Author
Matthias Swiderski

Matthias Swiderski, LL.M.

Associate

Read More
Author
Matthias Swiderski

Matthias Swiderski, LL.M.

Associate

Read More

2 September 2019

Disputed Dispute Resolution

In contrast to dispute settlement provision in intra-EU BITs (Achmea), the dispute resolution mechanism of the CETA treaty does not contravene EU law

As Tribunals established under the CETA dispute settlement mechanism do not interpret EU law, the CJEU rejects concerns regarding the mechanism’s union law conformity. The CJEU’s opinion is especially relevant for Canadian investors and indicates the general position of the CJEU towards investment treaty arbitration post Achmea.

Following the controversial Achmea decision, the CJEU dispels any concerns regarding the conformity of the CETA dispute resolution mechanism with EU law.

CETA contains a dispute settlement mechanism for investment disputes. The relevant provisions include the establishment of an appellate body and recommend the application of the ICSID or UNCITRAL arbitration rules.

Legitimate doubts

The Kingdom of Belgium requested an opinion of the CJEU due to doubts regarding the union law conformity of this dispute resolution mechanism. Belgium argued that CETA vested the tribunals with the ability to decide on the interpretation of union law without access to the preliminary ruling procedure according to Article 267 TFEU. Before, in its controversial decision in the Achmea case, the CJEU had deemed the dispute resolution mechanisms of intra-EU BITs to be contrary to European law, claiming a threat to its autonomy and uniform application.

A subtle difference

However, the CJEU spotted a decisive difference of the CETA dispute resolution bodies compared to the one in the Achmea case. According to the CJEU, CETA tribunals are not able to interpret EU law at all. Since the treaty contained an article that leaves the final decision about the correct respondent of a Canadian investor’s claim to the CJEU itself, the CETA courts had no jurisdiction regarding the question of the distribution of responsibilities between the EU and its member states. Furthermore, a bilateral investment treaty between member states, as was decided upon in the Achmea case, involved the principle of trust between the EU members. CETA tribunals, however, only decided upon the interpretation of CETA itself, according to the principles of public international law. Domestic and Union law would be taken into account as a matter of fact, whereby the Tribunals would, in that regard, be obliged to follow the prevailing interpretation given to that domestic law by the relevant courts or authorities.

No universal “Achmea-defence”

The opinion of the CJEU has been criticised as being too imprecise and offering only vague guidance to distinguish the situations of CETA and intra-EU BITs.

However, the opinion indicates that the CJEU does not oppose investment treaty arbitration in general as expected by some commentators following Achmea. Respondents in the EU will thus not be able to simply rely on the Achmea decision in order to object the arbitrability in every investment-arbitration case in the Union.

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