Dr. Roland Kläger
10. DAJV Fachgruppentag - 21 March 2014
The Impact of the TTIP on Europe’s
Investment Arbitration Architecture
Stuttgart · Frankfurt · Dresden · Brüssel
The Impact of the TTIP on Europe’s Investment Arbitration Architecture
Topics addressed
1. The old world of BITs
2. EU competence
3. Effect on existing BITs between EU Member States and the US
4. Scope of substantive guarantees for foreign investors
5. Dispute settlement mechanism
6. Respondent status of EU and Member States
7. Conclusion
Dr. Roland Kläger
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The Impact of the TTIP on Europe’s Investment Arbitration Architecture
1. The old world of BITs
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Bilateral investment treaties (BITs) focus only on the
promotion and protection of investment
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Originally concluded between a developed and a developing
state
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Worldwide: > 3000 BITs
•
EU Member States: around 1400 BITs
•
Germany: 131 BITs
•
Contain substantive legal guarantees for investors and
dispute settlement mechanism
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The Impact of the TTIP on Europe’s Investment Arbitration Architecture
2. EU competence
Article 207 TFEU:
“1. The common commercial policy shall be based on uniform principles,
particularly with regard to changes in tariff rates, the conclusion of tariff and trade
agreements relating to trade in goods and services, and the commercial aspects of
intellectual property, foreign direct investment, the achievement of uniformity in
measures of liberalisation, export policy and measures to protect trade such as
those to be taken in the event of dumping or subsidies. The common commercial
policy shall be conducted in the context of the principles and objectives of the
Union's external action.
4. […] For the negotiation and conclusion of agreements in the fields of trade in
services and the commercial aspects of intellectual property, as well as foreign
direct investment, the Council shall act unanimously where such agreements
include provisions for which unanimity is required for the adoption of internal rules.”
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The Impact of the TTIP on Europe’s Investment Arbitration Architecture
2. EU competence
Scope of the EU competence:
•
Limitation to foreign direct investment?
•
Limitation to liberalisation of market access?
•
EU competence for expropriation?
 Exclusive competence of EU or conclusion of mixed agreements
necessary?
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The Impact of the TTIP on Europe’s Investment Arbitration Architecture
3. Effect on existing BITs
•
EU Member States that have concluded BITs with the US:
Bulgaria, Croatia, Czech Republic, Estonia, Latvia, Lithuania,
Poland, Romania, Slovakia
•
Article 3 “grandfathering regulation”:
“Without prejudice to other obligations of the Member States under Union
law, bilateral investment agreements notified pursuant to Article 2 of this
Regulation may be maintained in force, or enter into force, in accordance
with the TFEU and this Regulation, until a bilateral investment agreement
between the Union and the same third country enters into force.”
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The Impact of the TTIP on Europe’s Investment Arbitration Architecture
4. Substantive guarantees
• Initially: “highest standards of protection that both Parties have
negotiated to date” (EU negotiation mandate), including
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fair and equitable treatment
national treatment
most-favoured-nation treatment
protection against direct and indirect expropriation
full protection and security
“umbrella clause”
free transfer of funds
Now:
 strong emphasis on right to regulate
 detailed language to narrow the scope of the guarantees
 possibility to clarify interpretation of individual provisions
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The Impact of the TTIP on Europe’s Investment Arbitration Architecture
5. Dispute Settlement Mechanism
Innovative proposals to amend investor-state dispute settlement clause:
• Costs follow the event
• UNCITRAL Rules on Transparency in Treaty-based Investor-State
Arbitration
• Code of conduct for arbitrators
• Appellate body?
 Attempt to increase consistency, legitimacy and transparency in
investment arbitration to accommodate public policy concerns
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The Impact of the TTIP on Europe’s Investment Arbitration Architecture
6. Respondent status of EU/Member States
• Proposal for a Regulation establishing a Framework for Managing
Financial Responsibility Linked to Investor-State Dispute Settlement
• Article 4: “The Union shall act as respondent where the dispute
concerns treatment afforded by the institutions, bodies or agencies
of the Union.”
• Member States may act as respondent after consultations with the
EU Commission (Article 8)
• EU Commission may actively participate in investment disputes
conducted by Member States (Article 9)
• Foreign investors need to request whether EU or Member States shall act
as respondent before submitting a claim
• Enforcement of arbitral awards against the EU uncertain
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The Impact of the TTIP on Europe’s Investment Arbitration Architecture
7. Conclusion
• EU is now an active player: negotiations with US, Canada, Singapore,
China, India, Japan, Ecuador etc.
• European system of investment protection is becoming more NAFTA-like
 from bilateral to regional
 from specialized investment agreement to FTA with investment
chapter
 substantive guarantees and dispute settlement mechanism take up
NAFTA elements
• Considerable uncertainties remain with regard to future of TTIP
negotiations
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Contact Details
Dr. Roland Kläger
HAVER & MAILÄNDER Rechtsanwälte
Lenzhalde 83-85
70192 Stuttgart (Germany)
Phone
Fax
+49 711 22744-0
+49 711 2991935
rk@haver-mailaender.de
www.haver-mailaender.de
Dr. Roland Kläger
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Thank you for your attention!
Stuttgart · Frankfurt · Dresden · Brüssel