Responsibility of the EU and the Member States under EU International Investment Protection Agreements: Between Traditional Rules, Proceduralisation and Federalisation

381 Pages·2019·3.97 MB·English

by  Philipp Theodor Stegmann

EYIEL Monographs
Studies in European and International Economic Law 6
Philipp Theodor Stegmann
Responsibility of the EU
and the Member States
under EU International
Investment Protection
Agreements
Between Traditional Rules,
Proceduralisation and Federalisation
European Yearbook of International
Economic Law
EYIEL Monographs - Studies in European
and International Economic Law
Volume 6
Series editors
Marc Bungenberg, Saarbrücken, Germany
Christoph Herrmann, Passau, Germany
Markus Krajewski, Erlangen, Germany
Jörg Philipp Terhechte, Lüneburg, Germany
Andreas R. Ziegler, Lausanne, Switzerland
EYIEL Monographs is a subseries of the European Yearbook of International
Economic Law (EYIEL). It contains scholarly works in the fields of European and
international economic law, in particular WTO law, international investment law,
international monetary law, law of regional economic integration, external trade law
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EYIEL Monographs are peer-reviewed by the series editors and external reviewers.
More information about this series at http://www.springer.com/series/15744
Philipp Theodor Stegmann
Responsibility of the EU and
the Member States under EU
International Investment
Protection Agreements
Between Traditional Rules,
Proceduralisation and Federalisation
Philipp Theodor Stegmann
Berlin, Germany
Dissertation zur Erlangung des Grades eines Doktors der Rechte (Dr. iur.) der Juristischen
und Wirtschaftswissenschaftlichen Fakultät der Martin-Luther-Universität Halle-Wittenberg
Vorgelegt von: Philipp Theodor Stegmann aus Frankfurt
Erstgutachter: Prof. Dr. Christian Tietje, LL.M.
Zweitgutachter: Prof. Dr. Dirk Hanschel
Tag der öffentlichen Verteidigung: 26. Juni 2018, Halle (Saale)
ISSN 2364-8392 ISSN 2364-8406 (electronic)
European Yearbook of International Economic Law
ISSN 2524-6658 ISSN 2524-6666 (electronic)
EYIEL Monographs - Studies in European and International Economic Law
ISBN 978-3-030-04365-0 ISBN 978-3-030-04366-7 (eBook)
https://doi.org/10.1007/978-3-030-04366-7
Library of Congress Control Number: 2018964415
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Preface
This book is the result of a doctoral thesis accepted by the University of Halle-
Wittenberg in Germany. It was written in large part during my time as a visiting
research student at Queen Mary University of London. This book takes into account
the legal situation, literature and case law until August 2018.
I wish to express my sincere gratitude to my doctoral thesis supervisor, Professor
Dr. Christian Tietje, for his encouragement, valuable advice and the opportunity to
embark on this interesting research topic. I am also thankful to Professor Dr. Dirk
Hanschel who kindly undertook the second evaluation of my doctoral thesis. I espe-
cially want to thank Dr. Angelos Dimopoulos for the many fruitful discussions we
had and his insightful, critical and thought-provoking comments on earlier drafts of
my thesis, which greatly helped advance my work and contour my arguments. I
would also like to mention the fantastic research environment at Queen Mary
University and wish to thank my fellow research students for many wonderful dis-
cussions. Moreover, I am deeply thankful to my parents and my sister, Anne, for
supporting me throughout my life.
Finally, I want to thank Juliane dearly for being the best support one can imagine.
I dedicate this book to her.
Berlin, Germany Philipp Theodor Stegmann
August 2018
v
Contents
1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Setting the Scene: Responsibility of the EU and the Member
States Under EU IIPAs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1.1 The Concept of IIPAs and ISDS: Abridged . . . . . . . . . . . . 2
1.1.2 The Emergence of EU IIPAs . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1.3 With Power Comes Responsibility . . . . . . . . . . . . . . . . . . . 4
1.1.4 The Dawn of a New Responsibility Regime . . . . . . . . . . . . 5
1.2 Aim and Structure of This Study . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2 International Obligations of the EU and the Member States
Under EU IIPAs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.1 Capacity to Conclude IIPAs: The EU and the Member States
as Subjects of International Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.2 Competence to Conclude IIPAs: The EU’s and the Member
States’ Treaty-Making Competence in the Field of Foreign
Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.2.1 The Link Between Treaty-Making Competences
Under EU Law and the Participation of the EU and the
Member States in the Conclusion of a Treaty . . . . . . . . . . . 15
2.2.2 The Division of Competences Between the EU and the
Member States with Respect to IIPAs . . . . . . . . . . . . . . . . . 17
2.2.2.1 Treaty-Making Competences Regarding
Foreign Investment Before Lisbon: Member
State BITs and the ECT as a Treaty
of ‘Shared Mixity’ . . . . . . . . . . . . . . . . . . . . . . . . 18
2.2.2.2 Treaty-Making Competence Regarding
Foreign Investment After Lisbon: EU-Only
or ‘Shared Mixity’ as the Crossroads for
Post-Lisbon IIPAs . . . . . . . . . . . . . . . . . . . . . . . . 20
2.3 International Obligations of the EU and the Member States
Under EU IIPAs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
vii
viii Contents
2.3.1 Apportionment of Obligations Between the EU and the
Member States Under Mixed IIPAs Along Competence
Lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.3.1.1 Apportionment of Obligations Along Division
of Competences Under Mixed Agreements
Devoid of Contractual Delimitations . . . . . . . . . . 28
2.3.1.2 Apportionment of Obligations Under Mixed
IIPAs Along Competence Lines as Per
Contractual Delimitations . . . . . . . . . . . . . . . . . . 48
2.3.2 I nternational Obligations Flowing from EU-Only IIPAs . . . 71
2.3.2.1 Member States Do Not Assume International
Obligations Under EU-Only IIPAs Under
the Law of Treaties . . . . . . . . . . . . . . . . . . . . . . . . 72
2.3.2.2 Member States Do Not Assume International
Obligations Under EU-Only IIPAs by Way
of Article 216(2) TFEU . . . . . . . . . . . . . . . . . . . . 74
2.4 Conclusions Chapter 2: Obligations Under Mixed IIPAs
Do Not Run Along Competence Lines . . . . . . . . . . . . . . . . . . . . . . 76
3 International Responsibility of the EU and the Member States
for Breaches of EU IIPAs Under Traditional Rules . . . . . . . . . . . . . . 79
3.1 International Responsibility for Breaches of EU IIPAs Under the
Lex Generalis of the ILC Articles and International Case Law . . . 80
3.1.1 The ‘Organic’ Model of Attribution of Conduct Under
the ARIO and ARS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
3.1.2 Capturing the Decentralised Implementation of EU Law
by the Member States Under the Lex Generalis of the
ARIO and International Case Law . . . . . . . . . . . . . . . . . . . 84
3.1.2.1 The ARIO’s (Non-)Recognition of the
Decentralised Implementation of EU Law
by Member States . . . . . . . . . . . . . . . . . . . . . . . . 86
3.1.2.2 (Incoherent) International Case Law Regarding
the Decentralised Implementation
of EU Law by the Member States . . . . . . . . . . . . 91
3.1.2.3 Result: No Uniformity Under International
Case Law and the ARIO . . . . . . . . . . . . . . . . . . . 98
3.1.2.4 The WTO Approach Is Not Transferable
to IIPAs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
3.1.3 Where Incumbency of Obligations and Attribution
Go Astray: The Risk of Accountability Gaps Under
EU-Only IIPAs Under the ILC Articles . . . . . . . . . . . . . . . 100
3.1.4 Conclusions on International Responsibility for
Breaches of EU IIPAs Under the Lex Generalis
of the ARS and ARIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Contents ix
3.2 International Responsibility for Breaches of EU IIPAs
Under Leges Speciales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
3.2.1 Joint (and Several) Responsibility of EU and Member
States Under Mixed IIPAs as Lex Specialis . . . . . . . . . . . . 106
3.2.1.1 Joint Responsibility as Expressly Stipulated
in a Mixed Agreement . . . . . . . . . . . . . . . . . . . . . 107
3.2.1.2 Joint Responsibility as the Default Rule Under
a Mixed Agreement . . . . . . . . . . . . . . . . . . . . . . . 110
3.2.2 The Division of Competences Between the EU and the
Member States Under the EU Treaties as Lex Specialis . . . 113
3.2.2.1 T he Division of Treaty-Making Competences
as the Criterion for International Responsibility . . . 115
3.2.2.2 The Division of Competences as Derives from
the EU Treaties . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
3.2.2.3 Conclusions on the Competence-Based Approach
as Lex Specialis . . . . . . . . . . . . . . . . . . . . . . . . . . 122
3.2.3 The ‘What-Is-Required-by-EU-Law’-Approach
as Lex Specialis Under the ECT . . . . . . . . . . . . . . . . . . . . . 122
3.2.3.1 Electrabel v Hungary . . . . . . . . . . . . . . . . . . . . . . 124
3.2.3.2 AES Summit v Hungary . . . . . . . . . . . . . . . . . . . 126
3.2.3.3 Conclusions on the ECT-Approach . . . . . . . . . . . 127
3.2.4 A Federal State Analogy as Lex Specialis Under
EU-Only IIPAs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
3.2.4.1 International Responsibility of Federal States . . . 130
3.2.4.2 A pplying a Federal State Analogy to the EU
and the Member States Under EU-Only IIPAs . . . 133
3.2.5 Summary: The Various Leges Speciales Under EU IIPAs . . . 136
3.3 Conclusions Chapter 3: The Traditional Rules of International
Responsibility Are Not Designed to Capture the Inner Workings
of the EU and the Member States . . . . . . . . . . . . . . . . . . . . . . . . . . 137
4 The Proceduralisation and Internalisation of International
Responsibility Under Post- Lisbon Mixed IIPAs . . . . . . . . . . . . . . . . . 139
4.1 The Rationale and Motives for a Proceduralisation
of International Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
4.1.1 Guaranteeing Legal Certainty . . . . . . . . . . . . . . . . . . . . . . . 141
4.1.2 Protecting the Autonomy of EU Law . . . . . . . . . . . . . . . . . 144
4.2 The Form of Proceduralisation Under Post-Lisbon Mixed
IIPAs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
4.2.1 The Functioning of the Respondent Determination
from the Perspective of the Mixed IIPA . . . . . . . . . . . . . . . 150
4.2.1.1 The Procedure for Determining the Respondent
Under Post-L isbon Mixed IIPAs . . . . . . . . . . . . . 151
4.2.1.2 A Single-Respondent Model . . . . . . . . . . . . . . . . 155
x Contents
4.2.1.3 The Mandatory Nature of the Respondent
Determination Mechanism . . . . . . . . . . . . . . . . . . 156
4.2.2 The Functioning of the Respondent Determination
from the Perspective of the REG . . . . . . . . . . . . . . . . . . . . 163
4.2.2.1 Applicability of the REG . . . . . . . . . . . . . . . . . . . 163
4.2.2.2 The Respondent Determination Under
the REG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
4.2.2.3 Settlement Rights and Duties Under the REG . . . 187
4.2.2.4 Payment Obligations Vis-à-Vis the Investor
Under the REG . . . . . . . . . . . . . . . . . . . . . . . . . . . 190
4.3 The Constitutive Effect of the Respondent Determination Under
Post-Lisbon Mixed IIPAs on the International Responsibility
of the Determined Respondent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190
4.3.1 The Precondition to a Constitutive Effect of the
Respondent Determination: ‘Respondent’ or Mere
‘Representative’? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192
4.3.2 The Scope of the Constitutive Effect: The ‘EU-Member
State Responsibility Window’ . . . . . . . . . . . . . . . . . . . . . . . 194
4.3.3 The Interpretation of the Respondent Determination
Mechanism Under Post-Lisbon Mixed IIPAs with Respect
to a Constitutive Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195
4.3.3.1 Textual Interpretation of Article 8.21(6)(7)
CETA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198
4.3.3.2 Possible Accountability Gaps and a Denial
of Justice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213
4.3.3.3 Protection of the Autonomy of EU Law . . . . . . . 216
4.3.3.4 Result on Interpretation: The Respondent
Determination Mechanism Under CETA
Has a Constitutive Effect on International
Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . 216
4.3.4 C apturing the Constitutive Effect Under the ILC Articles . . . 217
4.3.4.1 The Respondent Determination as Adoption
and Acknowledgment of Conduct Under
Article 11 ARS and Article 9 ARIO . . . . . . . . . . . 217
4.3.4.2 The Respondent Determination Mechanism
as a Lex Specialis of International Responsibility
Under Article 55 ARS and 64 ARIO . . . . . . . . . . 219
4.4 Excursus: Proceduralisation of International Responsibility
Under EU-Only IIPAs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221
4.4.1 No Consent to Arbitration of Member States Under
EU-Only IIPAs per se . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
4.4.2 No International Responsibility of Member States
Under EU-Only IIPAs per se . . . . . . . . . . . . . . . . . . . . . . . 224
4.4.3 Article 35 VCLT and Member State International
Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225