Partner Emmanuel Gaillard (Paris-International Arbitration) authored an article titled “Note sous avis 1/17 de la Cour de justice de l'Union européenne (CJUE) rendu le 30 avril 2019” that was published by the Journal du droit international on September 2019 (in French).
This commentary shows that, although in its landmark Opinion 1/17, the Court of Justice of the European Union (CJEU) approved the investor-State dispute resolution mechanism of the EU-Canada Comprehensive Economic and Trade Agreement (CETA), it imposed extraordinarily restrictive conditions for investor-State arbitration to be held compatible with EU law.
Describing the CJEU’s reasoning, Prof. Gaillard makes four key observations on the CJEU’s findings: (i) the worsening of the criteria for the compatibility of international investment agreements with EU law, as compared with the Achmea decision; (ii) the restrictive interpretation of the CETA’s substantive investment protection standards; (iii) the adoption of a unilateralist view of international investment law; and (iv) the CJEU’s endorsement of the CETA’s innovations regarding dispute settlement mechanisms.
Following that, Prof. Gaillard explores the dramatic impact of the opinion on the existing network of extra-EU investment treaties and future investment agreements. Under the CJEU’s standards, the vast majority of existing extra-EU BITs, as well as the Energy Charter Treaty, fail to meet the high standards of compatibility with EU law set by the CJEU in its Opinion 1/17, which will no doubt affect the future of these treaties as well as, possibly, the fate of awards rendered pursuant to these instruments. At the same time, there are no guarantees that the CETA tribunals will endorse the CJEU’s restrictive interpretation of the CETA investor-State dispute resolution mechanism, which in turn may raise doubts as to the CETA’s compatibility with EU law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.