CYIL 2015

ONDŘEJ SVOBODA CYIL 6 ȍ2015Ȏ by giving foreign investors the right to attack its decisions using an arbitration forum outside the national court system.” 25 This claim is often being supported by the increasing number of cases brought by investors against states. 26 Especially, the recent notorious cases Vattenfall v. Germany 27 and Philip Morris v. Australia 28 summon doubts over a sovereign’s ability to make legitimate public policy choices in sensitive areas such as energy policy or public health. The criticisms often lack common sense. There is no doubt about growing use of investment arbitration and the fact that US and EU investors are the most frequent litigants. This, nevertheless, does not take into account the record of disputes between American investors and eight EU Member States which have BITs in force with the US. The record indicates that ISDS within the TTIP would not result in increased disputes and such fears are overstated. Moreover, both the EU and the US implemented in their latest agreements various safeguards and recognised the right to regulate as a basic underlying principle. 29 The new treaty practice also clarifies the meaning of some problematic investment protection standards that raised concerns in the past, notably fair and equitable treatment and indirect expropriation. The European Commission is of the opinion that CETA 30 reflects a turning point ensuring a high level of protection while preserving the EU and Canada’s right to regulate and pursue legitimate public policy objectives. 31 A closer look at the text of the treaty confirms this ambitious statement. In its Preamble CETA makes clear from the start that the EU and Canada preserve their right to regulate. 32 The detailed fair and equitable treatment provision precisely defines the content of “treatment”, the breach of which can only arise from a closed list of actions, e.g. manifest arbitrariness or denial of justice. Moreover, the concept of legitimate expectations is limited to situations where the State made a specific promise or representation. 33 The proposed list thus undoubtedly reduces the scope of this standard. The second “usual suspect” due to vagueness misused by investors is indirect expropriation. In CETA, the term 25 Reinhard Quick, Why TTIP should have an investment chapter including ISDS, Journal of World Trade , Vol. 49, No. 2 (2015), p. 199. 26 With 56 new cases, year 2014 registers the second largest number of known investment disputes commenced in a single year. It brings the total number of known cases to 568. 27 Vattenfall AB, Vattenfall Europe AG, Vattenfall Europe Generation AG v. Federal Republic of Germany , ICSID Case No. ARB/09/6. 28 Philip Morris Asia Limited v. The Commonwealth of Australia , UNCITRAL, PCA Case No. 2012-12. 29 European Commission, Public consultation on modalities for investment protection and ISDS in TTIP (March 2014), p. 1. 30 The consolidated text of Canada-European Union Comprehensive Economic and Trade Agreement (CETA) is available at http://trade.ec.europa.eu/doclib/docs/2014/september/tradoc_152806.pdf. 31 European Commission, Investment provisions in the EU-Canada free trade agreement (CETA) (26 September 2014), p. 1, see http://trade.ec.europa.eu/doclib/docs/2013/november/tradoc_151918.pdf. 32 See CETA, Preamble. 33 See CETA, Art. X.9 Treatment of Investors and Covered Investments.

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