an european approach to bits, mits and isds

Emanuela Matei Of Counsel Mircea amp Partners httpsselinkedincominemanuelamatei 0046-735576666

An European approach

to BITs MITs and ISDSWhy the Investor-State Dispute Settlement has become such a

controversial matter


Tangible reality Micula Case and the

inclusion of ISDS in the TTIP

Two current events have brought the questions of international investment

law international arbitration and intra-EU bilateral trade agreements closer

to the public eye The issue of inherent conflict between law and politics

pacta sunt servanda and the right to regulate public and commercial

interests commitments undertaken under EU Treaties and obligations

imposed by BITs and MITs is no longer just an academic concern

1st Micula Dispute starting in 2005 closed with an award in favour of the

investor in 2013 An annulment request was brought by Romania in April 2014

2nd TTIP project a trade agreement between US and EU initiated in June

2013 at the G8 summit in Lough Erne


What can be said about the public

European-International divergent viewsThere are many perspectives that can be used in order to scrutinise the interaction between thenational-supranational-international levels of public protection of invested interests

Political ndash Sovereignty and Democracy and the central role of the nation state

Historical ndash The system was created for a different purpose under different historicalconditions before globalisation and constitutionalisation of international law Is 1950-thinking still relevant now-a-days in a global trade liberalised context

Practical ndash Enforceability amp Necessity Renegotiation of BITs bringing them in line with EU law

Legal ndash Inconsistency and Arbitrariness Kompetenz-Kompetenz

The solutions also can point towards distinct directions

Maintaining the system as it is There is no conflict that must be addressed

Maintaining the system while amending it Changes are necessary

Abolishing the system The national courts shall be empowered to grant remedies for abreach of BIT Systemic flaws cannot be addressed by amendments a radical change isneeded A parallel system of justice is not justified Why is an investor more than a EU-citizen


The European already classic ambiguity

A certain political indecision or confusion characterises the public discourse

- At the EU level there are Member States in favour and other Member States

against the inclusion of ISDS in the TTIP

- Also a difference of opinions exists between DG Trade and DG Competition

inside the European Commission

- In Romania the uncertainty and hesitation during the time of pre-accession

to the EU led to the signing of the BIT with Sweden and a series of legislative

measures in favour of investors but against the EU law

- In Romania the difference of opinions has been manifested between the

Government and the Competition Council in a sense a replication of the

conflict between DG Trade and DG Competition at a smaller scale


A happy marriage between the market and

the multi-layered stateEastern Europeans are generally more favourable to the ISDS and TTIP than the citizens of the oldMember States France Germany Luxembourg and Austria

A less critical view as regards the ISDS inclusion makes sense acknowledging the aspiration to fullydepart from the communist past The Micula case shows nevertheless that there is a lot oftension between these three spheres trade law competition law and foreign investor right ofaccess to arbitral justice

Arbitral justice is a parallel avenue an alternative to the national system of courts It meant tooffer a safer and effective protection and in the same time the very existence of this parallelsystem it presupposes that the system of national courts which is good enough for you and meis not good enough for the foreign investor The issue of reverse discrimination is open to debatebut also the observance of free movement provisions in Article 49 TFEU and protection ofcompetition in Article 107 TFEU

The state intervention made possible the accession to the EU and the signing of so many BITsMoreover markets are nothing but a regulatory space (even in the absence of states marketswould comply with rules) State made rules in the liberal society aim to deal with marketfailures thus they have a corrective function Competition law including state aid control meansto maintain competition on markets where the market in itself cannot provide it


Transfer of state power in the EU and in

the international context State intervention in general must be based on democratic principles and be necessary proportionate and

efficient

In certain areas eg internal market and foreign trade the state cannot regulate efficiently and thereforethe nation state transfers power to a pool of supranational legislative authority the EU

Any transfer of power is exposed to a test of necessity and proportionality according to the federal principleof subsidiarity (Article 5(3) TEU)

In other areas the state engages in contractual obligations with other states implying as well a transfer ofsovereignty which is nevertheless temporary and limited as scope

State transfer of power to the supranational pool might overlap with the commitments previously assumedvia international treaties

Both supranational and international law are state-made laws not laws beyond the nation state

In contrast the ancient lex mercatoria has its origins in non-state law though it has made its way intodifferent national laws

The true lex mercatoria according to Ralf Michaels marks the shift in global law from a segmentarydifferentiation in different national laws to a functional differentiation It is a law beyond not without thestate

According to Michaels there is no such thing as anational law and consequently the matter of enforceabilityof arbitral awards cannot be placed outside the national forum The relation is one of interdependence andlegitimacy Even the Article 54 ICSID follows this path and assigns the Convention state to enforce arbitraldecisions as if it were a final judgment of a court in that State


Public-Private global regulatory convergence

There are two golden rules of democracy

Prevalence of public over private interest including the prevalence of competitionprotection over the protection of competitorsinvestors

Transparency of the government

The constitutional law contributes to a well functioning market by designinginstitutions procedures and substantive tools directed towards the limitation of theprevalence of the public over the private interest especially the proportionality testand the non-discrimination principle Conceptually it can be made a distinctionbetween

bull Individual justice ndash Putting victims in the driving seat as the BITICSID system

bull Constitutional justice ndash Constitution of Romania Constitutional Court

bull Pluralist justice ndash European Convention of Human Rights ECtHR

bull Market justice ndash Vote with feet move away from the bad government The choicemust be free which in reality it is not


The rise of constitutional law

Three schools of constitutionalism

1 Normative ndash national law perspective international constitutionalism

supplements the national constitutionalism In this sense only if the

protection of rights including investor rights were insufficient then a

supplement would be required The complexity of world made state-law to be

less effective

2 Functional ndash supranational law perspective a centralised authority controls

the production of international law International law protection permeates

the supranational legal order only if it passes the control test exercised by a

central authority

3 Pluralist ndash transnational law perspective constitutionalism beyond the state


Private Investor Protection versus Free

Movement amp Competition Protection

The international treaty entitles the foreign investor to a better treatment

than normally a citizen would enjoy under the national constitution EU law

WTO law or ECHR

A better treatment than the national standard may relate to

a non-state law which may become national law as an implementation of

supranational law

b illegal discrimination or

c illegal subsidiesstate aid

A better treatment may imply an illegality

A better treatment may also be allowed to permeate the supranational legal

order if it passes the test developed by CJEU in Opinion 22013


Better rights imply unequal treatmentSomething conceptually desirable such as an individual justice system that puts

the investor in the driving seat remains at odds with the EU law

Better rights for some enterprise imply discrimination against other enterprises

and potentially it may induce market foreclosure where new investors are not

enjoying the same level of protection compared with the prevailing investors or

first-movers Discrimination must be justified

Compatible state aid implies justified discrimination and therefore the

compatibility is defined narrowly and made subject to strict procedural

conditions

In some cases procedural rules may give rise to substantive rights This is the

case of Article 108(3) TFEU Itrsquos a procedural rule addressed to the Member

States not to the beneficiaries of state aid but functionally the rule ensures

substantive protection to the competitors of the beneficiary and to the

beneficiary herself in terms of protection of legitimate expectations This is the

outset of Micula state aid case


Facts in MiculaThe Europe Agreement came into force in 1995 In 1997 the European Commission didnot accept Romaniarsquos application to join the EU The 1998 Annual Report of theEuropean Commission highlighted that regional development would be key toRomaniarsquos satisfaction of the economic criteria for EU accession In 1998 and 1999the European Commission issued Guidelines on Regional Aid and the Council issued aregulation governing the application of Article 108 TFEU In 1998 and 1999 Romaniaestablished a framework to grant incentives for investment in disfavoured regions

In 1999 the Miculas began their investment in food and drink production facilities inthe disfavoured region of Stei-Nucet-Draganesti Throughout the term of theinvestment Romania repeatedly amended its regulations on regional State aid tocomply with EU law

The Romanian courts struck down certain amendments hence there was a series ofwithdrawals and reinstatements of incentives In 2005 all but one of the incentiveswere withdrawn and the Commission issued its affirmative opinion on Romaniarsquosaccession Romania signed the accession treaty in 2005 and the Miculas brought aclaim under the Romania-Sweden BIT (signed in 2002come into force in 2003)requiring compensation for the abolished incentives


Fiscal regulation and its limits The autonomy of the national state in the field of taxation is not absolute

There are limits to this autonomy that inter alia relate to

o Constitutional law of the state itself and ECHR right to property

o Union law within which free movement rules constitute lex specialis in relation to non-discriminationprinciple and the competition rules especially state aid law

o WTO law ndash non-discrimination based on origin

o International law within which the Fair and Equitable Treatment standard constitutes a form of lexspecialis itself

What happens in Micula is that a new fiscal measure inferring a fiscal advantage granted toinvestors in a certain geographical region constituted illegal state aid under Union law (1998-9) The scheme was abolished in 2005 four years earlier than it had been decided initially

Not granting that fiscal advantage constitutes according to the interpretation given by theICSID-Tribunal a breach of the FET-standard which gives ground for compensation (ICSIDCase No ARB0520 11-12-2013)

The payment of compensation constitutes in its turn a state measure covered by thedefinition of state aid in Article 107(1) TFEU it falls within the scope of the prohibition inArticle 108(3) TFEU and it is precluded by Union law in conformity with Article 108(2) TFEU(Commission Decision SA38517 30-03-2015)


ldquoDisorder of legal ordersrdquo Global law International law Interstate law BIT VCLT NYC ICSID

Supranational law Law above the state EU law WTO law

Transnational law Law across the states emerging law beyond the control ofstate For instance sports or internet laws

Jus cogens ne EU law Higher-order law

Human rights Charter of Fundamental Rights General Principles of EU LawUN ECHR Social Rights Charter

New common law

Law of peoples as opposed to Law of nation states

Postnational law

Where to place the investor protection law in this disorder of legalorders


The emerging standard of protectionTWO STANDARDS OF PROTECTION

Customary Minimum Standard consistent with Rule of Law

Higher Treaty Standard In conflict with EU law since the advantages enjoyed by Member States areinseparable from the obligations imposed by the EU Treaties

Absolute standards so called protection against regulatory expropriation (Frivolous Ambiguous)

Fair and Equitable Treatment (Subjective Arbitrary)

Full protection and security (Consistency)

Relative standards ndash Non-discrimination which is the DNA of EU law and the cornerstone of WTO law

National Treatment

Most favoured nation treatment (MFN)

Is there any place left for regulatory competence to legislate in the public interest with reference toindirect expropriation which in principle can be anything

Are these real problems that must be fixed

Who is foreign anyway in a global world

Who has the competence to perform the balance test

Is there a need for an appeal mechanism

Should all trade risks be secured and to which extent


DG Competition monitoring activities and

analysis of intra-EU BITsThere are around 190 Bilateral Investment Treaties between EU Member States (intra-EU BITs) concluded almost exclusively between old (EU-15) and new (EU-12)Member States or between two EU-12 countries at a time when at least onecontracting party was not yet a Member of the European Union

The regulatory overlap between intra-EU BITs and EU legislation gives rise to a numberof problems In the Commissions view intra-EU BITs are not compatible with the EUinternal market because they only cover investment from the respective BIT partnercountry and not from all EU Member States and provide for parallel jurisprudencethrough arbitration procedures In this way these treaties conflict with thejurisdiction monopoly of the CJEU on EU law questions

There is an increasing number of arbitration procedures going on whereby investorsbased in one Member State invoke a BIT in order to claim damages from anotherMember State The three CJEU judgments (Case C-20506 Case C-24906 Case C-11808) on the incompatibility of BITs provisions on the transfer clause also showedclearly the regulatory overlap between investment agreements and the Treaty

Regarding this issue the Commission is in close contact with the Member States andhas repeatedly reiterated that the incompatibility of intra-EU BITs with EU law meansthat they have to be brought to an end


VCLT - a body of consolidated international

law of treaties Under Article 3(b) VCLT the fact that the VCLT doesnrsquot apply to international agreements

concluded between States and other subjects of international law (such as the EU) is not toaffect the application of VCLT-rules which are an expression of general internationalcustomary law to the EU and its member states in their entirety

Rules of general international customary law are binding upon the EU institutions and formpart of the Union legal order (see to that effect Racke paragraphs 24 45 and 46)

Pursuant to Article 31 VCLT a treaty is to be interpreted in good faith in accordance with theordinary meaning to be given to the terms of the treaty in their context and in the light of itsobject and purpose In that respect account is to be taken together with the context of anyrelevant rules of international law applicable in the relations between the parties (see to thateffect inter alia Opinion 191 [1991] ECR I-6079 paragraph 14 Case C-41696 El-Yassini [1999] ECR I-1209 paragraph 47 Case C-26899 Jany andOthers [2001] ECR I-8615 paragraph 35)

Article 30(4)(b) VCLT agrees with Article 351(1) TFEU

Article 26 VCLT embodies the principle of ldquopacta sunt servandardquo which can not beinterpreted against EU law as means to evade state liability in the event of a breach of EUlaw (see by analogy Case C-47003 AGM-COSMET [2007] ECR I-02749 paragraph 72)

ECO Swiss doctrine applies for the state aid prohibition as it does in cartel cases since thereis no differentiation between public and private arbitration in EU law that could have abearing on the scope of its application (See also Burgstaller pp 472-3)


No actual conflict in the meaning of VCLT The Tribunal upheld that it retained jurisdiction to adjudicate cases related to intra-EU

BITs (Electrabel Micula Eastern Sugar) and that Romaniarsquos accession to the EU did not

terminate the BIT signed with the member state Sweden Tribunal didnrsquot accept the

argument that the EU law may displace a pre-existent BIT (Eureko)

However the CJEU clarified that treaties concluded by MSs with acceding states

cannot in relations between the MSs be applied to the detriment of the objectives of

EU law (see to this effect Case 28686 Deserbais [1988] ECR 4907 paragraph 18 Joined Cases C-24191 P and C-24291 P RTE and

ITP v Commission [1995] ECR I-743 paragraph 84 Case C-30108 Bogiatzi [2009] ECR I-10185 paragraph 19 Case C-53308 TNT Express

Nederland [2010] ECR I-04107 paragraph 52)

The Commission required the termination of intra-EU BITs (See EC Letter of January 13 2006 quoted in

Eastern Sugar 27 March 2007 SCC Case No 0882004 Partial Award para 119 and the three judgments in Case C-20506 Case C-24906

Case C-11808)

According to EU law the conflicting obligations arenrsquot displaced but they become

inapplicable this is what the primacy principle infers that a MS shall disapply an

obligation found in breach of EU law

The ICSID decision only entitles an investor to receive compensation it does not set

aside the Romanian legislation on state aid but it penalises Romania for setting in

place this legislation


What is the nature of conflict According to the conferral principle the MSs remain lsquothe masters of the Treatiesrsquo because

they possess Kompetenz-Kompetenz within which they define their own competences and

those of the Union CJEU has long asserted its Kompetenz-Kompetenz to determine the limits

of EU authority

After Opinion 22013 it is crystal clear that this question of interpreting whether a higher

level of protection concurs with EU law will never be left at the discretion of a non-EU

forum On the other side the ICSID system takes for granted that an award would be

enforceable under any circumstances and it makes this assumption in a context where a

substantively erroneous arbitral decision cannot be corrected amended or annulled

As previously discussed a BIT is not law beyond state Itrsquos a synallagmatic contract concluded

between Sweden and Romania that cannot go any further than the intention of the parties

In this sense it is clear that Sweden EU Member State since 1995 and Romania an acceding

state with a fixed date of accession couldnrsquot have aimed to conclude a BIT that obliged them

to depart from their EU law onuses This is nevertheless the assumption made by the ICSID-

Tribunal in its imaginative interpretation of the BIT

The Tribunal interprets the BIT as a deviation from the accession course without giving any

solid argumentation why Sweden and Romania would have aimed to reach such an

agreement The interpretation is unreasonable since it infers an intent not to fulfil Treaty

obligations


Arbitral Tribunal disregards the issue of

unenforceability The Arbitral Tribunal provides a disruptive interpretation of the BIT obligations and moreover it ignores the

question of enforceability

Article 54(1) ICSID ldquoEach Contracting State shall recognize an award rendered pursuant to this Conventionas binding and enforce the pecuniary obligations imposed by that award within its territories as if it werea final judgment of a court in that Staterdquo

In essence the questions at bar relate to what are usually called the negative (or preclusive) and thepositive (or conclusive) effects of res judicata of arbitral awards

1 The first have to do with the effect of preventing further litigation on a matter that has formed the subject of a priorarbitral award FET standard and state aid compatibility with the internal market are two different matters

2 The second have to do with the effects of the decisions contained in an award in other proceedings whether or notbetween the same parties

In Micula case the effect of the award (2nd type) is precluded by EU law First the BIT is not binding on theEU and its institutions and in addition the principle of effet utile requires that the national court sets asidethe award and gives priority to the state aid prohibition (Lucchini doctrine)

A national court which is called upon within the exercise of its jurisdiction to apply provisions of EU law isunder a duty to give full effect to those provisions if necessary refusing of its own motion to apply anyconflicting provision of national legislation (see inter alia Case 10677 Simmenthal [1978] ECR 629paragraphs 21 to 24 Case 13078 Salumificio di Cornuda [1979] ECR 867 paragraphs 23 to 27 and Case C-21389 Factortame and Others [1990] ECR I-2433 paragraphs 19 to 21)


Res judicata in EU law The national legal systems of all the Member States include the principle

of res judicata The lodging of a fresh appeal with the same subject-matter thesame parties and the same arguments is ruled out

However a lawsuit on the compatibility of a state aid may never take placebetween the state and the state aid beneficiary but it always involves theCommission and the state or the Commission and a state aid beneficiary or otherinterested party Hence it is clear that the preclusive effect is irrelevant TheCommission does not decide on the same subject-matter the same parties and thesame arguments

Despite the major importance to be attached to res judicata its effect is notabsolute(Case C-11905 Lucchini ECR 2007 I-06199)

The application of res judicata that prevents the recovery of State aid granted inbreach of Union law which has been found to be incompatible with the internalmarket in a decision of the Commission which has become final would beprecluded by EU law

ldquoAs if it were a final judgment of a court in that Staterdquo in Article 54(1) impliesthat the conclusive effect of an arbitral decision does not enjoy absoluteprotection given that the res judicata effect of a national court decision in itsturn is not absolute


Summary of previous observations

BIT and state aid law do not treat the same subject-matter (as Article 30(3) VCLT

requires)

BIT and EU Treaties are not incompatible from their inception (matter of

interpretation)

EU Treaty doesnt supersede automatically the BIT (Article 59 VCLT)

The compatibility of investor-state dispute settlement mechanism with the EU judicial

system is a major problem Who has the competence to finally interpret the matter

o CJEU as a matter of interpretation of the Treaties

o ICSID as a matter of interpretation of the BIT

This set reminds of the issue of interpretation of human rights in EU law and the

division of competences between CJEU and ECtHR The protection of investor rights

by EU law could be considered to be equivalent to that of the BIT-ICSID system

Consequently a presumption would arise that a MS did not depart from the

requirements of the BIT when it implemented legal obligations flowing from its EU

membership


Status-quo Values in tension Currently the Arbitral Tribunals adopt an interpretation according to which a

Member State departs from the requirements of the BIT when it implements

legal obligations flowing from its EU membership

Arbitral Tribunals do not agree with the constitutional theory of high-order

overlap (Eureko)

So none of the usual tools of determining a conflict of norms in international

law was found to be useful by the Tribunals it seems that there is no point of

concurrence between the two legal orders

A point of convergence somewhere in the domain of principles of

international law that as shown before are binding on the EU and all its

member states must be identified

This point may be the protection of legitimate and reasonable expectations of

the investor in the context given by the accession to the EU of the host state

The FET is interpreted as a reflection of the principle of legal certainty


Legitimate and Reasonable The legitimacy of the expectations is deeply rooted in the BIT context and the

principle of legal certainty

The reasonableness follows from placing the legitimate expectations in the

context of the Accession Treaty and the principle of regulatory flexibility

One can rely in good faith on the premise that the future conduct of the

government will follow a certain trajectory unless there are compelling

reasons not doing so

It is not reasonable to assume that a government will never amend its

legislation however in the interpretation of the ICSID tribunals the FET

standard includes also a commitment of general nature called general

stability of the regulatory framework

Is it reasonable to affirm that the conduct of the government related to

alignment of its legislation to the acquis led to the destabilisation of the

regulatory framework to such extent that it implied a breach of the FET


Intention of the state to commit itself is

seen as irrelevant Where the state has acted in such a way so as to generate a legitimate expectation and the

investor has relied on that expectation to make its investment action by the state thatreverses or destroys those legitimate expectations will be in breach of the FET standard andthus give rise to compensation (Micula award paragraph 667)

There must be a promise assurance or representation attributable to a competent organ orrepresentative of the state which may be explicit or implicit (Micula award paragraph 669)

It is irrelevant whether the state in fact wished to commit itself it is sufficient that it actedin a manner that would reasonably be understood to create such an appearance (Micula awardparagraph 669)

A factual assessment must be undertaken in consideration of all the surroundingcircumstances (Micula award paragraph 669)

The question is whether a promisee (the investor) could reasonably understand that apromisor (the acceding state) would breach its previous commitments to a different promisee(the EU and all its member states) in order to satisfy the expectations of the first namedpromisee

Pacta sunt servanda beyond the intent of the state to commit itself would exercise a meta-function very similar with the principle of effectiveness in EU law the aim would be toacquire an effective protection of the values placed at the core of ICSID law


A point of major doctrinal splitEU law is uncompromising in relation to the breach of the standstill clause leaving noroom for legitimate expectations of a beneficiary of incompatible state aid since asexplained before the public interest of protecting competition is seen as superior tothe private interest of the beneficiary to retain an illegal advantage granted by a MSin breach of its Treaty obligations

ICSID on the other hand it interprets legitimate expectation as a belief that anygranted aid is compatible with the internal market otherwise it wouldnrsquot be grantedby a member state This is the point of major doctrinal split since the ICSID approachreverses by 180 degrees the rationale of state aid control and it denies the exclusivecompetence of the Union institutions in this field of law

There is no way in which the CJEU would allow that international legal obligationsderived from an intra-EU BIT overtrump the autonomy of EU law and this finding is soelementary as almost anybody could figure it out in a couple of minutes

Later on the ICCJ (Supreme Court of Romania) dealing with the matter ofenforceability would have to refer for preliminary ruling under Article 267(3) TFEUand the CJEUrsquos answer in the light of doctrine of effet utile will be undoubtedlyunfavourable for Micula (See Burgstaller p 474)


One million questions_ _ _ One answer Why did the Commission allow Romania to accede in 2007 despite the fact

that it had not terminated the intra-EU BITs

Why did the Commission allow the counterparties (whoever they were interalia Sweden) to maintain the intra-EU BITS signed with an acceding statesuch as Romania

Why did Romania negotiate and concluded intra-EU BITs during the period ofpre-accession (The objective of attracting more investments is kind of a fairy tale there is noevidence on the correlation between an increase of investments calculated in dollars and euros andthe signed BITs)

Why didnrsquot Sweden terminate all its intra-EU BIT or at least eliminate theincompatibilities following the judgment in Case C-24906

How can the EU start to negotiate the TTIP before solving internally thequestion of compatibility between the autonomy of the EU legal order andthe ISDS

One answer The Member States didnrsquot question the compatibility of theintra-EU BITs and expected that the ICSID Tribunal would interpret the BIT inline with their membership obligations


Pacta sunt servanda beyond the state Every agreement of a legal nature domestic or international whether it is a

contract between individuals or a treaty between states presupposes that inconcluding the agreement the parties acted with the intention to abide by itsprovisions

Micula award case states that ldquoIt is irrelevant whether the state in factwished to commit itself it is sufficient that it acted in a manner that wouldreasonably be understood to create such an appearancerdquo (Micula award paragraph 669)

ldquoNo doubt it is true to say that international law is made for States and notStates for international law but it is true only in the sense that the State ismade for human beings and not human beings for the Staterdquo (Lauterpacht pp 438-9)

1 International law creates basic rights and duties of the individual besides rightsand duties of states

2 In addition to treaties and customs the sources of international law includegeneral principles of law which are independent of state will

3 1+2 The primary normative unit is the individual rather than the State The ruleof law represents a method to empower individuals


An attempt to re-create order

The use of principle of conferral and subsidiarity can open a new perspective

Exactly as the borders between EU competences and MS are governed by theprinciple of conferral so should the relation between the internationalinvestment order and the EU be clarified in the sense that competences notconferred upon an external organisation remain with the EU

The conferral must be clear unconditional and explicit

For issues where the competences may overlap such as the commercialpolicy the principle of subsidiarity should apply in the sense that only whenthe objectives of a proposed action cannot be sufficiently achieved at thesupranational level an external actor can be competent to act and providethe necessary protection and the content and form of the action of thatexternal actor shall not exceed what it is necessary in order to achieve thepursued objectives

FET standard should either be compliant with the intention of the state as arule of interstate law should be or follow the postnational legal thinkingrespect the subsidiarity principle and adopt a functional philosophy


How to regulate in the global world

No market failures No public intervention is necessary

Intervention necessary + overlapping competences

o State then

o EU if the matter cannot be solved satisfactorily at the state-level then

o An external actor if the matter cannot be adequately solved at the EU-level

If each overlapping area had been governed by the principles of subsidiarity

and proportionality a contradictory approach as the one present in Micula

would have been avoided

The question of necessity and proportionality should be cardinal even during

the negotiation of ISDS inclusion into the TTIP


Letrsquos keep in touch share and discuss

information

To request membership to European Internal Market Law click Join the group

To follow updates from Mircea amp Partners click Join the company group

To follow updates from Centre for European Legal Studies click Join the group


References

1 ECtHR Case law Bosphorus Hava Yollari Turizm v Ireland App No 4503698 (Eur Ct H R 30 June

2005)

2 Eastern Sugar BV(Netherlands) v The Czech Republic SCC Case No 0882004 Micula and Others v

Romania ICSID Case No ARB0520 Electrabel SA v Republic of Hungary ICSID Case No

ARB0719 Achmea BV (Eureko) v The Slovak Republic UNCITRAL PCA Case No 2008-13

3 CJEU Case law Case C-20506 Case C-24906 Case C-11808 Opinion 191 Opinion 22013 AGM-

COSMET Bogiatzi Deserbais Eco Swiss El-Yassini Factortame and Others Jany and Others

Lucchini RTE and ITP v Commission Racke Salumificio di Cornuda Simmenthal TNT Express

Nederland

4 SA 38517 MiculaRomania (ICSID arbitration award) MiculaCommission Case T-64614 26-03-2014

to 30-03-2015

5 Ministry of Finance RomaniaMicula Court of Appeal Bucharest Case 1575532014 14-01-2015

pending

6 European CommissionBanking and FinanceFree Movement of CapitalEnforcement and

MonitoringMonitoring activities and analysis 11-11-2014

7 Transatlantic Trade and Investment Partnership (T-TIP) 9th Round of Negotiations NY 20-24 April

2015


Books amp Articles

1 Sadie Blanchard What can a foreign investor in a future member state legitimately expect

Negotiating legal certainty and regulatory flexibility during the accession (2014)

2 Dr Taida Begić Šarkinović Towards Shaping the New EU Investment Policy (2014)

3 Hege Elisabeth Kjos Applicable Law in Investor-State Arbitration The Interplay Between National

and International Law OUP (2013)

4 Karl-Heinz Boumlckstiegel An Arbitratorrsquos Perspective of BITs and their Relation to Other International

Law Obligations (2011)

5 Hersch Lauterpacht The Function of Law in the International Community OUP (2011)

6 Luca G Radicati di Brozolo Res Judicata in International Arbitral Awards 15-04-2011

7 Markus Burgstaller in Michael Waibel The Backlash Against Investment Arbitration Perceptions and

Reality KLI (2010)

8 Joseacute Enrique Alvarez A BIT on Custom 42 New York University Journal of International Law amp

Policy 17 (2009)

9 Ralf Michaels The True Lex Mercatoria Law Beyond the State 14 IND JGLOBAL LEGAL STUD 447

452ndash60 (2007)


Thank you for your time

and attentionEmanuela Matei

CELS researcher


An European approach

to BITs MITs and ISDSWhy the Investor-State Dispute Settlement has become such a

controversial matter















































efficient


























less effective




central authority







WTO law or ECHR



supranational law















conditions



























New common law


Postnational law










National Treatment



































Case C-11808)











of EU authority















obligations





















requires)


interpretation)











membership






overlap (Eureko)


































































o State then










information





References


2005)







Nederland


to 30-03-2015


pending




2015


Books amp Articles











Reality KLI (2010)


Policy 17 (2009)


452ndash60 (2007)




CELS researcher















































efficient


























less effective




central authority







WTO law or ECHR



supranational law















conditions



























New common law


Postnational law










National Treatment



































Case C-11808)











of EU authority















obligations





















requires)


interpretation)











membership






overlap (Eureko)


































































o State then










information





References


2005)







Nederland


to 30-03-2015


pending




2015


Books amp Articles











Reality KLI (2010)


Policy 17 (2009)


452ndash60 (2007)




CELS researcher


















less effective




central authority







WTO law or ECHR



supranational law















conditions



























New common law


Postnational law










National Treatment



































Case C-11808)











of EU authority















obligations





















requires)


interpretation)











membership






overlap (Eureko)


































































o State then










information





References


2005)







Nederland


to 30-03-2015


pending




2015


Books amp Articles











Reality KLI (2010)


Policy 17 (2009)


452ndash60 (2007)




CELS researcher






WTO law or ECHR



supranational law















conditions



























New common law


Postnational law










National Treatment



































Case C-11808)











of EU authority















obligations





















requires)


interpretation)











membership






overlap (Eureko)


































































o State then










information





References


2005)







Nederland


to 30-03-2015


pending




2015


Books amp Articles











Reality KLI (2010)


Policy 17 (2009)


452ndash60 (2007)




CELS researcher










conditions



























New common law


Postnational law










National Treatment



































Case C-11808)











of EU authority















obligations





















requires)


interpretation)











membership






overlap (Eureko)


































































o State then










information





References


2005)







Nederland


to 30-03-2015


pending




2015


Books amp Articles











Reality KLI (2010)


Policy 17 (2009)


452ndash60 (2007)




CELS researcher





















New common law


Postnational law










National Treatment



































Case C-11808)











of EU authority















obligations





















requires)


interpretation)











membership






overlap (Eureko)


































































o State then










information





References


2005)







Nederland


to 30-03-2015


pending




2015


Books amp Articles











Reality KLI (2010)


Policy 17 (2009)


452ndash60 (2007)




CELS researcher









National Treatment



































Case C-11808)











of EU authority















obligations





















requires)


interpretation)











membership






overlap (Eureko)


































































o State then










information





References


2005)







Nederland


to 30-03-2015


pending




2015


Books amp Articles











Reality KLI (2010)


Policy 17 (2009)


452ndash60 (2007)




CELS researcher




























Case C-11808)











of EU authority















obligations





















requires)


interpretation)











membership






overlap (Eureko)


































































o State then










information





References


2005)







Nederland


to 30-03-2015


pending




2015


Books amp Articles











Reality KLI (2010)


Policy 17 (2009)


452ndash60 (2007)




CELS researcher





of EU authority















obligations





















requires)


interpretation)











membership






overlap (Eureko)


































































o State then










information





References


2005)







Nederland


to 30-03-2015


pending




2015


Books amp Articles











Reality KLI (2010)


Policy 17 (2009)


452ndash60 (2007)




CELS researcher





















requires)


interpretation)











membership






overlap (Eureko)


































































o State then










information





References


2005)







Nederland


to 30-03-2015


pending




2015


Books amp Articles











Reality KLI (2010)


Policy 17 (2009)


452ndash60 (2007)




CELS researcher






overlap (Eureko)


































































o State then










information





References


2005)







Nederland


to 30-03-2015


pending




2015


Books amp Articles











Reality KLI (2010)


Policy 17 (2009)


452ndash60 (2007)




CELS researcher

























































o State then










information





References


2005)







Nederland


to 30-03-2015


pending




2015


Books amp Articles











Reality KLI (2010)


Policy 17 (2009)


452ndash60 (2007)




CELS researcher



information





References


2005)







Nederland


to 30-03-2015


pending




2015


Books amp Articles











Reality KLI (2010)


Policy 17 (2009)


452ndash60 (2007)




CELS researcher


References


2005)







Nederland


to 30-03-2015


pending




2015


Books amp Articles











Reality KLI (2010)


Policy 17 (2009)


452ndash60 (2007)




CELS researcher


Books amp Articles











Reality KLI (2010)


Policy 17 (2009)


452ndash60 (2007)




CELS researcher




CELS researcher
