Also requested to determine whether provisions of an
Also as mentioned in the previously discussed ECJ
Opinions, there is a lack of a preliminary reference procedure. The ECJ will
agree to a system of international adjudication, which allows extra-EU courts
to refer a question to the ECJ when confronted with the interpretation of EU
law. This possibility will be discssed more in detali in part 3.
Furthermore the case law studied
above shows that, from the perspective of EU law, conferring jurisdiction on a
court or tribunal established by an international agreement does not constitute
a problem in and of itself. However, what the ECJ perceives as important is the
potential far reaching negative consequences that a decision of such courts or
tribunals could generate1.
While some academics consider
that the threat might be overstated2
or, at least, might be described as a “misconception”3,
in some authors view, as supported by the European Commissioner for Trade, is
that a risk of incompatibility with the principle of autonomy exist4.
This would particularly be the case if investor-State tribunals were to interpret
EU law in a manner that would be binding on EU institutions5.
One may argue that ICS would only interpret the international agreement that established
them and therefore any concerns related to the incompatibility with the
autonomy of EU law are unfounded. By consequence, it should be determined whether
an Investment Court could, at least potentially, be placed in a position to interpret
and apply EU law or international obligations, which somehow may involve EU law
issues. In other words, the relevant question is could an Investment Court deal
with issues that fall within the scope of EU law? Many case scenarios could
evolve regarding a situation where IC is likely to interpret and apply EU law
in the future. For example, this situation may arise if the IC is requested to
determine whether provisions of an EU secondary law instrument violate the investor’s
rights with regard to an investment protection agreement6.
In that situation, the tribunal established to examine the case would inevitably
analyse and interpret the applicable EU law provisions7.
For instance, Investment Court could decide that the utilization for State aid
granted by a Member State violates standard rules contained in the EU FTA and
award damages, when “the very same aid, however, was declared contrary to EU
law – and the Member State was asked to reclaim it from the investor”8.
Even though the autonomy of the EU legal order seems not threatened under a
formal reading of the principle, such a scenario amounts to a “selective
non-application of EU State aid law”9.
In such circumstances, the autonomy of the EU legal order could be threatened
if the ICS would interpreted non EU law and this had negative consequences on
the autonomy of EU law10.
A case before the ECJ, Micula v.
very clearly demonstrates this hypothesis. The case follows an arbitral award
of December 2013 that condemned Romania to compensate two Swedish investors, the
Micula brothers. In reaction to the arbitral award, by revoking an investment
incentive scheme in 2005, four years prior to its scheduled expiry, Romania had
did not upheld their obligations under a bilateral investment treaty between
Romania and Sweden12.
The arbitral tribunal denied the argument that when Romania joined the Union,
it changed its international obligations under the BIlateral Investment Treaty,
ICSID Convention and New York Convention13.
At the beginning when enforcement stage started, the European Commission decided
to challenge this award14.
The ended up before the ECJ and the Commission requested the Court if the decision rendered against
Romania could be regarded as an illegal State aid as. Simply speaking, if
Romania would have complied with the arbitral award and granted the damages for
the investors they inccured, Romania would be infringin EU law and particullary
the provisions forbiding illegal state aid. By complying with the arbitral award,
Romania would have infringed its obligations under Union law. This case shows
that, even when extra-EU judicial tribunals rigidly employ international law, in
this way they do not consider matters of EU law, the autonomy of the EU law
might still be infringed.
Moreover, other fundamental EU principles can be
affected. The previously examined Opinions also include among the fundamental
characteristics of the EU the principles of conferral, supremacy and direct
effect. As Micula case illustrates, EU state aid law can also become a problem
between EU and investment law. Even though under EU law the benefits given to
the investors by the Romanian authorities amount to illegal state aid, the
ICSID tribunal constituted under the Sweden-Romania BIT decided against the
host State. Some of the safeguards included in the draft text might diminish
the possibility of another Micula type case . Article 2(1) of Section 2 of the draft
text acknowledges the right of the contracting parties to regulate through
measures necessary to achieve legitimate policy objectives. Moreover, possibly
as a result of the Micula case, according to Article 2(3) of Section 2, the
decision of a contracting party not to issue, renew or maintain a subsidy shall
not constitute a breach of the provisions on investment protection. While this
might be a sufficient guarantee for state aid, the ECJ may find find an
incompatibility with general principles of EU law concerning the EU’s
constitutional architecture, and also incompatibilities could occur with
substantive provisions of EU law, such as the ones on the internal market and
competition law. This could lead to a number of possible incompatibilities.
Furthermore, another concern
involves investment related tribunals directly applying EU law in the course of
assessing the claims brought by an investor. This situation is likely if the
future EU IIA investment chapters contain applicable law clauses providing for
treaty standards and encompass the law of the host State15.
Consequently, the IC tribunal may rule on ICS law, despite the ECJ reaffirming
in Opinion 1/09 that external jurisdictions must not call into question the
Court’s exclusive task of interpreting, applying and reviewing the legality of
acts of the EU. Another crucial area is the question of responsibility when an
act or omission has caused harm to foreign investors. In fact, to reach a determination
in such a case, an investment tribunal would clearly have “to rule on the respective
competences of the EU and the Member States as regards the matters governed by
the provisions of the agreements”16.
However, as affirmed in Opinion 1/91 and repeated in Opinion 1/09, when it comes
to powers of the EU institutions, the ECJ has first and foremost exclusive
jurisdiction. Therefore, when applied to ISDS disputes, the incorporation of an
ICS in future EU IIAs or FTAs could lead to an interference with the respective
powers of the European institution and distortion of the allocation of
jurisdiction between the EU and its Member States.
It is evident, that Investment
Court can survive the control of the ECJ if it does not negatively affect the
autonomy of he EU legal order. According to the existing case law of the ECJ
after Opinion 1/09 and others, it has to be oncluded that the ECJ will not
accept extra-EU judicial system with the power granted only to the ECJ i.e. preserving
the autonomy of EU law. Apparently, the current versions of the draft, contains
in itself clauses stating that “Investment Court should apply only the agreement
and other rules and principles of international law applicable between the
Parties to the agreement, excluding domestic law, whether of the EU or Member
In this respect Article 13 entitled “Applicable law and rules of interpretation”
states that “for greater clarity, the domestic law of the Parties shall not be
part of the applicable law”18.
When the “IC will have to ascertain the implication of a provision of the domestic
law of one of the Parties as a matter of fact, it shall follow the prevailing
interpretation of that provision made by the courts or authorities of that
Such provisions attempt to safeguard the
autonomy of the EU legal order. However, the adverse negative effects that a decision
from an ICS might have on this autonomy should not be understated.
1 Markus Burgstaller, “Investor-State Arbitration in EU
International Investment Agreements with Third States” (2012).
2 Athanase Popov, Issues Raised by Investor-State Dispute Settlement under Intra-EU BITs
Union International Investment Agreements, Jean Monnet Working Papers, Paper: 06/2017.
4 European Commission Press
release, EU finalises proposal for investment protection and Court System for
12 November 2015.
5 Pernice, Ingolf, The Autonomy of the EU Legal Order – Fifty
Years After Van Gend, in 50th Anniversary of the Judgment in Van Gend en Loos,
conference proceedings, Luxembourg, 13 May 2013, p. 57).
6 Dimopoulos, Angelos, “The involvement of the EU in investor-state
dispute settlement: a question of responsibilities”, (2014) 51 CML Rev, p.
8 Hindelang Steffen, Schwarz,
Michael and Reuling, Martin,
Investor-state dispute settlement provisions in the EU s International
Investment Agreements, Volume 2 – Studies, p.143, September 2014, available
(accessed on 22 October 2017).
9 Ibid, p. 145.
11 Case T-646/14 Micula and Others v
Commission, see also Micula v Romania (ICSID arbitration award)(Case SA.38517)
Commission Decision C/393/2014 2014 OJ C 393/27.
13 IbId, para 169.
15 Supra note 190, p. 146.
16 Matthew Parish, International Courts and the European Legal
Order (2012) 23 EJIL 141.
17 Stephan W Schill, Luxembourg Limits: Conditions for
Investor-State Dispute Settlement Under Future EU Investment Agreements (2013)
18 Supra note 13, draft text of