EU-Canada Comprehensive Economic and Trade Agreement (CETA Opinion)

JurisdictionEuropean Union
JudgeToader,Vajda,Biltgen,Regan,Jürimäe,Levits,Rosas,Rodin,Ilešič,Bonichot,Vilaras,Bot,Šváby,Silva de Lapuerta,Lycourgos,Safjan,von Danwitz,Malenovsky,Bay Larsen,Arabadjiev,Juhász,Prechal,Lenaerts,Fernlund
CourtCourt of Justice of the European Union
Date03 April 2019

Court of Justice of the European Union (Full Court).

(Lenaerts, President; Silva de Lapuerta, Vice-President; Bonichot, Arabadjiev, Prechal, Vilaras, Regan, von Danwitz, Toader, Biltgen, Jürimäe and Lycourgos, Presidents of Chambers; Rosas, Juhász, Ilešič (Rapporteur), Malenovsky, Levits, Bay Larsen, Safjan, Šváby, Fernlund, Vajda and Rodin, Judges;Bot, Advocate General)

(EU–Canada Comprehensive Economic and Trade Agreement (CETA Opinion))1

Economics, trade and finance — Free trade agreements — International investment — “New generation” free trade agreements — Comprehensive Economic and Trade Agreement, 2016 (“CETA”) — Whether CETA's investor–State dispute settlement provisions compatible with EU primary law — Principle of autonomy of EU legal order — Principle of equal treatment — Requirement of effectiveness of EU law — Right of access to an independent and impartial tribunal — Article 47 of Charter of Fundamental Rights of the European Union, 2000

Treaties — Interpretation — Application — Free trade agreements — International investment — “New generation” free trade agreements — CETA — European Union and non-member States Parties to international agreement — Agreements integral part of EU law and subject of references for preliminary ruling to Court of Justice of the EU — Compatibility of agreements with EU Treaties, constitutional principles and EU Charter — Court of Justice of the EU having jurisdiction to interpret and apply agreements — Whether jurisdiction of Court of Justice of the EU taking precedence over jurisdiction of court of non-member State — Reciprocal nature of international agreements — Maintenance of powers of European Union in international relations — Whether jurisdiction of Court of Justice of the EU taking precedence over jurisdiction of international courts and tribunals established by agreements — Whether EU law precluding agreement from providing for creation of tribunals — Whether EU law precluding agreement from conferring jurisdiction on those tribunals to interpret and apply provisions of agreement having regard to rules and principles of international law applicable between Parties — Whether conditions applicable

Jurisdiction — Court of Justice of EU — EU and non-member States Parties to international agreement — CETA — Court of non-member State — Agreement providing for creation of tribunals — Agreement conferring jurisdiction on those tribunals to interpret and apply provisions of agreement having regard to rules and principles of international law applicable between Parties — Whether precluded by EU law — Whether jurisdiction of Court of Justice of EU having precedence — Whether CETA conferring jurisdiction on CETA Tribunal to interpret or apply EU law — Whether CETA adversely affecting autonomy of EU legal order

Damages — CETA Tribunal — CETA Appellate Tribunal — Whether CETA tribunals having jurisdiction to award damages to Canadian investors for loss suffered through EU acts of general application setting the level of protection of a public interest adversely affecting autonomy of EU legal order — Whether damages granted for a fine for breach of EU competition law found to constitute an infringement of CETA undermining the principle of effectiveness of EU law

International tribunals — CETA Tribunal — CETA Appellate Tribunal — Whether Article 47 of Charter of Fundamental Rights of the European Union, 2000 applicable to dispute resolution fora created by EU's international agreements — Whether CETA tribunals satisfying requirements of accessibility, independence and impartiality — Whether small and medium-sized enterprises' right of access to CETA tribunals impaired by the “loser pays” principle — Whether powers of CETA Joint Committee to appoint and remove Members of CETA tribunals, to determine their remuneration and to issue binding interpretations of CETA respecting requirement of independence — Whether CETA sufficiently guaranteeing impartiality of Members of CETA tribunals vis-à-vis disputing parties and government of their State of origin

Jurisdiction — CETA Tribunal — CETA Appellate Tribunal — Whether CETA tribunals having jurisdiction to assess compatibility of EU acts of general application setting the level of protection of a public interest adversely affecting autonomy of EU legal order

Relationship of international law and municipal law — EU law as domestic law — Application or interpretation of domestic law as a matter of fact — Whether power of CETA tribunals to take EU law into account as a matter of fact compatible with principle of autonomy of EU legal order

Treaties — Free trade agreements — International investment — “New generation” free trade agreements — CETA — Equal treatment of Canadian and EU investors — Whether granting access to CETA's investor–State dispute settlement provisions for investments made in EU only to Canadian investors constituting discrimination — Whether Canadian and EU investors investing in EU in comparable situations — The law of the European Union

Summary:2The facts:—The Kingdom of Belgium submitted to the Court of Justice of the European Union (the “Court of Justice”) a request for an Opinion pursuant to Article 218(11) of the Treaty on the Functioning of the European Union, 2007 (the “TFEU”)3 in order to inquire whether the investor–State dispute resolution mechanism introduced by Section F of Chapter 8 of the Comprehensive Economic and Trade Agreement, 2016 (the “CETA”), concluded between the EU and its Member States and Canada, was compatible with EU primary law.

In its request for an Opinion, the Kingdom of Belgium expressed doubts regarding the compatibility of the CETA'S investor–State dispute settlement mechanism with EU primary law and, in particular, (i) the principle of autonomy of the EU legal order; (ii) the general principle of equal treatment and the requirement of effectiveness of EU law; and (iii) the right of access to

an independent tribunal enshrined in Article 47 of the Charter of Fundamental Rights of the European Union, 2000 (“the Charter”).4

Regarding point (i), the Kingdom of Belgium expressed concerns about the fact that the CETA Tribunal would be able to examine the compatibility of EU measures with the CETA without being able to rely on an interpretation of those measures already given by the Court of Justice. It also questioned the fact that the CETA Tribunal could take into account provisions of EU primary law on the basis of which the European Union had adopted the measure in question without, however, being able to refer questions for a preliminary ruling regarding their interpretation to the Court of Justice.

As far as point (ii) was concerned, the Kingdom of Belgium queried whether the fact that EU investors could not bring a dispute against the European Union and its Member States before the CETA Tribunal, whereas their Canadian counterparts could, constituted a breach of the principle of equal treatment5 and the prohibition of discrimination on the grounds of nationality.6 It suggested that such a breach would be particularly evident where a Canadian investor sought damages on behalf of a locally established enterprise.

In particular, the Kingdom of Belgium invited the Court of Justice to examine the compatibility of Section F of Chapter 8 of the CETA with EU competition law by inquiring whether it would be compatible with the principle of equal treatment for the CETA Tribunal to award damages extinguishing the effect of a fine for breach of EU competition law should it find that such a fine was in breach of the CETA. It also questioned the compatibility of Section F of Chapter 8 with EU competition law and the principle of effectiveness of EU law in light of the fact that the effects of competition law decisions adopted by the European Commission or Member States' authorities were not safeguarded by the CETA in the same manner as decisions taken in the field of State aid law.

Regarding point (iii), the Kingdom of Belgium questioned, first, whether it was excessively difficult for small and medium-sized enterprises (“SMEs”) to obtain access to the CETA Tribunal, especially in light of the “loser pays” principle and the absence of legal aid. Secondly, it questioned the fact that the remuneration of the Members of the CETA Tribunal and Appellate Tribunal (collectively “the CETA tribunals”) was not set out in the CETA but left to

the discretion of the CETA Joint Committee. Thirdly, the Kingdom of Belgium questioned the appointment of those Members by the CETA Joint Committee without prior recommendation by an independent authority composed of significant numbers of members of the judiciary. Fourthly, it expressed doubts about the CETA Joint Committee's powers to remove Members of the CETA tribunals without involving an independent body whose decisions were open to challenge before a higher judicial body. Finally, it questioned the fact that pending the adoption of a code of conduct by the Committee on Services and Investments, the Members of the CETA tribunals were bound by the International Bar Association (“IBA”) Guidelines regarding their rules of ethics without being able to play a major role in the adoption of those Guidelines and code of conduct.

Opinion of the Advocate General

Held:—Section F of Chapter 8 of the CETA was compatible with the Treaty on European Union, 1992, the TFEU (collectively “the EU Treaties”) and the Charter.

(1) Section F of Chapter 8 of the CETA did not undermine the autonomy of EU law and, in particular, did not affect the Court of Justice's exclusive jurisdiction over the definitive interpretation of EU law.

(a) Preservation of the autonomy of the EU legal order required, first, that the essential character of the powers of the European Union and its institutions as conceived in the EU Treaties remained unaltered. Secondly, it required that the procedure for resolving disputes would not have the effect of binding the European Union and its institutions...

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