347 / 464
333
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.