343 / 464
329
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.