69 Ibid, para 246.

70 Cf Opinion 2/13, see note 30 above, para 169 as well as Art 6(3) TEU and Art 52(3) of the EU Charter of Fundamental Rights.

* This paper is a revised version of the Mackenzie-Stuart Lecture given by Advocate General Kokott at the Centre for European Legal Studies, University of Cambridge, 26 February 2016. The authors are grateful to Katharina Diel-Gligor and Stephanie-Marleen Raach who provided invaluable support in the preparation of this lecture.

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Cambridge Yearbook of European Legal Studies
  • ISSN: 1528-8870
  • EISSN: 2049-7636
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