Foreign Investment Under the Comprehensive Economic and Trade Agreement (CETA)

370 Pages·2019·4.29 MB·English

by  Makane Moïse Mbengue

Studies in European Economic Law and Regulation 15
Makane Moïse Mbengue 
Stefanie Schacherer E ditors
Foreign Investment
Under the
Comprehensive
Economic and Trade
Agreement (CETA)
Studies in European Economic Law
and Regulation
Volume 15
Series editors
Kai Purnhagen
Law and Governance Group, Wageningen University
Wageningen, The Netherlands
Josephine van Zeben
Worcester College, University of Oxford
Oxford, United Kingdom
Editorial Board
Alberto Alemanno, HEC Paris, Paris, France
Mads Andenaes, University of Oslo, Oslo, Norway
Stefania Baroncelli, University of Bozen, Bozen, Italy
Franziska Boehm, Karlsruhe Institute of Technology, Karlsruhe, Germany
Anu Bradford, Columbia Law School, New York, NY, USA
Jan Dalhuisen, King’s College London, London, UK
Michael Faure, Maastricht University, Maastricht, The Netherlands and
Erasmus University Rotterdam, Rotterdam, The Netherlands
Jens-Uwe Franck, Mannheim University, Mannheim, Germany
Geneviève Helleringer, University of Oxford, Oxford, UK
Christopher Hodges, University of Oxford, Oxford, UK
Lars Hornuf, University of Bremen, Bremen, Germany
Moritz Jesse, Leiden University, Leiden, The Netherlands
Marco Loos, University of Amsterdam, Amsterdam, The Netherlands
Petros Mavroidis, Columbia Law School, New York, NY, USA and
University of Neuchatel, Neuchatel, Switzerland
Hans Micklitz, European University Institute, Florence, Italy
Giorgio Monti, European University Institute, Florence, Italy
Florian Möslein, Philipps-University of Marburg, Marburg, Germany and
Munich Centre on Governance, Communication, Public Policy and Law, Munich, Germany
Dennis Patterson, Rutgers University, Camden, NJ, USA
Wolf-Georg Ringe, University of Hamburg, Hamburg, Germany
Jules Stuyck, Katholieke Universiteit Leuven, Leuven, Belgium
Bart van Vooren, University of Copenhagen, Copenhagen, Denmark
This series is devoted to the analysis of European Economic Law. The series’ scope
covers a broad range of topics within economics law including, but not limited to,
the relationship between EU law and WTO law; free movement under EU law and
its impact on fundamental rights; antitrust law; trade law; unfair competition law;
financial market law; consumer law; food law; and health law. These subjects are
approached both from doctrinal and interdisciplinary perspectives.
The series accepts monographs focusing on a specific topic, as well as edited
collections of articles covering a specific theme or collections of articles. All
contributions are subject to rigorous double-blind peer-review.
More information about this series at http://www.springer.com/series/11710
Makane Moïse Mbengue • Stefanie Schacherer
Editors
Foreign Investment
Under the Comprehensive
Economic and Trade
Agreement (CETA)
Editors
Makane Moïse Mbengue Stefanie Schacherer
Faculty of Law Faculty of Law
University of Geneva University of Geneva
Geneva, Switzerland Geneva, Switzerland
Science Po Paris
School of Law
Paris, France
ISSN 2214-2037 ISSN 2214-2045 (electronic)
Studies in European Economic Law and Regulation
ISBN 978-3-319-98360-8 ISBN 978-3-319-98361-5 (eBook)
https://doi.org/10.1007/978-3-319-98361-5
Library of Congress Control Number: 2018961561
© Springer Nature Switzerland AG 2019
This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of
the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation,
broadcasting, reproduction on microfilms or in any other physical way, and transmission or information
storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology
now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication
does not imply, even in the absence of a specific statement, that such names are exempt from the relevant
protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information in this book
are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the
editors give a warranty, express or implied, with respect to the material contained herein or for any errors
or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims
in published maps and institutional affiliations.
This Springer imprint is published by the registered company Springer Nature Switzerland AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
Foreword
The Comprehensive Economic and Trade Agreement (CETA) between Canada and
the European Union (EU) and its Member States went through a long gestation and
negotiation period. Its actual birth was late and painful but yielded an extremely
interesting treaty that had many innovative aspects in international law and led to
many interesting repercussions for the internal legal regimes in the field of trade and
investment law of both parties. In Canada, the negotiations contributed to bringing
about a new interprovincial agreement on trade, called the Canadian Free Trade
Agreement, in April 2017, which considerably freed up interprovincial trade and
inter alia brought about mechanisms for reducing technical barriers to trade between
the provinces. Inside the EU, it was an important test of the Union’s newly acquired
powers in the field of international investment and a continued legal need (or politi-
cal wish on the part of the Member States) for the conclusion of so-c alled mixed
agreements when concluding broad trade agreements. After the Wallonia crisis over
CETA and Opinion 2/15 on the EU-Singapore Free Trade Agreement, the
Commission has pledged never to propose anymore to the EU Council of Ministers
the negotiation of trade agreements which would go beyond the Union’s exclusive
trade policy power. In the field of investment, this implies that portfolio investments
and investor-state dispute settlement (ISDS) will no longer be covered by such
agreements. How the Member States will react when this policy pledge is executed
remains to be seen.
The two politically responsible persons, Minister Chrystia Freeland for Canada
and Commissioner Cecilia Malmström for the EU, participated actively in the final
phase of the negotiations and made considerable claims about the new and unprec-
edented character of the agreement, especially in the field of investment and ISDS,
the parts of the agreement that had caused much of the political resistance to CETA
on both sides of the Atlantic. This book arrives at the right moment to assess these
claims, as well as the probable repercussions of the investment provisions of the
agreement on other, future, agreements in this field.
The book opens with the chapter written by Nicolas Angelet. This chapter is
unusual and interesting because it critically discusses the arguments advanced by
both sides in the debate about the (lack of) need for reform of investment protection
v
vi Foreword
and ISDS, as it was finally laid down in CETA. Arguments from both sides are
found wanting, the willingness to listen to the other side is low, while arguments of
authority are frequent, and thus the quality of the debate overall is pretty dismal.
Although one feels that Angelet’s heart is perhaps slightly more on the side of the
reformers, all this is laid out in a vivid style of “a plague on both your houses.” This
is refreshing, but, in the end, does not really grapple with the question whether the
war of words between the defenders of the status quo and the hard-core opponents
of any investment agreement has been successfully transcended by the investment
chapter of CETA.
It is the merit of the following chapters, which discuss the core concepts of any
investment protection and/or BIT agreement, such as the notions of investment, of
national treatment, the most-favored-nation clause, the concept of fair and equitable
treatment, and the notion of expropriation (including indirect and partial expropria-
tion), that they deal, whether implicitly or explicitly, with this question. Taking the
chapters by Bischoff and Wühler on the notion of investment and by De Nanteuil on
expropriation as examples, these show how the drafters of CETA took evolving case
law and drafts for a new generation of international investment agreements by vari-
ous states into account, and sometimes carried them a bit further, when they drafted
in the early stages and modified in extremis the texts on investment protection and
ISDS. The core concepts of investment protection may not have changed too much,
but they have been further refined and explained in CETA and its annexes so as to
take fully into account shifts in case law and changes in new texts of model BITs
that had been going on already for some time—an evolution of which the hard-core
naysayers to international investment protection never wanted to take cognizance.
The three chapters that discuss matters which are fully new in CETA, the explicit
recognition of the right to regulate of the parties (by Catherine Titi, a prolific author
on the subject), the new investment court system (by Von Walter and Andrisani, both
from the European Commission), and the attempt to operationalize the notion of
sustainable development (by Stefanie Schacherer), also set out clearly to what
extent the relevant CETA provisions build on existing concepts, whether in the con-
text of CETA they go much beyond the symbolic, and if not, why that might be
useful nonetheless. The new investment court system is, of course, a much more
substantive achievement than the other two, but it may prove to be a one-treaty
wonder if the Commission carries out its intention not to propose anymore any trade
agreements that go beyond the EU’s exclusive powers.
The three chapters that give a refreshing view, from the outside (Africa, Asia, and
Latin America) looking in, of the trans-Atlantic tribulations between the Canada
and the EU (with the USA heavily breathing over their shoulders), also remind us
that the countries from these regions are actively concluding BITs and multilateral
investment agreements among themselves and that these agreements, and any dis-
pute settlement that takes place under their aegis, will inevitably have an impact on
attempts at making any worldwide rules in this domain. The book ends with a
thoughtful final look toward the future from the vantage point of the present CETA
provisions on investment and ISDS.
Foreword vii
The core chapters, covering the main concepts of investment protection, situate
themselves wonderfully in the middle of the big debate over these issues of the last
few years and then lead onto new concepts, such as the right to regulate and sustain-
ability, which are fighting for a more than symbolic place in the field, and onto the
most advanced solutions to dispute settlement that have been put on paper in nego-
tiations so far. Moreover, the outside perspectives permit the readers to escape from
a purely “Western” perspective on it all.
University of Amsterdam P. J. Kuijper
Amsterdam, The Netherlands
Preface
On October 30, 2016, the European Union (EU) and Canada finally signed the
Comprehensive Economic and Trade Agreement (CETA) after a considerable polit-
ical struggle. The Belgian region of Wallonia kept the signature of CETA in limbo
for almost 2 weeks, as it refused to give its consent to the central Belgian govern-
ment to sign the agreement. Wallonia eventually agreed to the signature after
Belgium issued a statement, which inter alia announced its intention to ask the
Court of Justice of the European Union (CJEU) to rule on the compatibility with EU
law of the investor-state dispute settlement mechanism contained in CETA
Investment Chapter, the so-called Investment Court System (ICS). Wallonia’s signa-
ture was also prompted by the fact that the EU and Canada signed a Joint
Interpretative Instrument along with CETA, which seeks to address the concerns of
CETA’s opponents with respect to the potential negative effects of CETA on the
right to regulate of governments.
The signature of CETA paved the way for ratification, a process that in turn poses
its own challenges. One challenge is that CETA has to be ratified by all the EU
Member States as CETA has been classified as a mixed agreement under EU law.
Thus, national and also regional opposition to CETA can still materialize in the
course of its ratification. The second and arguably even more important challenge
lays within the request for an opinion on the compatibility of the CETA’s ICS with
EU law. On September 6, 2017, pursuant to its previous statement, Belgium submit-
ted the request to the CJEU, which is to become Opinion 1/17.
At this point, it seems to be impossible to predict how the Court will decide and
thus the ultimate fate of the ICS contained in CETA. Yet, the recently rendered
CJEU judgment in the case of Achmea (C-284/16), in which the Court held that the
investor-state dispute settlement system contained in an intra-EU bilateral invest-
ment treaty was incompatible with EU law, does a priori not cause optimism that
the ICS contained in CETA will be considered as compatible. Will the Court decide
Opinion 1/17 similarly? Or will the Court draw a distinction between intra-E U BITs
and, as it is the case for CETA, agreements of the EU with a third country? Questions
that still need to be answered.
ix
x Preface
This book on Foreign Investment under the Comprehensive Economic and Trade
Agreement (CETA) was prepared and finalized before Opinion 1/17 was rendered by
the CJEU. However, irrespective of the outcome of Opinion 1/17, the CETA
Investment Chapter constitutes a prime example of new trends in investment law
making. Even if the ICS in its current form was to be held incompatible with EU
law, the CETA Investment Chapter including the ICS gives an important impetus for
the start of the discussion on a multilateral investment court. CETA is already an
important and influential agreement for the still ongoing reform of international
investment law and investor-state dispute settlement. This book seeks to highlight
the contribution of the investment chapter of CETA to the future of international
investment law.
Geneva, Switzerland Makane Moïse Mbengue
J une 2018 Stefanie Schacherer