European Commission Issues Procedural Proposals For The Investment Court System Envisaged Under CETA

Author:Mr Andrew Cannon, Iain Maxwell and Helin Laufer
Profession:Herbert Smith Freehills
 
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In October 2019, the European Commission (the "Commission") presented four proposals (the "Proposals") to the Council of the European Union (the "Council") with specific rules to establish the Investment Court System ("ICS") envisaged under the EU-Canada Comprehensive Economic and Trade Agreement ("CETA"). If the Council and the EU Member States approve the Proposals, the EU will seek to agree them with Canada. The Proposals would enter into force upon the ratification of the CETA by all EU Member States.

Background

On 30 October 2016, the EU and Canada signed the CETA, which is to be implemented and applied through the CETA Joint Committee. While some of the provisions in the CETA have started applying in advance of the CETA's ratification, some substantive investor protections and the ICS do not apply yet. Please see our previous PIL Notes posts for further information about the negotiations and background of the CETA, as well as the compatibility of the CETA's ICS provisions with EU law (read more here and here).

The ICS is a new approach to investment-related disputes, which, according to the EU, eliminates the risk of abuse and safeguards the right to regulate in the public interest. The same dispute resolution approach has been taken in the agreements which the EU has negotiated with Singapore, Vietnam and Mexico. In addition, the EU has committed to this approach at a multilateral level as well, as it is seeking to attract international support for the establishment of a Multilateral Investment Court, as part of the discussions which are currently taking place in Working Group III ("WG III") of the United Nations Commission on International Trade. For further information about the EU's position in WG III, please see our previous PIL Notes post here. We have also published about the background of these WGIII discussions here and here.

The Commission's Proposals concern four issues in relation to the ICS: (i) the administrative and organisational framework on the proposed Appellate Tribunal; (ii) the code of conduct applicable to adjudicators; (iii) the adoption of mediation rules; and (iv) interpretations to be adopted by the CETA Joint Committee.

The Appellate Tribunal

According to Article 8.28.7 of the CETA, the CETA Joint Committee shall decide certain administrative and organisational matters with regard to the Appellate Tribunal. The relevant Proposal sets out the EU's position on these matters, which include the selection...

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