An European approach to BITs, MITs and ISDS

Emanuela Matei Of Counsel Mircea amp Partners httpsselinkedincominemanuelamatei 0046-735576666

An European approach to BITs

MITs and ISDSWhy the Investor-State Dispute Settlement has become

such a controversial matter

Emanuela Matei Of Counsel Mircea amp Partners httpsselinkedincominemanuelamatei 0046-735576666

Tangible reality Micula Case and the inclusion of ISDS in the TTIP Two current events have brought the questions of

international investment law international arbitration and intra-EU bilateral trade agreements closer to the public eye The issue of inherent conflict between law and politics pacta sunt servanda and the right to regulate public and commercial interests commitments undertaken under EU Treaties and obligations imposed by BITs and MITs is no longer just an academic concern

1st Micula Dispute starting in 2005 closed with an award in favour of the investor in 2013 An annulment request was brought by Romania in April 2014

2nd TTIP project a trade agreement between US and EU initiated in June 2013 at the G8 summit in Lough Erne

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What can be said about the public European-International divergent viewsThere are many perspectives that can be used in order to scrutinise the interaction between the national-supranational-international levels of public protection of invested interests Political ndash Sovereignty and Democracy and the central role of the nation state Historical ndash The system was created for a different purpose under different

historical conditions before globalisation and constitutionalisation of international law Is 1950-thinking still relevant now-a-days in a global trade liberalised context

Practical ndash Enforceability amp Necessity Renegotiation of BITs bringing them in line with EU law

Legal ndash Inconsistency and Arbitrariness Kompetenz-Kompetenz The solutions also can point towards distinct directions Maintaining the system as it is There is no conflict that must be addressed Maintaining the system while amending it Changes are necessary Abolishing the system The national courts shall be empowered to grant remedies

for a breach of BIT Systemic flaws cannot be addressed by amendments a radical change is needed A parallel system of justice is not justified Why is an investor more than a EU-citizen

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The European already classic ambiguityA certain political indecision or confusion characterises the public discourse At the EU level there are Member States in favour and

other Member States against the inclusion of ISDS in the TTIP

Also a difference of opinions exists between DG Trade and DG Competition inside the European Commission

In Romania the uncertainty and hesitation during the time of pre-accession to the EU led to the signing of the BIT with Sweden and a series of legislative measures in favour of investors but against the EU law

In Romania the difference of opinions has been manifested between the Government and the Competition Council in a sense a replication of the conflict between DG Trade and DG Competition at a smaller scaleEmanuela Matei Of Counsel Mircea amp Partners httpsselinkedincominemanuelamatei

0046-735576666

A happy marriage between the market and the multi-layered stateEastern Europeans are generally more favourable to the ISDS and TTIP than the citizens of the old Member States France Germany Luxembourg and Austria A less critical view as regards the ISDS inclusion makes sense acknowledging the aspiration to fully depart from the communist past The Micula case shows nevertheless that there is a lot of tension between these three spheres trade law competition law and foreign investor right of access to arbitral justiceArbitral justice is a parallel avenue an alternative to the national system of courts It meant to offer a safer and effective protection and in the same time the very existence of this parallel system it presupposes that the system of national courts which is good enough for you and me is not good enough for the foreign investor The issue of reverse discrimination is open to debate but also the observance of free movement provisions in Article 49 TFEU and protection of competition in Article 107 TFEUThe state intervention made possible the accession to the EU and the signing of so many BITs Moreover markets are nothing but a regulatory space (even in the absence of states markets would comply with rules) State made rules in the liberal society aim to deal with market failures thus they have a corrective function Competition law including state aid control means to maintain competition on markets where the market in itself cannot provide itEmanuela Matei Of Counsel Mircea amp Partners httpsselinkedincominemanuelamatei 0046-735576666

Transfer of state power in the EU and in the international context State intervention in general must be based on democratic principles and be necessary proportionate

and efficient In certain areas eg internal market and foreign trade the state cannot regulate efficiently and

therefore the nation state transfers power to a pool of supranational legislative authority the EU Any transfer of power is exposed to a test of necessity and proportionality according to the federal

principle of subsidiarity (Article 5(3) TEU) In other areas the state engages in contractual obligations with other states implying as well a

transfer of sovereignty which is nevertheless temporary and limited as scope State transfer of power to the supranational pool might overlap with the commitments previously

assumed via international treaties Both supranational and international law are state-made laws not laws beyond the nation state In contrast the ancient lex mercatoria has its origins in non-state law though it has made its way

into different national laws The true lex mercatoria according to Ralf Michaels marks the shift in global law from a segmentary

differentiation in different national laws to a functional differentiation It is a law beyond not without the state

According to Michaels there is no such thing as anational law and consequently the matter of enforceability of arbitral awards cannot be placed outside the national forum The relation is one of interdependence and legitimacy Even the Article 54 ICSID follows this path and assigns the Convention state to enforce arbitral decisions as if it were a final judgment of a court in that State

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Public-Private global regulatory convergenceThere are two golden rules of democracy Prevalence of public over private interest including the prevalence of

competition protection over the protection of competitorsinvestors Transparency of the governmentThe constitutional law contributes to a well functioning market by designing institutions procedures and substantive tools directed towards the limitation of the prevalence of the public over the private interest especially the proportionality test and the non-discrimination principle Conceptually it can be made a distinction betweenbull Individual justice ndash Putting victims in the driving seat as the BITICSID

systembull Constitutional justice ndash Constitution of Romania Constitutional Courtbull Pluralist justice ndash European Convention of Human Rights ECtHRbull Market justice ndash Vote with feet move away from the bad government The

choice must be free which in reality it is notEmanuela Matei Of Counsel Mircea amp Partners httpsselinkedincominemanuelamatei 0046-735576666

The rise of constitutional lawThree schools of constitutionalism1 Normative ndash national law perspective international

constitutionalism supplements the national constitutionalism In this sense only if the protection of rights including investor rights were insufficient then a supplement would be required The complexity of world made state-law to be less effective

2 Functional ndash supranational law perspective a centralised authority controls the production of international law International law protection permeates the supranational legal order only if it passes the control test exercised by a central authority

3 Pluralist ndash transnational law perspective constitutionalism beyond the stateEmanuela Matei Of Counsel Mircea amp Partners httpsselinkedincominemanuelamatei

0046-735576666

Private Investor Protection versus Free Movement amp Competition Protection The international treaty entitles the foreign investor to a

better treatment than normally a citizen would enjoy under the national constitution EU law WTO law or ECHR

A better treatment than the national standard may relate toa non-state law which may become national law as an implementation

of supranational lawb illegal discrimination orc illegal subsidiesstate aid

A better treatment may imply an illegality A better treatment may also be allowed to permeate the

supranational legal order if it passes the test developed by CJEU in Opinion 22013

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Better rights imply unequal treatmentSomething conceptually desirable such as an individual justice system that puts the investor in the driving seat remains at odds with the EU lawBetter rights for some enterprise imply discrimination against other enterprises and potentially it may induce market foreclosure where new investors are not enjoying the same level of protection compared with the prevailing investors or first-movers Discrimination must be justifiedCompatible state aid implies justified discrimination and therefore the compatibility is defined narrowly and made subject to strict procedural conditionsIn some cases procedural rules may give rise to substantive rights This is the case of Article 108(3) TFEU Itrsquos a procedural rule addressed to the Member States not to the beneficiaries of state aid but functionally the rule ensures substantive protection to the competitors of the beneficiary and to the beneficiary herself in terms of protection of legitimate expectations This is the outset of Micula state aid caseEmanuela Matei Of Counsel Mircea amp Partners httpsselinkedincominemanuelamatei 0046-735576666

Facts in MiculaThe Europe Agreement came into force in 1995 In 1997 the European Commission did not accept Romaniarsquos application to join the EU The 1998 Annual Report of the European Commission highlighted that regional development would be key to Romaniarsquos satisfaction of the economic criteria for EU accession In 1998 and 1999 the European Commission issued Guidelines on Regional Aid and the Council issued a regulation governing the application of Article 108 TFEU In 1998 and 1999 Romania established a framework to grant incentives for investment in disfavoured regions In 1999 the Miculas began their investment in food and drink production facilities in the disfavoured region of Stei-Nucet-Draganesti Throughout the term of the investment Romania repeatedly amended its regulations on regional State aid to comply with EU law The Romanian courts struck down certain amendments hence there was a series of withdrawals and reinstatements of incentives In 2005 all but one of the incentives were withdrawn and the Commission issued its affirmative opinion on Romaniarsquos accession Romania signed the accession treaty in 2005 and the Miculas brought a claim under the Romania-Sweden BIT (signed in 2002come into force in 2003) requiring compensation for the abolished incentives

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Fiscal regulation and its limits The autonomy of the national state in the field of taxation is not absolute There are limits to this autonomy that inter alia relate to

o Constitutional law of the state itself and ECHR right to propertyo Union law within which free movement rules constitute lex specialis in relation to non-

discrimination principle and the competition rules especially state aid lawo WTO law ndash non-discrimination based on origin o International law within which the Fair and Equitable Treatment standard constitutes a form

of lex specialis itself What happens in Micula is that a new fiscal measure inferring a fiscal

advantage granted to investors in a certain geographical region constituted illegal state aid under Union law (1998-9) The scheme was abolished in 2005 four years earlier than it had been decided initially

Not granting that fiscal advantage constitutes according to the interpretation given by the ICSID-Tribunal a breach of the FET-standard which gives ground for compensation (ICSID Case No ARB0520 11-12-2013)

The payment of compensation constitutes in its turn a state measure covered by the definition of state aid in Article 107(1) TFEU it falls within the scope of the prohibition in Article 108(3) TFEU and it is precluded by Union law in conformity with Article 108(2) TFEU (Commission Decision SA38517 30-03-2015)

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ldquoDisorder of legal ordersrdquo Global law International law Interstate law BIT VCLT NYC ICSID Supranational law Law above the state EU law WTO law Transnational law Law across the states emerging law beyond

the control of state For instance sports or internet laws Jus cogens ne EU law Higher-order law Human rights Charter of Fundamental Rights General

Principles of EU Law UN ECHR Social Rights Charter New common law Law of peoples as opposed to Law of nation states Postnational law

Where to place the investor protection law in this disorder of legal ordersEmanuela Matei Of Counsel Mircea amp Partners httpsselinkedincominemanuelamatei 0046-735576666

The emerging standard of protectionTWO STANDARDS OF PROTECTION Customary Minimum Standard consistent with Rule of Law Higher Treaty Standard In conflict with EU law since the advantages enjoyed by Member

States are inseparable from the obligations imposed by the EU Treaties

Absolute standards so called protection against regulatory expropriation (Frivolous Ambiguous)

Fair and Equitable Treatment (Subjective Arbitrary) Full protection and security (Consistency)

Relative standards ndash Non-discrimination which is the DNA of EU law and the cornerstone of WTO law

National Treatment Most favoured nation treatment (MFN)

Is there any place left for regulatory competence to legislate in the public interest with reference to indirect expropriation which in principle can be anything

Are these real problems that must be fixed Who is foreign anyway in a global world Who has the competence to perform the balance test Is there a need for an appeal mechanism Should all trade risks be secured and to which extentEmanuela Matei Of Counsel Mircea amp Partners httpsselinkedincominemanuelamatei 0046-735576666

DG Competition monitoring activities and analysis of intra-EU BITs

There are around 190 Bilateral Investment Treaties between EU Member States (intra-EU BITs) concluded almost exclusively between old (EU-15) and new (EU-12) Member States or between two EU-12 countries at a time when at least one contracting party was not yet a Member of the European UnionThe regulatory overlap between intra-EU BITs and EU legislation gives rise to a number of problems In the Commissions view intra-EU BITs are not compatible with the EU internal market because they only cover investment from the respective BIT partner country and not from all EU Member States and provide for parallel jurisprudence through arbitration procedures In this way these treaties conflict with the jurisdiction monopoly of the CJEU on EU law questionsThere is an increasing number of arbitration procedures going on whereby investors based in one Member State invoke a BIT in order to claim damages from another Member State The three CJEU judgments (Case C-20506 Case C-24906 Case C-11808) on the incompatibility of BITs provisions on the transfer clause also showed clearly the regulatory overlap between investment agreements and the TreatyRegarding this issue the Commission is in close contact with the Member States and has repeatedly reiterated that the incompatibility of intra-EU BITs with EU law means that they have to be brought to an end

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VCLT - a body of consolidated international law of treaties Under Article 3(b) VCLT the fact that the VCLT doesnrsquot apply to international

agreements concluded between States and other subjects of international law (such as the EU) is not to affect the application of VCLT-rules which are an expression of general international customary law to the EU and its member states in their entirety

Rules of general international customary law are binding upon the EU institutions and form part of the Union legal order (see to that effect Racke paragraphs 24 45 and 46)

Pursuant to Article 31 VCLT a treaty is to be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose In that respect account is to be taken together with the context of any relevant rules of international law applicable in the relations between the parties (see to that effect inter alia Opinion 191 [1991] ECR I‑6079 paragraph 14 Case C‑41696 El-Yassini [1999] ECR I‑1209 paragraph 47 Case C‑26899 Jany and Others [2001] ECR I‑8615 paragraph 35)

Article 30(4)(b) VCLT agrees with Article 351(1) TFEU Article 26 VCLT embodies the principle of ldquopacta sunt servandardquo which can not be

interpreted against EU law as means to evade state liability in the event of a breach of EU law (see by analogy Case C‑47003 AGM-COSMET [2007] ECR I-02749 paragraph 72)

ECO Swiss doctrine applies for the state aid prohibition as it does in cartel cases since there is no differentiation between public and private arbitration in EU law that could have a bearing on the scope of its application (See also Burgstaller pp 472-3)

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No actual conflict in the meaning of VCLT The Tribunal upheld that it retained jurisdiction to adjudicate

cases related to intra-EU BITs (Electrabel Micula Eastern Sugar) and that Romaniarsquos accession to the EU did not terminate the BIT signed with the member state Sweden Tribunal didnrsquot accept the argument that the EU law may displace a pre-existent BIT (Eureko)

However the CJEU clarified that treaties concluded by MSs with acceding states cannot in relations between the MSs be applied to the detriment of the objectives of EU law (see to this effect Case 28686 Deserbais [1988] ECR 4907 paragraph 18 Joined Cases C-24191 P and C-24291 P RTE and ITP v Commission [1995] ECR I-743 paragraph 84 Case C-30108 Bogiatzi [2009] ECR I-10185 paragraph 19 Case C-53308 TNT Express Nederland [2010] ECR I-04107 paragraph 52)

The Commission required the termination of intra-EU BITs (See EC Letter of January 13 2006 quoted in Eastern Sugar 27 March 2007 SCC Case No 0882004 Partial Award para 119 and the three judgments in Case C-20506 Case C-24906 Case C-11808)

According to EU law the conflicting obligations arenrsquot displaced but they become inapplicable this is what the primacy principle infers that a MS shall disapply an obligation found in breach of EU law

The ICSID decision only entitles an investor to receive compensation it does not set aside the Romanian legislation on state aid but it penalises Romania for setting in place this legislation

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What is the nature of conflict According to the conferral principle the MSs remain lsquothe masters of

the Treatiesrsquo because they possess Kompetenz-Kompetenz within which they define their own competences and those of the Union CJEU has long asserted its Kompetenz-Kompetenz to determine the limits of EU authority

After Opinion 22013 it is crystal clear that this question of interpreting whether a higher level of protection concurs with EU law will never be left at the discretion of a non-EU forum On the other side the ICSID system takes for granted that an award would be enforceable under any circumstances and it makes this assumption in a context where a substantively erroneous arbitral decision cannot be corrected amended or annulled

As previously discussed a BIT is not law beyond state Itrsquos a synallagmatic contract concluded between Sweden and Romania that cannot go any further than the intention of the parties

In this sense it is clear that Sweden EU Member State since 1995 and Romania an acceding state with a fixed date of accession couldnrsquot have aimed to conclude a BIT that obliged them to depart from their EU law onuses This is nevertheless the assumption made by the ICSID-Tribunal in its imaginative interpretation of the BIT

The Tribunal interprets the BIT as a deviation from the accession course without giving any solid argumentation why Sweden and Romania would have aimed to reach such an agreement The interpretation is unreasonable since it infers an intent not to fulfil Treaty obligations

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Arbitral Tribunal disregards the issue of unenforceability The Arbitral Tribunal provides a disruptive interpretation of the BIT obligations and moreover

it ignores the question of enforceability Article 54(1) ICSID ldquoEach Contracting State shall recognize an award rendered pursuant to this Convention as binding

and enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in that Staterdquo

In essence the questions at bar relate to what are usually called the negative (or preclusive) and the positive (or conclusive) effects of res judicata of arbitral awards1 The first have to do with the effect of preventing further litigation on a matter that has formed the

subject of a prior arbitral award FET standard and state aid compatibility with the internal market are two different matters

2 The second have to do with the effects of the decisions contained in an award in other proceedings whether or not between the same parties

In Micula case the effect of the award (2nd type) is precluded by EU law First the BIT is not binding on the EU and its institutions and in addition the principle of effet utile requires that the national court sets aside the award and gives priority to the state aid prohibition (Lucchini doctrine)

A national court which is called upon within the exercise of its jurisdiction to apply provisions of EU law is under a duty to give full effect to those provisions if necessary refusing of its own motion to apply any conflicting provision of national legislation (see inter alia Case 10677 Simmenthal [1978] ECR 629 paragraphs 21 to 24 Case 13078 Salumificio di Cornuda [1979] ECR 867 paragraphs 23 to 27 and Case C-21389 Factortame and Others [1990] ECR I-2433 paragraphs 19 to 21)

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Res judicata in EU law The national legal systems of all the Member States include the principle

of res judicata The lodging of a fresh appeal with the same subject-matter the same parties and the same arguments is ruled out

However a lawsuit on the compatibility of a state aid may never take place between the state and the state aid beneficiary but it always involves the Commission and the state or the Commission and a state aid beneficiary or other interested party Hence it is clear that the preclusive effect is irrelevant The Commission does not decide on the same subject-matter the same parties and the same arguments

Despite the major importance to be attached to res judicata its effect is not absolute(Case C-11905 Lucchini ECR 2007 I-06199)

The application of res judicata that prevents the recovery of State aid granted in breach of Union law which has been found to be incompatible with the internal market in a decision of the Commission which has become final would be precluded by EU law

ldquoAs if it were a final judgment of a court in that Staterdquo in Article 54(1) implies that the conclusive effect of an arbitral decision does not enjoy absolute protection given that the res judicata effect of a national court decision in its turn is not absolute

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Summary of previous observations BIT and state aid law do not treat the same subject-matter (as

Article 30(3) VCLT requires) BIT and EU Treaties are not incompatible from their inception

(matter of interpretation) EU Treaty doesnt supersede automatically the BIT (Article 59

VCLT) The compatibility of investor-state dispute settlement mechanism

with the EU judicial system is a major problem Who has the competence to finally interpret the mattero CJEU as a matter of interpretation of the Treaties

o ICSID as a matter of interpretation of the BIT

This set reminds of the issue of interpretation of human rights in EU law and the division of competences between CJEU and ECtHR The protection of investor rights by EU law could be considered to be equivalent to that of the BIT-ICSID system

Consequently a presumption would arise that a MS did not depart from the requirements of the BIT when it implemented legal obligations flowing from its EU membership

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Status-quo Values in tension Currently the Arbitral Tribunals adopt an interpretation according

to which a Member State departs from the requirements of the BIT when it implements legal obligations flowing from its EU membership

Arbitral Tribunals do not agree with the constitutional theory of high-order overlap (Eureko)

So none of the usual tools of determining a conflict of norms in international law was found to be useful by the Tribunals it seems that there is no point of concurrence between the two legal orders

A point of convergence somewhere in the domain of principles of international law that as shown before are binding on the EU and all its member states must be identified

This point may be the protection of legitimate and reasonable expectations of the investor in the context given by the accession to the EU of the host state

The FET is interpreted as a reflection of the principle of legal certainty

Emanuela Matei Of Counsel Mircea amp Partners httpsselinkedincominemanuelamatei 0046-735576666

Legitimate and Reasonable The legitimacy of the expectations is deeply rooted in the

BIT context and the principle of legal certainty The reasonableness follows from placing the legitimate

expectations in the context of the Accession Treaty and the principle of regulatory flexibility

One can rely in good faith on the premise that the future conduct of the government will follow a certain trajectory unless there are compelling reasons not doing so

It is not reasonable to assume that a government will never amend its legislation however in the interpretation of the ICSID tribunals the FET standard includes also a commitment of general nature called general stability of the regulatory framework

Is it reasonable to affirm that the conduct of the government related to alignment of its legislation to the acquis led to the destabilisation of the regulatory framework to such extent that it implied a breach of the FET

Emanuela Matei Of Counsel Mircea amp Partners httpsselinkedincominemanuelamatei 0046-735576666

Intention of the state to commit itself is seen as irrelevant Where the state has acted in such a way so as to generate a legitimate expectation and

the investor has relied on that expectation to make its investment action by the state that reverses or destroys those legitimate expectations will be in breach of the FET standard and thus give rise to compensation (Micula award paragraph 667)

There must be a promise assurance or representation attributable to a competent organ or representative of the state which may be explicit or implicit (Micula award paragraph 669)

It is irrelevant whether the state in fact wished to commit itself it is sufficient that it acted in a manner that would reasonably be understood to create such an appearance (Micula award paragraph 669)

A factual assessment must be undertaken in consideration of all the surrounding circumstances (Micula award paragraph 669)

The question is whether a promisee (the investor) could reasonably understand that a promisor (the acceding state) would breach its previous commitments to a different promisee (the EU and all its member states) in order to satisfy the expectations of the first named promisee

Pacta sunt servanda beyond the intent of the state to commit itself would exercise a meta-function very similar with the principle of effectiveness in EU law the aim would be to acquire an effective protection of the values placed at the core of ICSID law

Emanuela Matei Of Counsel Mircea amp Partners httpsselinkedincominemanuelamatei 0046-735576666

A point of major doctrinal splitEU law is uncompromising in relation to the breach of the standstill clause leaving no room for legitimate expectations of a beneficiary of incompatible state aid since as explained before the public interest of protecting competition is seen as superior to the private interest of the beneficiary to retain an illegal advantage granted by a MS in breach of its Treaty obligationsICSID on the other hand it interprets legitimate expectation as a belief that any granted aid is compatible with the internal market otherwise it wouldnrsquot be granted by a member state This is the point of major doctrinal split since the ICSID approach reverses by 180 degrees the rationale of state aid control and it denies the exclusive competence of the Union institutions in this field of lawThere is no way in which the CJEU would allow that international legal obligations derived from an intra-EU BIT overtrump the autonomy of EU law and this finding is so elementary as almost anybody could figure it out in a couple of minutesLater on the ICCJ (Supreme Court of Romania) dealing with the matter of enforceability would have to refer for preliminary ruling under Article 267(3) TFEU and the CJEUrsquos answer in the light of doctrine of effet utile will be undoubtedly unfavourable for Micula (See Burgstaller p 474)Emanuela Matei Of Counsel Mircea amp Partners httpsselinkedincominemanuelamatei 0046-735576666

One million questions_ _ _ One answer Why did the Commission allow Romania to accede in 2007 despite the

fact that it had not terminated the intra-EU BITs Why did the Commission allow the counterparties (whoever they were

inter alia Sweden) to maintain the intra-EU BITS signed with an acceding state such as Romania

Why did Romania negotiate and concluded intra-EU BITs during the period of pre-accession (The objective of attracting more investments is kind of a fairy tale there is no evidence on the correlation between an increase of investments calculated in dollars and euros and the signed BITs)

Why didnrsquot Sweden terminate all its intra-EU BIT or at least eliminate the incompatibilities following the judgment in Case C-24906

How can the EU start to negotiate the TTIP before solving internally the question of compatibility between the autonomy of the EU legal order and the ISDS

One answer The Member States didnrsquot question the compatibility of the intra-EU BITs and expected that the ICSID Tribunal would interpret the BIT in line with their membership obligations

Emanuela Matei Of Counsel Mircea amp Partners httpsselinkedincominemanuelamatei 0046-735576666

Pacta sunt servanda beyond the state Every agreement of a legal nature domestic or international

whether it is a contract between individuals or a treaty between states presupposes that in concluding the agreement the parties acted with the intention to abide by its provisions

Micula award case states that ldquoIt is irrelevant whether the state in fact wished to commit itself it is sufficient that it acted in a manner that would reasonably be understood to create such an appearancerdquo (Micula award paragraph 669)

ldquoNo doubt it is true to say that international law is made for States and not States for international law but it is true only in the sense that the State is made for human beings and not human beings for the Staterdquo (Lauterpacht pp 438-9)1 International law creates basic rights and duties of the individual

besides rights and duties of states2 In addition to treaties and customs the sources of international law

include general principles of law which are independent of state will

3 1+2 The primary normative unit is the individual rather than the State The rule of law represents a method to empower individuals

Emanuela Matei Of Counsel Mircea amp Partners httpsselinkedincominemanuelamatei 0046-735576666

An attempt to re-create order The use of principle of conferral and subsidiarity can open a new

perspective Exactly as the borders between EU competences and MS are governed by the

principle of conferral so should the relation between the international investment order and the EU be clarified in the sense that competences not conferred upon an external organisation remain with the EU

The conferral must be clear unconditional and explicit For issues where the competences may overlap such as the commercial

policy the principle of subsidiarity should apply in the sense that only when the objectives of a proposed action cannot be sufficiently achieved at the supranational level an external actor can be competent to act and provide the necessary protection and the content and form of the action of that external actor shall not exceed what it is necessary in order to achieve the pursued objectives

FET standard should either be compliant with the intention of the state as a rule of interstate law should be or follow the postnational legal thinking respect the subsidiarity principle and adopt a functional philosophy

Emanuela Matei Of Counsel Mircea amp Partners httpsselinkedincominemanuelamatei 0046-735576666

How to regulate in the global world No market failures No public intervention is necessary Intervention necessary + overlapping competences

o State theno EU if the matter cannot be solved satisfactorily at the state-

level theno An external actor if the matter cannot be adequately solved

at the EU-level If each overlapping area had been governed by the

principles of subsidiarity and proportionality a contradictory approach as the one present in Micula would have been avoided

The question of necessity and proportionality should be cardinal even during the negotiation of ISDS inclusion into the TTIP

Emanuela Matei Of Counsel Mircea amp Partners httpsselinkedincominemanuelamatei 0046-735576666

Letrsquos keep in touch share and discuss information

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To follow updates from Mircea amp Partners click Join the company group

To follow updates from Centre for European Legal Studies click Join the groupEmanuela Matei Of Counsel Mircea amp Partners httpsselinkedincominemanuelamatei

0046-735576666

References 1 ECtHR Case law Bosphorus Hava Yollari Turizm v Ireland App No 4503698

(Eur Ct H R 30 June 2005)2 Eastern Sugar BV(Netherlands) v The Czech Republic SCC Case No

0882004 Micula and Others v Romania ICSID Case No ARB0520 Electrabel SA v Republic of Hungary ICSID Case No ARB0719 Achmea BV (Eureko) v The Slovak Republic UNCITRAL PCA Case No 2008-13

3 CJEU Case law Case C-20506 Case C-24906 Case C-11808 Opinion 191 Opinion 22013 AGM-COSMET Bogiatzi Deserbais Eco Swiss El-Yassini Factortame and Others Jany and Others Lucchini RTE and ITP v Commission Racke Salumificio di Cornuda Simmenthal TNT Express Nederland

4 SA 38517 MiculaRomania (ICSID arbitration award) MiculaCommission Case T-64614 26-03-2014 to 30-03-2015

5 Ministry of Finance RomaniaMicula Court of Appeal Bucharest Case 1575532014 14-01-2015 pending

6 European CommissionBanking and FinanceFree Movement of CapitalEnforcement and MonitoringMonitoring activities and analysis 11-11-2014

7 Transatlantic Trade and Investment Partnership (T-TIP) 9th Round of Negotiations NY 20-24 April 2015

Emanuela Matei Of Counsel Mircea amp Partners httpsselinkedincominemanuelamatei 0046-735576666

Books amp Articles1 Sadie Blanchard What can a foreign investor in a future member state legitimately

expect Negotiating legal certainty and regulatory flexibility during the accession (2014)

2 Dr Taida Begić Šarkinović Towards Shaping the New EU Investment Policy (2014)3 Hege Elisabeth Kjos Applicable Law in Investor-State Arbitration The Interplay

Between National and International Law OUP (2013)4 Karl-Heinz Boumlckstiegel An Arbitratorrsquos Perspective of BITs and their Relation to

Other International Law Obligations (2011)5 Hersch Lauterpacht The Function of Law in the International Community OUP

(2011)6 Luca G Radicati di Brozolo Res Judicata in International Arbitral Awards 15-04-

20117 Markus Burgstaller in Michael Waibel The Backlash Against Investment Arbitration

Perceptions and Reality KLI (2010)8 Joseacute Enrique Alvarez A BIT on Custom 42 New York University Journal of

International Law amp Policy 17 (2009)9 Ralf Michaels The True Lex Mercatoria Law Beyond the State 14 IND JGLOBAL

LEGAL STUD 447 452ndash60 (2007)Emanuela Matei Of Counsel Mircea amp Partners httpsselinkedincominemanuelamatei 0046-735576666

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Emanuela Matei Of Counsel Mircea amp Partners httpsselinkedincominemanuelamatei 0046-735576666