EFFECT OF THE RECENT CJEU RULING ON THE COMPATIBILITY OF THE DISPUTE RESOLUTION MECHANISM IN CETA
At the session on investment arbitration held at the recent London International Disputes Week, the question posed to one of the panels was, “Are we Achmea-ed out?” The question was a timely one since the session came exactly one week after the Court of Justice of the European Union (CJEU) issued Opinion 1/17 of the Court. The opinion was issued at the request of Belgium, which sought a ruling on whether the dispute resolution mechanism for disputes between investors and states, contained in Chapter 8, Section. F of the Canada-EU Trade Agreement (CETA), is compatible with European Union (EU) law. The CJEU, despite its ruling in Achmea, answered this question in the affirmative.
In issuing its opinion, the CJEU has undertaken a precarious balancing act and is seeking to uphold both its rationale on investment arbitration handed down in the Achmea opinion, the legitimacy of the investor-state dispute settlement (ISDS) provisions contained in CETA, and recognition of the EU’s obligations under international law. This was clearly a difficult task. The EU has made no secret of the fact they have recently become dissatisfied with traditional investment protections and particularly with the dispute resolution mechanisms through which investors invoke those protections. The EU has pressed this view very firmly in the discussions on ISDS reform currently taking place in many international fora. Its view that the ISDS system should be dismantled and replaced with a Multilateral Investment Court (MIC) system of its own design is now widely known. The dispute resolution mechanism in CETA seems to reflect this position, to some extent, while at the same time acknowledging that eliminating investors’ rights in ISDS is likely to deter foreign investment.
Jul-Sep 2019 issue
CIArb