CYIL 2015

POSTǧLISBON EXERCISE OF EU COMPETENCE IN THE FIELD OF FOREIGN INVESTMENT… and similarly to the Extra-EU BITs Regulation, it does not help in clarifying the uncertain elements of the Union’s foreign investment competence. 58 To avoid any confusion, two major limits framing the applicability of this instrument should be fleshed out. Firstly and as its full title suggests, the Financial Responsibility Regulation concerns only responsibility incurred in an investment arbitration based on an international agreement to which the Union is party. Situations to which this regulation will apply may therefore arise under international investment instruments concluded as mixed agreements, such as the Energy Charter Treaty (“ECT”) 59 or under international investment instruments to which only the Union is party. The Financial Responsibility Regulation will not be applicable to financial responsibility arising out of arbitration proceedings based on the Member States’ extra-EU BITs. Should such an arbitration engender an obligation for a Member State to compensate an investor for a loss suffered due to domestic measures required by EU law, the Financial Responsibility Regulation will not apply in the relation between the Union and the Member State. From this perspective, intra EU management of the financial responsibility may seem, on the whole, somewhat asymmetrical. 60 Secondly, the Financial Responsibility Regulation concerns intra EU management of financial responsibility and this type of accountability has to be distinguished from the attribution of international responsibility to the Union and/ or to the Member States for violation of the respective international obligations. 61 As to the specifics, the Financial Responsibility Regulation structures the allocation of financial responsibility between the Union and the Member States around the main principle that each of the European actors financially responds for its own wrongdoings. In other words, the Union will bear financial responsibility where the treatment under review will have been afforded by one its institutions. Vice versa the “Member State concerned should bear the financial responsibility where the treatment concerned is afforded by that Member State”, 62 save for situations where the latter acted to comply with requirements of EU law. 63 This main rule is supplemented by several exceptions and similar (although more complex) criteria lead also to the determination of who shall act as respondent in a given ISDS proceeding, 64 the conduct thereof being framed by multiple expressions of sincere cooperation obligation. The regime laid 58 Art. 1(1) of the Financial Responsibility Regulation quoted above, fn. No. 56. 59 2080 UNTS 95; 34 ILM 360 (1995). 60 Considering this situation “inequitable” Dimopoulos (A.), “The involvement of the EU in investor state dispute settlement: A question of responsibilities”, CMLRev . (2014) vol. 51, No. 6, pp. 1671 1720, pp. 1711-1718, p. 1715. 61 See below. 62 Art. 3 and Recital 7 of the Preamble of the Financial Responsibility Regulation quoted above, fn. No. 56. 63 Such as where the Member States have “no discretion or margin of appreciation as to the result to be achieved”, Art. 3 (1)(c) and 2(l) of the Financial Responsibility Regulation quoted above, fn. No. 56. 64 Art. 4 to 11 and Recitals 9 to 13 of the Preamble of the Financial Responsibility Regulation quoted above, fn. No. 56.

329