CYIL 2015

POSTǧLISBON EXERCISE OF EU COMPETENCE IN THE FIELD OF FOREIGN INVESTMENT… the interplay between the Union’s and the Member States’ competences over the EUSFTA. 81 More precisely, the Commission has expressed its will to ask whether the Union has the competence to conclude the EUSFTA alone and specifically which provisions of the EUSFTA fall within the Union’s exclusive competence, which fall within the Union’s shared competence and which ones, if any, fall within the exclusive competence of the Member States. Once the CJEU delivers its reply, its opinion will in turn inform mutatis mutandis the discussion running in respect of the CETA and other instruments under negotiation. The interrogations as to the mixed or non mixed participation do not, however, exhaust all the difficult questions ahead, among them the issue of international responsibility. In this respect, the ISDS mechanism in the EUSFTA/CETA tailored to fit the Union’s/Member States’ complex legal existence aims to avoid the intricacies of the unsettled practice concerning the attribution and assessment of the international responsibility of the Union and of the Member States in connection with the latter’s EU-law obligations ( A ). Because the new ISDS mechanism is designed to be applied in an extra-EU context, its operation will have to embrace a fine line between the requirements of EU law, recently mentioned by the CJEU in a different context, and those of international law that will be the law that arbitrators will apply ( B ). A. Entering the Unsettled Field of International Responsibility Although the draft text of both the EUSFTA and CETA list only the Union as the contracting party on the “European” side, their ISDS provisions are worded in a way suggesting possible mixed participation of the Union and the Member States. Indeed, they lay down specific procedure to be embraced by the investors (claimants) so as to determine who, the Union or the Member States, shall act as respondent in a given arbitration. These procedural arrangements follow similar terms although CETA provisions 82 are more concise than those of the EUSFTA. 83 Briefly, these mechanisms require that before submitting a claim to arbitrate against the Union or the Member State, the investor shall turn to the Union so that the latter determines who should act as respondent (which gives the Union an opportunity to project internationally the rules spelled out in the Financial Responsibility Regulation). If the Union fails to deliver such determination, default rules indicate who the right respondent should be. Under these default rules, the Member State should be the respondent if the challenged measure is identified as adopted by such a Member State, while the Union shall act if the measures complained about include the Union’s measures. Contrary to the above-mentioned main rule, these default rules do not necessarily follow the logic of the Financial Responsibility Regulation. Importantly, once the respondent has been determined, it cannot object to the claim on the ground that the respondent

81 See above, fn. No. 4. 82 Art. X.20 CETA, quoted above, fn. No. 75. 83 Art. 9.15 EUSFTA, quoted above, fn. No. 76.

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