Skip to main content

Advertisement

SpringerLink
Log in

Brexit, BITs and enforcement

  • Article
  • Published:
ERA Forum Aims and scope

Abstract

The United Kingdom ceasing to be a Member State of the European Union necessitates finding a way to settle disputes arising out of any final UK-EU Withdrawal Agreement. In order to assess whether Investor State Dispute Settlement (ISDS) might provide a possible model in this regard, the present paper analyses the approach currently taken in EU law to International Investment Agreements (IIAs), and to the adjudication of disputes and enforcement of awards under their provisions setting out ISDS procedures.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Notes

  1. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/604079/Prime_Ministers_letter_to_European_Council_President_Donald_Tusk.pdf.

  2. Section 1 of the European Union (Notification of Withdrawal) 2017 (which received Royal Assent on 16 March 2017) provides as follows:

    ‘The Prime Minister may notify, under Article 50(2) of the Treaty on European Union, the United Kingdom’s intention to withdraw from the EU.’

  3. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/639609/Enforcement_and_dispute_resolution.pdf.

  4. See [2017] OJ C 147/01.

  5. The full list of the 94 countries within which the UK had concluded BITs as at May 2017 were: Republic of Albania - 30.3.1994; Republic of Angola - 4.7.2000; Antigua and Barbuda - 12.6.1987; Argentine Republic -11.12.1990; Republic of Armenia - 27.5.1993; Republic of Azerbaijan - 4.1.1996; Kingdom of Bahrain - 30.10.1991; People’s Republic of Bangladesh - 19.6.1980; Barbados - 7.4.1993; Republic of Belarus - 1.3.1994; Belize 30.4.1982; Republic of Benin - 27.11.1987; Bolivia - 24.5.1988; Bosnia and Herzegovina - 2.10.2002; Federative Republic of Brazil - 19.7.1994; Republic of Burundi -13.9.1990; Republic of Cameroon - 4.6.1982; Republic of Chile - 8.1.1996; People’s Republic of China - 15.5.1986; Republic of Colombia - 17.3.2010; Republic of the Congo - 25.5.1989; Republic of Costa Rica - 7.9.1982; Republic of Côte d’Ivoire - 8.6.1995; Republic of Cuba - 30.1.1995; Commonwealth of Dominica - 23.1.1987; Republic of Ecuador - 10.5.1994; Arab Republic of Egypt - 11.6.1975; Republic of El Salvador - 14.10.1999; Federal Democratic Republic of Ethiopia - 19.11.2009; Republic of the Gambia - 2.7.2002; Republic of Georgia - 15.2.1995; Republic of Ghana - 22.3.1989; Grenada - 25.2.1988; Republic of Guyana - 27.10.1989; Republic of Haiti - 18.3.1985; Republic of Honduras - 7.12.1993; Hong Kong Special Administrative Region of the People’s Republic of China - 30.7.1998; Republic of India -14.3.1994; Republic of Indonesia - 27.4.1976; Jamaica - 20.1.1987; Hashemite Kingdom of Jordan - 10.10.1979; Republic of Kazakhstan- 23.11.1995; Republic of Kenya -13.9.1999; Republic of Korea - 4.3.1976; State of Kuwait - 8.10.2009; Kyrgyz Republic- 8.12.1994; Lao People’s Democratic Republic - 1.6.1995; Lebanese Republic Agreement - 16.2.1999; Kingdom of Lesotho - 18.2.1981; Malaysia - 21.5.1981; Republic of Mauritius - 20.5.1986; United Mexican States - 12.5.2006; Republic of Moldova - 19.3.1996; Mongolia - 4.10.1991; Kingdom of Morocco - 30.10.1990; Republic of Mozambique - 18.3.2004; Nepal - 2.3.1993; Republic of Nicaragua - 4.12.1996; Federal Republic of Nigeria - 11.12.1990; Sultanate of Oman - 25.11.1995; Islamic Republic of Pakistan - 30.11.1994; Republic of Panama - 7.10.1983; Independent State of Papua New Guinea - 14.5.1981; Republic of Paraguay (as amended by 17 6.1993 Exchange of Notes) - 4 June 1981; Republic of Peru - 4.10.1993; Republic of the Philippines - 3.12.1980; State of Qatar - 27.10.2009; Russian Federation - 6.4.1989; Saint Lucia - 18.1.1983; Republic of Senegal - 7.5.1980; Republic of Serbia (with Exchange of Notes) - 6.11.2002; Republic of Sierra Leone - 13.1.2000; Republic of Singapore- 22.7.1975; Republic of South Africa (as supplemented by 20.9.1994 Protocol to the Agreement) - 25.11.1997; Democratic Socialist Republic of Sri Lanka - 13.2.1980; Kingdom of Swaziland - 5.5.1995; United Republic of Tanzania - 7.1.1994; Kingdom of Thailand - 28.11.1978; Kingdom of Tonga - 22.10.1997; Republic of Trinidad and Tobago - 23.7.1993; Republic of Tunisia -14.3.1989; Republic of Turkey - 15.3.1991; Turkmenistan - 9.2.1995; Republic of Uganda - 24.4.1998; Ukraine - 10.2.1993; United Arab Emirates - 8.12.1992; Eastern Republic of Uruguay - 21.10.1991; Republic of Uzbekistan - 24.11.1993; Republic of Vanuatu - 22.12.2003; Bolivarian Republic of Venezuela - 15.3.1995; Socialist Republic of Vietnam - 1.8.2002; Yemen Arab Republic- 25.2.1982; Republic of Zambia - 27.11.2009; Republic of Zimbabwe - 1.3.1995.

  6. http://investmentpolicyhub.unctad.org/IIA/CountryBits/221#iiaInnerMenu.

  7. EU:C:2017:699.

  8. Commission Staff Working Document Impact Assessment on Multilateral reform of investment dispute resolution (Brussels, 17 September 2017) COM(2017) 493 final, SWD(2017) 303 final at para. 1.1.

  9. EU:C:2017:376.

  10. See, inter alia, judgments of 12 December 2006, Test Claimants in the FII Group Litigation, C-446/04, EU:C:2006:774, paras. 181 and 182; of 26 March 2009, Commission v Italy, C-326/07, EU:C:2009:193, para. 35; and of 24 November 2016, SECIL, C-464/14, EU:C:2016:896, paras. 75 and 76.

  11. Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions, “Towards a comprehensive European international investment policy”, 7 July 2010 (http://trade.ec.europa.eu/doclib/docs/2010/july/tradoc_146307.pdf) at p. 4.

  12. EU:C:2017:699.

  13. See to similar effect the decision in the related PCA Case No 2008-13 Eureko BV v Slovak Republic 10 October 2010 (Permanent Court of Arbitration) available online at http://ita.law.uvic.ca/documents/EurekovSlovakRepublicAwardonJurisdiction.pdf rejecting the claims by the European Commission (intervening) that provisions of a bilateral investment treaty on inward investment had been superseded by the TFEU provisions on free movement of capital in the EU.

  14. Regulation (EU) No 1219/2012 of the European Parliament and of the Council of 12 December 2012 establishing transitional arrangements for bilateral investment agreements between Member States and third countries [2012] OJ L 351/40.

  15. The UNCTAD sites lists some 75 treaties with investment provisions concluded with third countries directly by the EU. See http://investmentpolicyhub.unctad.org/IIA/CountryOtherIias/221#iiaInnerMenu.

  16. Regulation (EU) No 912/2014 of the European Parliament and of the Council of 23 July 2014 establishing a framework for managing financial responsibility linked to investor-to-state dispute settlement tribunals established by international agreements to which the European Union is party [2014] OJ L 257/121.

  17. http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2014.257.01.0121.01.ENG.

  18. Judgment of 30 June 2009 - 2 BvE 2/08 [2010] 3 CMLR 13.

  19. Opinion 1/94 Re Competence of the Community to Conclude International Agreements Concerning Services and the Protection of Intellectual Property [1994] ECR I-5267 paras. 22 et seq.

  20. On the mixed-agreement status of an international agreement see also Opinion 1/78 Re Draft International Agreement on Natural Rubber, Re [1979] ECR 2871 para. 2; and Opinion 2/91 Re ILO Convention 170 on Chemicals at Work [1993] ECR I-1061 paras. 13 and 39.

  21. Opinion 1/94 Re Competence of the Community to Conclude International Agreements Concerning Services and the Protection of Intellectual Property [1994] ECR I-5267, paras. 98 and 105.

  22. See on the extent of the requirement of consent, which has not yet been clarified, Krajewski, “Das institutionelle Gleichgewicht in den auswärtigen Beziehungen”, in Herrmann, Krenzler and Streinz (eds), Die Außenwirtschaftspolitik der Europäischen Union nach dem Verfassungsvertrag (2006), p. 63 (69 et seq.).

  23. See the Agreement on Trade Related Investment Measures [1994] OJ L336/100.

  24. See Dolzer and Schreuer, Principles of International Investment Law (2008), pp. 11 et seq.

  25. See BVerfGE 84, 90 et seq.; 94, 12 et seq.; 112, 1 et seq.

  26. Bundesbank, Das deutsche Auslandsvermögen seit Beginn der Währungsunion: Entwicklung und Struktur, Monatsbericht 10.2008, p. 19 (table).

  27. Federal Ministry of Economics and Technology, Übersicht über die bilateralen Investitionsförderungs- und -schutzverträge (IFV) der Bundesrepublik Deutschland (as per May 27, 2008).

  28. See UNCTAD, World Investment Report 2008, Transnational Corporations, and the Infrastructure Challenge, p. 15.

  29. See Tietje, Die Außenwirtschaftsverfassung der EU nach dem Vertrag von Lissabon (2009), pp. 15–16.

  30. Art. 30.7 CETA provides (emphasis added):

    ‘1. The Parties shall approve this Agreement in accordance with their respective internal requirements and procedures.

    2. This Agreement shall enter into force on the first day of the second month following the date the Parties exchange written notifications certifying that they have completed their respective internal requirements and procedures or on such other date as the Parties may agree.

    3.

    1. (a)

      The Parties may provisionally apply this Agreement from the first day of the month following the date on which the Parties have notified each other that their respective internal requirements and procedures necessary for the provisional application of this Agreement have been completed or on such other date as the Parties may agree.

    2. (b)

      If a Party intends not to provisionally apply a provision of this Agreement, it shall first notify the other Party of the provisions that it will not provisionally apply and shall offer to enter into consultations promptly. Within 30 days of the notification, the other Party may either object, in which case this Agreement shall not be provisionally applied, or provide its own notification of equivalent provisions of this Agreement, if any, that it does not intend to provisionally apply. If within 30 days of the second notification, an objection is made by the other Party, this Agreement shall not be provisionally applied. The provisions that are not subject to a notification by a Party shall be provisionally applied by that Party from the first day of the month following the later notification, or on such other date as the Parties may agree, provided the Parties have exchanged notifications under sub-paragraph(a).

    3. (c)

      A Party may terminate the provisional application of this Agreement by written notice to the other Party. Such termination shall take effect on the first day of the second month following that notification.

    4. (d)

      If this Agreement, or certain provisions of this Agreement, is provisionally applied, the Parties shall understand the term “entry into force of this Agreement” as meaning the date of provisional application. The CETA Joint Committee and other bodies established under this Agreement may exercise their functions during the provisional application of this Agreement. Any decisions adopted in the exercise of their functions will cease to be effective if the provisional application of this Agreement is terminated under subparagraph (c).

    4. Canada shall submit notifications under this Article to the General Secretariat of the Council of the European Union or its successor. The European Union shall submit notifications under this Article to Canada’s Department of Foreign Affairs, Trade and Development or its successor.’

  31. EU:C:2017:376.

  32. EU:C:2016:992, 21 December 2016.

  33. In her Advice (EU:C:2016:992) to the CJEU in the EU-Singapore FTA matter AG Sharpston distinguished ‘direct investment’ from ‘portfolio investment’. The latter was said to be characterised by the absence of an ‘intention to influence the management or control of a company’: see Case C-81/09 Idrima Tipou AE, EU:C:2010:622 at para. 48 and Case C-212/09 Commission v. Portugal, EU:C:2011:717. AG Sharpston defined foreign direct investments (at para. 322) as

    ‘investments made by natural or legal persons of a third State in the European Union and investments made by EU natural or legal persons in a third State which serve to establish or maintain lasting and direct links, in the form of effective participation in the company’s management and control, between the person providing the investment and the company to which that investment is made available in order to carry out an economic activity.’

  34. Opinion 1/91 (First Opinion on the EEA Agreement) of 14 December 1991, EU:C:1991:490, paras. 40 and 70; Opinion 1/09 (Agreement creating a Unified Patent Litigation System) of 8 March 2011, EU:C:2011:123, para. 74; and Opinion 2/13 (Accession of the European Union to the ECHR) of 18 December 2014, EU:C:2014:2454, para. 182.

  35. EU:C:1991:490.

  36. EU:C:2014:2454.

  37. Opinion of the European Economic and Social Committee on investor protection and investor to state dispute settlement in EU trade and investment agreements with third countries (May 2015) [2015] OJ C-332/6 at para. 1.9.

  38. Article 8.29 CETA envisages the eventual development of a more general international investment court system which will supersede these CETA specific provisions by providing as follows:

    ‘Establishment of a multilateral investment tribunal and appellate mechanism

    The Parties shall pursue with other trading partners the establishment of a multilateral investment tribunal and appellate mechanism for the resolution of investment disputes. Upon establishment of such a multilateral mechanism, the CETA Joint Committee shall adopt a decision providing that investment disputes under this Section will be decided pursuant to the multilateral mechanism and make appropriate transitional arrangements.’

  39. See Article 8.30(1) CETA Ethics:

    ‘1. The Members of the Tribunal shall be independent. They shall not be affiliated with any government (For greater certainty, the fact that a person receives remuneration from a government does not in itself make that person ineligible.). They shall not take instructions from any organisation, or government with regard to matters related to the dispute. They shall not participate in the consideration of any disputes that would create a direct or indirect conflict of interest. They shall comply with the International Bar Association Guidelines on Conflicts of Interest in International Arbitration or any supplemental rules adopted pursuant to Article 8.44.2. In addition, upon appointment, they shall refrain from acting as counsel or as party-appointed expert or witness in any pending or new investment dispute under this or any other international agreement.’

  40. See Article 8.36 CETA on Transparency of proceedings:

    ‘1. The UNCITRAL Transparency Rules, as modified by this Chapter, shall apply in connection with proceedings under this Section.

    2. The request for consultations, the notice requesting a determination of the respondent, the notice of determination of the respondent, the agreement to mediate, the notice of intent to challenge a Member of the Tribunal, the decision on challenge to a Member of the Tribunal and the request for consolidation shall be included in the list of documents to be made available to the public under Article 3(1) of the UNCITRAL Transparency Rules.

    3. Exhibits shall be included in the list of documents to be made available to the public under Article 3(2) of the UNCITRAL Transparency Rules.

    4. Notwithstanding Article 2 of the UNCITRAL Transparency Rules, prior to the constitution of the Tribunal, Canada or the European Union as the case may be shall make publicly available in a timely manner relevant documents pursuant to paragraph 2, subject to the redaction of confidential or protected information. Such documents may be made publicly available by communication to the repository.

    5. Hearings shall be open to the public. The Tribunal shall determine, in consultation with the disputing parties, the appropriate logistical arrangements to facilitate public access to such hearings. If the Tribunal determines that there is a need to protect confidential or protected information, it shall make the appropriate arrangements to hold in private that part of the hearing requiring such protection.

    6. Nothing in this Chapter requires a respondent to withhold from the public information required to be disclosed by its laws. The respondent should apply those laws in a manner sensitive to protecting from disclosure information that has been designated as confidential or protected information.’

  41. [2014] OJ L 257/121.

  42. See generally on some of these issues: https://www.iisd.org/itn/2017/03/13/the-power-to-conclude-the-new-generation-of-eu-ftas-ag-sharpston-in-opinion-2-15-laurens-ankersmit/.

  43. See Statement by the Commission and the Council on investment protection and the Investment Court System [2017] OJ L11/20-1.

  44. See for example Janah v. Libya/Benkharbouche v. Sudan [2017] UKSC (judgment awaited) on appeal from [2015] EWCA Civ 33 on whether individual employees could rely, for the vindication of their employment and equality rights founded on EU law, upon the EU fundamental right of access to court contained in Article 47 of the EU Charter to require the disapplication of statutory immunity from suits otherwise granted to foreign embassies under UK law.

  45. Joined cases C-6/90 and C-9/90 Francovich, EU:C:1991:428.

  46. EU:C:2009:69 [2009] 1 AC 1138.

  47. [2009] EWHC 957 (Comm) [2009] 1 CLC 716.

  48. EU:C:2015:316.

  49. See Ioannis Glivanos http://verfassungsblog.de/brexit-lawsuits-but-not-as-you-know-them/. See too http://international.nd.edu/events/2017/05/30/can-foreign-investors-sue-the-uk-for-brexit/ and

Author information

Authors and Affiliations

  1. Matrix Chambers, Griffin Building, Gray’s Inn, London, WC1R 5LN, UK

    Aidan O’Neill

Authors
  1. Aidan O’Neill
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Aidan O’Neill.

Additional information

I am grateful to my Matrix colleague Tamara Jaber for her assistance in the preparation of this paper.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

O’Neill, A. Brexit, BITs and enforcement. ERA Forum 18, 513–546 (2018). https://doi.org/10.1007/s12027-018-0493-8

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s12027-018-0493-8

Keywords

Search

Navigation