A Critical Appraisal of the Investment Court System Proposed by the European Commission †

By Heppner, Sonja | Dispute Resolution Journal, January 1, 2017 | Go to article overview

A Critical Appraisal of the Investment Court System Proposed by the European Commission †


Heppner, Sonja, Dispute Resolution Journal


Efforts to institutionalise investor-state dispute resolution have reached a new peak with the recent proposal by the European Commission to introduce an investment court system under international investment agreements such as the proposed Comprehensive Economic and Trade Agreement between the EU, its Member States, and Canada (CETA)1 and the proposed Transatlantic Trade and Investment Partnership between the EU, its Member States, and the U.S. (TTIP).2 Canada has agreed to the proposal by the European Commission, but, to date, the US has not warmed to the idea of institutionalised investor-state dispute resolution. This article will compare the envisaged investment court system to traditional investor-state arbitration and will explain why scepticism of institutionalisation is reasonable given its potential drawbacks.3 With the European Union already pursuing the establishment of a multilateral investment court,4 it is time to reflect on the desirability of institutionalisation in investor-state dispute resolution in the first place.

First, this article describes the European Commission's proposal to create an investment court system under CETA, before analysing the role of the CETA Joint Committee (the 'Joint Committee'), the binding nature of its decisions, and whether the Joint Committee is designed to be making decisions in the realm of the Member States' competence. Secondly, it examines whether the proposed investment court system would be a better system of dispute resolution than traditional investor-state arbitration, given the agreement between the European Council and its Member States to take decisions in the Joint Committee based on mutual consent, if these decisions impact matters within the Member States' competence. Lastly, it offers an outlook on the realisation of the investment court system.

I.THE EUROPEAN COMMISSION'S PROPOSAL

The European Commission proposes to introduce what it calls interchangeably an investment court system5 or an improved investorto-state arbitration system.6 The European Commission envisages to introduce this system under international investment agreements such as CETA and TTIP, before establishing a multilateral investment court. The proposed texts of CETA and TTIP define the investment court system as comprising of a Tribunal7 and an Appellate Tribunal.8 Even though the European Commission proposes an essentially identical means of investor-state dispute resolution under CETA and TTIP, this article focuses on the dispute resolution mechanism under CETA, which has been signed by the European Union and Canada on 30 October 2016.9

Under CETA, neither the Tribunal nor the Appellate Tribunal are designed as permanent institutions or courts. Article 8.41(5) CETA and Article 8.41(6) CETA characterise their decisions as arbitral awards for the purposes of the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention)10 and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention),11 and no permanent secretariat is created. What makes the Tribunal a semi-permanent body is that its Members - initially fifteen - are appointed by the Joint Committee for a term of five to six years,12 renewable once. The European Commission, however, does not envisage the Members of the Tribunal to work full-time in fulfilment of their functions under CETA. Article 8.27(12) CETA only envisages the payment of a monthly retainer fee to Members of the Tribunal to ensure their availability. Article 8.27(6) CETA captures the understanding that all fifteen Members are collectively referred to as the Tribunal but that individual cases are heard by a sub-division thereof. This sub-division may consist of three Members of the Tribunal or a single Member.13 Article 8.27(7) CETA clarifies that it is the responsibility of the President of the Tribunal to appoint Members to cases 'on a rotation basis, ensuring that the composition of the divisions is random and unpredictable, while giving equal opportunity to all Members of the Tribunal to serve. …

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