The European Union and International Dispute Settlement 9781509903238, 9781509903269, 9781509903245

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THE EUROPEAN UNION AND INTERNATIONAL DISPUTE SETTLEMENT This monograph explores the connections between the European Union and ­international dispute settlement. It highlights the legal challenges faced by the principal players in the field: namely the EU as a political actor and the Court of Justice of the EU as an international and domestic judiciary. In addition, it places the subject in its broader context of international dispute settlement, and the p ­ articipation of the EU and its Member States in international disputes. It focuses on horizontal and cross-cutting themes, bringing together insights from the different sectors of trade, investment and human rights, and offering a variety of perspectives from academics, policymakers and practitioners.

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The European Union and International Dispute Settlement

Edited by

Marise Cremona, Anne Thies and Ramses A Wessel

OXFORD AND PORTLAND, OREGON 2017

Hart Publishing An imprint of Bloomsbury Publishing Plc Hart Publishing Ltd Kemp House Chawley Park Cumnor Hill Oxford OX2 9PH UK

Bloomsbury Publishing Plc 50 Bedford Square London WC1B 3DP UK

www.hartpub.co.uk www.bloomsbury.com Published in North America (US and Canada) by Hart Publishing c/o International Specialized Book Services 920 NE 58th Avenue, Suite 300 Portland, OR 97213-3786 USA www.isbs.com HART PUBLISHING, the Hart/Stag logo, BLOOMSBURY and the Diana logo are trademarks of Bloomsbury Publishing Plc First published 2017 © The Editors 2017 The Editors have asserted their right under the Copyright, Designs and Patents Act 1988 to be identified as Authors of this work. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage or retrieval system, without prior permission in writing from the publishers. While every care has been taken to ensure the accuracy of this work, no responsibility for loss or damage occasioned to any person acting or refraining from action as a result of any statement in it can be accepted by the authors, editors or publishers. All UK Government legislation and other public sector information used in the work is Crown Copyright ©. All House of Lords and House of Commons information used in the work is Parliamentary Copyright ©. This information is reused under the terms of the Open Government Licence v3.0 (http://www. nationalarchives.gov.uk/doc/open-government-licence/version/3) except where otherwise stated. All Eur-lex material used in the work is © European Union, http://eur-lex.europa.eu/, 1998–2017. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library. ISBN: HB: 978-1-50990-323-8 ePDF: 978-1-50990-324-5 ePub: 978-1-50990-325-2 Library of Congress Cataloging-in-Publication Data Names: Cremona, Marise, editor.  |  Thies, Anne, 1975-, editor.  |  Wessel, Ramses A., editor. Title: The European Union and international dispute settlement / Edited by Marise Cremona, Anne Thies and Ramses A. Wessel. Description: Portland, Oregon : Hart Publishing, 2017.  |  Includes bibliographical references and index. Identifiers: LCCN 2017013657 (print)  |  LCCN 2017016813 (ebook)  |  ISBN 9781509903252 (Epub)  |  ISBN 9781509903238 (hardback : alk. paper) Subjects: LCSH: Dispute resolution (Law)—European Union countries.  |  Pacific settlement of international disputes.  |  Conflict management—European union countries.  |  European Union­—Foreign relations.  |  Court of Justice (Court of Justice of the European Union). Classification: LCC KJE4169 (ebook)  |  LCC KJE4169 .E98 2017 (print)  |  DDC 347.24/09—dc23 LC record available at https://lccn.loc.gov/2017013657 Typeset by Compuscript Ltd, Shannon To find out more about our authors and books visit www.hartpublishing.co.uk. Here you will find extracts, author information, details of forthcoming events and the option to sign up for our newsletters.

PREFACE

This book is a timely collection of contributions on the international and EU law challenges the European Union faces as a party to international dispute settlement. While the Union’s activities as a global actor increasingly lead to a need to participate in international dispute settlement, the Court of Justice of the ­European Union imposes constitutional barriers to allowing the involvement of other courts and tribunals in the interpretation and application of EU law. This book reveals the tension between the Union’s global ambitions and the preservation of its autonomous legal order. This tension was also visible in Opinion 2/15, delivered by the Court of J­ustice on 16 May 2017, on the competence of the Union to conclude the Free Trade Agreement with Singapore (the first of the so-called new generation FTAs). This Opinion came too late to be included in the contributions in this Volume. For the topic of this book it is important to note that the Court held that the provisions on Investor-State Dispute Settlement (ISDS) in the Agreement were not covered by the EU’s exclusive competences. While the Court was only asked to assess the (exclusive) competence of the EU to conclude the Agreement—and not the compatibility of the provisions with EU law—it did acknowledge the competence of the Member States in the area of ISDS as well as the possible effects of ISDS on the Union’s judicial system. Upcoming cases (such as the one announced by Belgium on CETA) may shed a new light on the compatibility of ISDS with the Union’s legal order. After an initial exchange of ideas on the different facets of issues like these during a meeting held at the European University Institute in Florence in February 2015—organized jointly by the EUI’s Academy of European Law together with the Centre for the Law of EU External Relations (CLEER) and the ESIL Interest Group on the EU as a Global Actor—the contributors produced and discussed draft chapters with the editors. The end result has been brought together in the present volume. The Editors wish to thank the contributors for their willingness to share their insights, both during the initial meeting and afterwards. We also express our gratitude to Anny Bremner and Ceri Warner for their invaluable work in getting the manuscript ready for publication. We hope you will enjoy reading the book as much as we did preparing it. Marise Cremona Anne Thies Ramses A Wessel June 2017

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CONTENTS

Preface�������������������������������������������������������������������������������������������������������������������������v Contributors�������������������������������������������������������������������������������������������������������������� ix List of Abbreviations������������������������������������������������������������������������������������������������� xi

1. Introduction��������������������������������������������������������������������������������������������������������1 Marise Cremona, Anne Thies and Ramses A Wessel Part I: The European Union and International Dispute Settlement: Setting the Scene, Inside Out and Outside In 2. The European Union and International Dispute Settlement: Mapping Principles and Conditions������������������������������������������������������������������7 Christophe Hillion and Ramses A Wessel 3. European Union and Dispute Settlement: Managing Proliferation and Fragmentation���������������������������������������������������������������������31 Esa Paasivirta 4. The European Union’s Contribution to the Law on Standing and Jurisdiction in International Dispute Settlement�������������������������������������55 Danae Azaria 5. Aspects of the EU’s Responsibility in International Investment Disputes�����������������������������������������������������������������������������������������83 Catharine Titi Part II: Dispute Settlement Systems: Exclusive Jurisdiction of the Court of Justice of the European Union and the Principle of Free Choice of Means 6. The Exclusive Jurisdiction of the Court of Justice of the European Union and the Unity of the EU Legal Order�������������������������������������������������101 Niilo Jääskinen and Alicja Sikora 7. The Not So Free Choice of EU Member States in International Dispute Settlement������������������������������������������������������������������������������������������113 Tobias Lock 8. European Union Member States and State–State Arbitration: What’s Left?�����������������������������������������������������������������������������������������������������133 Anne Thies

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Contents Part III: Implementation and Effects of IDS Rulings in the EU Legal Order

  9. International Rulings and the EU Legal Order: Autonomy as Legitimacy?�����������������������������������������������������������������������������161 Christina Eckes 10. The Effects of International Dispute Settlement Decisions in EU Law�������������������������������������������������������������������������������������191 Andrés Delgado Casteleiro 11. The Position of European Citizens in International Dispute Settlement���������������������������������������������������������������������������������������213 Ernst-Ulrich Petersmann Part IV: The EU as a Party to International Dispute Settlement: Case Studies 12. The EU and its Member States in WTO Dispute Settlement: A ‘Competence Model’ or a Case Apart for Managing International Responsibility?�����������������������������������������������������������������������237 Gracia Marín Durán 13. The Unitary Patent and Unified Patent Court: Past, Present and Future�������������������������������������������������������������������������������275 Aurora Plomer

Index�����������������������������������������������������������������������������������������������������������������������293

CONTRIBUTORS

Danae Azaria is a Lecturer in Law at the Faculty of Law, University College London Marise Cremona is Professor of European Law at the European University ­Institute, Florence Andrés Delgado Casteleiro is Senior Research Fellow at the Max Planck Institute for International, European, and Regulatory Procedural Law, Luxembourg Christina Eckes is Professor of European Law at the University of Amsterdam and Director of the Amsterdam Centre for European Law and Governance Christophe Hillion is of Professor of European Law at the Universities of Leiden and Gothenburg; and Senior Researcher at the Swedish Institute for ­European Policy Studies in Stockholm Niilo Jääskinen is Justice and President of the Third Chamber at the Supreme Administrative Court of Finland Tobias Lock is Senior Lecturer in European Law and co-director of the Europa Institute, University of Edinburgh Gracia Marin Duran is Lecturer in International Economic Law at Edinburgh University School of Law, United Kingdom Alicja Sikora is Lecturer at the Faculty of Law of the Jagiellonian University in Krakow, Poland and Référendaire at the General Court of the European Union Esa Paasivirtaa is Legal Adviser at the European Commission and Adjunct ­Professor at the University of Helsinki Ernst Ulrich Petersmann is emeritus Professor of International and European Law at the European University Institute of Florence, Italy, and legal consultant for the World Trade Organization at Geneva, Switzerland Aurora Plomer is Professor in Law at the School of Law of the University of Bristol Anne Thies is Associate Professor in Law at the University of Reading Catharine Titi is Research Scientist at the French National Centre for Scientific Research (CNRS) and Faculty Member at the Research Centre on Procurement Law and International Investments (CREDIMI) of the University of Burgundy, France Ramses A Wessel is Professor of International and European Law and Governance at the University of Twente, The Netherlands

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LIST OF ABBREVIATIONS

ACCC ADA AFSJ ARIO ASR BIT CAC CCP CETA CFR CFSP CJEU DSU EA Treaty/ EURATOM EC ECB ECHR ECJ ECT ECtHR EEA EEC EEZ EFSF EFTA EPC EPO EPUE ERTA ESM EU EUCFR FDI FTA GATS

Aarhus Convention Compliance Committee Anti-Dumping Agreement Area of Freedom, Security and Justice Articles on the Responsibility of International Organizations Articles on the Responsibility of States for Internationally Wrongful Acts Bilateral Investment Protection Treaty Collective Action Clauses Common Commercial Policy Comprehensive Economic Trade Agreement Charter of Fundamental Rights Common Foreign and Security Policy Court of Justice of the European Union Dispute Settlement Understanding Treaty establishing the European Atomic Energy Community European Community European Central Bank European Convention on Human Rights European Court of Justice Energy Charter Treaty European Court of Human Rights European Economic Area European Economic Community Exclusive Economic Zone European Financial Stability Facility European Free Trade Association European Patent Convention European Patent Organisation European Union Patent with Unitary Effect European Agreement on Road Transport European Stability Mechanism European Union EU Charter of Fundamental Rights Foreign Direct Investment Free Trade Agreement General Agreement on Trade in Services

xii GATT GFCC HRL ICES ICJ ICS ICSID IDS IGC ILC IMF IMO IO ISDS ITA ITLOS LOSC MoU MS NAFO NGO PCA PCIJ PG PSI REIO SCM SME TAC TEU TFEU TRIPS TTIP UN UNC UNCLOS UNCTAD UPA UPC US VCLT VCLTIO WTO

List of Abbreviations General Agreement on Tariffs and Trade German Federal Constitutional Court Human Rights Law International Council for the Exploration of the Seas International Court of Justice Investment Court System International Centre for Settlement of Investment Disputes International Dispute Settlement Inter-Governmental Conference International Law Commission International Monetary Fund International Maritime Organization International Organisation Investor-State Dispute Settlement Information Technology Agreement International Tribunal for the Law of the Sea Law of the Sea Convention Memorandum of Understanding Member States North Atlantic Fisheries Organization Non-Governmental Organisation Permanent Court of Arbitration Permanent Court of International Justice Public Goods Private Sector Involvement Regional Economic Integration Organisation Subsidies and Countervailing Measures Small and Medium-sized Enterprises Total Allowable Catch Treaty on European Union Treaty on the Functioning of the European Union Trade-Related Aspects of Intellectual Property Transatlantic Trade and Investment Partnership United Nations United Nations Charter UN Convention on the Law of the Sea United Nations Conference on Trade and Development Unión de Pequeños Agricultores Unified Patent Court United States Vienna Convention on the Law of Treaties 1969 Vienna Convention on the Law of Treaties between States and International Organisations or between International Organisations 1986 World Trade Organization

1 Introduction MARISE CREMONA, ANNE THIES AND RAMSES A WESSEL As an international actor the European Union (EU) faces two types of challenge, each derived from the fact that the EU and its Member States operate internationally both independently and in tandem. The first is external: the challenge to be accepted as an autonomous player on the international stage with an identity and legal personality distinct from its Member States, while at the same time achieving recognition that ‘the EU is, under international law, precluded by its very nature from being considered a State’,1 thereby raising legal questions which may require bespoke answers over its participation in treaty regimes, dispute settlement systems and international responsibility. The second challenge, presenting to some degree the reverse of this coin, is internal: the construction of a constitutional framework which allows the EU to participate in international law-making and its attendant need for international dispute settlement, while at the same time safeguarding the EU-law-mediated relationship between the EU and its Member States. The Court of Justice of the European Union (CJEU) is certainly itself an international court but it is also in a real sense a ‘domestic’ court for the EU’s own legal order; in both roles it may find itself in competition with other international courts and tribunals. The essays brought together in this book, in focusing on the participation of the EU and its Member States in international disputes (as claimant, respondent and third party), reflect the constitutional challenges facing the EU as a political actor and the CJEU as both an international and a domestic judiciary, from these two European and international law perspectives. On the one hand, the contributions show ways in which the EU has been participating in international dispute settlement (IDS) as a political actor, by contributing to the development of international dispute settlement through treaty-making, and in its capacity as claimant, respondent or third party in international cases. In this way the book presents the EU’s contribution to the development of international dispute settlement under international law, including the establishment of additional institutions and the position of individuals under EU and international law. On the other hand, the contributions highlight the insistence of the EU judiciary on the autonomy of 1 

Opinion 2/13, EU:C:2014:2454, para 156.

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the EU legal order and its role as ‘gatekeeper’ when dealing with the reception of international rulings and interaction with other international courts and tribunals. The collection demonstrates that as a result of the constitutional structure of the EU and the significance of the EU’s external legal commitments, the role of the Court of Justice has been more central than that which a national court might have in establishing the conditions for the involvement of a nation-state in IDS. And, of course, its decisions may nonetheless be highly political. The questions addressed in this book are of practical as well as theoretical interest. There is a proliferation of international courts and tribunals under international law; the participation of the EU in international treaty-making and the work of international organisations which provide, inter alia, means for the settlement of international disputes is increasing, together with the consequent risks of fragmentation. Given this increased involvement of the EU, what are the implications for its Member States, as parties to state–state and investor– state disputes? How do developments in international dispute settlement affect private parties? What are the effects of international rulings within the European legal order, and how does the CJEU see its ‘gatekeeper’ role? The cross-policy nature of much EU external action (from trade to human rights, from investment protection to environmental matters) has given rise to an increasing number of vertical and horizontal competence disputes, affecting the standing of the EU and/or its Member States in international disputes. The allocation and categorisation of competence under the Lisbon Treaty2 in turn affects the approach of the CJEU towards its own role and its interaction with other international courts and tribunals (for example in the area of human rights and investment protection) with which it engages in dialogue, and even competition. The EU’s own practice, and its engagement with international dispute settlement, shapes the development of international law, for example as regards standing, jurisdiction and responsibility, and (most controversially) the role of arbitration in investor–state dispute settlement. Each chapter reflects on the way in which the EU, as a unique, non-state actor, participates in international dispute settlement and the extent to which international dispute settlement fora, as well as the EU’s own rules, are adequate to deal with the EU as a party. While we recognise that traditional international dispute settlement under public international law concerns state–state disputes (and possibly state–international organisation disputes), when editing this collection we decided also to include analysis of issues related to investment arbitration, the EU and the European Convention of Human Rights, the Unified Patent Court, and the effects of international rulings in the EU legal order, including the position of individuals. We see this broader approach as justified

2 Treaty of Lisbon Amending the Treaty on European Union and the Treaty Establishing the European Community [2007] OJ C 306/01.

Introduction

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both by the importance of the position of natural and legal persons under public international law and European law, and by current significant developments in the areas just mentioned. In putting together this collection we decided, rather than taking a sectoral approach, to identify a number of horizontal themes which would allow us to bring together insights from different sectors (such as trade, investment, patents and human rights). First, Part I examines some general trends in IDS, the overall approach of the CJEU to external mechanisms of dispute settlement, and the ways in which the EU as a global actor involved in international treaty-making may contribute to the management of fragmentation and proliferation. This gives a framework within which we can focus on more specific issues. Next, Part II turns to the international principle of free choice of means (of dispute settlement), and how this principle interacts with the unity of the EU legal order and the exclusive jurisdiction of the CJEU regarding the interpretation and application of EU law. EU international agreements become an integral part of EU law and thus fall within the exclusive jurisdiction of the CJEU. The link forged by the Court between its exclusive jurisdiction and the autonomy of the EU legal order makes it difficult to reconcile its position as the constitutional court of the EU with the jurisdiction of other international courts and tribunals and the need to ensure consistency between the interpretation given by an external (non-EU) court or tribunal, and that of the CJEU. The theme of Part III relates to the effects of international rulings within the EU legal order, the interaction between the CJEU and international courts and tribunals and their rulings, and the ways in which these interactions affect individuals, their rights and the non-EU courts and tribunals (such as the Unified Patent Court or investment tribunals) dealing with such rights. The CJEU has taken a protective approach to the existence of other courts and tribunals (for example in Opinion 1/09 on the Unified Patent Court)3 and the capacity of international courts to review EU measures (most recently in Opinion 2/13 on the EU’s accession to the ECHR).4 There is a tension between the principles invoked by the Court to support its approach to EU participation in IDS—including the autonomy of the EU legal order—and other principles which underpin the EU’s external action, including effectiveness, openness to international law, and the EU’s commitment to, and role within, the international legal order. Does the Court’s approach reflect the treaty-based ambitions and powers vested in the EU? And, finally, Part IV turns to the conditions under which the EU may be involved in the settlement of international disputes as a party: the EU has international legal personality (Article 47 of the Treaty on European Union), but what other conditions need to be met under EU or international law to bring cases, or to be

3  4 

Opinion 1/09 ECLI:EU:C:2011:123, [2011] ECR I-1137. Opinion 2/13 (n 1).

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a defendant in international proceedings, and what effect does this have on the position of the EU Member States? Our hope is that the chapters offered here will not only illuminate current debates and specific angles of this intricate relation between the EU and international dispute settlement, but that taken together they will also encourage reflection on the underlying tensions within the interlocking constitutional, European and international legal systems.

Part I

The European Union and International Dispute Settlement: Setting the Scene, Inside Out and Outside In

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2 The European Union and International Dispute Settlement: Mapping Principles and Conditions CHRISTOPHE HILLION AND RAMSES A WESSEL

I. Introduction In Opinion 2/13, the Court of Justice of the European Union (CJEU) confirmed the complexities related to the EU’s submission to external judicial scrutiny.1 In answering the question of whether the Union could join the European Convention on Human Rights (ECHR), the Court pointed to a number of (classic) principles and conditions inherent to the nature of EU law, which in effect encapsulate the difficulties of a combination of EU law and international dispute settlement (IDS). Rightfully distinguishing between different roles of international courts and tribunals (ranging from enforcement and administrative and constitutional review to dispute settlement), a recent study counted 17 international courts with a competence to settle disputes.2 Although the Court of Justice itself has a role in dispute settlement, international fora in which the EU can participate in legal proceedings are rare.3

1  Opinion 2/13 Accession by the Union to the European Convention for the Protection of Human Rights and Fundamental Freedoms, ECLI:EU:C:2014:2454. See also View of Advocate General Kokott, ECLI:EU:C:2014:2475. For an academic appraisal see, inter alia, A Łazowski and RA Wessel, ‘When Caveats turn into Locks: Opinion 2/13 on Accession of the European Union to the ECHR’ (2015) 16(1) German Law Journal 179; as well as A Łazowski and RA Wessel, The European Court of Justice Blocks the EU’s Accession to the ECHR, CEPS Commentary, 8 January 2015; www.ceps.eu/node/9942. 2  KJ Alter, The New Terrain of International Law: Courts, Politics, Rights (Princeton NJ, Princeton University Press, 2014) ch 5. See in general JG Merrills, International Dispute Settlement (Cambridge, Cambridge University Press, 2011). See on different forms of IDS also L Boisson de Chazournes, MG Kohen and JE Vinuales (eds), Diplomatic and Judicial Means of Dispute Settlement (Leiden, Martinus Nijhoff Publishers, 2013). 3 See also A Rosas, ‘The European Union and International Dispute Settlement’ in L Boisson de Chazournes, C Romano and R Mackenzie (eds), International Organizations and International

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Although there may be a relationship between the existence of IDS mechanisms in international agreements and the effects of international norms in the EU,4 this chapter will not deal with the more general question of the reception of international law (and international judicial decisions) in the EU legal order,5 nor with the impact of decisions of international organisations and their status in the EU;6 rather, it aims at mapping the situations in which the EU has accepted IDS as a full participant as well as situations in which the EU has attempted to participate (section II). This will be followed by an analysis of the principles underlying the conditions defining the ability of the EU to join an IDS system. This chapter will look at EU treaty provisions, namely EU external objectives and competence, with a view to establishing the normative and constitutional framework within which the Court is to adjudicate on the issue of participation (section III). Section IV will draw some conclusions.

II.  The European Union and International Dispute Settlement A. Participation of the European Union in International Dispute Settlement The obvious example of a successful participation of the EU in IDS is the World Trade Organization (WTO),7 of which the EU is one of the founding members. Given the impact on the EU legal order of the WTO judicial decisions from

Dispute Settlement: Trends and Prospects (Ardsley NY, Transnational Publishers Inc, 2002) 49; as well as A Rosas, ‘International Dispute Settlement—EU Practices and Procedures’ (2003) 46 German Yearbook of International Law 284; and F Hoffmeister, ‘The European Union and the Peaceful Settlement of International Disputes’ (2012) 11(1) Chinese Journal of International Law 77. 4  See for example BI Bonafé, ‘Direct Effect of International Agreements in the EU Legal Order: Does it Depend on the Existence of an International Dispute Settlement System?’ in E Cannizzaro, P Palchetti and RA Wessel (eds), International Law as Law of the European Union (Leiden, Martinus Nijhoff Publishers, 2011) 229. 5  See on the question for instance the various contributions to Cannizzaro et al (n 4); or RA Wessel, Close Encounters of the Third Kind: The Interface Between the EU and International Law after the Lisbon Treaty (Stockholm, Sieps Report, 2013). 6  See for instance RA Wessel and S Blockmans (eds), Between Autonomy and Dependence: The EU Legal Order Under the Influence of International Organisations (The Hague, TMC Asser Press/Springer, 2013); or more specifically: RA Wessel and S Blockmans, ‘The Legal Status and Influence of Decisions of International Organizations and other Bodies in the European Union’, in P. Eeckhout and M. LopezEscudero (eds.), The European Union’s External Action in Times of Crisis (Oxford, Hart Publishing, 2016), 223. cf also B Martenczuk, ‘Decisions of Bodies Established by International Agreements and the Community Legal Order’ in V Kronenberger (ed), The European Union and the International Legal Order: Discord or Harmony? (The Hague, TMC Asser Press, 2001) 141. 7  See further Gracia Marin-Duran, ch 12 in this volume.

The EU and IDS: Principles and Conditions

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the various panels and the Appellate Body,8 and the binding nature of these ­decisions,9 it is striking that the system was acceptable to the CJEU though it should be said that in its Opinion 1/9410 on the competence of the EU to join the WTO, the Court did not address questions related to the dispute settlement mechanism. While a real ‘Court’ is lacking in the WTO’s dispute settlement system (‘reports’ are adopted by a dispute settlement ‘body’), there seems to be consensus that the reports have ‘the binding force of a judicial decision’ and are in that sense not so different from, for instance, judgments by the European Court of Human Rights (ECtHR).11 Indeed, Dispute settlement … today is clearly dominated by a legal approach and no longer can be described by the ‘principle of negotiations’ … Dispute settlement in the WTO today amounts to a system which is different and unique, but on balance fully equivalent to what is traditionally known as legal dispute settlement in international law, both in terms of adjudication and ad hoc arbitration.12

Despite the fact that the WTO Agreement is a mixed agreement, practice reveals that the EU has taken the lead, even in procedures against the Member States. This implies that the European Commission represents both the Union and the ­Member States in all WTO litigation.13 While theoretical complexities related to the division of competences were bound to occur, Hoffmeister argued that: It has never happened in the history of WTO that the EU would try to argue itself out of a responsibility under WTO agreements by pointing a finger to a Member State and argue that that Member State is responsible. On the contrary, when protesting against the inclusion of the Member States in the dispute, the EU maintained the view that it is the correct respondent. In some instances, the EU even took full responsibility for a measure that was adopted by a Member State without being firmly based in EU law.14

To date the Union (including its predecessors) has been involved in a large number of WTO disputes: 97 times as a complainant, 82 times as a respondent and 158 times as a third party.15

8 See for instance PJ Kuijper and F Hoffmeister, ‘WTO Influence on EU Law: Too Close for Comfort?’ in Cannizzaro et al (n 4) 131–58. See in general G de Búrca and J Scott (eds), ‘The EU and the WTO: Legal and Constitutional Issues’ (Oxford, Hart Publishing, 2001). 9  cf Art 17.14 of the WTO Dispute Settlement Understanding: ‘An Appellate Body Report shall be adopted by the DSB and unconditionally accepted by the parties to the dispute …’. 10  Opinion 1/94, WTO, ECLI:EU:C:1994:384, [1994] ECR I-5267. 11  See C Eckes, ‘The European Court of Justice and (Quasi-) Judicial Bodies’ in Cannizzaro et al (n 4) 85. 12  Th Cottier, ‘Dispute Settlement in the World Trade Organization: Characteristics and Structural Implications for the European Union’ (1998) CML Rev 325, 335. 13  ibid 92–93. cf. MQ Zang, ‘Shall We Talk? Judicial Communication between the CJEU and WTO Dispute Settlement’ (2017), EJIL 273. 14  Hoffmeister (n 3) 90. 15 See The European Union and the WTO: www.wto.org/english/thewto_e/countries_e/european_ communities_e.htm.

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Another example is provided by the UN Convention on the Law of the Sea (UNCLOS). As a party to UNCLOS, the EU is subject to the dispute settlement mechanism laid down therein and it may become a plaintiff or defendant before the International Tribunal for the Law of the Sea (ITLOS) or in arbitration initiated under UNCLOS.16 The mechanism established by the Convention provides for four alternative means for the settlement of disputes: the ITLOS (Annex VI to the Convention); an arbitral tribunal constituted in accordance with Annex VII to the Convention; a special arbitral tribunal constituted in accordance with Annex VIII to the Convention; and the International Court of Justice (ICJ).17 While the latter option is excluded for the EU because the ICJ deals with inter-state disputes only (Article 34(1) ICJ Statute),18 the EU has participated in UNCLOS dispute settlement. In the conflict between Ireland and the United Kingdom about the building and operation of the MOX Plant at Sellafield, Ireland commenced dispute settlement proceedings under both the UNCLOS and the Convention for the Protection of the Marine Environment of the North-East Atlantic (OSPAR Convention). Furthermore, it also applied to the ITLOS for provisional measures to prevent the UK from commissioning the plant. The ITLOS ordered the parties to cooperate and to engage in consultations, including the exchange of information, without further delay. While the EU itself was not a party to the dispute, EU law played a role (see below).19 Nevertheless, an appearance by the EU in UNCLOS dispute settlement remains rare.20 One example is the so-called ‘swordfish dispute’ covering both access for EU fishing vessels to Chilean ports and bilateral and multilateral scientific and technical cooperation on conservation of swordfish stocks.21 The dispute was meant to be dealt with both by a WTO Panel and by the ITLOS, but in the end was solved on the basis of an amicable settlement between the two parties in 2001.22 In 2000, on the basis of Article 287(3) UNCLOS, Chile started proceedings against the (at that time) European Community by instituting an arbitral tribunal. During the process the parties agreed to ask the ITLOS, instead of the arbitral tribunal, to set up a special chamber to deal with the case. The Community—inter alia—claimed that Chile had violated the right to fish on the high seas. In return, 16 

The EU has accepted this under Art 287(3) UNCLOS. United Nations Convention on the Law of the Sea, www.un.org/depts/los/convention_ agreements/texts/unclos/unclos_e.pdf. 18  Yet, Art 43(2) of the Rules of the Court allows any international organisation that is party to a Convention invoked in a contentious case between two states to express its views on the matter arising under the Convention. This allows for the EU to act as a sort of amicus curiae to the ICJ on certain interpretative questions arising in litigation between others. cf also Art 34(2) of the Statute and Art 69 of the Rules of the Court on the possibility of supplying information in pending cases. See also Hoffmeister (n 3). 19  Case C-459/03 Commission v Ireland (MOX Plant), ECLI:EU:C:2006:345, [2006] ECR I-4635. 20  cf also Esa Paasivirtaa, ch 3 in this volume. 21  Case No 7, concerning the Conservation and Sustainable Exploitation of Swordfish Stocks in the South-Eastern Pacific Ocean (Chile/European Union), 2000–2009. 22  See ‘EU and Chile reach an amicable settlement to end WTO/ITLOS swordfish dispute’, European Commission Press Release IP/01/116, Brussels, 25 January 2001; http://europa.eu/rapid/press-release _IP-01-116_en.htm. 17 1982

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Chile argued—inter alia—that the commencement of the WTO dispute settlement proceedings was a breach of UNCLOS.23 The case is interesting as it reveals that the question on the appropriate forum for dispute settlement may involve more than two international regimes. As indicated by Stoll and Vdneky: Two obstacles could be brought in the way of the legal power of ITLOS: the first is that the case was already pending at the WTO, when it was brought before the tribunal; the second is that the core question of the case, the lawfulness of the prohibition on unloading swordfish, is covered by GATT rights and obligations.24

In this case no questions of EU law came up. Yet, for the purpose of the present discussion it is important to note that in general Article 287(7) UNCLOS would imply that there is no reason to halt cases brought before the ITLOS once they are also brought before another tribunal. In addition, and in relation to other agreements in general, Article 311(2) UNCLOS provides: This Convention shall not alter the rights and obligations of States Parties which arise from other agreements compatible with this Convention and which do not affect the enjoyment by other States Parties of their rights or the performance of their obligations under this Convention.

This would imply that the (older) EU obligations would have priority also on this basis; as long as it can be argued that those rights and obligations are ‘compatible’ with UNCLOS. Indeed, as the Tribunal argued in its own MOX Plant judgment ‘the rights and obligations of other agreements have a separate existence from those under the Convention’ and that ‘since the dispute before the tribunal concerns the interpretation or application of the Convention and no other agreement, only the dispute settlement procedures under the Convention are relevant to that dispute’.25 In other words: other procedures seem to be allowed as long as they are compatible with UNCLOS. As we will see below, this starting point comes close to that maintained by the CJEU in relation to the EU legal order. More recently, the EU was a party in another UNCLOS dispute as proceedings were brought against it by the Faeroe Islands before the Permanent Court of Arbitration.26 Again, the case was also subjected to WTO dispute settlement.27 And, again, the parties succeeded in reaching an agreement which led to a termination of the cases in 2014. An intervention of the EU took place in another ITLOS case—a request for an Advisory Opinion submitted by the Sub-Regional Fisheries 23  See P-T Stoll and S Vdneky, ‘The Swordfish Case: Law of the Sea v Trade’ (2002) Zeitschrift für ausländisches öffentliches Recht und Völkerrecht 21. 24  ibid 26. 25  Order of the International Tribunal of the Law of the Sea (ITLOS) in the MOX Plant case (Ireland v United Kingdom), 13 November 2002, paras 50–52. 26  Atlantico-Scandian Herring Arbitration (Denmark in respect of the Faroe Island v the European Union), PCA Case No 2103-30 (see www.pca-cpa.org). Note that the Faroe Islands (despite belonging to Denmark) are not part of the EU. 27  WT/DS 469/1 G/L/1058, 7 November 2013.

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Commission (SRFC)—in which the EU (represented by the European Commission) participated in the hearings and presented a written statement.28 These activities flowed from the fact that the subject matter of the requested opinion fell within the exclusive competence of the EU (fisheries policies) as recognised by the Tribunal.29 This is not to say that internal EU battles no longer occur. Case C-73/14 before the CJEU dealt with the question of whether the Commission could submit observations to ITLOS in the case mentioned above.30 The Commission had failed to submit the content of the written statement presented on behalf of the EU to the Council for prior approval. The Court held that the Commission could represent the EU on the basis of Article 335 of the Treaty on the Functioning of the European Union (TFEU).31 In addition, it did not follow the Council’s argument that Article 218(9) TFEU32 on the need for a Council decision on the positions to be adopted on the Union’s behalf was applicable. In that case the EU had been invited to present its views as a party to the Convention, whereas in the view of the Court, Article 218(9) addresses a situation which concerns the positions to be adopted on behalf of the European Union in the context of its participation, through its institutions or, as the case may be, through its Member States acting jointly in its interests, in the adoption of such acts within the international body concerned.33

As, furthermore, the purpose of the statement was not to formulate a policy in relation to fishing—see the second sentence of Article 16(1) of the Treaty on European Union (TEU)34—but to present to ITLOS an analysis of the provisions 28  ITLOS Case No 21, Request for an advisory opinion submitted by the Sub-Regional Fisheries Commission (SRFC): www.itlos.org/en/cases/list-of-cases/case-no-21/. The Advisory Opinion was delivered on 2 April 2015. 29  See para 64 of the Advisory Opinion. While beyond the scope of this chapter, it is interesting to note the views of the EU and ITLOS on possible EU responsibility for ‘flag state’ obligations: ‘The Tribunal holds that in cases where an international organization, in the exercise of its exclusive competence in fisheries matters, concludes a fisheries access agreement with an SRFC Member State, which provides for access by vessels flying the flag of its member States to fish in the exclusive economic zone of that State, the obligations of the flag State become the obligations of the international organization’ (para 172). 30  Case C-73/14 Council v Commission (ITLOS), ECLI:EU:C:2015:663. See also more extensively Esa Paasivirtaa, ch 3 in this volume. See also C Hillion, ‘Conferral, cooperation and balance in the ­institutional framework of the EU external action’ in M Cremona (ed) Structural Principles in EU external relations law (Oxford: Hart Publishing, forthcoming). 31  Art 335 TFEU: ‘In each of the Member States, the Union shall enjoy the most extensive legal capacity accorded to legal persons under their laws; it may, in particular, acquire or dispose of movable and immovable property and may be a party to legal proceedings. To this end, the Union shall be represented by the Commission. However, the Union shall be represented by each of the institutions, by virtue of their administrative autonomy, in matters relating to their respective operation.’ 32  Art 218(9) TFEU: ‘The Council, on a proposal from the Commission or the High Representative of the Union for Foreign Affairs and Security Policy, shall adopt a decision suspending application of an agreement and establishing the positions to be adopted on the Union’s behalf in a body set up by an agreement, when that body is called upon to adopt acts having legal effects, with the exception of acts supplementing or amending the institutional framework of the agreement.’ 33  Council v Commission (n 30) para 63. 34  Art 16(1) TEU: ‘The Council shall, jointly with the European Parliament, exercise legislative and budgetary functions. It shall carry out policy-making and coordinating functions as laid down in the Treaties.’

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of international and EU law relevant to that subject, the Commission did not encroach upon the prerogatives of the Council. The division of competences between the EU and its Member States often complicates international dispute settlement procedures. This was recently exemplified by an ITLOS Advisory Opinion. While a declaration of competences in this case was helpful to decide on the EU’s exclusive competences with regard to a certain matter (in this case ‘the conservation and management of sea fishing resources’), in matters dealing with ‘territorial’ questions (which often appear in law of the sea disputes) it remains difficult for third parties to simply replace a state by the EU as the entire system of ‘flag states’ etc is state-based. According to the ITLOS judges, the third states should thus always be allowed to request an international organization or its member States which are parties to the Convention for information as to who has responsibility in respect of any specific matter. The organization and the member States concerned must provide this information. Failure to do so within a reasonable time or the provision of contradictory information results in joint and several liability of the international organization and the member States concerned.35

Apart from the WTO and UNCLOS, occasionally the existence of international dispute settlement mechanisms in other international agreements has been relevant in relation to EU law. IDS has played a role in the Court’s case law, albeit mostly in relation to the establishment of internal effects of international agreements.36 Thus, in Chiquita,37 the fact that the Fourth EEC-ACP Convention (the 1989 Lomé Convention) ‘lays down a special procedure for settling disputes between the contracting parties’38 was mentioned as not affecting the direct effect of the Convention. Similar references to international dispute settlement mechanisms may be found in trade law cases such as Portugal v Council,39 or in Omega Air,40 to settle the effects of WTO provisions in the EU domestic legal order. The Court of Justice of the European Free Trade Association (EFTA Court) forms a special case as it has jurisdiction with regard to EFTA states which are parties to the European Economic Area (EEA) Agreement only (at present Iceland, Liechtenstein and Norway). The Court is mainly competent to deal with infringement actions brought by the EFTA Surveillance Authority against an EFTA state with regard to the implementation, application or interpretation of EEA law rules, for giving advisory opinions to courts in EFTA states on the interpretation of

35  Request for an Advisory Opinion Submitted by the Sub-Regional Fisheries Commission (SRFC), ITLOS Advisory Opinion No 21, 2 April 2015, para 174. 36  See more extensively Bonafé (n 4). 37 Case C-469/93 Amministrazione della Finanze dello Stato v Chiquita Italia SpA, ECLI:EU: C:1995:435, [1995] ECR I-4533. 38  ibid para 36. 39  Case C-149/96 Portugal v Council, ECLI:EU:C:1999:574, [1999] ECR I-8395, paras 34–47. 40  Case C-27/00 R v Secretary of State for the Environment, Transport and the Regions, ex parte Omega Air Limited, ECLI:EU:C:2002:161, [2002] ECR I-2569.

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EEA rules and for appeals concerning decisions taken by the EFTA Surveillance Authority. (See also Opinion 1/91 discussed below.) Furthermore, EU Member States may appear in IDS on issues related to EU law, either on their own or as agents of the EU. The division of powers between the EU and its Member States in this context will be dealt with in other chapters of this volume.41 Here, it suffices to note that—apart from the WTO context described above—Member States continue to appear in international arbitration under international law (including diplomatic means). Examples include the areas of international investment, environmental cooperation or the law of the sea. Given the Court’s claim to exclusive jurisdiction could this affect the rights Member States have under international law? Or, to make it concrete in Francis Jacob’s words, if a Member State is legally and constitutionally limited on the basis of EU law ‘is the effect to deprive the International Court of Justice of jurisdiction?’42 In a case between Belgium and Switzerland before the ICJ on—inter alia—the interpretation of the Lugano Convention,43 the Swiss raised the question of whether Belgium was allowed to bring this matter before the ICJ, given the link with EU law. Indeed, the duty of sincere cooperation (Article 4(3) TEU, see below) might require EU Member States to refrain from instituting proceedings (in this case concerning the Lugano Convention) before the ICJ.44 Several other multilateral agreements to which the EU is a party also foresee ­dispute settlement mechanisms. An example is formed by the Energy Charter Treaty (ECT), which contains a comprehensive system for settling disputes on matters covered by the treaty. These forms include binding dispute settlement in cases of state–state arbitration and investor–state arbitration for investment disputes. While the EU (as well as Euratom) is a party to the ECT, it has not been part of any of the dispute settlement mechanisms foreseen by the treaty. In a special Statement the Union and its Member States seem to have accepted their joint and several responsibility.45 The CJEU is expressly mentioned in the ECT as ‘a court or administrative tribunal’ within the meaning of Article 26(2)a ECT and the Statement adds: ‘Given that the Communities’ legal system provides for means of such action, the European Communities have not given their unconditional consent to

41 

See in particular Tobias Lock (ch 7), Anne Thies (ch 8) and Gracia Marin-Duran (ch 12). Jacobs, ‘Member States or the European Union before the International Court of Justice’ in I Govaere, E Lannon, P Van Elsuwege and S Adam (eds), The European Union in the World: Essays in Honour of Marc Maresceau (Leiden, Martinus Nijhoff Publishers, 2013) 245. 43  Jurisdiction and enforcement of judgments in civil and commercial matters (Belgium v Switzerland) [2009], available at www.icj-cij.org. 44  Jacobs (n 42) 253. 45  ‘The European Union and their Member States have both concluded the Energy Charter Treaty and are thus internationally responsible for the fulfilment of the obligations contained therein, in accordance with their respective competences.’ See Statement submitted by the European Communities to the Secretariat of the Energy Charter Treaty pursuant to Art 26(3)(b)(ii) of the Energy Charter Treaty (1994) OJ L 336/115. See also M Burgstaller, ‘The Energy Charter Treaty as a Mixed Agreement: A Model for Future European Investment Treaties?’ in G Coop (ed), Energy Dispute Resolution: Investment Protection, Transit and the Energy Charter Treaty (Huntington NY, Juris, 2011) 125, 147–48. 42  FG

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the submission of a dispute to international arbitration or conciliation.’ Yet, it is well known that individuals only enjoy limited rights to start proceedings before the Court. Finally, the emergence of the EU as a global investment actor also triggered its involvement in Investor–State Dispute Settlement (ISDS) forms. Note that the EU could not become a party to the 1965 Convention for the Settlement of Investment Disputes between States and Nationals of Other States (‘the ICSID Convention’). Yet, the current inclusion of foreign direct investment in the EU’s competences (Article 207(1) TFEU) may call for an accession of the EU to ICSID (after a modification of that Convention to allow for that). As argued by Dimopoulos, the role of the EU in ISDS varies and depends on the situation: ISDS may occur under an international investment agreement concluded by the EU, the EU and its Member States together, or its Member States alone; the dispute may concern a measure adopted by the EU, a Member State acting within the scope of EU law, or a Member State acting on its own; and it may concern a dispute where third countries or their nationals or only EU Member States and their nationals are involved.46 An important step to overcoming these complexities and to allow for a solution in ongoing negotiations (see below) was taken with the recent adoption of Regulation 912/2014 (the so-called ‘Financial Responsibility Regulation’),47 that deals with the allocation of financial responsibility between the EU and its Member States. While there may be doubts as to whether the Regulation will not be able to affect the Union’s famous autonomy,48 it has also been argued that it is questionable whether the Regulation is in conformity with international law, given— again—the specific nature and demands of the EU.49 For the present chapter it suffices to note that the EU can have a separate standing in ISDS. In addition, bilateral agreements, such as association or cooperation agreements, but also for instance investment agreements (BITs) may provide for dispute settlement mechanisms. While many of these may contain judicial IDS, some also contain options for non-judicial or ‘political’ IDS. The most telling examples can perhaps be found in some trade and investment agreements that have recently been negotiated between the EU and third states as these agreements include an ‘Investment Court’. Both the EU–Vietnam FTA and the Comprehensive

46  A Dimopoulos, ‘The Involvement of the EU in Investor-State Dispute Settlement: A Question of Responsibilities’ (2014) CML Rev 1671. 47  Reg 912/2014 of the European Parliament and of the Council establishing a framework for managing financial responsibility linked to investor-state dispute settlement tribunals established by international agreements to which the European Union is party [2014] OJ L 257/121. 48  See of the vast literature on the concept of autonomy, eg T Molnár, ‘The Concept of Autonomy of EU Law from the Comparative Perspective of International Law and the Legal Systems of Member States’ (2015) 3 Hungarian Yearbook of International Law and European Law 433; JW van Rossem, ‘The Autonomy of EU Law: More is Less?’ in RA Wessel and S Blockmans (eds), Between Autonomy and Dependence: The EU Legal Order Under the Influence of International Organisations (New York, Springer, 2013) 213; as well as Christina Eckes, ch 9 in this volume. 49  Dimopoulos (n 46).

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Economic Trade Agreement (CETA)50 between the EU and Canada contain a so-called investment court system (ICS) to deal with ISDS.51 Furthermore, ICS is part of the negotiations on the (infamous) Transatlantic Trade and Investment Partnership (TTIP) between the EU and the US.52 It goes beyond the scope of this chapter to go into detail as to the ins and outs of ICS. It is important to note, however, that—despite several safeguards—infringements by the Investment Court regarding the interpretation of EU law are not to be excluded (for example where the determination of a respondent or the attribution of responsibility is concerned). At the same time it has been argued that the ICS may violate the principle of autonomy as the possibility for prior involvement of the CJEU is absent.53

B.  Unsuccessful Attempts by the EU to Participate in IDS Indeed, the principle of autonomy and the exclusive jurisdiction of the CJEU as to the application and interpretation of EU law has blocked (and may indeed continue to block) attempts by the EU (or its Member States)54 to participate in IDS. Considering this chapter’s aim of mapping certain principles and conditions, this section will analyse a few failed attempts.

i.  The European Convention on Human Rights Opinion 2/13 on the Accession by the Union to the European Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR)55 contains quite extensive arguments regarding the problems indicated by the CJEU in relation to the effects of external judicial scrutiny. First, while Article 6 TEU contains an obligation for the EU to accede to the ECHR, it also provides that the accession to the ECHR ‘shall not affect the Union’s competences as defined in the Treaties’. This is not surprising, bearing in mind how much attention the Member States pay to the doctrine of attributed powers that underpins the EU legal order.

50 See for the currently available texts respectively http://trade.ec.europa.eu/doclib/press/index. cfm?id=1437 and http://trade.ec.europa.eu/doclib/docs/2016/february/tradoc_154329.pdf. 51  H Lenk, ‘An Investment Court System for the New Generation of EU Trade and Investment Agreements: A Discussion of the Free Trade Agreement with Vietnam and the Comprehensive Economic and Trade Agreement with Canada’, European Papers, European Forum, 14 August 2016, 1–13; See also C Titi, ‘The European Union’s Proposal for an International Investment Court: Significance, Innovations and Challenges Ahead’ (2017) Transnational Dispute Management (www.transnational-disputemanagement.com/article.asp?key=2427); as well as ch 5 in this volume. 52  L Pantaleo, ‘Light and Shadows of the TTIP Investment Court System’ in L Pantaleo, W Douma and T Takács (eds), Tiptoing to TTIP: What Kind of Agreement for What Kind of Partnership?, CLEER Papers, 2016/1, 77–92. 53  See Lenk (n 51) 10. 54  See further on Member State restrictions the contributions by Tobias Lock (ch 7) and Anne Thies (ch 8) in this volume. 55  See n 1 above. Parts of this section are based on Łazowski and Wessel, ‘When Caveats turn into Locks’ (n 1). Credits are due to Adam Łazowski; yet the usual disclaimer applies.

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Article 1 of Protocol No 8 clarifies further that the Accession Agreement will ‘make provision for preserving the specific characteristics of the Union and Union law’. This, in particular, should include a modus operandi for division of liability for breaches of the ECHR between the EU and its Member States. Article 2 of the Protocol emphasises again that the accession will affect neither competences of the EU nor powers of its institutions. Article 2 of the Protocol further clarifies that accession to ECHR does not affect the situation of Member States in relation to the European Convention, in particular in relation to the Protocols thereto, measures taken by Member States derogating from the European Convention in accordance with Article 15 thereof and reservations to the European Convention made by Member States in accordance with Article 57 thereof.

Last but not least, Article 3 of the Protocol aims at guaranteeing the immunity of Article 344 TFEU to participation in ECHR. Finally, Declaration No 2 on Article 6(2) TEU, annexed to the Final Act of the Inter-Governmental Conference (IGC) that prepared the Treaty of Lisbon, reiterates that accession to ECHR should ‘preserve the specific features of Union law’ and the need for reinforced dialogue between the CJEU in Luxembourg and the ECtHR in Strasbourg. As the CJEU argues in Opinion 2/13, submission of the EU to judicial control on the basis of an international agreement, is subject to a conditio sine qua non: such an international agreement, which provides for existence of another court, will be acceptable and may affect the Court’s powers ‘only if the indispensable conditions for safeguarding the essential character of those powers are satisfied and, consequentially, there is no adverse effect on the autonomy of the EU legal order’.56 In this particular case, the judges clarify that ECHR bodies, particularly the ECtHR, may not bind the EU, including its institutions, ‘to a particular interpretation of the rules of EU law’.57 As things stand, it would be the interpretation of the ECHR by the ECtHR that would bind the CJEU but, as the judges explicitly admit, it will not be the other way round. To put it differently, accession to the ECHR will only be possible if it is guaranteed that the CJEU will have the exclusive competence to determine whether EU law, particularly the Charter of Fundamental Rights, applies or whether a particular case falls within the remit of the ECHR. Behind all this lies Article 344 TFEU, which provides that ‘Member States undertake not to submit a dispute concerning the interpretation or application of the Treaties to any method of settlement other than those provided for therein’. This provision has continuously been used by the CJEU to claim its exclusive jurisdiction whenever the interpretation or application of EU law is at stake.58 As already explained, Article 6(2) TEU makes it clear that the accession will not 56 

Opinion 2/13 (n 1) para 183. ibid para 184. 58  See further below (s C) and for instance Opinion 1/91 EEA (I), ECLI:EU:C:1991:490, [1991] ECR I-6079, para 35 and Opinion 1/00 ECAA, ECLI:EU:C:2002:231, [2002] ECR I-3493, paras 11 and 12; judgments in C-459/03 Commission v Ireland (n 19) paras 123 and 136, and Kadi and Al Barakaat International Foundation v Council and Commission, ECLI:EU:C:2008:461, [2008] ECR I-6351, para 282. 57 

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affect the Union’s competences as defined in the Treaties. Furthermore, Article 3 of Protocol 8 confirms that nothing in the Agreement will affect Article 344 TFEU. Yet, Article 344 TFEU merely refers to Member States submitting a dispute. In that respect the Commission argued that disputes between the Member States in the context of the ECHR would be about the interpretation or application of the ECHR rather than about the EU Treaties. Obviously, in cases where the content of ECHR and EU provisions is similar, Article 344 TFEU could be infringed.59 Therefore, a special provision on the inadmissibility of those disputes would not be necessary. This view was shared by Greece, but not by France, which argued that it must still remain possible for a Member State to appear as a third-party intervener in support of one or more of its nationals in a case against another Member State that is brought before the ECtHR, even where that other Member State is acting in the context of the implementation of EU law. The Court devotes several paragraphs to its exclusive jurisdiction, the autonomy of EU law, the legal structure of the EU (including fundamental rights), the obligations of the Member States (for instance on the basis of the principle of sincere cooperation) and the need for consistency and uniformity in the interpretation of EU law.60 It concludes that ‘[f]undamental rights, as recognised in particular by the Charter, must therefore be interpreted and applied within the EU in accordance with the [this] constitutional framework’.61 While this conclusion should not come as a surprise, given the presence of Article 344 in the TFEU (as well as reference to that provision in Protocols and Declarations), it remains difficult to square these starting points with the notion (which is at the heart of the Strasbourg system) that external judicial control is to be accepted once a violation of ECHR provisions is at stake. A solution found in this respect was a prior involvement procedure, laid down in Article 3(6) of the Draft Accession Agreement. Ironically, this procedure is also under attack in the Court’s Opinion. Hence, over the years the CJEU has been quite consistent in pointing to some of the consequences of Article 344 TFEU. Yet the interpretation of this provision now seems to affect the very idea of joining the ECHR. For all other parties to the Convention, being bound by the fundamental rights in ECHR in the exercise of their internal powers is the very essence of joining the system in the first place. While the Court seems to acknowledge this in paragraph 185 of the Opinion, it nevertheless maintains that ‘it should not be possible for the ECtHR to call into question the Court’s findings in relation to the scope ratione materiae of EU law, for the purposes, in particular, of determining whether a Member State is bound by fundamental rights of the EU’.62 The problem therefore seems to flow from the risk that the application and interpretation of internal EU law (in disputes between Member States inter se or between Member States and the Union) will be by-passed. However, the question 59 

Opinion 2/13 (n 1) paras 106–07. ibid paras 163–74. 61  ibid para 177. 62  ibid para 186. 60 

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is how big a risk this is. Member States are well aware of the Court’s case law on this point and it could perhaps even be solved on the basis of so-called disconnection declarations.63 At the time of writing this chapter, debates are ongoing as to a possible way out,64 yet a reopening of the negotiations seems unavoidable.65

ii.  The European Economic Area and the European Patent Court The ECHR case was not the first one in which the CJEU eliminated all potential threats ab initio. This happened with the EEA Court in Opinion 1/91, and the European Patents Court in Opinion 1/09.66 The starting point is that subjecting the EU and the Court to an external judicial authority ‘is not, in principle, incompatible with EU law’ (as the Court repeated in paragraph 182 of the ECHR Opinion; see further section III below).67 If a dispute settlement body finds that a Union measure violates the provisions of an EU international agreement, the measure is not automatically invalidated, but it is up to the EU to take the appropriate measures so as to conform with the EU’s international obligations.68 In Opinion 1/91 (EEA) the CJEU concluded that ‘[t]he system of judicial supervision which the Agreement proposes to set up is incompatible with the EEC Treaty’.69 One of the main reasons was that the foreseen ‘legal homogeneity’ is not possible because of the special nature of the EU legal order. For the present chapter, however, the other argument used by the Court is more relevant, and in fact could already have warned the negotiators in the ECHR case: the fact that the foreseen EEA Court could be called upon to define the notion of Contracting Parties and thereby rule on the division of competences between the European Community (as it then was) and the Member States could jeopardise the autonomy of the Community legal order. As the Court argued, this competence: Is likely adversely to affect the allocation of responsibilities defined in the Treaties and, hence, the autonomy of the Community legal order, respect of which must be assured by the Court of Justice pursuant to Article 164 of the EEC Treaty. This exclusive 63  Advocate General Kokott mentioned the possibility used in Art 282 of the United Nations Convention on the Law of the Sea (para 115 of the View). Kuijper refers to the example of Annex 2 of the UNESCO Convention on cultural diversity, which states that the Member States of the EU which are party to the Convention (next to the EU itself) will apply the provisions of the agreement in question in their mutual relations in accordance with the EU’s internal rules and without prejudice to appropriate amendments being made to these rules. PJ Kuijper, ‘Reaction to Leonard Besselink’s ACELG Blog’, 6 January 2015; http://acelg.blogactiv.eu/2015/01/06/reaction-to-leonard-besselinks’s-acelg-blog/; further on disconnection clauses, see M Cremona, ‘Disconnection Clauses in EC Law and Practice’ in C Hillion and P Koutrakos, Mixed Agreements Revisited—The EU and its Member States in the World (Oxford, Hart Publishing, 2010). 64  See also ‘Editorial Comments’ (2015) CMLRev 1. 65  See also Łazowski and Wessel, ‘When Caveats turn into Locks’ (n 1). 66  See Opinon 1/91 (n 58), Opinion 1/09 Unified Patent Court, ECLI:EU:C:2011:123, [2011] ECR I-1137. 67  Yet, Opinion 1/91 (n 58) seems to indicate that the arguments were drawn more from international law under which the Community was capable of ‘creating or designating’ international tribunals (para 40), than from EU law logic. 68  Opinion 1/00 (n 58). 69  Opinion 1/91 (n 58) para 51. See more extensively eg B Brandtner, ‘The “Drama” of the EEA Comments on Opinions 1/91 and 1/92’ (1992) 3 European Journal of International Law 300.

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jurisdiction of the Court of Justice is confirmed by Article 219 of the EEC Treaty, under which Member States undertake not to submit a dispute concerning the interpretation or application of that Treaty to any method of settlement other than those provided for in the Treaty.70

And, yes, given the status of international agreements in the Community’s legal order, the decisions of the external Court would be binding on the Community institutions, including the CJEU. In addition, the model of CJEU judges participating in the EEA Court sounded like a good idea at first, but the CJEU held that because of the two instruments’ divergent objectives, the CJEU justices would have to apply and interpret ‘the same provisions but using different approaches, methods and concepts’.71 This would affect their independence as a CJEU judge. The bottom line in Opinion 1/91 was that interpretative jurisdiction had to remain exclusively with the CJEU. The arguments were not all new and could already partly be found in Opinion 1/76 on a European Laying-up Fund for Inland Waterways.72 The Convention which was to set up that system included the establishment of a Tribunal composed of judges from the CJEU and Switzerland with a competence to interpret the Agreement. In Opinion 1/76 the CJEU held that its own jurisdiction might be by-passed by the Tribunal, or that Member States would have the possibility to shop for a forum. At the same time, the participation of CJEU judges in the Tribunal could cause problems; albeit that the Court in Opinion 1/76 seemed to use more practical than principled arguments (for example it would be difficult to find enough judges for CJEU sessions when many of them would have participated in Tribunal cases). In the case of the European Patent Court,73 the problem emerged from the fact that an external dispute settlement body would have explicit jurisdiction to apply EU law. The draft agreement conferred on it exclusive jurisdiction to hear a significant number of actions brought by individuals in the field of patents. This would imply that domestic courts would be deprived of certain competences and retain only those powers which did not fall under the exclusive jurisdiction of the Patent Court. This, in turn, would affect the powers of the CJEU to reply, by preliminary ruling, to questions referred by the national courts. The Patent Court would have the duty to interpret and apply not only the international agreement, but also provisions of EU law. Accordingly, the agreement would alter the essential character of the powers conferred on the institutions of the Union and on the Member States which are, in the eyes of the CJEU, indispensable to the preservation of the very nature of EU law.

70 

Opinion 1/91 (n 58) para 35. ibid para 51. 1/76, European Laying-up Fund for Inland Waterways, ECLI:EU:C:1977:63, [1977] ECR 471. 73  Opinion 1/09 (n 66). 71 

72 Opinion

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C.  The European Union’s Contribution to the Development of IDS A different, but related, question is to what extent the difficulties of the EU in participating in IDS affect its influence on international law-making in that area.74 After all, since the Treaty of Lisbon in particular, the EU Treaties clearly reveal the EU’s global ambitions in this area, which basically boil down to the idea that the EU should—at least partly—shift its focus from its own Member States to third countries,75 thereby even limiting the possibilities for its own Member States to contribute on their own to international law-making.76 Obviously, the principle of autonomy could lead to further fragmentation and a disconnection between EU law and international law.77 Hence, we are used to extensive referencing by the EU Court to international law. As some observers found: A survey of the ever-burgeoning CJEU jurisprudence reveals that the EU courts, when faced with questions of international law, show a high degree of deference to the caselaw of the ICJ and use it as an authoritative interpretation of international norms that are of relevance to their work. This is especially the case when they are faced with questions of customary international law—chiefly relating to international law of the sea and to international treaty law.78

And, ‘recent practice shows that the EU Courts are making knowledgeable references to the case-law of the ICJ in order to settle a wider gamut of international law questions’.79 Yet, it remains unclear to which extent these references by the CJEU have contributed to international law-making. The CJEU is believed to have had some influence through its interpretation of international treaty law. As Odermatt argued in relation to international treaty law: By applying the VCLT, the CJEU can be seen as contributing to the ‘strict observance and the development of international law’. Like any domestic Court, however, the CJEU may employ international treaty law in a way that deviates from established practice in international law … This means the CJEU will sometimes contribute to international law by deciding upon the customary international law status of the VCLT rules.80

74  See more extensively on the influence of the EU on international law: RA Wessel, ‘Flipping the Question: The Reception of EU Law in the International Legal Order’ (2016) Yearbook of European Law 533–61. Parts of this section are based on that publication. 75  See in particular Arts 3(5), 21 and 22 TEU. 76  P Koutrakos, ‘In Search of a Voice: EU Law Constraints on Member States in International LawMaking’ in R Liijova and J Petman (eds), International Law-Making: Essays in Honour of Jan Klabbers (London, Routledge, 2014) 211. 77  See also Esa Paasivirtaa, ch 3 in this volume. 78  E Kassoti and L Louwerse, ‘Like Ships in The Night? The CJEU and the ICJ at the Interface’, paper presented at the 1st Jean Monnet workshop on the Dialogue between Judges: The Court of Justice of the European Union and Other International Courts, Geneva, 23–26 September 2015. 79  ibid 19. 80  J Odermatt, The European Union as a Global Actor and its Impact on the International Legal Order, PhD thesis, University of Leuven, 2016, at 127.

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Odermatt’s study also points to the fact that the CJEU often interprets treaty law in a somewhat ‘selfish’ way and its application is influenced by its approach to the interpretation of EU law.81 This may even lead to a misuse of international law and to further fragmentation.82 Yet, it may be also argued that by relying on ICJ interpretations of international law and by confirming the status of the rules, the EU in fact contributes to the coherence of the international legal system. The problem, however, is that, as Nevill has pointed out: There are no references to the decisions of the EU courts in judgments of the ICJ, the Inter-American Court of Human Rights, the Iran-US Claims Tribunal or International Tribunal for the Law of the Sea (ITLOS) awards. By contrast, the ICJ, Iran-US Claims Tribunal and the Inter-American Court cite judgments of the European Court of Human Rights and domestic courts.83

Only a very indirect reference to EU law may perhaps be found in the ICJ judgment on the Dispute regarding Navigational and Related Rights (Costa Rica v Nicaragua), where the CJEU’s view on commercial policy as presented in its Opinion 1/76 was accepted by the ICJ.84 Nevill added that: World Trade Organization … panel and Appellate Body reports refer to judgments of the European Court of Justice … but references are for the most part made in the context of an analysis of compliance by the EU and its member states with their WTO obligations, not as a subsidiary source of international law.85

Indeed, not only by the CJEU, but also by international tribunals, EU law is generally perceived as different or special, as for instance became clear in a WTO Panel decision when China relied on a judgment of the CJEU:86 [T]he fact that it may be legally appropriate for the [CJEU] not to apply EC rules on the free movement of goods to an import transaction involving hard-copy cinematographic film does not mean that it would be legally appropriate for a WTO panel not to apply China’s trading rights commitments to an analogous import transaction.87

81  ibid 145. See also B De Witte, ‘A Selfish Court? The Court of Justice and the Design of International Dispute Settlement Beyond the European Union’ in M Cremona and A Thies (eds), The European Court of Justice and External Relations Law: Constitutional Challenges (Oxford, Hart Publishing, 2014) 33. 82  Odermatt (n 80) 145. 83  P Nevill, ‘The European Union as a Source of Public International Law’, Hungarian Yearbook of International Law and European Law (The Hague, Eleven International Publishing, 2013) 281. See on the impossibility of the EU appearing before the ICJ (and, nevertheless, the possibility for it to present its views) Esa Paasivirtaa, ch 3 in this volume. 84  Dispute regarding Navigational and Related Rights (Costa Rica v Nicaragua) [2009] ICJ Rep 213. Credit is due to Professor Enzo Cannizzaro for drawing our attention to this case. 85  ibid 283. 86  In casu Case C-17/92 Federación de Distribuidores Cinematográficos v Estado Español and Unión de Productores de Cine y Televisión, ECLI:EU:C:1993:172, [1993] ECR I-2239. 87  China—Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products (2009), Panel Decision of 12 August 2009. See more extensively Nevill (n 83) at 283.

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The study by Nevill also highlighted that other international tribunals occasionally refer to CJEU case law, but that this case law hardly affects the outcome of a case. Thus, for instance, ‘there are only a handful of cases where the ECJ judgment has been invoked by the [ECtHR] in support of a particular interpretation or application of a Convention right’.88 Even more scarce are references to EU law by the UN human rights bodies. On the other hand, in investor–state disputes, CJEU judgments (as well as other EU law) do seem to play a somewhat larger role.89 As we have seen, in many cases, the EU, as reflected in the CJEU’s case law, presents itself as a closed entity, zealous to maintain its autonomy. Perhaps the ‘otherness’ or ‘specialness’ of the EU in itself as well as its effect on the ‘statehood’ of EU Member States may be the most visible contribution to, at least, the practice of international dispute settlement.90

III.  Principles Underlying the EU’s (Non-)participation in IDS The previous sections shed light on actual and attempted EU (and Member State) participation in IDS. The preliminary conclusion was that such participation remains limited at least if one considers IDS of a judicial or quasi-judicial nature.91 The question can thus be asked as to possible reasons behind this phenomenon; and in particular whether EU law is part of the explanation.92 As hinted earlier, various rules governing the EU participation in IDS have been spelled out in the case law of the CJEU rather than being clearly specified in primary law (section III.C). This does not mean that treaty provisions have little to say on the matter. This section thus briefly underlines the relevance of EU external objectives and competence, in that they establish the normative (section III.A) and constitutional framework (section III.B) within which the Court is to adjudicate on the issue of EU participation. This discussion indeed reveals a discrepancy between this framework on the one hand, and some of the judge-made conditions for EU participation in IDS, on the other.

88 

Nevill (n 83) at 284.

89 ibid. 90 

Wessel (n 74). If the notion of IDS is defined more broadly in the sense of encompassing non-judicial / ‘political’ IDS set up by bilateral agreements (eg association or cooperation agreements), participation of the EU is then far more developed. This would point to the importance of the nature (judicial or not) of IDS as determinant of EU participation. 92  See more extensively on the questions of the autonomy of the EU legal order and the legitimacy of EU law Christina Eckes, ch 9 in this volume. 91 

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A. The Normative Element: EU Participation and Objectives of EU External Action A cursory look at the objectives of the EU in the field of external action suggests that far from dissuading EU participation in IDS, those objectives seem on the contrary to encourage it. Thus, EU involvement in IDS may be viewed as a means to achieve ‘the strict observance and the development of international law, including respect for the principles of the United Nations Charter’, mentioned in Article 3(5) TEU. It also corresponds to the general ambition, set out in Article 21(1) TEU, that [t]he Union’s action on the international scene … be guided by the principles which have inspired its own creation, development and enlargement, and which it seeks to advance in the wide word [including] the rule of law … and respect for the principles of the United Nations Charter and International Law…

The intention is to ‘promote multilateral solutions to common problems, in particular in the framework of the United Nations’. It may equally help fulfilling the Union’s objective, enshrined in Article 21(2)(a) and (h) TEU, to ‘consolidate and support … the rule of law … and the principles of international law [and] promote an international system based on stronger multilateral cooperation and good global governance’. EU participation in IDS thus neatly fits with the teleological framework within which the EU ought to act externally. Further, such participation can be viewed as an effective means for the EU to be an active player on the international scene in line with its own objectives, not only in terms of its role as rule-promoter but also as rule-complier and rule-enforcer.

B. The Constitutional Element: EU Competence to Participate in (Specific) IDS The EU capacity to take part in and be bound by IDS derives from its legal personality confirmed by Article 47 TEU. The latter replicates the original phrasing of Article 210 EEC, which the Court of Justice had interpreted broadly.93 In the above-mentioned judgment concerning the EU’s participation in proceedings of the International Tribunal of the Law of the Sea (ITLOS), the CJEU also recalled the significance of the legal capacity that the EU enjoys under Article 335 TFEU, according to which: In each of the Member States, the Union shall enjoy the most extensive legal capacity accorded to legal persons under their laws; it may, in particular, acquire or dispose of movable and immovable property and may be a party to legal proceedings. To this end,

93 

Case 22/70 Commission v Council (ERTA), ECLI:EU:C:1971:32, [1971] ECR 263.

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the Union shall be represented by the Commission. However, the Union shall be represented by each of the institutions, by virtue of their administrative autonomy, in matters relating to their respective operation.

The Court thus found that: [I]t is clear from the case law of the Court that Article 335 TFEU, although restricted to Member States on its wording, is the expression of a general principle that the European Union has legal capacity and is to be represented, to that end, by the Commission (see, to that effect, judgment in Reynolds Tobacco and Others v Commission, C‑131/03 P, EU:C:2006:541, paragraph 94). It follows that Article 335 TFEU provided a basis for the Commission to represent the European Union before ITLOS in Case No 21.

In Opinion 1/91, the Court opined that the (then) Community’s competence in the field of international relations and its capacity to conclude international agreements necessarily entails the power to submit to the decisions of a court which is created or designated by such an agreement as regards the interpretation and application of its provisions.94

As we have seen, it also considered that submission of the EU to external jurisdiction is not per se in conflict with the characteristics of the EU’s legal order: [W]here … an international agreement provides for its own system of courts, including a court with jurisdiction to settle disputes between the Contracting parties to the agreement, and, as a result, to interpret its provisions, the decisions of that Court will be binding on the Community institutions, including the Court of Justice. Those decisions will also be binding in the event that the Court of Justice is called upon to rule, by way of preliminary ruling or in a direct action, on the interpretation of the international agreement, insofar as that agreement is an integral part of the Community legal order. An international agreement providing for such a system of courts is in principle compatible with Community law.95

That the full legal capacity has been vested on the EU as a whole has been subsequently acknowledged in Opinion 1/09,96 and more recently in Opinion 2/13 where the Court recalled that: [A]n international agreement providing for the creation of a court responsible for the interpretation of its provisions and whose decisions are binding on the institutions, 94  Opinion 1/91 (n 58). Emphasis added. It added that then Art 238 EEC could be a legal basis for this kind of agreement, at para 70. 95  Opinion 1/91 (n 58) paras 39–40. The Court had implicitly taken that position earlier in Opinion 1/76 (n 72): ‘The Community is … not only entitled to enter into contractual relations with a third country in this connexion but also has the power, while observing the provisions of the Treaty, to cooperate with that country in setting up an appropriate organism such as the public international institution which it is proposed to establish under the name of the “European Laying-up Fund for Inland Waterway Vessels”. The Community may also, in this connexion, cooperate with a third country for the purpose of giving the organs of such an institution appropriate powers of decision and for the purpose of defining, in a manner appropriate to the objectives pursued, the nature, elaboration, implementation and effects of the provisions to be adopted within such a framework’ (para 5). 96  Opinion 1/09 (n 66) para 74.

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including the Court of Justice, is not, in principle, incompatible with EU law; that is particularly the case where, as in this instance, the conclusion of such an agreement is provided for by the Treaties themselves. The competence of the EU in the field of international relations and its capacity to conclude international agreements necessarily entail the power to submit to the decisions of a court which is created or designated by such agreements as regards the interpretation and application of their provisions.97

As the italicised phrase indicates, EU Treaties may indeed contain a specific mandate for the Union to take part in IDS. In establishing that the EU shall accede to the ECHR, Article 6(2) TEU implies that the EU is empowered (if not bound) to become part of the judicial system set up by the ECHR, albeit under the conditions contained in particular in Protocol 8, as further discussed below. Arguably, the inclusion of foreign direct investment in the Common Commercial Policy, as per Article 207 TFEU (see above), also points towards the implicit acceptance, if not intention, of the treaty drafters that the EU will get involved in related IDS. In particular, empowering the EU to conclude investment treaties (alone or with Member States), suggests the acknowledgement that it could participate in the dispute settlement mechanism that often features in such treaties. In sum: EU primary law contains several elements that point towards an interest in the EU’s participation in IDS. This is not only inherent in its international legal personality, it also derives from various treaty provisions which articulate this specific aspect of the EU international legal personality.98 Having established its connection between EU participation in IDS and the EU global objectives, as well as having recalled the EU constitutional mandate for such a participation, the next section turns to the additional conditions governing this participation, which the CJEU has set out.

C. General Conditions Governing the EU (and Member State) Participation in IDS As one of its expressions, participation in IDS by the EU (and Member States) is governed by the basic principles that organise the Union’s external action. 97 

Opinion 2/13 (n 1) para 182. Emphasis added. In a judgment concerning the EU’s participation in the proceedings of the International Tribunal of the Law of the Sea (ITLOS), the Court also recalled the significance of Art 335 TFEU according to which: ‘In each of the Member States, the Union shall enjoy the most extensive legal capacity accorded to legal persons under their laws; it may, in particular, acquire or dispose of movable and immovable property and may be a party to legal proceedings. To this end, the Union shall be represented by the Commission. However, the Union shall be represented by each of the institutions, by virtue of their administrative autonomy, in matters relating to their respective operation.’ In that judgment (Council v Commission (ITLOS) (n 30)), the Court thus found that: ‘it is clear from the case law of the Court that Article 335 TFEU, although restricted to Member States on its wording, is the expression of a general principle that the European Union has legal capacity and is to be represented, to that end, by the Commission (see, to that effect, judgment in Reynolds Tobacco and Others v Commission, C‑131/03 P, EU:C:2006:541, paragraph 94). It follows that Article 335 TFEU provided a basis for the Commission to represent the European Union before ITLOS in Case No 21.’ 98 

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Hence, the EU may only take part in IDS if it has the (substantive) competence to conclude the international agreement that sets it up, and if the international agreement concerned allows organisations such as the EU to take part. EU participation also depends on the scope of the agreement establishing the IDS. If the agreement and ensuing remit of the IDS relate to an area that falls outside areas of exclusive competence, the agreement will be mixed, and the right to participate in the IDS might have to be allocated between Member States and the EU, or joined, depending on the subject matter. In this mixed framework, joint participation of Member States and the EU will equally be governed by general obligations deriving from EU external relations law, and particularly the duty of compliance and cooperation. The Court has thus articulated various obligations of conduct stemming from the duty of cooperation which bind Member States vis-à-vis EU institutions, including duties to inform and consult.99 In addition to these principles, the basic rules governing the functioning of the EU institutional framework also have significance for the EU’s participation in IDS proceedings. The principles of inter-institutional conferral, balance and cooperation, enshrined in Article 13(2) TEU,100 are of particular relevance.101 That said, the EU (and Member State) participation in IDS further involves ­specific conditions. Partly enshrined in EU primary law, such conditions have been articulated by the CJEU, and partly codified since—viz in relation to the accession to the ECHR. These additional rules constrain both the EU participation in IDS, and that of Member States. Hence, the CJEU considers that the participation of the EU is conceivable provided the autonomy of the EU legal order is preserved, a condition that, in effect, has led the Court to reject several international agreements on the ground that the IDS they established would be incompatible with the EU Treaties. One particular aspect of this autonomy is that the IDS cannot interpret or apply EU law. In acknowledging that the EU had the capacity to conclude agreements, it emphasised that the IDS is acceptable only if its jurisdiction is limited to the interpretation and application of the agreement that establishes it: [T]he competence of the European Union in the field of international relations and its capacity to conclude international agreements necessarily entail the power to submit itself to the decisions of a court which is created or designated by such agreements as regards the interpretation and application of their provisions.102

In particular, the international treaty and its IDS should not alter the distribution of power within the EU, notably between the EU and the Member States. In MOX 99 

See eg MOX Plant (n 19). institution shall act within the limits of the powers conferred on it in the Treaties, and in conformity with the procedures, conditions and objectives set out in them. The institutions shall practice mutual sincere cooperation.’ 101  See eg Council v Commission (ITLOS) (n 30). 102  Opinion 1/09 (n 66), para 74. Emphasis added. 100  ‘Each

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Plant, the Court underlined that ‘an international agreement cannot affect the allocation of responsibilities defined in the Treaties and, consequently, the autonomy of the Community legal system, compliance with which the Court ensures’,103 even though it subsequently admitted that ‘an international agreement may affect its own powers provided that the indispensable conditions for safeguarding the essential character of those powers are satisfied and, consequently, there is no adverse effect on the autonomy of the European Union legal order’.104 The scrupulous respect for the autonomy of the EU legal order also means, for the Court, the obligation for Member States to respect the exclusivity of its jurisdiction stipulated in Article 344 TFEU. This condition was understood broadly in Opinion 2/13: 201. … an international agreement cannot affect the allocation of powers fixed by the Treaties or, consequently, the autonomy of the EU legal system, observance of which is ensured by the Court. That principle is notably enshrined in Article 344 TFEU, according to which Member States undertake not to submit a dispute concerning the interpretation or application of the Treaties to any method of settlement other than those provided for therein (see, to that effect, Opinions 1/91, EU:C:1991:490, paragraph 35, and 1/00, EU:C:2002:231, paragraphs 11 and 12; judgments in Commission v Ireland, C‑459/03, EU:C:2006:345, paragraphs 123 and 136, and Kadi and Al Barakaat International Foundation v Council and Commission, EU:C:2008:461, paragraph 282). 202. Furthermore, the obligation of Member States to have recourse to the procedures for settling disputes established by EU law—and, in particular, to respect the jurisdiction of the Court of Justice, which is a fundamental feature of the EU system—must be understood as a specific expression of Member States’ more general duty of loyalty resulting from Article 4(3) TEU (see, to that effect, judgment in Commission v Ireland, EU:C:2006:345, paragraph 169), it being understood that, under that provision, the obligation is equally applicable to relations between Member States and the EU.105

It is indeed for the CJEU to determine the perimeter of that exclusive jurisdiction, based on the subject matter of the dispute.106 As a complementary condition, the Court held in Opinion 1/09, that EU (and Member State) participation in IDS cannot have the effect of diminishing the jurisdiction of Member States’ courts and tribunals, as courts of the EU. For the Court they are ‘the guardians of [the EU] legal order and the judicial system of the European Union’, alongside the Court of Justice ‘the[ir] tasks … are indispensable to the preservation of the very nature of the law established by the Treaties’.107 As alluded to earlier, the TEU now refers to specific conditions regarding the EU accession to the ECHR. Protocol 8 foresees that the Accession Agreement is to make provision for preserving the specific characteristics of the EU and EU law

103 

MOX Plant (n 19). Emphasis added. Emphasis added. See Opinion 1/00 (n 58), later confirmed in Opinion 1/09 (n 66). Emphasis added. 106 See MOX Plant (n 19). 107  Opinion 1/09 (n 66) paras 66 and 85. 104  105 

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and ensure that accession does not affect the competences of the EU or the powers of its institutions, or the situation of Member States in relation to the ECHR, or indeed Article 344 TFEU. Aside from the reference to ‘specific characteristics of the EU and EU law’, the Protocol thus essentially reiterates the conditions that had been developed in the case law, and recalled above. This suggests that even without this Protocol, the Court could have reached the same conclusion in Opinion 2/13. To be sure, the Court’s strict application of that Protocol confirms that participation in IDS is subject to very strict conditions, based on a broad concern for the autonomy of the EU legal order, and the preservation of its numerous specific characteristics, particularly the Court’s position therein.

IV. Conclusions European Union participation in IDS appears to be encouraged by EU Treaties, albeit under certain broad conditions, including the classic rules governing the external action of the EU. Partly based on the EU primary law, such conditions have been developed by the CJEU, around the cardinal principle of the autonomy of the EU legal order, which have arguably inspired the Treaty-based prerequisites, conditioning the specific process of EU accession to the ECHR. The way in which the conditions have been articulated and interpreted lately by the CJEU appears to leave little room for actual participation. That said, the mapping exercise undertaken here of successful and unsuccessful attempts by the EU to participate in IDS did not reveal definitive criteria for such participation. This ambiguity is borne out by a comparison between Opinion 2/13 (ECHR) to Opinion 1/94 (WTO). As held by Cottier, [the] WTO dispute settlement and its transmutation into a judicial system is a fascinating example how international law has begun to change and affect internal structures of the European Union. First, the expansion of the scope of WTO law cuts through traditional modes of allocating powers between the Union and the Member States … Second, the juridification of WTO dispute settlement means rethinking the role of the courts and their relationship to WTO rules.108

While these elements did not prevent the Court of Justice from approving the Union’s accession to the WTO, similar arguments were at the heart of its disapproval in Opinion 2/13. This brings us to the key question raised in this chapter: given that the EU participation in IDS appears to be encouraged by EU Treaties, what are the conditions under which this participation would be in conformity with the principles underlying the EU legal order?

108 

Cottier (n 11) 378.

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On the basis of primary law as well as case law flagged up here, we come to the following list of requirements: 1. IDS does not entail an adverse effect on the autonomy of the EU legal order. 2. IDS does not affect the allocation of powers between the EU and its Member States. 3. IDS cannot interpret EU law. 4. IDS does not limit the jurisdiction of the Court in relation to the application and interpretation of EU law. 5. CJEU judges cannot sit on IDS tribunals. These conditions in turn lead to a new set of questions, including: 1. How can possible issues relating to the autonomy of the EU legal order be adequately solved given the restrictive approach taken by the CJEU in Opinion 2/13? 2. As an EU international agreement becomes EU law, thus falling within the exclusive jurisdiction of the CJEU, how can consistency be ensured between the interpretation given by IDS of the agreement to which it belongs, and that provided by the CJEU of the same instrument as part of EU law? And, how should possible differences be addressed? 3. How can the rule of Article 344 TFEU be reconciled with, for example, the treaty-based obligation for the EU to accede to the ECHR? 4. Is there a possible tension between the principles invoked by the CJEU to support its restrictive approach to EU participation in IDS (for example autonomy of the EU legal order) and other principles underpinning the EU external action? Does the Court’s case law adequately reflect the treaty-based ambitions and powers vested in the EU? The conclusion may very well be that EU participation in IDS would only be acceptable if the dispute to be settled concerns an interpretation of the international instrument and not interpretation of EU law, thus leaving the exclusive power to set the terms of internal application to the CJEU. Yet, given the EU’s treaty-based mandate to participate in IDS and the questionable compatibility between the Court’s stance and the principles enshrined in Article 13(2) TEU to which it is subject as an EU institution, it may be wondered whether the issue of EU participation should ultimately be left to the EU judiciary, particularly in view of the institutional interests that might colour its position.

3 European Union and Dispute Settlement: Managing Proliferation and Fragmentation ESA PAASIVIRTA

I. Introduction The twin terms of ‘fragmentation’ (of international law) and the ‘proliferation’ (of courts and tribunals) have a negative air about them. In fact, they point to the side effects which result from the growth of international law in recent decades. Fragmentation undermines the idea of unity of law, while the proliferation of tribunals brings with it the possibility of different legal results. These issues have been subject to academic research over recent years,1 and have also caught the attention of the International Law Commission, which has produced a report on fragmentation, accompanied by a series of recommendations.2 Fragmentation denotes the plurality of legal regimes prevailing today. This has followed from increasing specialisation in areas such as trade law, the law of the sea and law relating to the environment. The International Court of Justice (ICJ) was once the primary court for litigation of international law disputes, but now a number of parallel international tribunals such as the International Tribunal of the Law of the Sea (ITLOS) and the World Trade Organization (WTO) dispute settlement body, amongst others, also deal with international law issues. In the area of foreign investments, a large number of international arbitrations are conducted under bilateral investment protection treaties (BITs) or multilateral agreements such as the Energy Charter Treaty. All these developments appear to gear towards a fragmented international law scene. This is, perhaps, inevitable if a great variety of treaty regimes are established, 1  See eg A Reinisch, ‘International Courts and Tribunals, Multiple Jurisdiction’, Max Planck Encyclopedia of Public International Law (Oxford, Oxford University Press, 2017 (date of article 2011)), which contains a useful overview of case law and comprehensive bibliographic references. 2  Fragmentation of International Law: Difficulties Arising From the Diversification and Expansion of International Law. Report of the Study Group of the International Law Commission finalised by Martti Koskenniemi. A/CN.4/L. 682 of 13 April 2006.

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as they proceed at different speeds and time-lines and entail different participation amongst the members of the international community. The fragmentation scenario is, in fact, ultimately constructed on the foundations of international law based on the territorial sovereignty and the sovereign treaty-making power of states. On the international plane, there is nothing which resembles a centrally managed governance system for steering the interactions between these different facets of law, and instruments like the Vienna Convention on the Law of Treaties (for example Articles 30 and 59) provide only limited guidance regarding relations between different international treaties.3 There is, however, wide recognition for ‘judicial dialogue’ amongst international courts, and the EU judiciary has normally shown deference to the case law of international courts and tribunals in respect of the interpretation of international norms.4 Where does the European Union (EU) stand in respect of the fragmentation of law and the proliferation of tribunals? It seems to be in the midst of the phenomenon in at least the following senses. First, the EU can be seen as a part of the problem of fragmentation and proliferation. This is so, for instance, if the matter is seen from the viewpoint of the EU Member States, in the sense that they are subject to both EU law obligations and international law commitments. This was flagged by the much debated Kadi case, which sat at the crossing point between Member States’ UN obligations and fundamental rights under EU law.5 In reality, it seems that the Court’s ruling in that case has not triggered serious problems visà-vis the UN obligations of the EU Member States. More generally, the EU’s internal dynamics over the decades, especially under the influence of the European Court of Justice (ECJ), has consistently perceived EU law as an autonomous legal order.6 Yet, such an approach may feed into a perception of fragmentation and proliferation, while at the same time the EU engages itself in international commitments. For the ECJ the autonomy of EU law figures as a central constitutional principle and it gives rise to stringent systemic requirements related to the well-functioning of the EU legal order. This has been seen in the Court’s Opinion 2/13 concerning the EU’s access to the European Convention on Human Rights (ECHR).7 In that context, it was confirmed in particular that the legal arrangements concerning the EU’s participation in proceedings before the European Court of Human Rights (ECtHR) cannot be such as to affect the internal allocation of powers established by the EU Treaties.

3  Art 30 of the Vienna Convention provides for general rules concerning the application of successive treaties relating to the same subject matter, while its Art 59 concerns termination or suspension of the operation of a treaty implied by conclusion of a later treaty. 4  A Rosas, ‘With a Little Help from My Friends: International Case-Law as a Source of Reference for the EU Courts’ (2006) 5 The Global Community Yearbook of International Law and Jurisprudence 2005, 203–30. 5  Joined cases C-584/10 P, C-593/10 P and C-595/10 P Commission v Kadi, ECLI:EU:C:2013:518. 6  Case 6/64 Costa v ENEL, ECLI:EU:C:1964:66, [1964] ECR 585, 593–94; Case C 26/62 van Gend & Loos v Netherlands Inland Revenue Administration, ECLI:EU:C:1963:1, [1963] ECR 1, 12. 7  Opinion 2/13, ECLI:EU:C:2014:2454.

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Second, while Member States have conferred on the EU important public powers (competences) to lay down legislation and conclude international agreements, the EU’s access to international institutions is often more restricted than that of states generally. This reflects the historical fact that international law and its institutional structures have been made by states and primarily for them. In so far as international constraints exist they, of course, affect the EU’s ability to deliver on the public tasks entrusted to it. There have been adjustments and progress of international law in this respect, making certain parts of the international system more accessible than others. The WTO and the United Nations Convention on the Law of the Sea (UNCLOS) are examples of this adjustment, especially as the EU is a contracting party to these agreements alongside the EU Member States and third states, while the ICJ and, so far, the ECtHR are still largely, though not entirely, inaccessible to the EU. Third, in any event, all international actors, including the EU, have to find ways to deal with special legal regimes and the proliferation of tribunals with limited jurisdiction enabling them to deal only with certain types of disputes on a sectorial basis. The recent examples below on the borderlines of WTO and UNCLOS are amongst the recent EU experiences. This chapter addresses the fragmentation/proliferation phenomenon in the light of EU’s practical experience. First, it describes these experiences in different settings in order to highlight the multiple dimensions of the phenomenon. Second, the means by which basic ‘external’ and ‘internal’ constraints on the EU’s international action may be overcome are discussed. Third, a distinction is made between bilateral and multilateral legal frameworks, as it affects the possibilities to manage the issues in practice. Finally, the conclusion will bring together the points made in the preceding discussion. The purpose is to describe and illustrate by practical examples the multiple dimensions of the fragmentation/proliferation phenomenon, as experienced in the EU context, rather than entering into full analysis of some specific aspects which are addressed elsewhere in this book.8

II.  Fragmentation and Proliferation Experiences in Different Settings A. Experiences from the EU’s Own Restricted Access to International Judiciary: The ICJ and the ECtHR Since the EU is not a state, it seems appropriate first of all to recall that it has limited access to international tribunals. This is particularly so in the case of the ICJ. Article 34(1) of the ICJ Statute provides that ‘[o]nly States may be parties in 8  For a general overview of possibilities and constraints in relation to the EU’s role in IDS, see Christophe Hillion and Ramses A Wessel, ch 2 in this volume.

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cases before the Court’. This fact was brought home in the Fisheries Jurisdiction case (Spain v Canada) in 1998.9 The case arose from a fisheries dispute involving Spanish vessels in Canadian waters in the mid-1990s, and the ICJ ultimately ruled that the case was inadmissible. The dispute originated from fishing activities off the Canadian coast in Newfoundland, in an area partly belonging to the high seas. In 1994, the then European Community (EC) and Canada were not able to reach agreement on the total allowable catch for certain straddling stocks in the Grand Banks area covered by the NAFO (North Atlantic Fisheries Organization). The same year Canada amended its Coastal Fisheries Protection Act to extend to parts of the Grand Banks area. The act also made it illegal for certain states to fish in the area, and in 1995 the list came to include Spain and Portugal. On 10 May 1994, Canada made a declaration, in accordance with Article 36(2) of the Statute of the ICJ, revoking the declaration that it had made earlier concerning the scope of the Court’s jurisdiction. The new declaration now contained a further reservation which excluded from the Court’s jurisdiction ‘disputes arising out of or concerning conservation and management measures taken by Canada with respect to vessels fishing in the NAFO Regulatory area … and the enforcement of such measures’. On March 1995 the Spanish flagged vessel Estai was intercepted by Canadian authorities in the Grand Banks area. Warning shots were fired, the vessel was seized and the master arrested on infringement of Canadian fishing regulations. The EC and Spain protested. On April 1995, an agreement was reached between the EC and Canada removing Spain and Portugal from the list of flag states which were not allowed to fish in the area. The proceedings against Estai were then discontinued. The case reflects the reality that, while the issues concerned fishing activities, a core area of Community competence, the EC had no access to the ICJ’s jurisdiction. It was for Spain as the flag state to take up the claim. At the time, the UNCLOS was not yet in force and operational. Today, while Article 34(1) of the ICJ Statute remains intact, an international organisation like the EU may contribute to the proceedings before the World Court in certain other ways. Pursuant to Article 34(2) of the Statute, and in conformity with Article 69 of the Rules, the Court may request from an international organisation information that is relevant for the cases before it, and it will receive any such information presented by the organisation on its own initiative. Moreover, in the context of advisory opinion proceedings, Article 66(2) and (4) of the ICJ Statute foresees the possibility that the Court may invite an international organisation to provide information on questions before it, which can be done by way of written or oral statements to the Court. Likewise, an organisation that has made such statements is permitted to comment on the statements made by other states or organisations. It may be noted, in particular, that, following amendments which came into force in 2005, Article 43(2) of the Rules of the Court now provides that

9 

Judgment of 4 December 1998.

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whenever the matter concerns interpretation of a convention to which a particular organisation is a party, the Court must consider notifying that organisation in order to allow it to submit its observations on the particular provisions concerned. This situation could well arise in the case of the EU, which is a contracting party to a large number of international agreements. Indeed, the Court regularly notifies the EU institutions of such cases pending before it. This has been the case with UNCLOS in particular, though the EU has not so far made observations relating to UNCLOS due to the fact that the pending cases have concerned the delimitation of maritime boundaries for which the Union does not have competence.10 With regard to the maritime field it may be added that, pursuant to UNCLOS, Article 7(3) of Annex IX, where the EU and one or more of its Member States are joint parties to a dispute, the organisation is deemed to have accepted the same procedures for the settlement of disputes as the Member States. However, when a Member State has chosen the ICJ as the only means of dispute settlement under Article 287 of UNCLOS, the EU and the Member State concerned are deemed to have accepted UNCLOS Annex VII arbitration, unless the parties to the dispute otherwise agree. Basically similar constraints on EU access still persist with regard to the ECtHR, and due to reasons expressed in the Court’s Opinion 2/13 related to the requirements of the EU’s internal law, an agreement on accession to the ECHR would require fresh negotiations with the Member States of the Council of Europe. This would also involve states such as Russia and Turkey, as their support would be necessary for the EU to adhere to the ECHR. It seems that EU accession is not in sight in the near future. Thus, for the time being, the only avenue for access to the ECtHR which remains open for the EU is that the Commission may intervene when necessary to express its views by way of amicus curia briefs, which it has done in the past in a handful of cases in the ECtHR relating to relevant EU law.11

B. Experiences from ‘Proliferated’ International Tribunals: UNCLOS and WTO The EU has faced two ‘proliferated’ international disputes in recent years. Both involve parallel proceedings under the UNCLOS and the WTO.12 In 2000 in the

10 In 2015 in the pending case concerning maritime delimitation in the Indian Ocean (Kenia v Somalia) the ICJ was informed that the EU did not have observations. For earlier cases, see Frank Hoffmeister, ‘The European Union and the Peaceful Settlement of International Disputes’ (2012) 11(1) Chinese Journal of International Law (2012) 77–105, ss 275–310. 11  Avotins v Latvia (App No 17502/07); Artemi and Gregory v Cyprus and 21 other EU Member States (App No 35524/06); Emesa Sugar v The Netherlands (App No 62023/00); Senator Lines v 15 EU Member States (App No 56672/00), Bosphorus v Ireland (App No 45036/98). 12  Esa Paasivirta, ‘The European Union and the United Nations Convention on the Law of the Sea’ (2015) 38 Fordam International Law Journal 1045–71, 1056–58. See also Christophe Hillion and Ramses A Wessel, ch 2 in this volume.

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‘Swordfish Case’ (Chile v European Community)13 Chile brought the Community to a Special Chamber of ITLOS, invoking its right to conservation measures regarding highly migratory fish in its exclusive economic zone (EEZ) adjacent to the high seas, and challenging the fishing activities of Community-flagged fishing vessels for which the Community relied on the freedom of the high seas (UNCLOS Article 116). Chile’s action followed immediately after the Community had submitted the dispute concerning Chile’s unilateral conservation measures to the WTO. This led to the establishment of a parallel WTO panel (Chile—Measures Affecting the Transit and Importation of Swordfish), where the Community complained of a violation of General Agreement on Tariffs and Trade (GATT) rules (Articles V and XI) on the part of Chile, which had prevented Community fishing vessels from unloading their swordfish in Chilean ports either to land them for warehousing or to transfer them to other vessels. Chile’s defence in turn relied on the general exceptions of GATT (Article XX).14 While these parallel cases were pending, and after the respective proceedings were suspended in 2001, informal contacts continued. The parties finally succeeded in their negotiations to reach a settlement after nine years; the ITLOS case was discontinued in 2009 and the WTO case was discontinued in 2010.15 In 2013, a similar proliferated scene, again between the UNCLOS and the WTO, was at stake in the dispute which arose between the Faroe Islands (which are part of Denmark but outside the EU) and the EU, related to the sharing of fishing quotas and the EU’s restrictive trade measures. Here, the EU had adopted measures banning the import of fish or fishery products caught by vessels flying the flag of the Faroe Islands. They also restricted the use of EU ports to counter what was seen as the unsustainable fishing practices of the Faroe Islands. The fishing stock had previously been managed in annual consultations between the relevant coastal states, which agreed on the sharing arrangements, according to which 5.16 per cent of the allowable catch (TAC) was allotted to the Faroe Islands. However, in the coastal state consultations for 2013, the Faroe Islands refused to continue those arrangements and announced that they had unilaterally set a new catch limit of 105,230 tonnes for the Faroese fleet. This represented 17 per cent of the recommended TAC. The EU considered, inter alia, that the Faroe Islands had failed its cooperation obligations under UNCLOS (Article 61(2), Article 63(1–2)) and notified the Faroe Islands of its intention to identify it as a country allowing unsustainable fishing. The Faroe Islands denied having withdrawn from the consultations, but did not indicate any intention to amend its unilateral decision. Consequently, the EU adopted measures banning the import of fish or fishery products caught by

13  Conservation and Sustainable Exploitation of Swordfish Stocks in the South-Eastern Pacific Ocean (Chile v European Community), Case No 7 (20 December 2000), www.itlos.org. 14  WT/DS193/1 of 26 April 2000. 15  Order 2009/1 of 16 December 2009, www.itlos.org; Joint Communication WT/DS193/4, G/L/367/ Add.1 June 2010.

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vessels flying the flag of the Faroe Islands and the vessels were subjected to restrictions on the use of EU ports.16 In 2013, in the face of the EU measures, Denmark, in respect of the Faroe Islands, initiated the Atlanto-Scandian Herring Arbitration under Annex VII of UNCLOS alleging violation by the EU of its cooperation obligations under UNCLOS (Article 63(1)).17 The claimant also initiated parallel proceedings under the WTO dispute settlement system to contest the GATT compatibility of the EU trade measures in European Union—Measures on Atlanto-Scandian Herring.18 However, outside those proceedings, contacts between the two parties continued, and a settlement was reached. The Faroe Islands reduced its quota significantly (from 105,230 tonnes for 2013 to 40,000 for 2014), and this, taken together with the quotas of the other coastal states, was not considered to undermine the conservation efforts of the EU, and the EU repealed its trade measures.19 Both cases were terminated in September 2014. Both of the above proliferated disputes illustrate the reality that different sector regimes and respective international tribunals can be seized at the same time, with the obvious risk that divergent interpretations or results may transpire. However, neither of the above cases provided the international bodies with an opportunity to address the issue of the splitting of jurisdictions or how the respective proceedings could possibly have influenced each other. The key actors in both cases were the parties themselves, who were able to find a satisfactory settlement by way of negotiation.

C. Contestation and Control of the EU’s Participation in International Proceedings: View from the European Court of Justice Participation in proceedings before an international tribunal is not part of everyday legal experience anywhere in the world, despite the increased number of such tribunals. It is also a traditional province of states in so far as it is associated with foreign policy or international implications where special considerations may apply. This is also true in the EU context. WTO dispute settlement has wellsettled working practices and in the EU context this is largely taken care of by the Commission. Yet, when moving to another area with another judiciary, issues of control by Member States arise in a fresh way. This is reflected in the EU participation 16  Commission Implementing Regulation (EU), No 793/2012, [2012] OJ L223, at 1 (21 August 2003). 17 See Atlanto-Scandian Herring Arbitration (Denmark in respect of Faroe Islands v EU), PCA Case 2013-30. 18 Request for Consultations by Denmark in Respect of the Faroe Islands, European Union— Measures on Atlanto-Scandian Herring, WTO Doc. WT/DS469/1 (7 November 2013). 19  Commission Implementing Regulation 896/2014, Establishing Measures in Respect of the Faroe Islands to Ensure the Conservation of the Atlanto-Scandian Herring [2014] OJ L 244/10.

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in the proceedings before the ITLOS in Case No 21, of 2 April 2015, Request for an advisory opinion submitted by the Sub-Regional Fisheries Commission (SRFC),20 which was followed, on the internal plane, by legal proceedings which the Council brought against the Commission before the ECJ.21 The ITLOS Advisory Opinion concerns IUU (illegal, unreported and unregulated) fishing practices, addressing in particular questions of the liability of the flag states and international organisations for fishing activities conducted in the EEZ of a coastal state. In terms of EU law, the case concerns the area of the conservation of marine biological resources under the common fisheries policy, which falls within the EU’s exclusive jurisdiction.22 The European Commission, acting on behalf of the EU, made written observations in the case, consisting of suggested answers to the questions raised in the advisory opinion on the basis of envisaged interpretation of UNCLOS and related instruments. In that capacity, the Commission also participated in the oral hearings in September 2014. This was the first time that the EU had participated in this kind of advisory proceedings. The Commission had taken a decision in 2013, based on Article 335 of the Treaty on the Functioning of the European Union (TFEU),23 to submit observations and participate in the oral proceedings. This decision also directed the Commission services, ‘under the principle of loyal cooperation’, to inform the Council via its competent working groups. Therefore, several working documents setting out the main lines of the EU submission were prepared and submitted to the Council for discussion in the relevant working groups. During these discussions the main issue concerned the limits of ITLOS advisory jurisdiction, on which there was no common view amongst the Member States. The Commission drew the practical conclusion that this aspect should not be advanced and the EU submission focused on the substance ‘without prejudice’ to the ITLOS jurisdiction. Certain Member States made their own written observations, bearing mostly on the ITLOS advisory jurisdiction on which views were diverging (UK, Spain, Germany, the Netherlands and France), and the Netherlands and France made limited observations on the substance. In the oral hearings in ITLOS, the Commission pleaded the substance and three Member States argued on the jurisdictional aspects (UK, Spain and Germany).24 Prior to the ITLOS oral proceedings, the Council brought proceedings before the ECJ in Council v Commission,25 supported by 10 Member States, and requesting the Court to annul the Commission’s decision to submit written observations 20 

Available at www.itlos.org. Case C-73/14 Council v Commission, ECLI:EU:C:2015:663. 22  Art 3(1)(d) TFEU. 23  Art 335 TFEU provides: ‘In each of the Member States the Union shall enjoy the most extensive legal capacity accorded to legal persons under their laws; it may, in particular, acquire or dispute of movable and immovable property and may be a party to legal proceedings. To this end, the Union shall be represented by the Commission …’. 24  The observations are available in the ITLOS website, www.itlos.org. 25  Case C-73/14 Council v Commission, ECLI:EU:C:2015:663. See also the short analysis of the finding in Christophe Hillion and Ramses A Wessel, ch 2 in this volume. 21 

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to ITLOS. The Council pleaded, first, on infringement of the principle of conferral of powers in Article 13(2) of the Treaty on European Union (TEU) and the principle of institutional balance and, second, on the infringement of sincere cooperation. The Court rejected both pleas and dismissed the action. As regards the first plea, the Court examined the scope of Article 335 TFEU, the Commission’s main defence. The Court referred to the precedent in Reynolds, relating to the Commission’s participation in court action in a foreign domestic court (in the United States). In line with that case, though the wording of Article 335 was restricted to the courts of the Member States, it was considered to be an expression of a ‘general principle’ and to provide a basis for the Commission to represent the EU before ITLOS. The Court then looked further into the issue of institutional balance in the light of Article 218(9) TFEU, which provides that a prior Council Decision is required for establishing an EU position ‘in a body’ set up under an international agreement when that body is called upon to adopt acts having legal effects. However, it did not consider this provision to be relevant for positions to be adopted ‘before’ an international court, consisting of independent members, thus rejecting that the Commission had disregarded the powers of the Council by not submitting the final written statement for the Council’s approval. In the same vein, the Court rejected that the EU statement could be regarded as ‘policy making’ subject to the Council’s prerogatives.26 Instead, the statement was considered to present a set of legal observations based on the analysis of the provisions of international and EU law. The observations relating to ITLOS jurisdiction and admissibility issues were not considered to constitute ‘strategic or political choices’ for the Council to make,27 but such observations as well as those on substance were ‘characteristic of participation in proceedings before a court’.28 The Court also confirmed that the principle of sincere cooperation (Article 31(2) TEU) requires the Commission to consult the Council beforehand if it intends to express a position on behalf of the EU before an international court. However, as the Commission had sent the Council a working document in several revisions, this principle had been fully respected. Since the Court addressed the issues in general institutional terms the case is clearly of wider significance than just limited to the advisory opinion at hand. The action against the Commission, supported by a number of Member States, may also reflect a sense of unease that can still be felt inside the EU circles in connection with external representation and participation in legal proceedings before an international tribunal. Despite the EU’s emphasis on international rule of law, in reality proceedings before an international jurisdiction still to some extent resonate with policy making. Be that as it may, the Court’s clear ruling and the generic approach that it took is likely to facilitate the management of other proceedings in the future. 26 

Art 16(1) TEU. Case C-73/14, ECLI:EU:C:2015, point 72. 28  ibid, point 73. 27 

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D. The Treaty-making Power of the Member States and Fragmentation Risks Within the EU’s Internal Market: The Case of Intra-EU Arbitrations An arbitral tribunal established under a BIT is an international tribunal which applies the provisions of the BIT and other international law rules. Such BITbased arbitration relies ultimately on the customary treaty-making powers of the states based on their sovereignty.29 The legal framework created thereby enables a private investor to bring direct claims against the host government concerning alleged violations of the rules established under the BIT. The rules established under BITs prevail over conflicting domestic laws and, likewise, the status of the tribunals differs from commercial arbitration which remains subject to the empowerment and limitations of domestic law. The BITs have gained particular legal significance in the internal EU context when a large number of BITs were rolled over in the midst of the Union following the past EU enlargements. The ‘new’ Member States became subject to the internal market rules, yet the BITs concluded with ‘old’ Member States being terminated. The ensuing arbitrations under such BITs—‘intra-EU arbitrations’—involve a large number of claims by companies based in the territory of an EU Member State and brought against another EU Member State. Typically, many of these arbitrations stem from a withdrawal of state aid from the investor by the host government, as result of the examination by the Commission considering such aid unlawful under the EU state aid rules. The legal regimes created by the BITs between EU Member States bring issues of fragmentation and proliferation of tribunals several steps closer to the EU’s core areas and principles. The EU’s internal market is constituted by the founding Treaties, consisting of uniform rules which are ultimately safeguarded by the ECJ. Against this background the intra-EU BITs appear like separate ‘islands’ of special rules and privileges, adjudicated outside the immediate reach of the public justice system consisting of the EU’s judiciary, consisting of the ECJ and the national courts of the Member States. In the Commission it is clearly felt that this is a challenge to the unity of the internal market and the role of the ECJ in ensuring compliance with EU law. The EU Treaties do not envisage parallel legal regimes amongst the Member States which would overlap with the internal market rules established under the founding Treaties of the Union. Article 351 TFEU relating to agreements concluded before their EU membership clearly does not apply to agreements between the Member States.30

29  Art 6 of the Vienna Convention on the Law of Treaties: ‘Every State possesses capacity to conclude treaties.’ 30  See generally, A Rosas, ‘The Status in EU law of international Agreements Concluded by EU Member States’ (2011) 34(5) Fordham International Law Journal 1304, 1320–22.

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Many of these intra-EU arbitrations have also arisen under the Energy Charter Treaty (ECT) concluded by the then European communities in 1997.31 It is a multilateral treaty containing provisions on investment protection formulated on the basis of past BIT practice. On the EU side, it is a ‘mixed’ agreement where both the EU and the Member States are parties. However, it falls short of making fully clear and explicit the separation between ‘intra-EU relations’ and relations between the EU/Member States with non-EU states including their companies. As regards the intra-EU relations, the situation thus resembles that under the intra-EU BITs. According to the United Nations Conference on Trade and Development (UNCTAD) statistics, at the end of 2014 the overall number of intra-EU arbitrations amounted to 99 cases, ie about 26 per cent of all cases globally.32 The EU is not a contracting party to the above intra-EU BITs and not a party to the arbitrations thereunder. As regards the ECT, no arbitrations have yet been initiated against the EU as such, but only against Member States. The legal issues related to the BITs have not yet been solved in a definitive way as there is no ruling yet by the ECJ, though that can be expected in the future as indicated below. Yet, the Commission’s view is clearly that such BITs are not compatible with the EU law. For the present purposes, it suffices to note the EU law nexus comes into play in different contexts and at different stages outlined below. That includes issues of jurisdiction, applicable law and enforcement of awards. Outside the arbitral process, the Commission has also initiated infringement action against some Member States which are party to the intra-EU BITs in order to attempt to terminate the BITs. First, given that the EU is not party to these arbitrations (or intra-EU BITs generally), the Commission has in the past requested, and continues doing so, leave from the relevant arbitration tribunal to make its views known as an amicus curia. This is done in writing and normally subject to certain restrictions. The Commission has sent amicus briefs in some 20 cases altogether, after having learned of on-going arbitration proceedings involving EU law aspects. Though amicus briefs are also used in other contexts, especially in respect of litigations in US courts33 and the ECtHR,34 their most frequent use recently has related to intra-EU arbitrations. Indeed, the amicus briefs have been the main vehicle to make the EU law aspects heard in these arbitrations. They normally explain the system of EU’s state aid rules, since issues relating to state aid form a core part of these arbitrations. The briefs also describe the system of remedies in the EU legal

31  Concluded by the Council and Commission Decision (98/181/EC, ECSC, Euratom) of 28 September 1997, OJ L69, 9 March 1998, 1. 32  UNCTAD II A Issues Note, No 1, February 2015, 6. 33  Since 2004, amicus briefs have been submitted to US courts in 14 cases, covering the areas of anti-dumping (1), anti-trust (3), enforcement of arbitration award against a member state (1), extraterritorial application of US law (3) and death penalty (4). Answer of the Commission (11 August 2015) to a Parliamentary question E-009124/15: www.europarl.europa.eu/sides/getAllAnswers.do?reference =E-2015-009124&language=EN. 34  See n 11.

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order, consisting of the system of national courts and the ECJ, where the Court has the exclusive jurisdiction to ensure the unity of EU law and safeguard its uniform interpretation. The use of such amicus briefs in the intra-EU arbitrations reflects the reality that the EU law aspects are introduced only ‘from the margin’ as the EU is not a party in these cases and thus is not able to fully argue the issues involved. Second, the Commission in its amicus capacity has argued that the arbitration tribunals lack jurisdiction because Article 344 TFEU commits the Member States not to submit a dispute concerning the interpretation and application of the Treaties to any method of settlement other than those provided there. At least so far, this argument has not been heeded by the arbitral tribunals, as seen for instance in Eureko v the Slovak Republic35 (under the Dutch-Slovak BIT) and in the EURAM v Slovakia cases (under the Austria Slovak BIT).36 Third, in some cases the focus of the Commission’s argument has moved beyond the question of jurisdiction to that of applicable law and interpretation. This was the case, for example, in AES v Hungary37 (under the ECT) involving the withdrawal of state aid. While the ECT was determined as the applicable law, the tribunal, following Articles 31 and 32 of the Vienna Convention, clearly took EC competition law aspects into account in its assessment and, in the end, dismissed the claim on the merits. That outcome was echoed in the award in Charanne and Construction Investments v Spain,38 an intra-EU arbitration under the ECT, which relates to Spanish measures bringing an alternation of the regulatory framework affecting renewable energy sources. While again the tribunal rejected the argument that it lacked jurisdiction, it gave way to the defendant’s views in the merits to the extent of concluding that the claimants did not have legitimate expectations that the regulatory frame remains unchanged, provided the changes are not arbitrary, irrational or contrary to public interest. Fourth, the EU law nexus comes into play in the context of the enforcement of arbitration awards. The arbitral award in Micula v Romania39 concluded that by revoking the incentives, in the context of its EU accession, Romania had violated the standard ‘fair and equitable treatment’ clause contained in the Romania– Sweden BIT. The enforcement of the award has been challenged inter alia in Romanian courts, but the matter is still pending.40

35  PCA Case No 2008-13, Award on Jurisdiction, Arbitrability and Suspension, 26 October 2010, at para 193, www.iareporter.com. 36  PCA Case No 2010-17, Award on Jurisdiction, 22 October 2012, paras 248–67, www. iareporter. com. 37  ICSID Case No ARB/07/22), 23 September 2010, www.iareporter.com. 38  Final Award of 21 January 2016, para 539, www.italaw.com/sites/default/files/case-documents/ italaw7162.pdf. 39  Micula v Romania, ICSID Case No ARB/05/20 of 11 December 2013, www.italaw.com/cases/697; the ICSID ad hoc Committee’s Decision on Annulment, 26 February 2016, rejected the application for annulment: www.italaw.com/cases/697. 40  The parallel challenge of the Commission ordered suspension of the execution of the award of damages that had later been withdrawn by the applicants. Case T-646/14 Micula ao v Commission, ECLI:EU:T:2016:135, Order of the President of 29 February 2016.

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It should be noted that the German Bundesgerichtshof has recently made a request to the ECJ for a preliminary decision in Case C-284/16, in connection with the enforcement of an arbitration award rendered by a tribunal under a Dutch– Slovakian BIT.41 It raises questions of the compatibility of such arbitral tribunals with Article 344 TFEU and issues of possible discrimination (Article 18 TEU). It seems that this pending case is quite likely to be decisive for the future of intra-EU BITs. Fifth, the intervention of EU law can also take the form of infringement action by the Commission against the EU Member States party to intra-EU BITs, on the basis of their failure to terminate such BITs as incompatible with the EU law. Such actions have now been brought against five Member States (Austria, the Netherlands, Romania, Slovakia and Sweden).42 As regards others which still have intra-EU BITs in place, the Commission is at the stage of investigation, requesting information and initiating more informal dialogues. For a number of years, despite its views that the intra-EU BITs are not compatible with EU law, the Commission has avoided such infringement action and tried to find practical solutions with the Member States. This line of action has clearly not proved to be successful and, as a result, the Commission has now turned to more formal legal action.43 In the light of the above, guidance from the ECJ seems indispensable in the first place to clarify the legal scene as far as the intra-EU BITs are concerned. This could also, by way of analogy, provide clarity in so far as similar intra-EU elements are involved in an arbitration conducted under the ECT, to which the EU and Member States are parties. It should be noted that the description above has only touched on intra-EU arbitrations, and not extra-EU arbitrations involving private investors from non-EU states. In this latter case, different considerations clearly apply as the EU and its Member States have jointly adopted clear commitments vis-à-vis other contracting parties regarding international arbitration, for instance under the ECT.

III.  Special Treaty Clauses as Means for Addressing the ‘External’ and ‘Internal’ Constraints on the EU’s International Action International law traditionally assumes that participation in international treaties applies only to states. The fact that the EU is not a state means that it cannot benefit 41 www.globalinvestmentprotection.com/index.php/intra-eu-bits-before-the-court-of-justice-ofthe-eu/. 42  Commission’s letters of formal notice have been sent to the five member states in June 2015: http://europa.eu/rapid/press-release_IP-15-5198_en.htm. 43  For an earlier Commission’s reply (Commissioner Barnier) to a parliamentary question, 19 July 2011. E-005232/2011, [2011] OJ C365 E. Commissioner De Gucht replied to an oral question during a parliamentary debate stating: ‘The Commission agrees that bilateral and investment treaties (BITs) between EU Member States do not comply with EU law’. Debates, 22 May 2013—Strasbourg. AT-0124/2013, CRE 22/05/2013-19.

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from the assumption of automatic participatory rights connected with the status of state. In that case, it would, of course, be excluded from international dispute resolution established under the treaty concerned. The internal constraints, on the other hand, point to certain restrictions originating from the EU’s own legal order, in particular that the EU’s international participation should not undermine the basic principles of EU law such as the principle of autonomy.

A. Overcoming ‘External’ Constraints by Treaty Negotiations and REIO Clauses The position of customary international law could not be more clear regarding the ability of states to adhere to multilateral treaties and their dispute settlement mechanisms. In the words of Article 6 of the Vienna Convention on the Law of Treaties (1969), ‘[e]very State possesses capacity to conclude treaties’. However, no similar ‘possessive’ presumption exists in the case of international organisations. The corresponding Article 6 of the Vienna Convention on the Law of Treaties between States and International Organizations (1986) (not in force), provides in turn that ‘[t]he capacity of an international organization to conclude treaties is governed by the rules of that organization’. That language means in essence that the capacity of organisations to conclude is not automatic, but subject to an assessment of the rules of the organisation. Given the nature of their functions, international organisations are not contracting parties to treaties of multilateral nature and therefore such treaties habitually contemplate participation by only states. For a global actor like the EU, with comprehensive public powers and functions, these traditional assumptions and practices can be a constraint in the fulfilment of its tasks. For practical purposes, the issue of overcoming such external constraints and enabling EU participation in a multilateral agreement, with dispute resolution procedures, is above all a matter of negotiation with the other parties. Currently, it often results in the introduction of special provisions which enable EU participation, often subject to specific conditions relating to its competences. In reality, in the case of almost every multilateral agreement a particular effort is required for the EU to become a fully-fledged treaty partner. This normally requires justification and explanation as to why the EU should participate alongside states. The third states often need to be informed about the nature of the EU and how it compares with other organisations, and how the system of internal conferral of public powers from the Member States to the organisation is established and how it operates. This is probably the experience of any EU negotiator that proposes inclusion of ‘REIO clauses’ (Regional Economic Integration Organisation) to multilateral treaties, which are a key mechanism permitting an organisation such as the EU to become party to a multilateral treaty. The UNCLOS example, the first major multilateral Convention with EU participation, is telling. When UNCLOS was negotiated in the 1970s and early 1980s, the European Economic Community (EEC), as it then was, did not take part in the

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negotiations, but attended as a mere observer. The interests of the EEC were taken care of by the Member State which held the rotating presidency. At that stage, the EEC concerns were above all related to fisheries and its exclusive jurisdiction, which for the then Member States were the essential elements if the EEC were to become a party. During the negotiations a major effort concerned the clear spelling out of EEC competences, which resulted in these competences being set out in detail. In any event, the efforts produced the first-ever declaration of competences by the European Community (EC) attached to the Convention. The outcome, that the EC became a contracting party, was considered a major achievement.44 Since the entry into force of UNCLOS, and the WTO as another major precedent, ‘REIO-clauses’ have been introduced into a large number of multilateral agreements. Altogether, this amounts to 81 multilateral agreements.45 In this way, it has become an increasingly common practice to introduce special provisions to permit EU participation in international treaty frameworks. As the above implies, the primary aim of the EU has been to secure international participation as such, and it has not been concerned over the plurality of dispute resolution mechanisms or fragmentation at the level of international law. It is probably due to such reasons that the fragmentation/proliferation phenomenon does not figure as a distinct agenda point in the EU’s internal deliberations. It is, rather, the internal EU law issues, concerning the principle of autonomy of EU law and the role of the EU judicial system, which have occupied the EU’s own agenda in this context.

B. Overcoming ‘Internal’ Constraints by ‘Conflict of Forum’ Provisions in International Treaties: MOX Plant Model Revisited In practice, it is of great importance for EU negotiators in the context of multilateral agreements to find appropriate solutions in its provisions which are compatible with EU law. This is so especially when the agreement involves complex institutional issues such as dispute settlement mechanisms and when the agreement would be concluded in the form of a mixed agreement, with the EU and the Member States acting together. The ECJ has also played an important role in providing guidance to address the issue of compatibility between EU law and international arrangements for dispute settlement. Sometimes the negotiators have identified potential issues well in advance. In that case, the EU institutions or a Member State can seek an ex ante opinion by the Court under Article 218(11) TFEU. Such opinions usually review the issues at stake in comprehensive constitutional terms and the opinions are legally binding 44 

Paasivirta (n 12) at 1061–70. See the inventory of agreements containing the REIO clause, EEAS Treaties Office, 12/12/2014: http://ec.europa.eu/world/agreements/viewCollection.do. 45 

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under the EU Treaties. It remains for the negotiators to seek any necessary adjustments to the draft agreement. Such prior opinions of the Court were sought, for instance, in relation to the EU accession to the European Convention of Human Rights and in the case of the Agreement on the European Economic Area (EEA). No such prior opinions were sought, however, in the case of UNCLOS and the ECT, for instance. In Opinion 2/13, concerning the EU Accession Agreement to the European Convention of Human Rights, the Court emphasised the principle of autonomy. It took a long view stemming from the classic rulings—van Gend & Loos, Costa v Enel46—sending the message that EU law constitutes a separate legal order, with its own institutions and specific character. In particular, an international agreement cannot affect the allocation of powers established in the Treaties, and thus the autonomy of the EU legal system and the central role of the ECtHR in ensuring that the rules are observed. This means that the Member States cannot submit a dispute concerning the interpretation or application of the EU Treaties to any other dispute resolution, as provided for in Article 344 TFEU. It also means that it is not for an outside body to take final and binding decisions regarding the division of powers between the EU and the Member States. The central tenets of Opinion 2/13 are very similar to the Court’s earlier Opinion 1/91 (EEA Agreement).47 This latter opinion also highlighted the exclusive jurisdiction of the Court in ensuring autonomy of the (then) EC legal order. In that context, the central issue concerned the possibility of establishing a common court (the EEA Court) amongst the then European Free Trade Association (EFTA) states and the EC. This readily negotiated plan had to be put aside as the ECJ ruled that no outside body could give rulings which would impact on the competences of the EC and its Member States, or to give binding interpretations related to internal EC rules. This outcome led to renewed negotiations and the splitting of the EEA into two separate EFTA and EC spheres under their own judiciaries. At other times, no such prior opinion has been sought from the Court. Particular mention should here be made of UNCLOS, as reflected in the judgment in the MOX Plant case48 which is instructive for the actual application of EU law principles in the context of ‘competing’ tribunals. In that case, the issue concerned in particular what is now Article 344 TFEU, which provides that ‘Member States undertake not to submit a dispute concerning interpretation and application of the Treaties to any method of settlement other than those provided for therein’. UNCLOS is particularly interesting as it incorporates a specific ‘conflict of forum’ provision for dealing with inter-systemic relations in a regional context. Article 282 of UNCLOS provides that if states parties to UNCLOS which are parties to a dispute concerning its interpretation or application have agreed, through a general, regional or bilateral agreement or to otherwise, that such a dispute shall, at the request of any party to a dispute, be submitted to a procedure that 46 

See n 6 above. Opinion 1/91, ECLI:EU:C:1991:490. 48  Case C-459/03 Commission v Ireland, ECLI:EU:C:2006:345, [2006] ECR I-4635. 47 

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entails a binding decision, that procedure shall apply in lieu of the procedures provided for in this part [XV], unless the parties to the dispute otherwise agree.

The origin of the MOX Plant case involved a dispute between two EU Member States, Ireland and the UK, relating to the Irish concerns about radioactive discharges from the MOX Plant in Sellafield, UK, being released in the Irish Sea. The Irish request led to the establishment of an arbitral tribunal under Annex VII of UNCLOS and another tribunal under the Convention for the Protection of the Marine Environment of the North-East Atlantic (‘the OSPAR Convention’), although the latter aspect was not part of the case in the ECJ.49 Before the Annex VII Arbitral Tribunal was established, it was for the ITLOS to address requests for provisional measures, pursuant to Article 290(5) of UNCLOS. In that context, the UK had brought a challenge on the jurisdiction of the arbitral tribunal on the basis of Article 282 of UNCLOS, stating that some aspects fell within the scope of EC law and the exclusive jurisdiction of the ECJ. However, surprisingly ITLOS considered that Article 282 was not applicable and assumed prima facie jurisdiction. To that effect, ITLOS did not seem to consider the provision and the context in any greater depth, but was led by more formal considerations. It said that, though rights and obligations under other agreements such as the EC Treaty and EURATOM are similar or identical, they have a ‘separate existence’ from those under UNCLOS. Moreover, it considered that the rules on interpretation of treaties if applied to identical provisions in other treaties may not yield the same results, and that the dispute before the Annex VII Tribunal concerned the interpretation of UNCLOS and no other agreement.50 Later, after the Annex VII Arbitral Tribunal had been established, the jurisdictional argument was brought again by the UK, leading to the suspension of the proceedings as decided by the Tribunal’s Order of 23 June 2003.51 In reaching that decision, the Tribunal clearly took a more thorough look at the issues, noting the problems concerning the standing of the parties and the division of the competences between the EC and its Member States and the exclusive jurisdiction of the ECJ. It also took into consideration the answer given by the European Commission in the European Parliament, which had brought to its attention that the Commission was examining whether to initiate infringement proceedings under the

49  Ireland v United Kingdom (OSPAR arbitration), Permanent Court of Arbitration, Final award of 2 July 2003, https://pcacases.com/web/sendAttach/121. The case involved a narrow claim concerning Ireland’s right to access of information under Art 9 of the Convention for the Protection of the Marine Environment of the North-East Atlantic (1992) (OSPAR Convention). The question of overlapping jurisdiction with the ECJ was not advanced in any prominent way in these proceedings though the potential was there in the same way as in the proceedings under UNCLOS, both being mixed agreements. The OSPAR Tribunal just noted briefly that the similar language in the relevant EC Dir 90/313 and OSPAR Convention ‘does not limit a Contracting Party’s choice of a legal forum to only of the two available, ie either the ECJ or an OSPAR Tribunal’ (para 143 of the award). In the end, the Irish claim was dismissed. See also, R Churchill and J Scott, ‘The Mox Plant Litigation: The First Half-Life’ (2004) 53 International & Comparative Law Quarterly 643–76, at 669–70. 50  Order of 3 December 2001, Case No 10, the MOX Plant Case, Ireland v United Kingdom, paras 52–53, www.itlos.org/fileadmin/itlos/documents/cases/case_no_10/Order.03.12.01.E.pdf. 51  Order No 3, of 24 June 2003, www.pcacases.com/web/sendAttach/867.

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(then) Article 226 of the EC Treaty. It considered that there was a ‘real possibility’ that the ECJ could be seized and that there were ‘substantial doubts’ on whether the jurisdiction of the Tribunal could be established. The Tribunal recognised that the problems related to matters which concerned the ‘internal operation of a separate legal order’ and should be determined within that institutional framework. In view of the risk of conflicting decisions and mindful of the ‘considerations of mutual respect and comity’ between judicial institutions, the Tribunal considered it inappropriate to proceed further with the hearings. The parties were directed to take steps separately or jointly to expedite the resolution of the outstanding issues within the institutional framework of the EC, and the Registrar was instructed to provide a copy of the order to the European Commission.52 The European Commission had been informed earlier, by a letter of 18 June 2001 of the Executive Secretary of the OSPAR Commission, of the arbitration proceedings under the OSPAR Convention. The European Commission services had contacted Ireland to suspend those proceedings on the ground that the dispute came under the exclusive jurisdiction of the ECJ. The Commission and Ireland held a meeting concerning the totality of the issues concerning the MOX Plant, and Ireland acceded to the request to provide its pleadings relating to the two arbitral proceedings. On that basis, the Commission initiated infringement proceedings against Ireland before the ECJ under (what was then) Article 226 of the EC Treaty (now Article 258 TFEU) for having violated the exclusive jurisdiction of the ECJ (now Article 344 TFEU) in disputes between the Member States and the duty of sincere cooperation (now Article 4(3) TEU).53 The ECJ’s judgment54 found that Ireland had failed to fulfil its obligations under the above provisions by instituting arbitral proceedings against the EU under UNCLOS. In its reasoning the ECJ referred to the ‘obligation of close cooperation’ under a mixed agreement. This was the case in particular as the undertakings resulting from a mixed agreement related to an area—protection and preservation of maritime environment—where the respective competences of the Community and the Member States are ‘liable to be closely related’. In such context, there was a risk that a judicial forum other than the ECJ would rule on the ‘scope of obligations’ imposed pursuant to EC law. The Court’s concern here, as in Opinions 1/92 (EEA) and 2/13 (ECHR), seems to be that outside bodies might come to rule on the respective competences between the Community and its Member States. It confirmed that, in the context of a mixed agreement, close cooperation was required, with a duty to inform and consult the EU institutions before instituting dispute settlement proceedings under UNCLOS.55 Following the ECJ judgment, Ireland communicated to the UNCLOS Annex VII Tribunal notification of the withdrawal of the case which led to the formal termination of the arbitral proceedings.56 52  53 

ibid paras 20–29, order point 9. Case C-459/03, Commission v Ireland, ECLI:EU:C:2006:345, [2006] ECR I-4635, paras 49–56.

54 ibid. 55  56 

ibid paras 175–79. Order No 6 of 2008, www.pcacases.com/web/sendAttach/870.

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The MOX Plant case displays interesting exchanges between the EU’s institutions and international tribunals. It shows, in particular, that the means for maintaining the autonomy of the EU’s legal order and the exclusive jurisdiction of the ECJ were built on Article 282 of UNCLOS. The provision makes it possible for parties to UNCLOS to have an alternative dispute resolution procedure, provided that they have ‘agreed’ through a regional agreement to a procedure that entails a ‘binding’ decision in lieu of the UNCLOS procedures. This clearly enabled the ECJ to play its full role in this intra-EU context.57 Yet, on the side of the UNCLOS tribunals, the situation was somewhat less clear. Initially, ITLOS was completely unimpressed by the jurisdictional argument and considered that Article 282 was not applicable for the purpose of deciding the prima facie jurisdiction in relation to provisional measures. Later, however, the Annex VII Tribunal recognised that there were ‘substantial doubts’ regarding whether its jurisdiction could be established, which led it to suspend the proceedings and inform the European Commission thereof. The outcome in the MOX Plant case could also be of wider interest elsewhere where regional arrangements may be contemplated in the future. In this respect, it is interesting to notice that, in the context of the Philippines v China arbitration, another UNCLOS Annex VII Tribunal drew a contrast between the exclusionary language in Article 344 TFEU and the China-Asean Declaration on the Conduct of Parties in the South China Sea (2002). While Article 281 of UNCLOS permits parties to a dispute to choose any peaceful means for settlement, including negotiation preferred by China, the fact that the China-Asean Declaration did not contain similar exclusionary language to Article 344 TFEU was an element in the Tribunal’s reasoning. Hence, the Declaration was premised on the role of negotiations in the settlement of disputes, but as it lacked exclusionary language it did not constitute a bar for the Philippines to initiate UNCLOS arbitration instead.58 To be clear, if EU law limits the role of international tribunals when dealing with disputes involving EU law aspects, especially as regards certain disputes between the Member States or in a mixed agreement context, it nevertheless leaves some scope for international tribunals to act. Both Opinions 2/13 (ECHR) and 1/92 (EEA) confirm that there is in principle no obstacle to the EU participating in an international treaty with a dispute resolution body which can rule on the interpretation of the provisions of that treaty in a binding way without it being incompatible with EU law.59 Indeed, the EU law can be a wholly incidental factor in international dispute settlement. That is clear from WTO litigation. The panels and the Appellate Body give interpretations on the agreements covered by the WTO in a manner that binds all parties. The legal systems of the contracting parties, including EU law, are not applied as such. Thereby the WTO dispute 57  ‘It should be stated at the outset that the Convention precisely makes it possible to avoid such a breach of the Court’s exclusive jurisdiction in such a way as to preserve the autonomy of the Community legal system.’ Case C-459/03 (n 53), para 124. 58  Philippines v China case, PCA Case No 2013-19, the award on jurisdiction and admissibility, of 29 October 2015, para 222, https://pcacases.com/web/sendAttach/1506. 59  Opinion 2/13 (n 7) para 182; Opinion 1/91 (n 47) para 40.

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resolution reflects the classic view that, in the light of international law, domestic law is a fact.60 If a violation is found, the Dispute Settlement Body recommends bringing the measure at issue into conformity with the agreement concerned. As regards past EU treaty practice, regarding the issue of not allowing an outside body to determine the respective EU/Member State competences (and hence their responsibilities), the following examples should be noted: The following statement has been made regarding the ECT: The Communities and the Member States will, if necessary, determine among them who is the respondent party to arbitration proceedings initiated by an investor of another Contracting Party. In such cases, upon request of the investor, the Communities and the Member States concerned will make such determination within a period of 30 days.61

UNLCLOS Annex IX, Article 6(2) states: Any State Party may request an international organization or its member States which are States Parties for information as to who has responsibility in respect of any specific matter. The organization and the member States concerned shall provide this information. Failure to provide this information within a reasonable time or the provision of contradictory information shall result in joint and several liability.

Such clauses on the one hand aim to satisfy the expectations and concerns of third parties and, on the other hand, to conform to the internal EU law requirements as regards the competences between the EU and the Member States. In essence, they convey the message that it is for the EU to inform others what are the respective competences/responsibilities of the EU and its Member States and avoid this determination being made by an outside body.

IV.  Bilateral and Multilateral Frameworks Contain Different Potential for Handling Inter-systemic Issues Though risking stating the obvious, it should be emphasised that the distinction between a bilateral and multilateral framework makes a major difference in terms of management of the EU’s external relations. Negotiation of multilateral agreements can be a daunting task for the EU, especially if complex institutional issues 60  For instance, in India—Patents (US), paras 65–67 (WT/DS50/AB/R), the Appellate Body was led back to cite the judgment of the Permanent Court of International Justice in the Certain German Interests in Polish Upper Silesia case: ‘The Court is certainly not called upon to interpret the Polish law as such; but there is nothing to prevent the Court’s giving judgment on the question whether or not, in applying that law, Poland is acting in conformity with its obligations towards Germany under the Geneva Convention.’ 61  Statement submitted by the European Communities to the Secretariat of the Energy Charter pursuant to Art 26(3)(b)(ii) of the Energy Charter Treaty [1994] OJ L336/115.

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and relations with its Member States are involved. As noted above, the EU participation in international treaties may also be challenged and appropriate solutions need to meet the interests of many others. Bilateral agreements set a different scenario. Limited participation permits easier management and the drafting of the agreements in a satisfactory manner from the EU viewpoint. Mixed bilateral agreements traditionally indicate that the contracting parties are, ‘on the on hand’, the EU and its Member States and, ‘on the other hand’, the partner country concerned. That kind of drafting makes clear that the treaty partners’ intention is to apply the treaty in their mutual relations and not in intra-EU relations. As for dispute settlement, traditional bilateral agreements such as association agreements do not contain dispute settlement mechanisms which can be triggered unilaterally by either the partner country or the EU side. They operate on a consensual basis in the framework of the joint bodies under the agreements, permitting unilateral action only in exceptional cases. Bilateral fisheries agreements operate in a similar fashion. Regardless of the interest that the EU has expressed in dispute settlement mechanisms in multilateral contexts, bilateral fisheries agreements and related protocols do not incorporate such mechanisms. A reason may be that the protocols are typically concluded for a limited time (three to five years) and such protocols involve, in essence, an exchange of access to fishing waters against payment of compensation. These periodic protocols also permit, for example, a possible excess of quotas to be deducted from the quotas under the subsequent protocol.

A.  New Association Agreements The new association agreements such as those with Ukraine,62 Moldova63 and Georgia64 break away from the earlier tradition in several respects. As regards trade issues, these new agreements contain a robust dispute settlement mechanism, which can be triggered unilaterally by the EU side or the partner country concerned. Such an arbitration procedure is contained, for instance, in Chapter 14 of the EU–Ukraine Association Agreement. The trade part of the Agreement also contains special procedures, including conciliation for urgent energy disputes. In contrast, the non-trade parts are based on the premise that disputes can be resolved within the framework of the Association Council. Yet, the Agreement establishes a monitoring mechanism which is also applicable to non-trade matters. In fact, these new agreements also incorporate large portions of EU secondary legislation in non-trade parts which need to be implemented by the treaty partner. Moreover, Article 475 of the EU–Ukraine Association Agreement foresees assessments of approximation of Ukrainian law to EU law and on-the-spot missions. 62 

[2014] OJ L161/3. [2014] OJ L260/4. 64  [2014] OJ L261/4. 63 

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The EU–Ukraine Agreement also regulates the relationship with the WTO. It provides that the dispute settlement provisions are without prejudice to any action in the WTO. However, it specifies inter alia that proceedings concerning the same measure cannot be brought in the other forum until the first proceeding has been concluded (Article 324). These bilateral agreements also contain other interesting features, for instance the way in which the agreement is linked to EU law and the role that is given to the ECJ in interpretation, as mentioned below.

B.  To ‘Connect’ or ‘Disconnect’? Negotiation of international agreements often poses a challenge for the EU over whether or how closely the agreement should be connected with the EU legal system or whether it should be entirely disconnected. In this regard, there is a difference between bilateral and multilateral agreements. The above new association agreements are designed on the basis of a close connection with the EU legal order. This shows, for instance, in the context of dispute resolution relating to ‘regulatory approximation’ relevant to the trade part of the agreement. Article 322 of the EU–Ukraine Agreement provides for a preliminary ruling system with regard to some of the provisions. These include provisions concerning technical barriers, sanitary and phytosanitary measures, or public procurement and competition, all of which otherwise impose obligations defined by a reference to a provision of EU law. Article 322(2) reads as follows: Where a dispute raises a question of interpretation of a provision of EU law referred to in paragraph 1, the arbitration panel shall not decide the question, but request the Court of Justice of the European Union to give a ruling on the question. In such cases, the deadlines applying to the rulings of the arbitration panel shall be suspended until the Court of Justice of the European Union has given its ruling. The ruling of the Court of Justice of the European Union shall be binding on the arbitration panel.65

Such a clause is meant to safeguard the role of the ECJ in ensuring interpretation and application of EU law. This is essential, as the Agreement provides market access to the EU’s single market and thus needs to function in a uniform manner as regards both parties. On the other hand, certain multilateral agreements, especially in the Council of Europe context, contain explicit ‘disconnection clauses’.66 They are aimed to ensure that when the EU Member States participate in multilateral agreements,

65  Similar provisions are also contained in the new Association Agreements with Moldova and Georgia. See Moldova Agreement, Art 403(2) and the Georgia Agreement, Art 267(2). 66  See generally, M Cremona, ‘Disconnection Clauses in EU Law and Practice’ in C Hillion and P Koutrakos (eds), Mixed Agreements Revisited (Oxford, Hart Publishing, 2010) 160–86. The most recent use of a disconnection clause has been in the context of Convention on Mutual Administrative Assistance in Tax Matters, which was developed jointly by the OECD and the Council of Europe in

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the rules of EU law should continue to govern the relations between them and in respect of the EU institutions. At the same time, the treaty relations with third countries need to remain unaffected. However, the use of such clauses has been in decline in recent years, probably due to criticisms that they have faced inter alia for endangering the coherence of a convention. Currently, requests for such clauses are limited to situations where conflict between a convention and EU rules remains a real possibility in practice, and especially when only the Member States are parties to the convention, and it needs to be ensured that EU law prevails in their mutual relations.

V. Conclusion This chapter has brought together examples of situations connected with the phenomenon of fragmentation of law and proliferation of tribunals. It has outlined a series of external and internal constraints as regards the EU and outlined certain means for addressing the concerns connected with their management. The question of access and basic attitude to international courts and tribunals is ultimately a rule of law issue. While not a state, but where it acts on the basis of the competences conferred on it by the Member States, the EU should have unhindered access to international courts and tribunals. It is also unthinkable, given its commitment to rule of law, that the EU could easily dismiss international dispute settlement. This inevitably means that the EU has a positive bent towards international dispute settlement in general. The specific issue of proliferation of tribunals at international law level is perhaps more a practical or policy issue rather than a rule of law matter. Yet, it can be a matter of concern that proliferated tribunals may be receptive to different types of reasoning and that they cannot deal with the underlying dispute as a whole. For example the Atlanto-Scandian Herring case discussed above was brought to arbitration under UNCLOS on a narrow point of good faith cooperation while the trade aspects were left to the WTO dispute settlement. The case was settled before the issues could be addressed by the split jurisdictions. The internal constraints stemming from the EU’s legal order discussed above are of a constitutional nature and set out clear limits and conditions for external action by the EU. Certain matters, especially those concerning the role of the ECJ in the interpretation of the EU Treaties and the autonomy of the EU legal system, are not open for negotiation in international contexts. The provisions of UNCLOS

1988 and amended by Protocol in 2010, which entered into force on 1 June 2011. The new Art 28(2) provides: ‘Notwithstanding paragraph 1, those Parties which are member States of the European Union can apply, in their mutual relations, the possibilities of assistance provided for by the Convention in so far as they allow a wider co-operation than the possibilities offered by the applicable European Union rules.’

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permitting dispute settlement procedures other than those established thereunder, and borne out in the MOX Plant case, were highlighted as an example which gives room for regional dispute settlement while preserving the exclusive role of the ECJ. Bilateral treaties are clearly more manageable as far as inter-systemic legal aspects are concerned. The new association agreements concluded by the EU with Ukraine, Georgia and Moldova are instructive in this respect. In the intra-EU arbitrations established under international treaties the EU law dimension can come into play in different scenarios. The intra-EU BITs are, to a large extent, a heritage from the past and likely to be a transitional phenomenon. The Commission has now turned to infringement actions to persuade the Member States to terminate the intra-EU BITs, as other means have been unsuccessful. It remains to be seen how the ECJ will address the issues, whether in the context of infringement proceedings or preliminary rulings.

4 The European Union’s Contribution to the Law on Standing and Jurisdiction in International Dispute Settlement DANAE AZARIA

I. Introduction The European Union (EU) is an international organisation (IO) and, as such, a subject of international law. It participates in the formation of international law; it bears international obligations and holds rights; it engages international responsibility if it commits an internationally wrongful act pertaining to a breach of its international obligations; and it can invoke the responsibility of other subjects of international law. The invocation of international responsibility is the most usual subject matter of international disputes and is thus a central issue in the context of international dispute settlement. However, the machinery for implementing the international responsibility of IOs or for implementing the responsibility of states by IOs through judicial means is limited in international law. For instance, the International Court of J­ustice (ICJ) can only entertain contentious claims between states,1 and individuals (‘investors’) can initiate proceedings only against states (rather than IOs) in arbitration proceedings under the International Centre for Settlement of Investment Disputes (ICSID).2 This chapter argues that the practice of the EU (undoubtedly owing to its competences) has contributed to the development of international law in relation to international dispute settlement. First, the EU practice has contributed to the development of standing by and against IOs to bring a claim for a breach

1 

Art 34(1), Statute of the International Court of Justice (1945) 39 AJIL Supp 215. 25 and 67, Convention on the Settlement of Investment Disputes Between States and ­Nationals of Other States (done 18 March 1965, entered into force 14 October 1966) 575 UNTS 159. 2 Arts

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of ­international obligations within judicial dispute settlement fora, as well as ­outside such fora by resorting to countermeasures under the law of international ­responsibility. Second, the EU has increasingly participated in a practice pursuant to which some international judicial fora enjoy jurisdiction over disputes between states and an IO. The EU has become party to treaties that provide such jurisdiction, such as the Agreement Establishing the World Trade Organization (the WTO Agreement),3 the United Nations Law of the Sea Convention (LOSC)4 and the Energy Charter Treaty (ECT).5 In international law, standing is the cause of action upon which a claim is based. It arises from ‘(a) the existence of an international obligation owed to another subject of international law or a group of subjects of international law; and (b) the conduct which has allegedly breached that obligation’.6 In international courts and tribunals, standing is a matter of admissibility. It arises as an objection against the claim brought by the claimant and challenges whether the claimant has a legal interest to bring the claim. By contrast, despite the fact that a claimant may have standing to make a claim, the judicial/quasi-judicial body may lack jurisdiction. Jurisdiction, which may also arise as an objection, is a challenge to the competence of the judicial body to which a claim has been brought.7 While legal standing needs to be established irrespective of whether the dispute is brought within a judicial and quasi-judicial forum, jurisdiction is relevant mainly in the context of judicial and quasi-judicial fora. The following analysis begins by looking at the contribution of the EU to the law on legal standing within and outside international dispute settlement fora, and then discusses its contribution to the law on standing and jurisdiction within international judicial and quasi-judicial fora.

3  Marrakesh Agreement establishing the World Trade Organization (with final act, annexes, and protocol) (concluded on 15 April 1994, entered into force 1 January 1995) 1867 UNTS 3. 4  United Nations Convention on the Law of the Sea (done 10 December 1982, entered into force 16 November 1994) 1833 UNTS 3. 5  The Energy Charter Treaty (with annexes) (done 17 December 1994, entered into force 16 April 1998) 2080 UNTS 95, as amended by the Final Act of the International Conference and Decision by the Energy Charter Conference in respect of the Amendment to the Trade-Related Provisions of the Energy Charter Treaty, Annex 1 (adopted on 24 April 1998, entered into force 21 January 2010) in The Energy Charter Treaty and Related Documents, 2004. 6  J Crawford and A Pellet, ‘Anglo Saxon and Continental Approaches to Pleading before the ICJ’ [‘Aspects des Modes Continentaux et Anglo-saxons de Plaidoiries devant la C I J’] in I Buffard, J Crawford, A Pellet and S Wittich (eds), International Law between Universalism and Fragmentation: Festschrift in Honour of Gerhard Hafner (Leiden, Nijhoff, 2008) 831–67 at 850–51. cf Pellet adds a third element: that the dispute is susceptible to judicial proceedings: ibid 848. However, this is not established in the case law or literature. See also I Brownlie, ‘Causes of Action in the Law of Nations’ (1979) 50 British Yearbook of International Law 13–41. 7 On the distinction between jurisdiction and admissibility: Hochtief AG v the Argentine Republic, ICSID Case no ARB/07/31, Decision on Jurisdiction, 24 October 2011: https://icsid. worldbank.org/ICSID/FrontServlet?requestType=CasesRH&actionVal=showDoc&docId=DC2351_ En&caseId=C260, paras 90–96; Giovanni Alemanni et al v the Argentine Republic, ICSID Case no ARB/07/8, Decision on Jurisdiction and Admissibility, 17 November 2014, http://italaw.com/sites/ default/files/case-documents/italaw4061.pdf, paras 257–60.

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II.  Standing under Customary International Law Under the Articles on the Responsibility of States for Internationally Wrongful Acts (ASR),8 which reflect the state of customary international law on this point, and whose approach has also mutatis mutandis been transposed in the Articles on the Responsibility of International Organizations for Internationally Wrongful Acts (ARIO),9 injured states and/or international organisations may claim cessation, assurances and guarantees of non-repetition of the internationally wrongful act, and reparation (ASR Article 42; ARIO 43). In contrast, states and/or international organisations other than an injured state and/or international organisation may only claim cessation and assurances of non-repetition of the wrongful act (ASR Article 48; ARIO 49(4)(b)). According to the ASR and ARIO, they may also claim reparation in the interest of the injured state/international organisation or of the beneficiaries of the obligation breached. However, this does not reflect lex lata.10 The distinction between injured subjects and subjects other than the injured subject is predicated on the classification of primary international obligations as bilateral, interdependent and erga omnes (partes).11 Bilateral obligations are either grounded in bilateral norms, such as bilateral treaties; or are found in multilateral norms, such as treaties or general custom, but translate into bundles of bilateralisable relationships between states; in the latter case they may be called ‘bilateralisable obligations’.12 Interdependent and erga omnes (partes) obligations are collectively owed obligations, but are very different. Erga omnes obligations are owed indivisibly and collectively among all international subjects,

8  Text of the draft articles on the responsibility of states for internationally wrongful acts, Report of the Commission to the General Assembly on the work of its 53rd session, Yearbook of the International Law Commission, 2001, Vol II, 26–30. 9 Text of the draft articles on the responsibility of international organizations, Report of the ­International Law Commission, 63rd session (26 April–3 June and 4 July–12 August 2011), General Assembly, Official Records, 66th session, Supplement No 10 (A/66/10), 52–66. 10  Text of the draft articles on responsibility of States for internationally wrongful acts with commentaries thereto, Report of the Commission to the General Assembly on the work of its 53rd session (n 8), Vol II 31–143 at 127, para 12. The Commentary to the ARIO does not explicitly clarify that Art 49(4)(b) is a progressive development, as did the Commentary to the ASR. Text of the draft articles with commentaries thereto, Report of the International Law Commission, 63rd session (n 9), General Assembly, Official Records, 66th session, Supplement No 10 (A/66/10) (n 9), 67–170, at 77–81. ­However, the Commentary to ARIO cross-refers to the ASR, which may allow the argument that this provision has been included as a progressive development of the law. ibid 78, para 1. 11  For explanation of the types of international obligations: L-A Sicilianos, ‘The Classification of Obligations and the Multilateral Dimension of the Relations of International Responsibility’ (2002) 13 European Journal of International Law 1127–45. 12 D Azaria, Treaties on Transit of Energy via Pipelines and Countermeasures (Oxford, Oxford ­University Press, 2015) 103–04; Sicilianos, ibid 1133–34. On bilateral obligations found in multilateral treaties, see B Simma, ‘Bilateralism and Community Interest in the Law of State Responsibility’ in Y Dinstein (ed), International Law at a Time of Perplexity (Dordrecht, Martinus Nijhoff, 1989) 821–44 at 822–23.

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while erga omnes partes obligations are owed indivisibly and collectively among a group of subjects.13 These obligations transcend reciprocity and set standards. By contrast, interdependent obligations are indivisibly and collectively owed but are fundamentally characterised by global reciprocity. All parties have to perform for any of them to perform.14 For the purpose of the ASR and ARIO, invocation of international ­responsibility involves claims of ‘relative formality’, such as recourse to a method of dispute ­settlement or unilateral countermeasures against the responsible subject. Mere protests are not a means of invoking international responsibility.15 Given that countermeasures are the default means of invoking r­esponsibility in the absence of special mandatory means for settling the dispute between the parties, the following analysis first examines countermeasures. Judicial (and quasi-judicial) means of dispute resolution are discussed separately (Section III), as it is in that context that jurisdictional restrictions also appear. The analysis in Section II shows that the practice of the EU has contributed to the development of the law in relation to both of these issues.

A. The Function of Countermeasures and Their Relationship to Dispute Settlement As a means of invoking responsibility, countermeasures are inextricably connected to dispute settlement for a number of reasons. First, resorting (lawfully) to countermeasures presupposes that the party taking the countermeasure has standing to invoke international responsibility. Second, most disputes that end up in judicial (or quasi-judicial) fora involve questions of responsibility. Countermeasures may prompt the responsible state to get involved in the settlement of the dispute (or comply with its obligation to participate in dispute settlement where such an obligation exists). They may thus expedite the resolution of a dispute concerning a violation of international law. However, third, countermeasures involve a significant risk: they are premised on auto-determination. The subject resorting to them unilaterally determines whether there has been a prior internationally wrongful act. This can lead to wrongful conduct by the subject resorting to such measures. They may thus aggravate a dispute and compromise its resolution. The following

13  Usually created by treaty and binding on treaty parties. For instance, Questions relating to the Obligation to Prosecute or Extradite (Belgium v Senegal), Judgment, ICJ Reports 2012, 422, para 66. 14  In relation to classification of treaties of this nature: Special Rapporteur Fitzmaurice, Second Report on the Law of Treaties, A/CN.4/107, Yearbook of the International Law Commission, 1957, Vol II, 53, para 120; 54, para 126; Special Rapporteur F ­ itzmaurice, Third Report on the Law of Treaties, A/CN.4/115, Yearbook of the International Law ­Commission, 1958, Vol II, 44, para 91. Azaria (n 12) 109. 15  Text of the draft articles on responsibility of States for internationally wrongful acts with commentaries thereto, Report of the Commission to the General Assembly on the work of its 53rd session (n 8) Vol II, 31–143, at 117, para 2.

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analysis first touches on the function of countermeasures and second examines the relationship between countermeasures and dispute settlement.

i.  The Function of Countermeasures Countermeasures represent a means of self-help aimed at providing the injured subject with the means to satisfy its claim in the context of a decentralised system of enforcement. Under the law of international responsibility countermeasures have a double function. First, they are a means of implementing international responsibility. They are unilateral measures taken against the responsible subject in response to a prior breach of an international obligation owed to the subject taking the countermeasure. They are intended to induce the responsible subject to comply with its obligation to cease the internationally wrongful act and to make reparation. Second, at the same time, countermeasures are circumstances that preclude wrongfulness. Countermeasures are wrongful acts themselves. But the wrongfulness that they entail is precluded owing to the prior violation of international law to which they are responding. Countermeasures are different from retorsion,16 and from treaty law responses to treaty breaches.17 They also differ from sanctions. ‘While countermeasures are acts that would per se be unlawful, sanctions are lawful measures that an ­international organization may take against its members according to the rules of the ­organization.’18 By contrast, responses (that pertain to the suspension of performance of international obligations) taken by an international organisation against a responsible state that is not a member of that organisation are countermeasures against a responsible state, not a sanction.19

16  Retorsion does not involve a breach of an international obligation but only an unfriendly act. P Reuter, Droit International Public (Presse Universitaire de France, 1976) 399–400; E Zoller, Peacetime Unilateral Remedies: An Analysis of Countermeasures (Transnational Publishers, 1984) 5–9, 43–44. 17  Countermeasures involve the suspension of performance of any obligation owed to the responsible state, and are aimed at inducing the latter to comply with its obligations, while treaty law responses can only be taken in the form of suspending the treaty’s operation in response to a material breach of the same treaty and they purport to rebalance the treaty relationship that was de-stabilised by the material breach. For distinction between the law of treaties and the law of state responsibility in this respect: Gabčvkovo-Nagymaros Project (Hungary/Slovakia), Judgment of 25 September 1997, ICJ Reports 1997, 7, para 47; Separate Opinion of Judge Simma, Application of the Interim Accord of 13 September 1995 (the former Yugoslav Republic of Macedonia v Greece), ICJ Reports 2011, 695 at 704, para 20; B Simma and C Tams, ‘Article 60’ in O Corten and P Klein (eds), The Vienna Conventions on the Law of Treaties (Oxford University Press, 2011) 1351–78, at 1376–77. 18  Special Rapporteur Gaja, Seventh Report on Responsibility of International Oranizations, 27 March 2009, A/CN.4/610, para 111. 19  L-A Sicilianos, ‘Sanctions Insitutionelles et Contre-Mesures: Tendances Récentes’ in L Picchio Forlati and L-A Sicilianos (eds), Les Sanctions Économiques en Droit International/Economic Sanctions in International Law (Leiden, Nijhoff, 2004) 3–98 at 19. For other differences see Sicilianos, ibid, 17–25; J Crawford, ‘The Relationship Between Sanctions and Countermeasures’ in V Gowlland-Debbas (ed), United Nations Sanctions and International Law (Alphen aan den Rijn, Kluwer Law International, 2001) 57–68.

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ii. The Relationship between Countermeasures and International Dispute Settlement In their adopted form, the ASR include a number of provisions concerning the relationship between countermeasures and dispute settlement. First, the ­subject taking countermeasures is not relieved from fulfilling its obligation under any dispute settlement procedure applicable between it and the responsible state (ASR Article 50(2)). Second, before taking countermeasures the injured subject is obliged to call upon the responsible subject to fulfil its secondary obligations and to notify it of its decision to take countermeasures and offer to negotiate (ASR Article 52(1)). Third, ‘countermeasures cannot be taken and if taken must be s­ uspended without undue delay if the internationally wrongful act has ceased and the dispute is pending before a court or tribunal with the authority to make decisions binding on the parties’, as long as the responsible subject implements the dispute settlement procedures in good faith (ASR Article 52(3)–(4)). Fourth, urgent countermeasures may be taken when necessary to preserve the rights of the injured subject, in which case the acting state does not need to notify and offer negotiations (ASR Article 52(2)). Fifth, lex specialis may exclude countermeasures as a means of invoking responsibility (ASR Article 55). While countermeasures may contribute to the willingness of the responsible subject to engage in peaceful settlement,20 it is preferable to use third party determination than resorting to unilateral means of enforcement. The latter are based on auto-determination as to whether an internationally wrongful act has occurred; they inherently involve a risk of wrong determination on this point. As a result, owing to their unilateral nature and the auto-determination on which they are predicated, countermeasures are likely to aggravate the dispute. This may be particularly the case of countermeasures taken by the EU, which are operationalised by EU Member States against the responsible third state. As such, they may have significant consequences on the third state, and may potentially undermine the countermeasures’ proportionality to the injury suffered, which is one the conditions of lawfulness of countermeasures (ASR Article 51). However, the ASR (and arguably customary international law) do not include a rule that requires that there is recourse to third party dispute settlement before resorting to ­countermeasures. This matter remains open to debate and subject to the determination of lex specialis.21

20 Case concerning the Air Service Agreement of 27 March 1946 between the United States of ­America and France, RIAA, Vol XVIII, 417–93 (9 December 1978), paras 94–95; K Zemanek, ‘The Unilateral Enforcement of International Obligations’ (1987) 47 Zeitschrift für ausländisches öffentliches Recht und Völkerrecht 32, 37. 21  First, it has been argued that countermeasures are excluded when there are treaty means for the peaceful settlement of a dispute, and so countermeasures are available only if treaty means have been exhausted but have not effectively functioned. DW Bowett, ‘Reprisals Involving Recourse to Armed Force’ (1972) 66 American Journal of International Law 11; B Simma, ‘Counter-Measures and Dispute Settlement: A Plea for a Different Balance’ (1994) 5 European Journal of International Law 102–05;

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B.  The EU Practice of Resorting to Countermeasures The EU has resorted to countermeasures in numerous instances. This section begins with its more recent practice and then summarises briefly its earlier practice. It illustrates the implications of countermeasures for international dispute settlement and how they EU has addressed these implications when invoking responsibility for the breach of collectively owed obligations (erga omnes or erga omnes partes). Under international law, when breaches of erga omnes (partes) obligations occur, specially affected subjects are injured, and can resort to countermeasures (ASR Articles 42 and 49; ARIO Articles 43 and 51). In 2001, the ILC, in the ASR, considered that the practice of ‘third party countermeasures’ was embryonic.22 The ASR and ARIO include ‘a saving clause which … leaves the resolution of the [question whether there is a customary right of states other than an injured state to resort to countermeasures] to the further development of international law’23 (ASR Article 54; ARIO Article 57). The question about the availability and lawfulness of ‘third party countermeasures’ is not new. The academic literature has resorted to de lege ferenda ­arguments.24 On the other hand, a number of authors since the adoption of the ASR in 2001 have argued that the practice of ‘third party countermeasures’ is not scarce, and that the law on state responsibility permits ‘third party countermeasures’.25 Some authors have suggested that state practice before the adoption of ASR was substantial and sufficient for the emergence of a rule of customary international law that allows countermeasures by states and IOs other than the injured state.26 ILC members who supported this position without taking a view on whether this is positive law: ­Economides, ILCYB 2001-I, 115, para 7; Montaz, ILCYB 2001-I, 116, para 14. Second, it has been ­maintained that countermeasures are not ipso facto affected by the existence of clauses for the peaceful settlement of disputes, but there are instances where countermeasures are prohibited. Case concerning the Air Service Agreement of 27 March 1946 between the United States of America and France, RIAA, Vol XVIII, pp 417–493 (9 December 1978); For ILC members endorsing this position as being one of positive law: ­Rosenstock, ILCYB 2001-I, 16, paras 51 and 54–55, para 29; Tomka, ILCYB 2001-I, 54, paras 24 and 117, para 27; Rao, ILCYB 2001-I, 57, para 42. 22  Text of the draft arts on responsibility of States for internationally wrongful acts with commentaries thereto, Report of the Commission to the General Assembly on the work of its 53rd session (n 8) Vol II, 31–143 at 137, para 3. 23  ibid at 129 para 8; 137, para 3; 139, paras 6–7; Text of the draft arts with commentaries thereto, Report of the International Law Commission, 63rd session (n 9), General Assembly, Official Records, 66th session, Supplement No 10 (A/66/10) (n 9) 67–170 at 154, paras 1 to 155, para 2. 24  M Akehurst, ‘Reprisals by Third States’ (1970) 44 British Yearbook of International Law 1–18; M Koskenniemi, ‘Solidarity Measures: State Responsibility as a New International Order?’ (2001) 72 British Yearbook of International Law 337–56. 25  Sicilianos argues that there is abundant practice of countermeasures taken by states other than the injured state. L-A Sicilianos, ‘Countermeasures in Response to Grave Violations of Obligations owed to the International Community’ in J Crawford, A Pellet and S Olleson (eds), The Law of I­ nternational Responsibility (Oxford, Oxford University Press, 2010) 1137–48, at 90–91 and 208–25. 26  Sicilianos, ibid 1137–48, 1146–48.

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This discussion does not address the question of the lawfulness of the measures taken by the EU. Rather, it illustrates that the practice of the EU has been and continues to be instrumental in shaping the law of implementing international responsibility for breaches of erga omnes obligations.

i.  EU/Faroe Islands Dispute The dispute between the EU and the Faroe Islands concerning the Total ­Allowable Catch (TAC) for the Atlanto-Scandian herring stock illustrates the widespread practice of the EU in respect of law-making with third states and other actors, and demonstrates the variety of disputes that the EU can be and has been involved in view of its competences. The dispute also demonstrates the EU’s caution in ­determining its measures as responses under the law of international­ responsibility. A particular element of this case is the peculiar status of the Faroe Islands under international law. The Faroe Islands are a self-governing territory within Denmark, but not a state.27 While Denmark is a member of the EU, the founding treaties of the Union do not apply to the Faroe Islands by express provision in the Treaty on the Functioning of the European Union (TFEU).28 Although it cannot be argued that the Faroe Islands have a general capacity to conclude international agreements with subjects of international law, they have in practice concluded such agreements. More specifically, in 2007, the Faroe Islands, Russia, Iceland, Norway and the EU agreed on an annual TAC for the Atlanto-Scandian herring stock.29 For the purpose of this agreement, the Faroe Islands are party to it.30 The 2007 Agreed Record of Conclusions of Fisheries Consultations on the ­Management of the Norwegian Spring-Spawning (Atlanto-Scandian) Herring Stock in the North-East Atlantic included an agreement on an annual TAC for the Atlanto-Scandian herring stock.31 The agreement also provided that in s­ ubsequent years the parties would restrict their fishing on the basis of a TAC c­onsistent

27  Albeit it could be argued that they are entities proximate to a state, for which Denmark exercises international relations. J Crawford, The Creation of States in International Law 2nd edn (Oxford, Oxford University Press, 2006) 739. 28  See, Treaty of Lisbon amending the Treaty on European Union and the Treaty establishing the European Community [2007] OJ C 306. According to Art 355(5)(a) TFEU ‘the Treaties shall not apply to the Faroe Islands’. 29  Agreed Record of Conclusions of Fisheries Consultations on the Management of the Norwegian Spring-Spawning (Atlanto-Scandian) Herring Stock in the North-East Atlantic for 2007, 18 January 2007. Available at: www.fisk.fo/media/3618/190107_norðhavssildin_2007.pdf. 30 Such international agreements are not treaties within the meaning of Art 2(1)(a) of the Vienna Convention on the Law of Treaties (23 May 1969, entered into force on 27 January 1980) 1155 UNTS 331, or the Vienna Convention on the Law of Treaties between States and International Organizations or between International Organizations (21 March 1986, not yet in force) Doc A/CONF.129/15, reproduced in 25 ILM 543. There is no evidence in the 2007 Agreement itself or the subsequent conduct of the parties to it that the latter was not an agreement governed by international law. The subject matter itself indicates that it is an agreement governed by international law. 31  Above (n 24).

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with a set fishing mortality rate as defined by the International ­Council for the ­Exploration of the Seas (ICES). Moreover, they would revise these m ­ anagement measures jointly on the basis of any advice by ICES.32 In 2013, when the Faroe Islands allegedly unilaterally decided to increase their TAC,33 the European Commission on behalf of the EU unilaterally responded to what it considered a breach of the international agreement on the management of the stock by the Faroe Islands.34 The Commission notif[ied] the Home Government of the Faeroe Islands and the Government of D ­ enmark its intention to identify the Faeroe Islands as a country allowing non-sustainable fishing, indicating the reasons for that identification and describing the possible measures that may be taken pursuant to [Regulation 1026/2012].35

The measures that were to be taken under Regulation 1026/2012 consisted of quantitative import restrictions of ‘fish of any associated species, and fishery products made of or containing such fish, when caught while conducting fisheries on the stock of common interest under the control of [the country identified as a country allowing non-sustainable fishing]’ (Article 4(d), Regulation 1026/2012). These measures were arguably inconsistent with the obligations of the EU under the ­General Agreement on Tariffs and Trade (GATT), and more particularly Article IX.36 The question arises whether the measures were taken as a countermeasure against the allegedly responsible Faroe Islands for a breach of the international agreement to which the EU was party, or whether they were measures ‘relating to the conservation of exhaustible natural resources … made effective in conjunction with restrictions on domestic production or consumption’ falling within the general exceptions of GATT Article XX(g).37 If the measures fell within the ambit of the general exceptions of GATT Article XX, the EU would not have violated its obligation under GATT Article IX. In such a case, the examination of whether the measure was a lawful countermeasure under customary international law would

32  Annex II, paras 2 and 4, ibid. See also reference to these provisions of the agreement in ­Preamble para 3, Commission Implementing Regulation (EU) No 793/2013 of 20 August 2013 establishing measures in respect of the Faeroe Islands to ensure the conservation of the Atlanto-Scandian herring stock. 33  Preamble paras 8–9, 13, Commission Implementing Regulation (EU) No 793/2013 of 20 August 2013 establishing measures in respect of the Faeroe Islands to ensure the conservation of the AtlantoScandian herring stock. 34 ibid. 35  Decision C(2013) 2853 of 17 May 2013. 36  General Agreement on Tariffs and Trade, Annex IA to the Agreement establishing the World Trade Organization (done 15 April 1994, entered into force 1 January 1995) 1867 UNTS 3. 37  The Panels and the AB have generally adopted two steps for the assessment of the lawful use of GATT Article XX by WTO members: first the specific exceptions in the sub-sections of the article have to be met; second, if the first step is satisfied, the requirements of the chapeau have to be met. Appellate Body Report, United States—Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/ AB/R, adopted 6 November 1998, paras 118–19, and 147; Appellate Body Report, China—Measures Related to the Exportation of Various Raw Materials, WT/DS394/AB/R, WT/DS395/AB/R, WT/DS398/ AB/R, adopted 22 February 2012, para 354.

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be unnecessary, because countermeasures themselves constitute an unlawful act (whose wrongfulness is precluded).38 However, the measures may have been taken on the basis of multiple reasons and for different purposes. Their purpose and content, as well as the manner and context in which they have been adopted may assist in d ­ etermining as to whether they are taken for the one or the other reason or for both. First, the stated purpose of the measures according to the Preamble of Regulation 1026/2012 is ‘to encourage that country to contribute to the conservation of that stock’.39 This would allow a countermeasure to be taken by the Union EU against a responsible ‘country’ for a breach of its obligations under LOSC or another fishing management agreement. The Preamble of the Commission Implementing Regulation 793/2013 of 20 August 2013 establishing measures in respect of the Faeroe Islands to ensure the conservation of the Atlanto-Scandian herring stock, which is the instrument specifically introducing measures in this particular case pursuant to Regulation 1026/2012, explicitly links the measures to conservation objectives, and explains the steps that have been taken in order for the measures to meet the requirements of the chapeau of GATT Article XX.40 It also states that the measures ‘relate to the conservation of an exhaustible fish stock and aim at the avoidance of over-exploitation of the stock made effective, since the measures aim to maintain the Atlanto-Scandian herring stock within safe biological limits’.41 Although the purpose of inducing the responsible subject to comply with its obligations to cease the wrongful act might have been present, there is no evidence of this aim in the text and context of Commission Implementing Regulation 793/2013. Second, pursuant to the provisions of Regulation 1026/2012, such measures have to be proportionate (Article 5(c)). The question arises as to how proportionality is to be gauged: if it has been assessed by reference to the injury suffered, it would provide some evidence that the measures were intended to fulfil the requirement of proportionality of countermeasures, under customary international law. Countermeasures shall be proportionate to the injury s­ uffered taking into account the rights in question.42 In contrast, if it is measured by reference to the measure’s purpose of effectively preventing further damage to the sustainability of the herring stock, this would provide evidence that the measure was taken

38  Further analysis on the relationship between treaty exceptions and circumstances precluding wrongfulness under customary international law in general and in relation to the WTO Agreement: Azaria (n 12) 80–88. 39  Para 2, Preamble, Reg (EU) No 1026/2012 of the European Parliament and of the Council of 25 October 2012 on certain measures for the purpose of the conservation of fish stocks in relation to countries allowing non-sustainable fishing. Available at: http://faolex.fao.org/docs/pdf/eur117342.pdf. 40  Paras 23–28, Preamble, Commission Implementing Reg (EU) No 793/2013. 41  Para 27, Preamble, Commission Implementing Reg (EU) No 793/2013. 42  ASR Art 51; Gabčvkovo-Nagymaros Project (Hungary/Slovakia), Judgment of 25 September 1997, ICJ Reports 1997, 7, para 85.

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within the ambit of the exceptions under GATT Article XX(g). But, Regulation 1026/2012 allows for measures to be taken on either of these grounds. According to Article 5(1)(c) of Regulation 1026/2012, the measures have to be proportionate ‘to the objectives pursued and compatible with the obligations imposed by ­international agreements to which the Union is a party and any other relevant norms of international law’. This requirement is sufficiently wide to include both the proportionality required under the chapeau of the general exceptions of GATT Article XX and proportionality required under customary international law for lawful countermeasures. The Preamble of Regulations 1026/2012 indicates both environmental and proportionality considerations (paragraphs 6–10), but also considerations of targeting a third ‘country’ (‘measures adopted against a country’ in paragraphs 8–10). However, paragraphs 25–27 of the Preamble of ­Implementing Regulation 793/2013 (adopted after Regulation 1026/2012) indicates that proportionality was couched in terms of GATT Article XX(g): [T]he Commission examined the compatibility of the measures with international law and concluded that they relate to the conservation of an exhaustible fish stock and aim at the avoidance of over-exploitation of the stock made effective, since the measures aim to maintain the Atlanto-Scandian herring stock within safe biological limits. The measures are made effective in conjunction with the Union’s own conservation measures (Article 5(1)(b) of Regulation (EU) No 1026/2012).

It may be argued that the rationale underlying the EU’s responses to the perceived breach of the 2007 agreement by the Faroe Islands was to meet the requirements of two separate rules: primarily the requirements of the general exceptions under GATT, so as to avoid an inconsistency with GATT/WTO obligations, and supplementarily the requirements of the countermeasures under customary ­ international law, should inconsistency with GATT/WTO obligations nevertheless occurs. In the latter case, the wrongfulness of the EU’s conduct would be precluded should the measures not meet the requirements of the general exceptions under GATT Article XX(g).43 Seen through these lenses, the EU’s conduct prior to adopting Implementing Regulation (EU) No 793/2013 may be compatible with the obligation to offer to the responsible subject an opportunity to negotiate and to request the responsible subject to cease the wrongful act, and to notify that countermeasures will be taken (ASR Article 52(1)).44 When the Faroe Islands responded that they were unwilling to rectify their unilateral measures, the Commission adopted measures that would be ‘effective and proportionate to achieve their conservation objective and should prevent the Faroe Islands to take advantage of the Union

43  For in-depth analysis of the issue: Azaria (n 12) 80–88. These measures could not have been taken under the law of treaties, which would have allowed solely the unilateral suspension of the same agreement’s operation (VCLT Art 60(2)(b)), assuming that such a rule would mutatis mutandis apply to international agreements other than treaties. 44  Preamble para 15, Commission Implementing Reg (EU) No 793/2013.

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markets, ports and facilities to maintain its unsustainable fishery for herring’.45 Furthermore, they could also meet the requirements of proportionality (vis-à-vis the injury suffered by the EU when the Faroe Islands violated their obligations under the 2007 Agreement).46 The measures were repealed eventually in 2014, when the Faroe Islands and the EU reached an agreement,47 after Denmark (on behalf of the Faroe Islands) initiated proceedings against the Union under the WTO Dispute Settlement Understanding (DSU)48 and LOSC.49 Assuming arguendo that this was a countermeasure taken by the EU, the question arises whether the EU was acting as an injured subject or as a subject other than the injured subject, essentially resorting to ‘third party countermeasures’ in the latter case. As explained in section 2.B.ii below, there is some doubt as to whether third party countermeasures are permitted under customary international law. The question can only be answered by interpreting the primary rule; in this case, the obligation allegedly breached by the Faroe Islands concerning TAC. If the obligations concerning TAC in fisheries agreements are seen as obligations relating to management of resource exploitation prescribing that all have to abstain from unilaterally (and at their own rate) exploiting the resource, the obligation is better classified as interdependent. The obligation requires everyone to comply with it in order for everyone else to perform; it is based on a ‘global synallagma’.50 On the other hand, if it is perceived as an obligation concerning the conservation and protection of a natural resource, it is better understood as characterised by a rationale that transcends the individual interests of the subjects, which bear that obligation.51 Although Annex II to the 2007 Agreed Record is entitled ‘Arrangement on the Long-term Management …’, it also states that the parties have agreed

45 

Preamble para 20, ibid. The threshold by which proportionality under GATT Art XX and countermeasures under the law of international responsibility is gauged differs. The latter’s criterion is the injury suffered taking into account the rights in question. ASR Art 51. See discussion in n 37 above. 47  Commission Implementing Reg (EU) No 896/2014 of 18 August 2014 repealing Implementing Reg (EU) No 793/2013 establishing measures in respect of the Faroe Islands to ensure the conservation of the Atlanto-Scandian herring stock. See also: Prime Minister welcomes understanding to resolve dispute on EU’s economic measures, 12 June 2014, www.government.fo/news/news/ prime-minister-welcomes-understanding-to-resolve-dispute-on-eu-s-economic-measures/. 48 Request for Consultations by Denmark in Respect of the Faroe Islands, European Union— Measures on Atlanto-Scandian Herring, 4 November 2013 (terminated on 21 August 2014); Understanding on Rules and Procedures Governing the Settlement of Disputes, Annex 2 to the Agreement establishing the World Trade Organization (done in Marrakesh 15 April 1994, entered into force 1 January 1995) 1869 UNTS 401. 49  Denmark, in respect of the Faroe Islands, initiated arbitration proceedings under Annex VII of LOSC, invoking Arts 287 and 288(1) of LOSC, and Art 1 of Annex VII to LOSC. The dispute concerned the interpretation and application of LOSC Art 63(1) in relation to the shared stock of Atlanto-­ Scandian herring. The proceedings were terminated by Termination Order of 23 September 2014: https://pcacases.com/web/sendAttach/781. 50  Azaria (n 12) 109–10; Sicilianos (n 11) 1127–45. 51  See introduction to section II above. 46 

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to ­implement this arrangement, ‘which is consistent with the precautionary approach, intended to constrain the harvesting within safe biological limits and designed to provide for sustainable fisheries’. This language could be seen as evidence that the obligations therein are intended to protect a resource in an integral manner, rather than putting emphasis on the individual interests of the parties. As such, the alleged countermeasure would be taken for a breach of an erga omnes partes obligation. The EU’s standing in that case would either be that of a subject other than the injured subject (in this situation it is unlikely that there was an injured subject) or as an injured subject to the extent that it could be shown that the EU was specially affected (by comparison to the other parties to the arrangement). This dispute adds to the EU practice concerning standing to invoke responsibility for a breach of erga omnes partes obligations. But, it also illustrates the difficulty of identifying whether a measure has been taken in response to a perceived non-compliance, or with a view to protecting environmental values or natural resources concerns, especially in the context of obligations that have to do specifically with the management and conservation of natural resources. This may be driven by a reluctance to raise the question as to the relationship between countermeasures, as circumstances precluding wrongfulness, and the WTO Agreement. This may be because should the matter appear before a WTO Panel and the Appellate Body they may be inclined to take the approach of lex specialis to the exclusion of countermeasures in the form of suspending compliance with WTO obligations.52 It is also possible that given the lack of clarity as to whether ‘third party countermeasures’ are available to subjects other than the injured ­subject, the EU had an additional reason for being reluctant to suggest that it was taking countermeasures against the Faroe Islands. Furthermore, this dispute demonstrates first that countermeasures may escalate an existing dispute, notwithstanding the fact that this is not their intended purpose,53 and second that they come with a risk of auto-determination. In the context of this dispute, the EU was the respondent in WTO procedures for alleged violations of its obligations in the form of the measures taken against the Faroe Islands’ conduct. Against this background, the need for and importance of third party dispute settlement is highlighted, because it may objectively determine the law, and as demonstrated in this case, it may work as a deterrent for unilateral action by both parties to the dispute and as an incentive for both sides to reach an agreement.

52 

Azaria (n 12) 80–88. For the risk of aggravating the dispute and the relationship between countermeasures and dispute settlement, see Azaria (n 12) 163–66. The objective of countermeasures is to induce the responsible subject to comply with its obligation to cease the wrongful conduct and to make reparation. See Art 49, Text of the draft articles on the responsibility of states for internationally wrongful acts, Report of the Commission to the General Assembly on the work of its 53rd session (n 8) Vol II, 26–30. 53 

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The following section examines the EU contribution to standing for implementing responsibility for breach of erga omnes (partes) obligations.

ii. The EU’s Countermeasures against Russia for its Wrongful Conduct in Crimea The most recent example is the EU countermeasures against Russia for the latter’s prohibited use of force in 2014. Russia used force against Ukraine and subsequently annexed parts of the territory of Ukraine in breach of international law.54 The obligation not to use force is an obligation erga omnes.55 As from March 2014, the EU adopted a series of measures against Russia.56 ­Initially the measures taken involved the freezing of assets and visa bans imposed on individuals and entities.57 Later, the measures were intensified, including export restrictions on dual-use goods and equipment, and also imposing restrictions on services, and restrictions on the sale, supply, transfer or export, directly or indirectly, of certain technologies for the oil industry in Russia through the form of a prior authorisation requirement.58 In September 2014, the EU prohibited the provision of services for deep-water oil exploration and production, arctic oil exploration and production or shale oil projects. In addition, legal/natural persons may not directly or indirectly purchase, sell, provide investment services for or assist in the issuance of, or otherwise deal with transferable securities by a number of Russian energy companies.59

54  JA Green, ‘The Annexation of Crimea: Russia, Passportisation and the Protection of National Revisited’ (2014) 1 Journal on the Use of Force and International Law 3, 5; T Christakis, ‘Les conflits de la sécession en Crimée et dans l’est de l’Ukraine et le droit international’ (2014) 141 Journal du droit international 733, 750. 55  Dissenting Opinion of Judge Schwebel, Military and Paramilitary Activities in and against N ­ icaragua (Nicaragua v United States of America), Provisional Measures, Order of 10 May 1984, ICJ Reports 1984, 169 at 198. For the more narrow category of aggression: Barcelona Traction, Light and Power Company, Limited, Second Phase, Judgment of 5 February 1970, ICJ Reports 1970, 3 at 32, paras 33–34. 56  Council Decision 2014/145/CFSP of 17 March 2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine; Council Decision 2014/512/CFSP of 31 July 2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine; Council Reg (EU) No 833/2014 of 31 July 2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine; Council Reg (EU) No 960/2014 of 8 September 2014 amending Reg (EU) No 833/2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine; Council Reg (EU) No 1290/2014 of 4 December 2014 amending Reg (EU) No 833/2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine, and amending Reg (EU) No 960/2014 amending Reg (EU) No 833/2014. 57  Council Decision 2014/145/CFSP of 17 March 2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine. 58  Council Decision 2014/512/CFSP of 31 July 2014 concerning restrictive measures in view of ­Russia’s actions destabilising the situation in Ukraine. 59  Art 5, Council Reg (EU) No 960/2014 of 8 September 2014 amending Reg (EU) No 833/2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine.

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These measures constituted prima facie violations of the WTO Agreement (GATT) and the General Agreement on Trade in Services (GATS))60 to which both the EU and Russia are parties.61 For instance, export restrictions on technology in the energy sector would arguably be incompatible with the obligation not to quantitatively restrict exports (under GATT Article XI), while a prohibition on brokering services may arguably be incompatible with GATS Article II.62 If the measures of the EU fall within the ambit of GATT Article XXI(b)(iii) or GATS Article XIV bis respectively, they are not prohibited and are lawful. Although what constitutes ‘essential security interests’ within the meaning of GATT Article XXI(b)(iii) or GATS Article XIV bis is a ‘self-judging’ matter,63 measures taken under this provision are subject to the jurisdiction of the WTO DSU Panels and Appellate Body. WTO members are at least obliged to furnish good faith evidence that they are protecting their own essential security interests and the necessity of the measures can also be reviewed.64 Given that the prohibition of the use of force constitutes a collective obligation owed to everyone (erga omnes), the EU, as a subject other than the injured state, primarily adopts these measures for the protection of the common interest of the international community. It could be argued that the measures of the EU are not taken for the protection of ‘its essential security interests’ and the measures go beyond the threshold of GATT Article XXI(b)(iii) and GATS Article XIV bis. On the other hand, under the law of international responsibility such measures would be taken on the basis of standing for the breach of an erga omnes obligation, which is separate and different from the threshold required within the meaning of GATT Article XXI and GATS Article XIV bis. While state responsibility is formed of secondary rules, GATT Article XXI and GATS Article XIV bis are part of the primary rules.65

60  General Agreement on Trade in Services, Annex IB to the Agreement establishing the World Trade Organization (done 15 April 1994, entered into force 1 January 1995) 1869 UNTS 185. 61 Russia acceded to the WTO Agreement on 22 August 2012. WTO Ministerial Council ­Decision of 16 December 2011 (with Annex on the Accession Protocol of the Russian Federation), WT/MIN(11)/24WT/L/839, 17 December 2011. 62  Art 5, Council Reg (EU) No 833/2014 of 31 July 2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine. 63  No WTO case law as yet exists on security exceptions. Literature on GATT Art XXI: D Akande and S Williams, ‘International Adjudication on National Security Issues: What Role for the WTO?’ (2002–03) 43 Virginia Journal of International Law 365; HL Schloemann and S Ohlhoff, ‘“Constitutionalization” and Dispute Settlement in the WTO: National Security as an Issue of Competence’ (1999) 93 American Journal of International Law 424; RE Browne, ‘Notes, Revisiting “National Security” in an Interdependent World: The GATT Article XXI Defense After Helms-Burton’ (1997–98) 86 Georgetown Law Journal 405; MJ Hahn, ‘Vital Interests and the law of GATT: An Analysis of GATT’s Security ­Exception’ (1990–91) 12 Michigan Journal of International Law 558–620. 64  Akande and Williams, ibid 389–90. 65  These issue brings to the fore the question as to the relationship between security exceptions in GATT and GATS and countermeasures, as circumstances precluding wrongfulness, under the law of international responsibility. For instance, the wording ‘[n]othing in [GATT] shall be construed to prevent any contracting party from taking any action … for the protection of its essential security interests taken in time of … other emergency in international relations’ in GATT Art XXI(b)(iii) overlaps with a situation addressed by countermeasures under the law of international responsibility. Dissenting

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Given that these are two different issues, the threshold of GATT Article XXI and GATS Article XIV bis cannot be replaced by the requirements under the law of international responsibility. The fact that under the law of international ­responsibility third party countermeasures by the EU would have been taken to protect an interest beyond the EU’s individual interests does not mean that the same interest would fall within the scope of the term ‘its essential security interests’ in GATT Article XXI and GATS Article XIV bis. If this were the case, the measures would not be unlawful under GATT or GATS to the extent that they were permitted under the security exceptions. As a result, they would constitute retorsion in response to an internationally wrongful act. If the EU’s measures against Russia do not fall in the scope of the security exceptions in the WTO covered Agreements (such as GATT Article XXI(b)(iii)), their wrongfulness would be precluded as ‘third party countermeasures’ under customary international law. If this is so, there is no evidence in the practice of states— members and non-members of the EU—that the measures of the EU are unlawful. The United States took similar measures against Russia for similar reasons.66 The practice of the EU (and its member states) may suggest a tacit acknowledgment that third party countermeasures are permitted.

iii.  Other Examples of EU Practice Other examples of countermeasures taken by EU Member States for breaches of erga omnes obligations were the freezing of funds and assets of the Federal R ­ epublic of Yugoslavia and the Serbian Government in 1998 contrary to i­nternational ­obligations.67 Moreover, a flight ban was imposed, which at least for France and the UK was contrary to their international obligations under bilateral aviation treaties with Yugoslavia.68 opinion of Judge Sir Robert Jennings, Military and Paramilitary Activities in and against Nicaragua, ­Merits, Judgment of 27 June 1986, ICJ Reports 1986, 528 at 541; OY Elagab, The Legality of Non-­ Forcible Counter-Measures in International Law (Oxford, Oxford University Press, 1988) 186. However, there is no evidence that the WTO Agreement and its annexes derogate (as lex specialis) from circumstances precluding wrongfulness in general, and from countermeasures in particular. The wording in this provision suggests that it delineates the obligations under the GATT. No GATT or WTO case law, nor practice of WTO members or supplementary means of interpretation of the GATT suggest that GATT Art XXI deviates from circumstances precluding wrongfulness under customary international law. See detailed analysis of GATT and WTO case law, as well as practice of WTO members concerning this issue in Azaria (n 12) 80–88. In fact, while detailed rules concerning unilateral ‘countermeasures’ were introduced in the DSU as a means of implementing responsibility for breaches of WTO obligations (besides for non-violation claims), there is no provision about circumstances precluding ­wrongfulness, despite the fact that the issue of the relationship between countermeasures under custom and the GATT had arisen in the pre-WTO era. Azaria (n 12) 86–87. 66  US measures: Executive Order 13660—Blocking Property of Certain Persons Contributing to the Situation in Ukraine, 6 March 2014: www.gpo.gov/fdsys/pkg/FR-2014-03-10/pdf/2014-05323.pdf; and subsequently on 12 September 2014: www.treasury.gov/press-center/press-releases/Pages/jl2629.aspx. 67  Common Position of 7 May 1998 defined by the Council on the basis of Art J.2 of the Treaty on European Union concerning the freezing of funds held abroad by the Federal Republic of Yugoslavia (FRY) and Serbian Governments (98/326/CFSP), OJ L 143/1. 68  For details see CJ Tams, Enforcing Obligations Erga Omnes in International Law (Cambridge, Cambridge University Press, 2005) 223.

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In recent years, EU responses to breaches of erga omnes obligations, such as the prohibition of aggression, or grave human rights violations, have taken a more targeted form: they involve asset freezes and travel bans that target specific individuals involved in such breaches.69 Examples include the measures imposed on the members of the Zimbabwean Government (2005),70 and in relation to Crimea (2014).71 In relation to these types of responses the question arises as to their compliance with two conditions of lawfulness of countermeasures under custom. First, countermeasures have to be targeted against the responsible state (ASR Article 49(1)). Although it could be argued that such measures are not targeted against the responsible state, but rather against individuals, the conduct targets nationals of the target state. Its form may directly affect individuals, but they are targeted owing to their link with the responsible state and in response to the wrongful act of that state. Second, countermeasures shall not affect fundamental human rights obligations (ASR Article 50(1)(b)).72 Usually countermeasures of the type adopted in this case affect individuals who are located outside the territory of the EU, and a number of questions may arise about whether the EU (as opposed to Member States) is bound by customary human rights obligations; which human rights obligations cannot be affected (given that the rule refers to ‘fundamental human rights obligations’); whether such human rights obligations apply, as part of the rule on countermeasures, or whether there is no exercise of ‘jurisdiction’ over the individuals in question, given that they are located outside the territory of EU Member States where the EU founding treaties apply, and thus such obligations do not apply and thus do not limit the conduct of the EU taking such countermeasures.73

69  Owing to the limitation in the extraterritorial application of human rights obligations, such as the right to property (assuming that it is a fundamental human right within the meaning of the customary rule on countermeasures; in relation to this issue, see Azaria (n 12) 234–36), it may be difficult to establish that such countermeasures affect the fundamental human rights obligations of the EU (under customary international law, as the EU is not party to the ECHR or other human rights treaties that protect such a right). For extraterritorial application of human rights obligations, M Milanovic, Extraterritorial Application of Human Rights Treaties: Law, Principles, and Policy (Oxford, Oxford ­University Press, 2011). 70 Council Common Position of 18 February 2002 concerning restrictive measures against ­Zimbabwe (2002/145/CFSP), OJ L 50/1. 71  Art 2, Council Decision 2014/145/CFSP of 17 March 2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine. 72 For specific discussion in relation to the requirement that countermeasures shall not affect human rights obligations: Azaria (n 12) 232–46. 73  If the countermeasure involves a restriction of assets within EU Member State jurisdiction, such a human right may be affected, and the question then becomes one about whether the right to property is one of the rights not to be affected by countermeasures under the rules of customary international law. See problems surrounding the interpretation of the term ‘fundamental human rights’ in ASR Art 50(1)(b): Azaria (n 12) 234–36). Travel bans could also in certain circumstances violate the right to private life of individuals located outside the territory of the subject taking the countermeasure. See Nada v Switzerland [GC], Judgment (Merits and Just Satisfaction), No 10593/08, 12 September 2012. See point in relation to extraterritoriality scenario in Azaria (n 12) 240.

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iv.  Interim Conclusion The analysis of a number of measures taken by the EU (or its predecessors) or by Member States in the context of the EU framework provides evidence of practice involving suspension of compliance with (trade/economic law) obligations owed to third states who violated erga omnes (partes) obligations. This practice has ­contributed to a trend towards the concretisation of a rule of customary ­international law concerning the lawfulness of ‘third party countermeasures, and has contributed to the law on standing to invoke responsibility for breaches of erga omnes (partes) obligations’.74 Having examined the EU practice in countermeasures against third subjects, the following section examines the practice of third state countermeasures against the EU, as a means of invoking the responsibility of the EU.

C.  The EU as the Subject of Countermeasures The EU can be and has been subject to countermeasures by third states.75 There is no abundant practice in this respect, but this is not specific to the EU. In 2011, the ILC noted the lack of practice of countermeasures against IOs in general—whether in response to breaches of bilateral obligations or collectively owed obligations.76 On 6 August 2014, Russia adopted a ban on agricultural products from the EU, the US, Canada, Australia and Norway, as a result of the implementation of economic responses against Russia in the context of the situation in Ukraine. On 7 August 2014, the Russian government adopted a list of products to be banned for a period of one year.77 The list, which was modified on 20 August 2014, covered specific products over several sectors: fruit and vegetables, dairy products and meat.78 Of the imports that were banned, 73 per cent originated in the EU.

74  International organisations have international legal personality, but special/limited competence. As a result, it can be argued that although they can participate in the formation of custom independently from states (including their Member States) the limited scope of their competences should be taken into account when examining their practice as an element for the formation of rules of customary international law. T Treves, Customary International Law, Max Planck Encyclopedia of Public International Law (Oxford, Oxford University Press, 2006) 171. See also about the distinction between the conduct of the organisation and that of the member states: J Klabbers, ‘International Organizations in the Formation of Customary International Law’ in E Canizzaro and P Palchetti (eds), Customary International Law on the Use of Force (Leiden, Martinus Nijhoff Publishers, 2005) 183. 75  It has not been possible to identify evidence of countermeasures by other IOs against the EU. 76  Text of the draft arts with commentaries thereto, Report of the International Law Commission, 63rd session (n 9), General Assembly, Official Records, 66th session, Supplement No 10 (A/66/10) (n 9), 67–170, at 148, para 4. 77  Resolution of the Government of the Russian Federation No 778 of 7 August 2014 as amended by Resolution No 830 of 20 August 2014. Available at: http://ec.europa.eu/agriculture/russian-import-ban/ pdf/list-of-banned-products-20-08-2014_en.pdf. 78  ПОСТАНОВЛЕНИЕот 20 августа 2014 г. No 830, О внесении изменений в постановление Правительства Российской Федерации от 7 августа 2014 г. No 778. Available at: http://government. ru/media/files/41d4fd237c91ea4213b0.pdf. Informal translation: Resolution of the Government of the ­Russian Federation No 778 of 7 August 2014 as amended by Resolution No 830 of 20 August 2014.Available at: http://ec.europa.eu/agriculture/russian-import-ban/pdf/list-of-banned-products-20-08-2014_en.pdf.

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These measures involved the non-performance of the obligations of Russia under the GATT. Russia allegedly responded to what it considered to be unlawful conduct by the EU in the form of breaching the GATT/GATS (taken in response to Russia’s unlawful conduct against Ukraine).79 Assuming arguendo that the EU measures were wrongful80 and that their wrongfulness was not precluded,81 Russia’s responses were in breach of WTO obligations in response to alleged breaches of the WTO Agreement. Under the WTO Agreement, WTO Russia was obliged not to resort to any unilateral measures outside the WTO in response to alleged violations of the WTO Agreement by other WTO members, but to have recourse only to the WTO DSU.82 Thus its measures are unlikely to be compliant with the WTO Agreement. However, these measures furnish an example where third states have unilaterally invoked the alleged responsibility of the EU by resorting to unilateral self-help.

D.  Interim Conclusion This section demonstrated the EU practice of recourse to countermeasures as an indication of developing standing to bring a claim for breaches of international obligations, and the practice of other states resorting to countermeasures against the EU. It also showed that countermeasures are inextricably connected to dispute settlement, because most disputes that end up in judicial (or quasijudicial) fora involve questions of responsibility; because countermeasures may prompt the responsible state to become involved in the settlement of the dispute (or to comply with its obligation to participate in dispute settlement where such an obligation exists); and because countermeasures may also aggravate disputes and lead to spirals of unilateral responses to wrongfulness, owing to the fact that they involve a unilateral determination as to the lawfulness of the initial conduct complained of.

79 

See s 2.A.iii.b. See analysis in s 2.A.iii.b above. Even assuming that the EU measures did not meet the thresholds required by the security exceptions in GATT Art XXI(b)(iii) and GATS Art XIV bis, those measures were lawful (their wrongfulness was precluded) as ‘third party countermeasures’ against Russia’s prior wrongful act of use of force and annexation in Ukraine. It is possible that Russia would be claiming that customary international law does not permit ‘third party countermeasures’ and thus the wrongfulness of these EU measures is not precluded. 82  Panel Report, United States—Import Measures on Certain Products from the European Communities, WT/DS165/R and Add.1, adopted 10 January 2001, as modified by the Appellate Body Report,WT/ DS165/AB/R, para 6.123 and paras 6.134–6.135; Panel Report, European Communities—Measures Affecting Trade in Commercial Vessels, WT/DS301/R, adopted 20 June 2005, paras 7.196–7.197; Azaria (n 12) 166–72; PC Mavroidis, ‘Remedies in the WTO Legal System: Between a Rock and a Hard Place’ (2000) 11 European Journal of International Law 763; B Simma and D Pulkowski, ‘Of Planets and the Universe: Self-Contained Regimes in International Law’ (2006) 17 European Journal of International Law 483, 523; J Gomula, ‘Responsibility and the World Trade Organization’ in Crawford, Pellet and Olleson (eds) (n 52) 799. 80  81 

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The following section will examine the practice of the EU in developing rules of standing and jurisdiction within the context of treaty-established judicial or quasi-judicial means of dispute resolution.

III.  Jurisdiction and Standing in Judicial and Quasi-Judicial Means of Settlement While standing has to do with the legal interest of the claimant to bring the claim, jurisdiction is about the competence of the court to deal with a ­particular ­dispute.83 The EU has negotiated and become party to treaties that include jurisdiction clauses, which confer power to judicial bodies to deal with disputes between an IO and states, or to apply and interpret treaties between states and IOs. This practice has significantly contributed to the expansion of jurisdiction of (ad hoc and permanent) judicial and quasi-judicial bodies, which traditionally has been restricted to disputes between states.84 Additionally, the treaty practice of the EU has expanded standing to individuals to bring claims against (not only states but also) IOs. The following analysis shows the development of jurisdiction and standing in judicial and quasi-judicial bodies, which have the power to entertain claims by and/or against the EU. The analysis begins with judicial means of settlement between states and IOs under the WTO Agreement and the ECT. Then the bodies that have the power to entertain claims by individuals against the EU are examined: arbitral tribunals under the ECT and the Aarhus Convention Compliance Committee.

A. Judicial and Quasi-judicial Means of Settlement Between the EU and Non-Member States i.  The World Trade Organization a. ‘Jurisdiction’ Given that the international law machinery for the implementation of international responsibility of IOs or the implementation of responsibility of states by IOs through judicial means is limited, the fact that the EU is a particularly active complainant in the WTO DSU procedures is the exception rather than the rule. As at the time of writing (30 June 2016), the EU (formerly the EC) has been the claimant in 96 disputes brought under 1947 GATT and the WTO/DSU.85 83 

On the distinction between jurisdiction and admissibility, see n 7 above. See, for instance, the ICJ Statute and ICSID Convention respectively. 85 The US was the complainant in 107 cases. Information available at: www.wto.org/english/ tratop_e/dispu_e/find_dispu_cases_e.htm#results. 84 

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This practice is coupled with the lack of practice on behalf of EU Member States individually bringing claims against other WTO members.86 From the point of view of standing under the WTO DSU, there is nothing that prevents such an eventuality—albeit an individual complaint by an EU Member State against another WTO member would be prohibited under EU law owing to the exclusive competence of the EU in relation to the common commercial policy. Similarly, in the dispute settlement framework of the GATT, and later the DSU, states have regularly brought complaints against the EU (formerly the European Community) for a breach of the 1947 GATT and later the WTO Agreement. The number of such claims is unprecedented in comparison to claims brought against the EU under other procedures and against other IOs generally. As at the time of writing, the EU has been the respondent in 80 disputes.87 b. Standing In the context of these disputes the EU—as claimant and as respondent—has contributed to the shaping of the (special) rules of standing under the WTO Agreement (as well as the special rules of enforcement under the DSU). The nature of WTO obligations, which determines standing, has been considered by the Panel in European Communities—Regime for the Importation, Sale and Distribution of Bananas (‘EC—Bananas’) and by an Arbitrator in United States— Tax Treatment for ‘Foreign Sales Corporations’ (Recourse to Arbitration under DSU Article 22.6) (‘US—FSC’). The former case dealt with standing as such, while in the latter case the Arbitrator was not examining the issue of standing but the quantitative amount of the countermeasure agreed between the parties to the dispute.88 The EU was respondent in the former, and complainant in the latter.89 In its long-debated Report in EC—Bananas, the Panel found: The United States does produce bananas … Moreover, even if the United States did not have even a potential export interest, its internal market for bananas could be affected

86  The only available cases are those where claims were brought before the accession of the Member State to the EC (now EU). For instance, Request for Consultation by Czech Republic, Hungary— Safeguard Measure on Imports of Steel Products from the Czech Republic, 21 January 1999; Request for Consultation by Hungary, Slovak Republic—Measure Affecting Import Duty on Wheat from Hungary, 19 September 1998, DS143; Request for Consultation by Hungary, Czech Republic—Measure Affecting Import Duty on Wheat from Hungary, DS148; Request for Consultation by Hungary, Romania—Import Prohibition on Wheat and Wheat Flour, 18 October 2001, DS240; Request for Consultation by ­Hungary, Croatia—Measures Affecting Imports of Live Animals and Meat Products, 9 July 2003, DS297; AB Report, Thailand—Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H Beams from Poland, WT/DS122/AB/R, 12 March 2001; Request for Consultations by Poland, Slovak Republic—Safeguard Measure on Imports of Sugar, 11 July 2001, DS235; Request for Consultations by Poland, Czech Republic—Additional Duty on Imports of Pig-Meat from Poland, 16 April 2003, DS289. 87  For the sake of comparison, the US is respondent in 123 cases. Information available at: www.wto. org/english/tratop_e/dispu_e/find_dispu_cases_e.htm#results. 88  Decision of the Arbitrator, United States—Tax Treatment for ‘Foreign Sales Corporations’— recourse to Arbitration by the United States under Art 22.6 of the DSU and Art 4.11 of the SCM Agreement, WT/DS108/ARB, circulated 30 August 2002, para. 6.1. 89  This analysis draws heavily on Azaria (n 12) 126–30.

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by the EC regime and that regime’s effect on world supplies and prices. Indeed, with the increased interdependence of the global economy, which means that actions taken in one country are likely to have significant effects on trade and foreign direct investment flows in others, Members have a greater stake in enforcing WTO rules than in the past since any deviation from the negotiated balance of rights and obligations is more likely than ever to affect them, directly or indirectly. Since the United States is likely to be affected by the EC regime, it would have an interest in a determination of whether the EC regime is inconsistent with the requirements of WTO rules. [A] Member’s potential interest in trade in goods or services and its interest in a determination of rights and obligations under the WTO Agreement are each sufficient to establish a right to pursue a WTO dispute settlement proceeding. Moreover, we note that this result is consistent with decisions of international tribunals.90

The Panel did not expressly uphold that the GATT obligations are either ­bilateralisable, erga omnes partes or interdependent.91 Its reasoning was based on the factual interconnectedness of international markets (‘interdependence of global economy’) and the risk of economic impact, including in the form of supplies and prices, faced by any other WTO member in cases where violations of GATT occur. In support of its findings, the Panel cited the Judgment of the Permanent Court of International Justice (PCIJ) SS Wimbledon,92 as well as the provisionally adopted ILC Draft Articles on State Responsibility (1996), particularly Article 40(e) and (f), which encompass bilateral, interdependent, erga omnes (Article 40(e)) and erga omnes partes obligations (Article 40(f)). By including community interest obligations and without distinguishing among these bases, the Panel opened up the debate about whether GATT obligations are erga omnes partes. However, the fact that it cited the page of the SS Wimbledon judgment where the PCIJ addressed the issue of jurisdiction (and by implication standing), rather than the judgment’s operative part, may offer support to the understanding that rules on standing in the WTO Agreement may be generous and unconnected to the nature of the primary obligations therein. The US—FSC case was a dispute brought by the US against the EU. The arbitration proceedings concerned the quantum of the countermeasures agreed between the US and the EU (for the former’s breach of the Agreement on Subsidies and Countervailing Measures (SCM)).93 The arbitrator found that the prohibition of the subsidy under the SCM Agreement was an erga omnes obligation.94 ­Presumably 90 Panel Reports, European Communities—Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/R/USA, adopted 25 September 1997, as modified by Appellate Body Report, para 7.50. 91  The relevant passage concerning standing is in: Panel Report, European Communities—Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/R/USA, adopted 25 September 1997, as modified by Appellate Body Report, para 7.50. 92  SS Wimbledon, Judgment of 17 August 1923, [1923] PCIJ Ser A, No 1, 11. 93  Annex 1A on Multilateral Agreements on Trade in Goods to the WTO Agreement, Agreement on Subsidies and Countervailing Measures, 1869 UNTS 14. 94  Decision of the Arbitrator, United States—Tax Treatment for ‘Foreign Sales Corporations’— recourse to Arbitration by the United States under Art 22.6 of the DSU and Art 4.11 of the SCM Agreement, WT/DS108/ARB, circulated 30 August 2002, para 6.10.

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the arbitrator meant erga omnes partes given that the obligations are binding only on WTO members. However, the arbitrator substantiated his finding by reference to the effects of the measure in question, rather than the nature of the obligations and the treaty’s object and purpose: ‘once such a measure is in operation, its real world effects cannot be separated from the inherent uncertainty that is created by the very existence of such an export subsidy’.95 While different opinions have been expressed as to the nature of obligations under the WTO Agreement,96 the reasoning in EC—Bananas is based on the factual interconnectedness of international markets (‘interdependence of global economy’) and the risk of economic impact, including in the form of supplies and prices, faced by any other WTO member in cases where violations of GATT occur. It implies that a wide pool of WTO members have standing without necessarily upholding that the obligations are collective. Nor does the reasoning of the Arbitrator in US–FCS suggest a different understanding of the obligations under the SCM Agreement, despite the reference to obligations erga omnes. It is better to understand that special rules on standing under the WTO Agreement, as developed by the WTO case law, are generous (but unconnected to the nature of the primary obligations under the WTO Agreement) and allow any WTO member to bring a claim against another in relation to breaches of the WTO Agreement.97 These cases did not develop rules on standing specifically owing to the special nature of the EU. However, they have been paramount for the WTO dispute settlement system and the EU has contributed to this development by influencing the reasoning of the WTO Panel and Arbitrator in the form of its pleadings as claimant and responded respectively.

ii. The Inter-contracting Party Arbitration under the Energy Charter Treaty The EU is party to the ECT.98 Pursuant to Article 27(2) of the ECT, Contracting Parties may have recourse to ad hoc arbitration (after a period of negotiations)99

95 

ibid para 6.8. Pauwelyn, ‘A Typology of Multilateral Treaty Obligations: Are WTO Obligations Bilateral or Collective in Nature?’ (2003) 14 European Journal of International Law 907; T Gazzini, ‘The Legal Nature of WTO Obligations and the Consequences of their Violation’ (2006) 17 European Journal of International Law 723; C Carmody, ‘WTO Obligations as Collective’ (2006) 17 European Journal of International Law 419. 97  J Crawford, ‘Multilateral Rights and Obligations in International Law’ (2006) 319 Recueil des Cours de l’Académie de Droit International de la Hague 325 at 451. This chapter does not examine complaints for conduct that does not involve the breach of the WTO Agreement. 98  EU Member States are also parties to the ECT. On 30 December 2014, Italy notified its withdrawal from the ECT to the Depository of the ECT (the Government of Portugal) pursuant to ECT Art 47. Pursuant to ECT Art 47(2) the withdrawal took effect upon the expiry of one year after the date of the receipt of the notification by the Depositary, meaning on 1 January 2016, since its notification instrument did not determine a precise date. 99  ECT Art 27(1). 96  JHB

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that will be conducted in accordance with the UNCITRAL Arbitration Rules (ECT Article 27(3)(f)). This arbitral procedure has not been used by the EU or against the EU. As at 30 June 2016, no ECT Contracting Party had used this dispute resolution provision. ­Nevertheless, this arbitration clause is an additional instance of treaty practice that widens the jurisdiction of ad hoc judicial fora which are competent to entertain disputes between an IO (the EU) and a state (another ECT Contracting Party).

B. Rules on Standing of Individuals and Competence of Judicial and Quasi-Judicial Bodies over Claims brought by Individuals against the EU Individuals cannot per se invoke the responsibility of states or of IOs for breaches of international obligations, in the absence of some form of consent of the states or IOs in question.100 However, states and IOs may specifically consent to give such entitlement to individuals by treaty. The instances of claims brought by individuals against IOs for a violation of international law in an international forum are exceptionally rare. The EU is the only IOn that has subjected itself to the competence of international judicial or quasi-judicial fora in which individuals are given the capacity to bring complaints concerning its compliance with international law. Had the EU acceded to the European Convention on Human Rights (ECHR),101 individuals would have been able to invoke the responsibility of the EU for breaches of the ECHR before the European Court of Human Rights.102 Nevertheless, the area that has prompted this unprecedented development is not international human rights law, but rather investment protection and participatory rights for the protection of the environment.103 More specifically, the ECT entitles investors (within the meaning of that treaty) to bring claims against ECT Contracting Parties, including the EU, for a breach of the ECT obligations concerning the protection of investors in the framework of arbitration procedures. Under the Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters (Aarhus Convention) individuals have standing to bring complaints against the treaty parties, including the EU, concerning non-performance of treaty 100  R Higgins, Problems & Process: International Law and How We Use It (Oxford, Oxford University Press, 1994) 54. 101 Convention for the Protection of Human Rights and Fundamental Freedoms (signed 4 ­November 1950, entered into force on 3 September 1953) 213 UNTS 221. 102  Draft revised agreement on the accession of the European Union to the Convention for the Protection of Human Rights and Fundamental Freedoms: www.coe.int/t/dghl/standardsetting/hrpolicy/ Accession/Meeting_reports/47_1(2013)008rev2_EN.pdf. See Opinion 2/13 of the Court (Full Court) of 18 December 2014. This issue falls outside the scope of this chapter. 103  For the difference between international human rights law and treaties specifically dealing with participatory rights in environmental matters: P Birnie, A Boyle and C Redgwell, International Law and the Environment 3rd edn (Oxford, Oxford University Press, 2009) 296.

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obligations, and provides competence to the Aarhus Compliance Committee to deal with complaints brought by individuals against treaty parties.104

i.  The ECT Investor–EU Arbitration Procedure Under ECT Article 26, investors that are nationals of an ECT Contracting Party may bring claims against another ECT Contracting Party for a violation of Part III of the ECT concerning the protection of investment.105 Investors may initiate disputes under ICSID, UNCITRAL Arbitration Rules or before the Arbitration Institute of the Stockholm Chamber of Commerce (ECT Article 26(4)). According to Article 26(3)(b)(ii) all Contracting Parties listed in Annex ID are obliged to provide, for transparency reasons, a written statement of their policies, practices and conditions, which do not allow an investor to resubmit the same dispute to international arbitration at a later stage in accordance with Article 26(3)(b)(i). The EU made such a statement, but its statement does not exclude the possibility of an investor of another ECT Contracting Party from bringing a claim under international arbitration against the EU.106 However, it is questionable whether an arbitral tribunal would have jurisdiction over a dispute between an EU national or a company organised according to the laws of a European Member State and the EU; such an investor would not be an ‘Investor of another Contracting Party’ as required by ECT Article 26(1).107 Arbitral proceedings against the EU by an investor have not yet been brought in practice. However, it remains a possible means of recourse under the ECT, and may arise in the future under the UNCITRAL Arbitration Rules or before

104 Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters (25 June 1998, entered in force 30 October 2001) 2161 UNTS 447. 105  Whether an investor national of an EU Member State can bring a claim against another EU Member State is beyond the scope of this chapter. There is no provision in the ECT that prohibits this outcome. A number of pending investment–arbitration procedures involve this particular situation and will address this question: RENERGY Sàrl v Spain, ICSID Case No ABR/14/18; RWE Innogy GmbH and RWE Innogy Aersa SAU v Spain, ICSID Case No ABR/14/34; Stadtwerke München GmbH, RWE Innogy GmbH et al v Spain, ICSID Case No ABR/15/1. Beyond but similarly to the ECT, the argument that intra-EU bilateral investment treaties have been terminated upon accession to the EU and that are inapplicable owing to the primacy of EU law has been rejected by arbitral tribunals: Achmea BV (formerly known as ‘Eureko BV’) v The Slovak Republic, Award on Jurisdiction, Arbitrability and Suspension, 26 October 2010, paras 231–77. 106  According to the Statement, ‘The European Communities and their Member States have both concluded the Energy Charter Treaty and are thus internationally responsible for the fulfilment of the obligations contained therein, in accordance with their respective competences. The [Union] and the Member States will, if necessary, determine among them who is the respondent party to arbitration proceedings initiated by an Investor of another Contracting Party. In such case, upon the request of the Investor, the Communities and the Member States concerned will make such determination within a period of 30 days.’ Information available at: www.energycharter.org/fileadmin/DocumentsMedia/ Legal/Transparency_Annex_ID.pdf. 107 M Burgstaller, ‘European Law and Investment Treaties’ (2009) 26 Journal of International ­Arbitration 206.

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the Arbitration Institute of the Stockholm Chamber of Commerce (ECT Article 26(4)),108 depending on the choice made by the claimant.109

ii.  The Aarhus Convention Compliance Committee The EU is party to the Aarhus Convention, but not all EU Member States are party to it.110 A Compliance Committee has been established by the Meeting of the Parties, pursuant to Article 15 of the Aarhus Convention. Treaty parties, the Secretariat and individuals (­ ‘members of the public’) may bring complaints before the Compliance Committee concerning the breach of the Aarhus ­Convention by a treaty party, including the EU. The Compliance Committee is not a judicial body and can only adopt non-binding recommendations. Complaints against the EU alone, a Member State alone, or against the EU and a Member State together may be brought, and have been brought, before the Compliance Committee.111 The Compliance Committee does not directly deal with and does not couch its analysis in terms of international responsibility. However, to the extent that it makes determinations as to the compliance of parties’ measures with the Aarhus Convention, it implicitly determines whether international responsibility has been engaged.112 It is a forum where standing to invoke the responsibility of the EU has been afforded to individuals, and which although not judicial, has competence over disputes between an individual and IO (the EU) that is party to the Aarhus Convention.

IV. Conclusions Given the limited jurisdiction of international courts and tribunals to adjudicate upon claims by and against international organisations, such as the ICJ, diplomatic

108  The EU is not party to the ICSID Convention, nor can it become party to it pursuant to its ­current provisions (n 2). 109  See also Electrabel SA (Belgium) v Republic of Hungary, Decision on Jurisdiction, 30 November 2012, para 3.21. 110  See complaint against the EU and findings by the Aarhus Compliance Committee concerning non-compliance of the EU with the Aarhus Convention in relation to renewable projects in Ireland, which is not party to the Aarhus Convention. Aarhus Compliance Committee, Findings and recommendations with regard to communication ACCC/C/2010/54 concerning compliance by the European Union, 29 June 2012. 111  See eg Aarhus Compliance Committee, Report concerning compliance by the European Union, ECE/MP.PP/2008/5/Add.10, 2 May 2008; Findings and recommendations with regard to communication ACCC/C/2012/68 concerning compliance by the European Union and the United Kingdom of Great Britain and Northern Ireland, Adopted by the Compliance Committee on 24 September 2013, ECE/MP.PP/C.1/2014/5, 13 January 2014. 112  Responsibility is engaged automatically upon the commission of an internationally wrongful act. An internationally wrongful act consists of conduct attributed to the state or IO and which consistutes a breach of that state’s or IO’s international obligations (ASR Art 2; ARIO Art 4).

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means of dispute resolution (negotiation, enquiry, mediation and c­ onciliation)113 remain an important option for international dispute resolution between the EU and other subjects of international law.114 Diplomatic means are by default available, and may at times assist in the conclusion of a special agreement for arbitration between the parties to the dispute. Nevertheless, the EU has been instrumental in shaping the law on standing and jurisdiction in the context of international dispute settlement in several areas. First, countermeasures are a means of invoking responsibility. Recourse to them provides evidence as to standing under general international law. The EU has contributed to the elaboration of practice concerning countermeasures in response to breaches of international obligations, including practice concerning third party countermeasures for violations of erga omnes (partes) obligations, such as the prohibition of the use of force and grave violations of human rights. From the point of view of dispute settlement, countermeasures may be instrumental for inducing the responsible subject to settle a dispute, although they may also aggravate the dispute. This is illustrated by the effects of the countermeasures to which the EU itself has resorted, and the responses of the targeted third states. Second, the EU has contributed to significant treaty practice that confers international judicial and quasi-judicial fora with jurisdiction over disputes between states and IOs either brought by states or brought by IOs against states. It has also been a pioneer in concluding treaties that confer standing to individuals to bring claims against it for a violation of it treaty obligations. Surprisingly, this practice is not rooted in human rights, but in treaties concerning the protection of foreign investment and participatory rights in relation to environmental concerns.

113  Art 33(1), UN Charter. JG Collier and AV Lowe, The Settlement of Disputes in International Law: Institutions and Procedures (Oxford, Oxford University Press, 1999) 20–30; JG Merrills, ‘The Means of Dispute Settlement’ in MD Evans (ed), International Law 3rd edn (Oxford, Oxford University Press, 2010) 559–85; JG Merrills, International Dispute Settlement 5th edn (Cambridge, Cambridge ­University Press, 2011) 1–82; For the advantages of judicial means in terms of (legal and actual) finality over non-judicial means, such as conciliation: H Lauterpacht, The Function of Law in the International Community (Oxford, Oxford University Press, 2012) 276. 114  Although this issue has not been the focus of this study, the EU has also played a significant role in the context of the settlement of disputes between other subjects of international law, for instance by mediating disputes between third states: eg Council of the European Union, Concept on Strengthening EU Mediation and Dialogue Capacities, 10 November 2009: http://eeas.europa.eu/cfsp/ conflict_prevention/docs/concept_strengthening_eu_med_en.pdf.

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5 Aspects of the EU’s Responsibility in International Investment Disputes CATHARINE TITI*

I. Introduction The question of the responsibility of international organisations for breaches of international law acquires particular significance in the European context in light of the exercise of the European Union’s (EU) new competence over foreign direct investment. But the topic was not born with the exercise of the EU’s competence, and the Union’s international responsibility for potential breaches of international investment law may be envisaged outside the conventional context. Since the adoption of the International Law Commission’s (ILC) Articles on the responsibility of international organizations (ARIO),1 the issue seems particularly topical. This is also the topic of the present chapter. This chapter focuses on aspects of the EU’s responsibility under customary international law, and more particularly in light of the ARIO. In particular, it considers the ARIO and the lex specialis principle. The chapter then turns to the EU, addressing the rules of attribution according to the Financial Responsibility Regulation; attribution according to the ILC Articles; responsibility arising from aid or assistance in the commission of an internationally wrongful act; responsibility due to direction and control over the commission of an internationally wrongful act; the applicability of the ILC Articles vis-à-vis individuals; Member State responsibility in connection with the conduct of the EU; and responsibility due to state coercion regarding commission of an internationally wrongful act. In this manner, this chapter contributes to the broader theme of the EU’s responsibility in relation to international dispute settlement. A caveat is in order: this chapter does not look at the EU as the respondent in investor–state disputes, but on the EU as bearing the potential responsibility

* 

The author would like to thank Niilo Jaaskinen for his helpful comments. The Arts on the responsibility of international organizations were adopted by the ILC at its 63rd session in 2011 and published, as part of the Commission’s report covering the work of that session (A/66/10), in Yearbook of the International Law Commission, 2011, Vol II, Pt Two. 1 

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for eventual breaches, irrespective of whether it has appeared as respondent in an investment dispute or not. The EU’s status as respondent is dependent on its participation in international investment agreements, especially future agreements, while the question of its responsibility is larger and can be considered outside this context. For the same reason, in order to assist the exploration of the Union’s responsibility under customary law, a particular case study which falls outside the context of the EU’s obligations undertaken directly through investment agreements will be used, that of the potential responsibility of the EU for Member State violations of international investment law.

II.  The ILC Articles on the Responsibility of International Organizations and the lex specialis Rule This section will briefly explore the adoption of the ARIO and the lex specialis rule to determine the applicable law in relation to the attribution of potential responsibility for the EU in international dispute settlement. When the International Law Commission elaborated its 2001 Articles on state responsibility for internationally wrongful acts, it established in Article 57 that the latter are ‘without prejudice’ to the question of the responsibility under international law of i­nternational organisations and that of the responsibility of ‘any State for the conduct of an i­nternational organization’.2 The proliferation of international organisations and of their respective functions eventually rendered the issue of the responsibility of international organisations and participating states sufficiently important for the International Law Commission to deal with these two issues that had been left open in Article 57.3 The ARIO were adopted by the International Law Commission at its sixty-third session in 2011.4 Like their predecessors on state responsibility, they constitute 2 

Art 57 ILC Arts on the responsibility of states, emphasis added. Draft arts on the responsibility of international organizations, with commentaries, 2011, Yearbook of the International Law Commission, 2011, Vol II, Pt Two (hereinafter ‘ILC Commentaries’), General commentary, para 1. 4  For some of the prolific literature in respect of ARIO and the international responsibility of international organisations, see M Ragazzi (ed), Responsibility of International Organizations, Essays in Memory of Sir Ian Brownlie (Leiden, Brill, 2013); N Nedeski and A Nollkaemper, ‘Responsibility of International Organizations “in Connection with Acts of States”’ (2012) 9(1) International Organizations Law Review 33–52; S Bouwhuis, ‘The International Law Commission’s Definition of International Organizations’ (2012) 9(2) International Organizations Law Review 451–65; C Ahlborn, ‘The Rules of International Organizations and the Law of International Responsibility’ (2011) 8 International Organizations Law Review 397–482; K Daugirdas, ‘Reputation and the Responsibility of International Organizations’ (2015) 25(4) European Journal of International Law 991–1018; P Jan Kuijper and E Paasivirta, ‘Further Exploring International Responsibility: The European Community and the ILC’s Project on Responsibility of International Organizations’ (2004) 1 International Organizations Law Review 111–38; F Hoffmeister, ‘Litigating Against the European Union and Its Member States: Who Responds Under the ILC’s Draft Articles on International Responsibility of International Organizations?’ (2010) 21 European Journal of International Law 723–47. 3 

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secondary rules of international law; in other words, they do not identify the obligations incumbent on international organisations—this is the function of primary rules—but instead they consider the consequences of a breach of an international obligation for the responsible international organisation.5 One element must be stressed early on: given the scant available practice, in contrast with the ILC Articles on state responsibility, the rules regarding the responsibility of international organisations are closer to constituting progressive development of the law on international responsibility than codification of existing law, and their authority will largely depend on how they are received by their addressees.6 For this reason, and although they are generally referred to as reflecting customary ­international law, the analysis in their respect should be taken with a pinch of salt; they offer an indication of where responsibility lies rather than ‘black and white’ responses. Like the ILC Articles on state responsibility,7 the ILC Articles on the responsibility of international organizations (ARIO) stress that they constitute the lex generalis. They are not applicable if the ‘conditions for the existence of an internationally wrongful act or the content or implementation of the international responsibility of an international organization, or a State in connection with the conduct of an international organization, are governed by special rules of international law’.8 And they specify further: ‘Such special rules of international law may be contained in the rules of the organization9 applicable to the relations between an international organization and its members.’10 One particularly pertinent example in this context concerns attribution rules with in the EU. The ILC Commentaries explicitly cite the following example (‘which has given rise in practice to a variety of opinions concerning the possible existence of a special rule’): according to the Commission, the conduct of Member States in the implementation of binding acts of the EU has to be attributed to the EU.11

5 

ILC Commentaries (n 3) General commentary, para 3. ibid General commentary, para 5. 7  Art 55 ILC Arts on the responsibility of states. 8  Art 64 ILC Arts on the responsibility of international organizations. 9  The term ‘rules of the organization’ is defined in Art 2 as ‘in particular, the constituent instruments, decisions, resolutions and other acts of the international organization adopted in accordance with those instruments, and established practice of the organization’. See further Art 2 para 1 of the 1986 Vienna Convention on the Law of Treaties between States and International Organizations and between International Organizations, A/CONF.129/15. 10 Art 64 ILC Arts on the responsibility of international organizations. For a discussion, see Hoffmeister (n 4); Ahlborn (n 4); A Pellet, ‘International Organizations are Definitely Not States— Cursory Remarks on the ILC Articles on the Responsibility of International Organizations’ in Ragazzi (n 4). 11  ILC Commentaries (n 3), commentary on Art 64, para 2. See further Kuijper and Paasivirta (n 4) 127; Hoffmeister (n 4) 723. 6 

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III.  Attribution According to the Financial Responsibility Regulation An international organisation is responsible under international law for conduct consisting in an act or omission that is attributable to it under international law and which constitutes a breach of an international obligation of that organisation.12 This section will consider under what conditions an act may be attributed to the EU in light of internal rules of attribution and, especially, in the context of investor–state dispute settlement (ISDS), in light of the Regulation ‘establishing a framework for managing financial responsibility linked to investor-to-state dispute settlement tribunals established by international agreements to which the European Union is party’ (Financial Responsibility Regulation)13 prevailing as lex specialis in its targeted area of application. The following section will address the Union’s responsibility in light of customary international law, and notably the ARIO, applicable in a residual fashion where the internal rules do not provide solutions. The Financial Responsibility Regulation deals with two distinct issues: who should act as the respondent and who should bear the ‘financial responsibility’ in the context of investor–state disputes on the basis of international agreements to which the Union is party.14 The chapter deals only with the second of these issues in order to identify where ‘liability’ or ‘responsibility’ lies, considering that whoever is responsible to pay is simply the one ‘responsible’ and to whom the treatment is imputable. Although the Regulation itself is applicable only to disputes decided on the basis of EU investment agreements, it may be possible to establish more general rules of attribution by analogy to the Regulation for cases where a Member State is brought before an international tribunal for alleged violation of one of its investment treaties. A necessary caveat is that the Regulation states clearly and repeatedly that it is without prejudice to the division of competences between the EU and its Member States established by the Treaties.15 In apportioning responsibility, the Regulation establishes that the EU bears ‘the financial responsibility arising from treatment afforded by the institutions, bodies, offices or agencies of the Union’ and that the Member State bears the responsibility ‘arising from treatment afforded by that Member State’. Nevertheless, where

12 

Art 4 of the ILC Arts on the responsibility of international organizations. Reg (EU) No 912/2014 of the European Parliament and of the Council of 23 July 2014 establishing a framework for managing financial responsibility linked to investor-to-state dispute settlement tribunals established by international agreements to which the European Union is party. 14  The Financial Responsibility Regulation defines ‘financial responsibility’ as ‘an obligation to pay a sum of money awarded by an arbitration tribunal or agreed as part of a settlement and including the costs arising from the arbitration’ (Art 2(g) ibid). 15 Art 1 and Joint declaration by the European Parliament, the Council and the Commission (annex) of the Financial Responsibility Regulation. 13 

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the treatment afforded by a Member State was ‘required by Union law’ it is the EU that bears the financial responsibility.16 The Regulation defines treatment ‘required by Union law’ as one ‘where the Member State concerned could only have avoided the alleged breach of the agreement by disregarding an obligation under Union law such as where it has no discretion or margin of appreciation as to the result to be achieved’.17 If the Member State was required to act pursuant to EU law with a view to remedying ‘the inconsistency with Union law of a prior act’, the responsibility lies with the Member State, ‘unless such prior act was required by Union law’.18

IV.  Attribution According to the ILC Articles This section examines whether the EU can be held responsible on the basis of customary international law rules of attribution where treatment afforded by a Member State, although not stricto sensu ‘required by Union law’, was nonetheless encouraged by the EU, notably to the extent that the Member State may have been indirectly compelled to act in the way it did and the EU agreed to the treatment. The question is whether the EU can be held responsible in relation to international dispute settlement for wrongful conduct attributed to it. The analysis relies on three cases brought before the International Centre for Settlement of Investment Disputes (ICSID) in respect of restrictive financial measures adopted by indebted Member States in order to obtain EU-IMF (International Monetary Fund) loans. These are the Poštová banka19 and Cyprus Popular Bank20 claims against Greece in relation to that state’s 2012 debt restructuring and the Marfin claim against Cyprus arising out of nationalisations in the banking sector.21 Although, at the time of writing, the first of these cases has been resolved in favour of the respondent, and so no question of responsibility arises, the counterfactual, in other words where responsibility would lie had the tribunal found against Greece, provides an interesting case study. A brief overview of the circumstances that gave birth to the claims is given below. Following the severe debt crisis that enveloped it, Greece initially requested financial assistance on 23 April 2010.22 The basic structure for the negotiations

16 

Art 3(1) of the Financial Responsibility Regulation. ibid Art 2(l). 18  ibid Art 3(1). 19  Poštová banka, as and ISTROKAPITAL SE v Greece, ICSID Case No ARB/13/8, Award, 9 April 2015. 20  Cyprus Popular Bank Public Co Ltd v Greece, ICSID Case No ARB/14/16, registered 16 July 2014. 21  Marfin Investment Group Holdings SA, Alexandros Bakatselos and others v Cyprus, ICSID Case No ARB/13/27, registered 27 September 2013. 22  European Parliament resolution of 13 March 2014 on the enquiry on the role and operations of the Troika (ECB, Commission and IMF) with regard to the euro area programme countries, Recital E, para 16. 17 

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that followed ‘between the official lenders and the governments of the recipient countries’ was the Troika,23 a joined mission consisting of the European Commission, the European Central Bank (ECB) and the IMF. It is noteworthy that when referring to the Memorandum of Understanding (MoU) in which negotiations culminated on 2 May 2010 and which contained the ‘policy conditionality’ for the financial assistance,24 the European Parliament noted that this was concluded ‘between the Greek authorities on the one side and the EU and IMF on the other’.25 From January to February 2012, the Troika met the Greek authorities again. After assessing the state’s compliance with the terms and conditions of this first Economic Adjustment Programme, it agreed in March 2012 to disburse its successor, the Second Economic Adjustment Programme.26 In line with the latter, Greece’s sovereign debt was restructured with the adoption of the Bondholder Act in 201227 which introduced collective action clauses (CACs) in the sovereign bond contracts governed by Greek legislation.28 Collective action clauses allow a supermajority of bondholders to accept a debt restructuring that is binding also on the minority holdout bondholders. In light of the ECB’s refusal to participate in the Private Sector Involvement (PSI) exchange before the Bondholder Act 2012 was passed, Greece agreed to the exchange of sovereign bonds held by the ECB with new ones. The latter were not covered by the debt exchange offer, which only concerned sovereign bonds issued on or before 31 December 2011.29 In other words, ‘ECB-held sovereign debt … would be serviced in full, in contrast to other Greek government bond creditors affected’ by the retroactive imposition of CACs under the Bondholder Act 4050/2012, such as those held by Poštová banka.30 Equivalent arrangements seem to have been made for other lenders, notably the IMF and EU Member State central banks.31 The claim against Cyprus arose out of the nationalisation of Popular Bank. The claim was filed by Marfin, Popular Bank’s most important shareholder.32 The deterioration of public finances and the Cypriot banking sector’s exposure to the Greek sovereign debt restructuring resulted in sizeable losses for Cyprus.33 Cyprus requested financial assistance on 25 June 2012.34 The first draft financial assistance 23 ibid. 24 

ibid para 16. ibid para 16, emphasis added. 26  ibid para 16. 27  Act 4050/2012, Hellenic Government Gazette A 36/23.02.2012. 28  A Gourgourinis, ‘The Shared Responsibility of the EU for Member States’ Financial Crisis Measures as a Deference in International Investment Claims’, paper presented at the ESIL 10th Anniversary Conference, held in Vienna in 2014 (paper on file with the author). 29 ibid. 30 ibid. 31  I Glivanos, ‘Haircut Undone? The Greek Drama and Prospects for Investment Arbitration’ (2014) 5(3) Journal of International Dispute Settlement 3, 14 (online version). 32  K Hope, ‘Greek Fund in Legal Move Against Cyprus’, The Financial Times (18 January 2013). 33  European Parliament resolution of 13 March 2014 (n 22) para 15. 34  ibid para 22. 25 

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programme which contained ‘bail-in of insured depositors’ was rejected by the Cypriot Parliament on 19 March 2013 due to the fact that ‘it envisaged haircut of small deposits’; however, the ­Cypriot Parliament eventually endorsed the agreement on 30 April 2013.35 The Cypriot authorities ‘referred to difficulties in convincing the Troika representatives of their concerns during the negotiation process’ and, according to the Parliament, ‘the Cypriot Government was reportedly obliged to accept the bail-in instrument on bank deposits in view of the exceptionally high level of private debt in relation to GDP’.36 The measures invoked by the investors as violating the international investment obligations assumed by Greece and Cyprus were adopted in the context of the EU financial assistance programmes. The question that arises is whether the EU shares in the legal responsibility in the alleged violations of international investment law and, more concretely for the purposes of the present section, whether the alleged wrongful act could be attributed to the EU. Article 6 ARIO provides: 1. The conduct of an organ or agent of an international organization in the performance of functions of that organ or agent shall be considered an act of that organization under international law, whatever position the organ or agent holds in respect of the organization. 2. The rules of the organization shall apply in the determination of the functions of its organs and agents.

The interpretation of the terms of this provision is assisted by Article 2 ARIO. According to the latter, an ‘organ of an international organization’ is defined as ‘any person or entity which has that status in accordance with the rules of the organization’ and an ‘agent of an international organization’ as ‘an official or other person or entity, other than an organ, who is charged by the organization with carrying out, or helping to carry out, one of its functions, and thus through whom the organization acts’. Given that both organs and agents may engage the responsibility of an international organisation, the distinction between the two for the purposes of the ARIO is not relevant.37 There is little doubt that the European Commission and the European Central Bank are organs or agents of the EU.38 The problem that may arise concerns the requirement that the conduct of the organ or agent occurs ‘in the performance of [its] functions’, a requirement which is absent from the Financial Responsibility Regulation for that context. In the first place, the ILC Commentaries on Article 6 indicate that conduct is not attributable to the organ or agent when the latter ‘acts in a private capacity’.39 Attribution of ultra vires conduct is dealt with 35 

ibid para 22. ibid para 22. See also ILC Commentaries (n 3), commentary on Art 6, para 5. 38  In this sense, also Gourgourinis (n 28). 39  ILC Commentaries (n 3), commentary on Art 6, para 7. 36  37 

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elsewhere in the ILC ARIO.40 The functions entrusted to the organs or agents of an organisation can generally be said to be established through the ‘rules’ of that organisation.41 However, the International Law Commission has underlined that [b]y not making the rules of the organization the only criterion, the wording of paragraph 2 is intended to leave the possibility open that, in exceptional circumstances, functions may be considered as given to an organ or agent even if this could not be said to be based on the rules of the organization.42

In order to apply these comments to the EU and the Troika, and therefore consider the potential responsibility of the EU in relation to international dispute settlement, it is necessary to explore the procedure followed for the disbursement of the financial assistance programmes more closely. Within the Troika, the Commission has been acting as an agent of the Eurogroup, entrusted with the function of ‘negotiating the conditions for financial assistance for euro area Member States’.43 In other words, ‘the Eurogroup gives a mandate to the Commission to negotiate on its behalf the details of the conditions attached to the assistance, while taking into account member states’ views on key elements of the conditionality’.44 Here again, it seems that Member States’ leeway in the ‘negotiations’ is limited. The Eurogroup is politically responsible for the financial assistance programmes.45 Nevertheless, it must be noted that it does not constitute an official institution of the EU.46 Both the Troika and the rescue mechanisms have an ad hoc nature and they do not rely on a concrete basis in EU primary law. This has resulted in the establishment of intergovernmental mechanisms, notably the European Financial ­Stability Facility (EFSF) and the European Stability Mechanism (ESM).47 It is significant, however, that the European Parliament has considered the Council to bear the political responsibility ‘for approving the macroeconomic adjustment programmes’.48 In order to obtain financial assistance, the states and the Troika concluded Memoranda of Understanding which were the outcome of negotiations and ‘by which a Member State undertakes to carry out a number of precise actions in exchange for financial assistance’.49 In other words, the measures consequently challenged were suggested by the Troika. The ‘Commission signs the MoU on behalf of euro area finance ministers’50 who in any case have backed the

40 

Art 8 ARIO. ILC Commentaries (n 3), commentary on Art 6, para 9. 42  ibid, commentary on Art 6, para 9. 43  European Parliament resolution of 13 March 2014 (n 22) recital D. 44  ibid para 50. 45  ibid recital E. 46  ibid para 50. 47  ibid para 51. 48  ibid recital D. 49  ibid recital L, emphasis added. 50  ibid recital L. 41 

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macroeconomic adjustment programmes.51 The European Parliament has reiterated that ‘the Eurogroup, the Council and the European Council’ must ‘assume full responsibility for the operations of the Troika’,52 while elsewhere it has cited the Commission’s ‘full accountability … when it acts in its capacity as a member of the EU assistance mechanism’.53 The European Parliament deplored the lack of transparency, which does not reveal the extent to which a Member State ‘has been able to influence the outcome of negotiations’.54 But insider knowledge is not needed in order to determine the EU’s participation in the deal. The European Parliament’s ‘slip of the tongue’, which cited that the MoU concerning the 2010 financial assistance programme for Greece was concluded between the Greek authorities on the one hand and the EU and the IMF on the other, has already been mentioned. Multiple elements clearly reveal the EU institutions’ participation in the programmes. For instance, the European Parliament further notes that the Member States being members of the IMF have the right to request its financial assistance ‘in cooperation with the EU institutions’ and, in any case, reliance only on the means of the IMF would not have been adequate in order to tackle the problems of the countries in question.55 It has further evoked the ‘dual role of the Commission in the Troika as both an agent of Member States and an EU institution’.56 In this same context, the Parliament further stressed that this is not the Commission’s ‘normal role’57 and similar comments have been made for the ECB.58 At this stage, the Pringle judgment of the Court of Justice of the European Union (CJEU) may be noted,59 whereby the Court considered that the functions conferred on the Commission and the ECB in the ESM Treaty ‘do not alter the essential character of the powers conferred on those institutions by the EU and FEU Treaties’ and therefore the Member States are entitled to entrust these tasks to institutions ‘outside the framework of the Union’.60 The role entrusted to the Commission by EU primary law is to ‘promote the general interest of the Union’ and ‘oversee the application of Union law’.61 Both of these elements are fulfilled though the Commission’s involvement in the ESM Treaty, since the latter’s objective is to ‘ensure the financial stability of the euro area as a whole’ and the tasks 51 

ibid paras 33, 50. ibid para 61, 102. 53  ibid para 85. 54  ibid recital L, see also paras 30, 39, 48, 66. 55  ibid para 24, emphasis added. 56  ibid para 53. 57  ibid para 53. 58  ibid para 55. 59 Case C-370/12 Thomas Pringle v Government of Ireland, Ireland and the Attorney General, Judgment of the Court (Full Court) of 27 November 2012. 60 ibid paras 158, 159. For earlier jurisprudence on some of these topics, see Opinion 1/92, ECLI:EU:C:1992:189, [1992] ECR I-2821, paras 32 and 41; Opinion 1/00, ECLI:EU:C:2002:231, [2002] ECR I-3493, para 20; and Opinion 1/09, ECLI:EU:C:2011:123, [2011] ECR I-1137, para 75. 61  Art 17(1) of the Treaty on European Union. 52 

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allocated to the Commission by the ESM Treaty enable it to ‘ensure that the memoranda of understanding concluded by the ESM are consistent with European Union law’.62 Similarly, the Court confirms that the tasks entrusted to the ECB by the ESM Treaty are ‘in line with the various tasks which the FEU Treaty and the Statute of the ESCB [and of the ECB] confer on that institution’, since by ‘virtue of its duties within the ESM Treaty, the ECB supports the general economic policies in the Union’.63 In other words, through this involvement, the European Commission and the ECB carry EU functions.64 Despite its criticism of several aspects of the financial assistance programmes, the European Parliament has stressed its backing for the conditionality of the programmes, underlining that ‘national-level ownership is crucial, and that failure to implement agreed measures has consequences’.65 The Member States had, in theory, the option of turning down the financial assistance and the ‘terms and conditions’ that came with it. Ironically, the European Parliament noted that ‘when consulted, national parliaments were faced with the choice between eventually defaulting on their debt or accepting Memoranda of Understanding negotiated between the Troika and national authorities’.66 The EU had an interest in the Member States’ acceptance of the programmes. In the short run, these were intended in the main to prevent ‘a disorderly default and stop speculation on sovereign debt’,67 in the case of a very severe crisis that, the European Parliament recognised, would have had even more severe results had action not been taken at EU level.68 In particular, concerning the Greek financial assistance programmes, the Parliament underlined the ‘dual fear associated with the “insolvency” and the “non-sustainability” of the public finances of Greece’ prior to the beginning of the financial assistance programme.69 However, whether or not the Member States were obliged or free to adopt the measures they adopted, Article 6 ARIO is applicable. In short, the EU institutions that participated in the Troika, and thus signed the Memoranda of Understanding, did so in the performance of their functions according to the rules of the organisation and so their actions are attributable to the EU. Additionally, the financial assistance programmes responded to an urgent situation of crisis and the actions of the EU institutions as members of the Troika could fall within the ‘exceptional circumstances’ that would allow the functions to ‘be considered as given to an organ or agent’.70

62 

Pringle v Ireland (n 59) paras 163–64. ibid para 165. 64  Gourgourinis (n 28). 65  European Parliament resolution of 13 March 2014 (n 22) para 46. 66  ibid para 56. 67  ibid recital U, para 38. 68  ibid para 4. 69  ibid para 5. 70 See aforecited comment of ILC Commentaries (n 3), commentary on Art 6, para 9. Also Gourgourinis (n 28). 63 

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Finally, it is interesting to consider the potential more direct or uncontested implication of the EU in the event of similar cases born in the future. The European Parliament envisages the institution of a clearly integrated EU-based mechanism, notably the ESM,71 and recommends that this should evolve in the future to function in the following manner: A European Monetary Fund, combining ‘the financial means of the ESM’ and the human resources of the Commission, would take over the Commission’s role; the ECB would participate as an observer during the negotiations; while the IMF ‘should its involvement be strictly necessary, would be a marginal lender and therefore could leave the programme if in disagreement’.72 Nevertheless, if the act is attributable to the EU, and in other words the EU’s action is not compatible with the investment obligations of the Member State, a problem remains: in the cases discussed, the obligations towards the international investors have been undertaken by the Member States but not by the EU. The crucial dilemma then in this respect is whether the act is internationally wrongful if committed by the EU. Had the alleged violation concerned an investment treaty concluded by the EU, the EU would be bound by the treaty and so its international responsibility would be engaged where conduct attributed to it was found to have breached such an investment treaty. In the cases brought against Greece and Cyprus, however, the alleged violations concern provisions in investment treaties concluded by the Member States, which do not bind the EU. Beyond investor–state dispute settlement, the EU could, in theory, still be held to have obligations vis-à-vis investors on the basis of customary international law but, in that case, the procedure and the content of such obligations would differ. According to the International Court of Justice (ICJ)’s advisory opinion on the agreement between the WHO and Egypt, international organisations ‘are bound by any obligations incumbent upon them under general rules of international law’.73 If the EU is not party to an actual investment treaty, there is no forum where its responsibility can be invoked, given that even the ICJ does not have jurisdiction over alleged violations of customary international law committed by international organisations.74 Yet, in view of the EU’s new competence over foreign direct investment, it may be possible to argue that Member State obligations become EU obligations.75

71 

European Parliament resolution of 13 March 2014 (n 22) paras 104, 106. ibid para 115. ICJ, Interpretation of the Agreement of 25 March 1951 between the WHO and Egypt, Advisory Opinion, ICJ Reports 1980, 73, para 37. 74  For some related discussion, see D Azaria, ‘The European Union’s Contribution to Shaping the Law on Standing and Jurisdiction in the Context of International Dispute Settlement’ in M Cremona, A Thies and RA Wessel (eds), The EU and International Dispute Settlement (Oxford, Hart Publishing, 2016). 75  Further Gourgourinis (n 28). 72 

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A.  Some Final Considerations in This Context By virtue of Article 9 ARIO, even where conduct is not stricto sensu attributable to the EU, where the latter acknowledges and adopts such conduct as its own, this will be considered a Union act. In its Commentaries, the International Law ­Commission makes a distinction between attributable conduct and responsibility. It cites the statement made by the European Communities before a WTO panel, according to which the former were ‘ready to assume the entire international responsibility for all measures in the area of tariff concessions, whether the measure complained about has been taken at the EC level or at the level of Member States’.76 It must be noted that the Financial Responsibility Regulation allows an act to be attributable to the EU in a much more flexible way. It cites responsibility ‘arising from treatment afforded by the institutions, bodies, offices or agencies of the Union’ without requiring that they offer the treatment in the performance of their function or that the conduct be wrongful if afforded by the EU rather than the Member State. This raises the question whether an interpretation by analogy may—or may not—be employed in order to import those rules.

V.  EU Responsibility Because of Aid or Assistance in the Commission of an Internationally Wrongful Act The international responsibility of the EU could, in theory, also be invoked in international dispute settlement for aiding or assisting a Member State in the commission of an internationally wrongful act. According to Article 14 ARIO: An international organization which aids or assists a State or another international organization in the commission of an internationally wrongful act by the State or the latter organization is internationally responsible for doing so if: (a) the organization does so with knowledge of the circumstances of the internationally wrongful act; and (b) the act would be internationally wrongful if committed by that organization.77

If we look closer at the terms of Article 14 and try to apply them to the cases at hand, it may be claimed that the EU has aided or assisted the Member States in the 76 

ILC Commentaries (n 3), commentary on Art 9, para 3. See further Hoffmeister (n 4). For a discussion of this provision, see A Reinisch, ‘Aid or Assistance and Direction and ­Control Between States and International Organizations in the Commission of Internationally Wrongful Acts’ (2010) 7 International Organizations Law Review 63; A Delgado Casteleiro and J Larik, ‘The “Odd ­Couple”: The Responsibility of the EU at the WTO’ in M Evans and P Koutrakos (eds), The International Responsibility of the European Union: European and International Perspectives (Oxford, Hart Publishing, 2014) 243. 77 

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commission of an internationally wrongful act by these states (on the assumption that the measures taken are found to be in violation of international investment law). However, in order to apply Article 14 ARIO two further conditions need to be met. First, the organisation must do so ‘with knowledge of the circumstances of the internationally wrongful act’. In the case of the EU, this would mean that the aid or assistance is not given while the EU was ‘unaware of the circumstances in which its aid or assistance [was] intended to be used by’ the state.78 It is unclear whether a further element invoked by the ILC, that of the organ’s intent to facilitate the occurrence of the internationally wrongful act by the state79 is fulfilled, but it is significant that this ‘condition’ is not reflected in the wording of the ARIO.80 It has also been suggested that the absence of the organ’s intention to facilitate the internationally wrongful act may be ‘offset by sufficient knowledge’.81 The second requirement is that the act would be internationally wrongful if committed by the international organisation. This question was addressed above; given that the conduct would not be considered against the same rules (the bilateral investment treaty (BIT) in the case of the Member States and customary international law in the case of the European Union), it may or may not have been internationally wrongful if committed by the international organisation, depending on the standard applied. In other words, it is unclear whether Article 14 ARIO would apply.

VI.  EU Responsibility Due to Direction and Control Over the Commission of an Internationally Wrongful Act Difficulties similar to those raised above are encountered when attempting to apply Article 15 ARIO. That provision establishes that: An international organization which directs and controls a State or another international organization in the commission of an internationally wrongful act by the State or the latter organization is internationally responsible for that act if: (a) the former organization does so with knowledge of the circumstances of the internationally wrongful act; and (b) the act would be internationally wrongful if committed by that organization.82

Apart from the aforementioned issues, to establish the EU’s responsibility the ­elements of ‘direction and control’ over the commission of the act would also need 78 

ILC Commentaries (n 3), commentary on Art 14, para 3. ibid, commentary on Art 14, para 4. 80  Nor in that of the ILC Arts on the responsibility of states from which the comment is transposed to the context of the responsibility of international organisations. See ILC Arts on the responsibility of states, Commentary on Art 16, para 5. 81  Gourgourinis (n 28). 82  For a discussion of Art 15 ARIO see Reinisch (n 77). 79 

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to be established. The Commentaries of the International Law Commission in this respect seem to coincide to a great extent with the provisions of the EU’s Financial Responsibility Regulation. Without going to any lengths, it is worth noting that the International Law Commission has noted that the concept of ‘direction and control’ could conceivably be extended so as to encompass cases in which an international organization takes a decision binding its members. … the adoption of a binding decision on the part of an international organization could constitute, under certain circumstances, a form of direction or control in the commission of an internationally wrongful act. The assumption is that the State or international organization which is the addressee of the decision is not given discretion to carry out conduct that, while complying with the decision, would not constitute an internationally wrongful act.83

VII.  EU Responsibility Due to Coercion of a State Regarding Commission of an Internationally Wrongful Act A further scenario where the EU’s responsibility could in principle be invoked in international dispute settlement is in case of coercion of a state in relation to the commission of an internationally wrongful act. Article 16 ARIO establishes: An international organization which coerces a State or another international organization to commit an act is internationally responsible for that act if: (a) the act would, but for the coercion, be an internationally wrongful act of the coerced State or international organization; and (b) the coercing international organization does so with the knowledge of the circumstances of the act.

In contrast with the previously cited provisions, Article 16 ARIO does not require that the act should be internationally wrongful if committed by the organisation.84 What makes the provisions less likely to be applied is the condition of coercion. The ILC Commentaries make reference to the commentary on the Articles on the responsibility of states. According to these, coercion ‘has the same essential character as force majeure … Nothing less than conduct which forces the will of the coerced State will suffice, giving it no effective choice but to comply with the wishes of the coercing [international organisation]’.85 Nevertheless, the ­International Law Commission recognised that an international organisation may be considered as coercing a Member State ‘when it adopts a binding decision’.86 83 

ILC Commentaries (n 3), commentary on Art 15, para 4. ibid, commentary on Art 16, para 3. 85  ibid, commentary on Art 16, para 4, citing commentary on Art 18 on the responsibility of states. 86  ibid, commentary on Art 16, para 5. 84 

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VIII.  Applicability of the ILC Articles vis-à-vis Individuals If the EU bears international responsibility, even outside the context of investment arbitration, it will be under an obligation to ‘make full reparation for the injury caused by the internationally wrongful act’.87 However, the requirement for full reparation disappears when the organisation shares responsibility with one or more states or international organisations, such as in the case where the organisation aids or assists the state in the commission of the internationally wrongful act.88 Responsibility may also be shared where an international organisation and one or more states or other international organisations are responsible for the same wrongful act; responsibility in that case may be invoked in relation to each one of them.89 The ARIO are expressly ‘without prejudice to any right, arising from the international responsibility of an international organization, which may accrue directly to any person or entity other than a State or an international organization’.90 However, it is significant to note that this is a ‘without prejudice’ provision. The ILC Commentaries on the Articles are unequivocal that the consequences of the breaches of international law with respect to individuals are not covered by the Articles.91

IX.  Other Questions of Responsibility: Responsibility of a Member State in Connection with the Conduct of the EU Article 58 ARIO introduces a provision that does not have an equivalent in the Articles on state responsibility.92 It provides: 1. A State which aids or assists an international organization in the commission of an internationally wrongful act by the latter is internationally responsible for doing so if: (a) the State does so with knowledge of the circumstances of the internationally wrongful act; and (b) the act would be internationally wrongful if committed by that State.

87 

Art 31(1) of the ILC Arts on the responsibility of international organizations. ILC Commentaries (n 3), commentary on Art 31, para 7. 89  Art 48 of the ILC Arts on the responsibility of international organizations. 90  Art 33(2) of the ILC Arts on the responsibility of international organizations. 91  ILC Commentaries (n 3), commentary on Art 33, paras 1 and 5. 92  In fact, Art 57 of the ILC Arts on the responsibility of states is a ‘without prejudice’ provision regarding the question of state responsibility for the conduct of an international organisation. 88 

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2. An act by a State member of an international organization done in accordance with the rules of the organization does not as such engage the international responsibility of that State under the terms of this article.

Article 58 ARIO deals with a situation ‘parallel’ to the one covered in Article 14 ARIO, which relates to aid or assistance by an international organisation in the commission of an internationally wrongful act by a state or another international organisation.93

X. Conclusions This chapter has considered some aspects of the EU’s international responsibility in relation to international investment dispute settlement. Although the discussion on the responsibility of international organisations under customary international law is not new, this topic is likely to acquire further significance in the future. Within this context, the debate on the potential responsibility of the EU for breaches of international investment law will be particularly interesting to observe. Such debate will, of course, primarily take place in respect of eventual investor–state or investor–EU disputes where the Union and/or a Member State are found to have violated conventional obligations undertaken in EU investment agreements. This chapter has addressed the topic of the EU’s international responsibility from a more unconventional viewpoint, in circumstances where responsibility is difficult—indeed unlikely—to establish. Although such aspects of the EU’s alleged responsibility have not so far come into play in investment dispute settlement the dilemmas raised by them are real. It may be interesting to note, with respect to one of these ‘missed opportunities’ of invoking the potential responsibility of the EU, that the European institutions kept a low profile in the concluded Poštová banka dispute. One might easily forget that it was an intra-EU case.

93 

See also ILC Commentaries (n 3), Commentary on Art 58, para 1.

Part II

Dispute Settlement Systems: Exclusive Jurisdiction of the Court of Justice of the European Union and the Principle of Free Choice of Means

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6 The Exclusive Jurisdiction of the Court of Justice of the European Union and the Unity of the EU Legal Order NIILO JÄÄSKINEN AND ALICJA SIKORA

I. Introduction Saint Peter and Cerberus are undoubtedly the two most renowned gatekeepers in the realm of human imagination. In popular culture, such as cartoons, Saint Peter is represented as a jovial figure kindly admitting even the less deserving into the joys of paradise. Cerberus, on the other hand, is the dreadful three-headed dog guarding the entrance of the underworld in Greek mythology. His task is to prevent not only the dead from escaping, but also the living from entering the underworld. The Court of Justice of the European Union (CJEU) is, due to its exclusive competence with respect to interpretation of European Union (EU) law, the gatekeeper of this legal system. In this chapter the authors will ponder the role of the Court as a gatekeeper overseeing the gate in the wall separating public international law from EU law, and thereby protecting its own jurisdiction vis-à-vis other, potentially competing, international judicial bodies. This argument can be summarised by stating that, in essence, the Court has acted like Cerberus while disguised as Saint Peter. It is common ground that the phenomenon of continuous proliferation of international courts and tribunals in various areas of international law naturally gives rise to a hypothetical conflict between them. At the present time of globalisation and ‘fragmentation’ of international relations, there is a growing need for coordination between the numerous international jurisdictions. One of the answers to this imperative is embodied in international dispute settlement, which aims at maintaining the international public law order as an expression of states’ and non-state actors’ intentions to resolve their differences through

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peaceful dispute settlement mechanisms.1 In that vein, the International Court of Justice’s reliance on a wide range of jurisprudence from other tribunals is viewed as a counter-argument to concerns about the ‘fragmentation’ of international law,2 demonstrating the ability of international courts to engage in a cooperative transinstitutional dialogue.3 The risk of conflict and overlapping competences presents a logical challenge to the EU legal order. Such a challenge can be grasped through the interpretation of the core of the Court’s attitude which lies in Article 344 of the Treaty on the Functioning of the European Union (TFEU), a provision which is fundamental for ensuring the uniformity of EU law. At the EU level, the prevailing impression is that, owing to considerable development in its external relations, there is a continuing and perceptible expansion of EU competences into an increasing number of policy areas that used to be governed mainly by international law, such as trade, environment, human rights, security and international private law. Furthermore, commentators point to a new threat, consisting in interpretation of EU law by the ever-growing range of international tribunals that sit outside the domestic legal order.4 Therefore, it is perhaps no wonder that in the case law of the Court over the last few years we can observe that the jurisdictional concepts of unity and autonomy of EU law have led the Court to sharpen its approach as far as both its jurisdiction and the relationship between EU law and international law are concerned. As far as the uniformity of EU law is concerned, in the case law of the Court ‘unity’ of EU law seems, above all, to refer to the requirement of this legal order to feature the same content everywhere in EU territory (unless a special geographical regime is provided by the Treaties or secondary law). This is the present authors’ understanding, for example, of the notion underpinning the formula ‘primacy, unity and effectiveness’ of EU law that was introduced by the Melloni and Åkerberg Fransson judgments.5 Unity construed as an instrument of protection against interference by national legal orders into the ‘uniformity and efficacy’ of EU law is echoed in the case law concerning review of the validity of EU acts.6 In much the same vein, as far as questions

1  United Nations Office of Legal Affairs, Handbook on the Peaceful Settlement of Disputes between States (United Nations, 1992). 2 See International Law Commission, ‘Fragmentation of International Law: Difficulties Arising from the Diversification and Expansion of International Law’ [Report of the Study Group of the International Law Commission, finalized by Martti Koskenniemi, UN Doc A/CN.4/L.682 (13 April 2006), as corrected UN Doc A/CN.4/L.682/Corr.1 (11 August 2006)]. 3  SD Murphy, ‘What a Difference a Year Makes: The International Court of Justice’s 2012 Jurisprudence’ (2013) 4 Journal of International Dispute Settlement 539. 4  M Parish, ‘International Courts and the European Legal Order’ (2012) 23 European Journal of International Law 141. 5  See Case C-399/11 Melloni, ECLI:EU:C:2013:107, para 60, and Case C-617/10, Åkerberg Fransson, ECLI:EU:C:2013:105, para 29. 6  See Case 11/70 Internationale Handelsgesellschaft, ECLI:EU:C:1970:114, [1970] ECR 1125, para 3.

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of infringement of fundamental rights by a measure of the EU law are concerned, the Court excluded the option of applying criteria stemming from national legislation, as this would damage ‘the substantive unity and efficacy’ of EU law and ‘lead inevitably to the destruction of the unity of the common market and the jeopardizing of the cohesion of the [Union]’.7 Otherwise, in the European Road Transport Agreement (ERTA) case law unity is juxtaposed with solidarity as a requirement of the ‘united front’ of the Member States and the EU vis-à-vis third countries.8 On the other hand, in primary law, more particularly in Article 62 of the Statute of the Court, ‘unity and consistency of Union law’ seems to refer to intellectual coherence or ‘fit’. In other words, it refers to the idea the legal philosopher Ronald Dworkin referred to as the ‘integrity’ of law. This integrity is ensured by a single judicial body having a monopoly over the supply of authoritative interpretations of EU law. In the realm of Article 344 TFEU, the Court’s position mirrors the cross-cutting values of integrity, which has crucial impact on international dispute settlement. The scope of the Court’s competence is conceived in an open-ended manner as, according to the settled case law, an international agreement concluded by the EU ‘may confer new powers on the Court, provided that in so doing it does not change the nature of the function of the Court’ as conceived in the Treaties.9 In parallel, the expansive interpretation by the CJEU of its exclusive jurisdiction limits the exercise of the jurisdiction of other international courts and tribunals that are called upon to adjudicate on a dispute that possibly involves EU law.10 In the light of the case law, it seems nevertheless that the Court skillfully navigates among the conflicting claims of jurisdiction, while protecting the genuine, autonomous and uniform character of the EU legal order. The question remains whether it navigates in the right direction.

II.  Between Openness towards International Law and the Court’s Monopoly over Interpretation of EU Law The rationale behind the Court’s interpretation of its exclusive jurisdiction and its attitude to the external dispute settlement mechanisms is seemingly driven by the original sin of EU law. Undoubtedly, the European Communities, and the European Union, came into being as creatures of international law. Yet, the EU 7 

See Case 44/79 Hauer, ECLI:EU:C:1979:290, [1979] ECR 3727. Opinion 1/76, ECLI:EU:C:1977:63, [1977] ECR 741, para 12, referring to Case 22/70 Commission v Council (ERTA), ECLI:EU:C:1971:32, [1971] ECR 263. 9  EEA Agreement (Opinion 1/92), ECLI:EU:C:1992:189, [1992] ECR I-2821, para 32; cf Patents Court (Opinion 1/09), ECLI:EU:C:2011:123, [2011] ECR I-1137, para 75. 10  See Case C-459/03 Commission v Ireland, ECLI:EU:C:2006:345, [2006] ECR I-4635. 8 See

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as an international legal experiment is often viewed as ‘something else’.11 The sui generis legal order stands in harmony with the defensive jurisprudence of the Court focusing, as demonstrated by the Kadi judgment, on the autonomy of the Community legal system.12 Although the relationship between the EU and public international law is described as one of friendliness, the seductive story of a happy family has a few holes in its plot, as Jan Klabbers has rightly pointed out. He notes that, inter alia, the paternal vision of public international law implies that somehow EU law seems to need protection from international law.13 Such an interpretation has profound implications on the Court’s attitude towards international dispute settlement displaying characteristics of a network. Hence, the concepts of cooperation, peaceful settlement, arbitration and negotiation stand in contrast to the exclusive interpretation ensured by a single judicial body. The leitmotif of this chapter is to identify a borderline in the case law of the Court, based on the dialectic between the autonomy of the EU legal order and position of international law norms within the latter. It is argued that the Court has gradually developed EU law as an impregnable and self-contained legal order. Nevertheless, the dominant reading of the TEU is that the notion of conferred powers may also encompass implied powers, as has been suggested by the Court itself in Opinion 1/03 on the Lugano Convention.14 While discussing the relationship between the EU and public international law, the immense heritage of the ERTA judgment15 is worth recalling. The ERTA judgment recognised the implicit competence of the Community to conclude international agreements where the participation of the Community was necessary for the attainment of a Community objective. As rightly put by scholars,16 the ERTA principle is not confined to the history of Community; this is evidenced by the recent Opinion 1/13 concerning the exclusive competence of the EU relating to third country accessions to the Convention on the civil aspects of international child abduction.17 In fact, as markedly activist and supportive of European integration, the ERTA doctrine remains a key safeguard to the uniformity and effectiveness of EU law.18 As stated in Opinion 1/03, the purpose of the ERTA principle of implied treaty-making competence is to ensure ‘that the agreement is not

11  B de Witte, ‘The European Union as an International Legal Experiment’ in de G de Búrca and JHH Weiler (eds), The Worlds of European Constitutionalism (Cambridge, Cambridge University Press, 2012) 19–57. 12  See Case C-402/05 P and C-415/05 P Kadi and Al Barakaat International Foundation v Council and Commission, ECLI:EU:C:2008:461, [2008] ECR I-6351, para 282. 13  J Klabbers, ‘Völkerrechtsfreundlich? International Law and the Union Legal Order’ in P Koutrakos (ed), European Foreign Policy (Cheltenham, Edward Elgar, 2011) 95. 14  Opinion 1/03, ECLI EU:C:2006:81, [2006] ECR I-1145, para 124. 15 See Commission v Council (n 8). 16  P Eeckhout, ‘Bold Constitutionalism and Beyond’ in M Poiares Maduro and L Azoulai (eds), The Past and Future of EU Law (Oxford, Hart Publishing, 2010) 218–23. 17  Concluded in The Hague on 25 October 1980. 18  Eeckhout (n 16).

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capable of undermining the uniform and consistent application of the Community rules’.19 In contrast, the Court’s line of case law related to the delimitation of its own jurisdiction with respect to external dispute settlement mechanisms represents a combination of openness in principle with such restraint in practice that this acceptance in principle is, perhaps, never allowed to take effect. Driven by the concept of autonomy of EU law, this case law raises global questions related to the understanding of international law from the EU law perspective. In Opinion 1/91 on the compatibility with the EEC Treaty of the system of judicial supervision proposed under the EEA Agreement, the Court verified whether the proposed system, which included a special joint judicial body called the EEA Court, could undermine the autonomy of the Community legal order in pursuing its own particular objectives.20 In principle, the Court affirmed the compatibility with Community law of a mechanism where the Community institutions, the Court itself included, were to be submitted to the decisions of a judicial organ created or designated by an international agreement. Such a solution was within the remit of the powers entailed by the Community’s competence in the field of international relations.21 Hence, the Court accepted that the interpretation and application of provisions of international agreement by a ‘foreign’ court could be binding for the Community institutions and also for the Court itself in its mission of interpretation and application of agreements concluded by the Community. This statement made explicit what was already implicitly stated in Opinion 1/76 on the draft agreement on the European Laying-up Fund for Inland Waterway Vessels.22 The solemn principle of compatibility with EU law of an agreement providing for the creation of a judicial body responsible for interpretation of the provisions of that agreement was reaffirmed in Opinion 1/09. This opinion related to the draft agreement on a unified patent litigation system.23 Recently, in Opinion 2/13 the CJEU reinforced this statement of principle when, as in the case of accession of the EU to the European Convention on Human Rights (ECHR), the conclusion of such an international agreement is provided for by the Treaties themselves.24 Hence, in principle, the approach of the Court towards such mechanisms has been like that of a benevolent Saint Peter. Nevertheless, such declarations of compatibility have never been implemented in practice. This outcome has been justified with a reference to the need to safeguard the essential element of the EU legal order, ie its autonomy, and more particularly, the autonomy of interpretation concerning the contents of EU law, and ensured by the monopoly of interpretation of the Court. 19 

See Opinion 1/03 (n 14), para 133. See Opinion 1/91, ECLI:EU:C:1991:490, [1991] ECR I-6079, para 30. 21  ibid para 40. 22  See Opinion 1/76 (n 8) para 21. 23  See Opinion 1/09 (n 9). 24  See Opinion 2/2013, ECLI:EU:C:2014:2454. 20 

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The Court stated in Opinion 1/91 that because of the objective of ensuring homogeneity throughout the EEA, interpretation of the EEA agreement would also determine the interpretation of the corresponding rules of Community law. This was in conflict with Article 164 of the EEC Treaty (present Article 19 of the EU Treaty) and ‘with the very foundations of the Community’.25 Moreover, in Opinion 1/91 the Court acted as a classic guardian of the principle of the allocation of responsibilities defined in the Treaties and, consequently, of the autonomy of the Community legal system combined with the principle of exclusive jurisdiction enshrined in Article 344 TFEU.26 The intensity of this monopoly of the Court on the judicial interpretation of disputes between EU Member States falling within the scope of EU law was later illustrated in particular by the MOX Plant case27 and, recently, by Opinion 2/13 on EU Accession to the ECHR. At the heart of the MOX Plant case laid the interpretation of the United Nations Convention on the Law of the Sea (UNCLOS), which had been concluded as a mixed agreement.28 The UNCLOS was concluded on the basis of the Community’s shared competence in the field of environmental protection laid down in [then] Articles 174 to 176 EC. The Court came to the conclusion that Ireland had breached its obligations under the EC Treaty by submitting a dispute regarding provisions of the UNCLOS to an organ other than the CJEU. In Opinion 2/13 the Court recalled that an international agreement affecting the powers of the Court was compatible with EU law and its autonomy only if the indispensable conditions for safeguarding the essential character of those powers were satisfied.29 It also emphasised that any action by the bodies afforded decision-making powers by the ECHR must not have the effect of binding the EU and its institutions in the exercise of their internal powers.30 It should not be possible for the European Court of Human Rights (ECtHR) to ‘call into question the Court’s findings in relation to the scope ratione materiae of EU law, for the purposes, in particular, of determining whether a Member State is bound by fundamental rights of the EU’.31 It is in the name of this judicial monopoly of interpretation and autonomy of the EU legal order that the principle of compatibility, as previously affirmed, has been gradually weakened by the Court. This may render it devoid of any practical effect in the conduct of the external legal relations of the EU. In particular, in Opinion 2/13 the Court seems to adopt an absolute and maximalist vision of the impenetrability of EU and international law. As a result, it may be unsurprising that in Opinion 2/13 the CJEU found that the ‘very existence of a possibility’ of the EU or Member States submitting an 25 

See Opinion 1/91 (n 20) paras 45–46 (emphasis added). ibid paras 34–35 and 45–46. 27 See Commission v Ireland (n 10). 28  United Nations Convention on the Law of the Sea (adopted 10 December 1982, entered into force 16 November 1994) 1833 UNTS 3. 29  See Opinion 2/2013, ECLI:EU:C:2014:2454, para 183. 30  ibid para 184. 31  ibid para 186. 26 

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inter-state application to the ECtHR with respect to a violation involving EU law violates Article 344 TFEU.32 According to the CJEU, only the express exclusion of the application of the ECHR from the scope ratione materiae of EU law would be compatible with Article 344 TFEU.33 The risk of an adverse effect resulting from the Draft Agreement on Accession to the ECHR led the CJEU also to outlaw the possibility of the ECtHR ruling on a question after the Court had already given the ruling on the same point of law. The CJEU said that this would be tantamount to conferring on the ECtHR jurisdiction to interpret the case law of the CJEU.34 The echoes of this attitude can be also found in relation to judicial review of Common Foreign and Security Policy (CFSP) matters.35 The reasons underpinning the attitude of the CJEU towards external jurisdiction emanate from its case law. In this perspective, Opinion 1/00 on the establishment of a European Aviation Area is a source of abundant reasoning as to the test for assessing the compatibility with the EC Treaty36 of agreements creating internationally binding decision-making structures.37 An important step was also made by the Court in Opinion 1/09 by rejecting, in the name of ensuring the inviolability of the national courts’ powers to seek interpretations of EU legislative acts through preliminary references, the possibility of attribution to an internal judicial organ the exclusive competence within a field of law pertaining to EU law, in this case patent law.38 Finally, Opinion 2/13 sets requirements in relation to the recognition of the jurisdiction of external judicial organs that are so strict that they may be impossible to achieve. This may, indeed, be the case if the international agreement in question relates to a field of law having substantive importance in terms of EU internal legal relations and is capable, because of the nature of international law obligations it entails, to affect the application of EU law. This leads to the question of the role of international law in respect of the control of the validity of EU legal acts.

III.  Between Monism of Principle and the Requirement of Direct Effect of International Norms as a Precondition in the Control of Validity of EU Legal Acts International actors, including the EU, enter into undertakings with one another on a constant basis. An important part of those undertakings are treaties, which 32 

ibid para 208. ibid para 213. 34  ibid para 239. 35  ibid para 255. 36  See Opinion 1/00, ECLI:EU:C:2002:231, [2002] ECR I-3493 and the commentary of F Castillo de la Torre, (2002) 39 Common Market Law Review 1373. 37  See Opinion 1/00, ECLI:EU:C:2002:231, [2002] ECR I-3493. 38  See Opinion 1/09 (n 9) paras 78–80. 33 

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give rise to legal rights and obligations under public international law.39 According to Article 216 TFEU, ‘agreements concluded by the Union are binding upon the institutions of the Union and on its Member States’. It is accepted since the Haegeman judgment40 that a monist approach underlies this provision, thus entailing ‘automatic incorporation’, with the result that international agreements, as such, are sources of EU law. However, the dialectic between monism and the principle of autonomy of EU law is well illustrated by the effects of binding international agreements in the EU legal system in terms of control of validity exercised by the Court.41 To put it shortly, the Court’s case law leads inevitably to a process of fading or overlapping between monism and dualism. In fact, treaty friendly interpretation of internal law, well accepted by dualistic systems, has been given a predominant role as the device for coordinating EU law and international law, whereas monism, doctrinally implying primacy of international law, has a lesser role to play. This stems from the requirement of direct effect, which must be fulfilled by a rule of international law in order to be able to affect the validity of internal EU rules, at least in so far as treaty law, in contradistinction to customary international law, is concerned. In accordance with the classic approach, in situations where the question of the effect of provisions of the international agreement has not been expressly dealt with in the agreement, it is for the CJEU to decide upon it.42 However, on the basis of this statement of principle, the Court has gradually created an almost impregnable shield via the condition of direct effect and applied it to the provisions of international agreements. It is true that particular conditions were elaborated as far as World Trade Organization (WTO) and General Agreement on Tariffs and Trade (GATT) provisions were concerned in the Fediol and Nakajima judgments.43 In these cases, however, what seems to have been at stake was the status of Community regulations implementing a specific transformation obligation set out by WTO law, and not the issue of direct effect of trading rules.44 Nevertheless, it is common ground that the main line of case law is encapsulated and generalised by the Intertanko judgment,45 according to which, in order 39  J Klabbers, The Concept of Treaty in International Law (Alphen aan den Rijn, Kluwer Law International, 1996) 245. 40  Case 181/73, Haegeman, EU:C:1974:41, [1974] ECR 449. 41  For further analysis, see Opinion of Advocate General Jääskinen in joined Cases C-401/12 P to C-403/12 P Council and Parliament v Commission and Commission v Vereniging Milieudefensie and Stichting Stop Luchtverontreiniging Utrecht, ECLI:EU:C:2014:310. 42 See Case C-120/06 P and C-121/06 P FIAMM and Others v Council and Commission, ECLI:EU:C:2008:476, [2008] ECR I-6513, para 108. 43  See Case 70/87 Fediol v Commission, ECLI:EU:C:1989:254, [1989] ECR 1781 and Case C-69/89 Nakajima v Council, ECLI:EU:C:1991:186, [1991] ECR I-2069. 44  In fact, in these cases, the Court did not apply the classical direct effect test. See Nakajima (n 43), paras 28–29 ‘Nakajima is not relying on the direct effect of those provisions’. In Fediol (n 43), see paras 19–22, where the Court rejected the Commission’s plea, according to which absence of direct effect would make the submission inadmissible. 45 See Case C-308/06 The International Association of Independent Tanker Owners and Others (Intertanko), ECLI:EU:C:2008:312, [2008] ECR I-4057.

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for a norm of an international agreement to be a criterion governing the validity of an act of EU law, a provision of a convention must be, inter alia, unconditional and sufficiently precise; that is to say, it must have direct effect.46 The Intertanko case law seems now to be carved in stone, in view of the recent judgments in environmental cases pertaining to the Aarhus convention.47 In these judgments, the Court seems to have also abandoned the orientation adopted by the General Court, where the requirement of direct effect could be circumvented by relying on Fedjol and Nakajima.48 In his Opinion in the International Fruit Company case, AG Mayras justified the Court’s adherence to the notion of direct effect in the name of unity of the EU law: The unity and, it can be said, the very existence of Community law require that the Court is alone empowered to say, with the force of law, whether an agreement binding the Community or all the Member States is or is not directly applicable within the territory of the Community and, if it is, whether or not a measure emanating from a Community institution conforms to that external agreement.49

The direct effect requirement applicable to public international law norms nevertheless raises some issues if it is to be used as an absolute yardstick for their penetration within the EU legal order. First, it is true that the Court’s response given in the Lesoochranárske case (the ‘Slovakian Bears’ case) to the lack of direct effect of an international agreement was the interpretation of that agreement in conformity with international law.50 This does not require the adoption of a particular approach by the domestic legal systems. Nevertheless, EU secondary legislation should remain in harmony with public international law. According to the Court, ‘primacy of international agreements concluded by the Community over provisions of secondary Community legislation means that such provisions must, so far as possible, be interpreted in a manner that is consistent with those agreements’.51 However, as illustrated notably by the Slovakian Bears case, which related to the interpretation of Article 9(3) of the Aarhus Convention, the doctrine of direct effect, even when combined with interpretation in conformity with international law, features serious limits. In this judgment, the Court found that Article 9(3) of the Convention regulating access to a judge in environmental matters does not have direct effect in EU law. Despite this strong statement, the Court imposed on the

46  See Case C-366/10 Air Transport Association of America and Others, ECLI:EU:C:2011:864, [2011] ECR I-13755. 47  See joined Cases C-401/12 P to C-403/12 P Council and Parliament v Commission and Commission v Vereniging Milieudefensie and Stichting Stop Luchtverontreiniging Utrecht, ECLI:EU:C:2015:4. 48  See ibid paras 56–62. 49  Opinion of Advocate General Mayras in Joined Cases International Fruit Company and Others, ECLI:EU:C:1972:89, [1972] ECR 1219, 1234. 50  See Case C-240/09 Lesoochranárske zoskupenie, ECLI:EU:C:2011:125, [2011] ECR I-1255, paras 47–52. 51  See Case C‑61/94 Commission v Germany, ECLI:EU:C:1996:313, [1996] ECR I-3989, para 52.

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national judge the task of interpreting, to the fullest extent possible, the procedural rules relating to the conditions to be met in order to bring administrative or judicial proceedings in accordance with the objectives of Article 9(3) of that Convention. This was also necessary due to the objective of effective judicial protection.52 Second, the Court’s case law leads to an amalgam between the judicial protection of the rights of individuals and the implementation of its international obligations by the EU itself. This was one of the questions put forward in the recent Opinion in a saga of environmental cases considered in Vereniging Milieudefensie.53 In these cases, where the legality of an EU regulation implementing the Aarhus Convention at the EU level was at stake, the Advocate General expressed the view that a clear distinction should be drawn, conceptually speaking, between the situation in which an individual wishes to invoke directly a norm of international law by relying on a right laid down in that norm for his or her benefit, and that of the review of the discretion enjoyed by the institutions during the process of alignment of EU law with an act of international law. It is usually the intention of the privileged stakeholders to initiate such a review before the Courts of the European Union. Yet in the context of the Aarhus Convention that possibility was also afforded to environmental protection organisations satisfying the criteria laid down in this regard. In the above mentioned cases the CJEU reiterated its interpretation of Article 9(3) of the Aarhus Convention and relied on the Intertanko solution. From a constitutional law point of view this creates an area free from any judicial review. This, again, is problematic with regard to the general principle expressed in the Les Verts judgment,54 which subjected all action by the EU institutions to judicial control exercised by the Court.

IV.  Concluding Reflections The main question to be asked in view of the threads in the case law described in this chapter is whether strengthening the CJEU’s position as a final gate-keeper of the autonomy of EU legal order is a proper means for guaranteeing its unity and coherence. Has Cerberus overtaken the field? There is no clear answer to this dilemma. On the one hand, this development may appear as disappointing for those who regard openness towards international law, that ‘gentle civilizer of nations’ to recall the title of Martti Koskenniemi’s excellent book,55 as the yardstick of civility for any domestic legal order, EU law included. 52 See

Lesoochranárske zoskupenie (n 50) paras 50–51. See Opinion of Advocate General Jääskinen in Vereniging Milieudefensie (n 41) para 77. See Case 294/83 Les Verts v Parliament, ECLI:EU:C:1986:166, [1986] ECR 1339. 55  M Koskenniemi, The Gentle Civilizer of Nations: The Rise and Fall of International Law 1870–1960 (Hersch Lauterpacht Memorial Lectures) (Cambridge, Cambridge University Press, 2010). 53  54 

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However, as the Kadi case law56 demonstrates, on the other hand, all incomers do not necessarily deserve entrance. In fact, the very expansion of the scope of the EU’s external competences, and the variety of its treaty relations with third parties, may justify the restrictive approach adopted by the Court. Seen from this angle, general international law and various regimes created by multilateral and bilateral international agreements may fail to offer sufficient protection of the fundamental rights of the individuals, and the general standard of protection may differ or deviate from the constitutional principles of the EU legal order. Hence, although from the perspective of the relationship between global public law and EU law the attitude of the CJEU may be considered as ‘strictly communautaire’, from the perspective of the participation of the EU in international dispute settlement mechanisms, it represents a balanced advance with far reaching consequences. In fact, by not occupying the field of public international law norms and strictly observing the limits of its own competence, the Court, first and foremost, reserves the EU’s position in such international litigation and allows the EU to safeguard the margin of appreciation in this context. In other words, the EU is not constrained by any domestic judicial interpretations of public international law norms and can, case by case, defend its interest in the context of the international dispute settlement. Nevertheless, as the MOX Plant case and Opinion 2/13 clearly demonstrate, where the CJEU curtails non EU-adjudication in matters where the EU is competent, this implies heavy responsibilities on the Court itself. It is apparent that overstating exclusive, interpretative authority can lead to the isolation of the EU at the global level. It is true that, in Christianity, Saint Paul holds the keys of Paradise. However, he is not expected to allow everybody to enter. It can be recalled that the gates of Paradise should be open only for those who—to paraphrase the Divine Liturgy of Saint John Chrysostom—had ‘a good account before the awesome judgment seat of Christ’. Perhaps strict gatekeeping by the CJEU builds upon this principle.

56 See

Kadi (n 12).

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7 The Not So Free Choice of EU Member States in International Dispute Settlement TOBIAS LOCK

I. Introduction The exclusive jurisdiction of the Court of Justice of the European Union (CJEU) over certain disputes between Member States is but one example of how a state’s membership of the European Union (EU) affects its ability to act on the international plane. International dispute settlement is based on the free choice ­principle, which finds expression in the UN General Assembly’s Friendly Relations ­Declaration1 and is based on state sovereignty. It will be argued that a state’s EU membership restricts the free choice of forum quite considerably. It will be shown that the jurisdiction of the CJEU goes much further than the wording of Article 344 of the Treaty on the Functioning of the European Union (TFEU), which forms its basis and expressly only refers to disputes over the EU Treaties, might suggest. It is well known that the CJEU claims jurisdiction not only over EU law proper, that is the EU Treaties and secondary acts adopted according to them, but also over certain international agreements concluded by the Member States either together with the EU or, in some cases, alone. Yet the restrictions placed on the free choice of Member States reach further, in that a widely conceived duty of loyal cooperation means that EU law restricts the possibilities of bringing disputes to international courts even in cases over which the CJEU would not have jurisdiction. This not only puts concurring international dispute settlement regimes under pressure by offering a competing forum,2 but has the potential of considerably restricting Member States’ freedom to choose the forum for the settlement of disputes. 1  GA Res 2625(XXV) Declaration on Principles of International Law concerning Friendly Relations and Co-operation among States in accordance with the Charter of the United Nations. 2  See eg the reaction to the CJEU’s MOX Plant decision by V Röben, ‘The Order of the UNCLOS Annex VII Arbitral Tribunal to Suspend Proceedings in the Case of the Mox Plant at Sellafield: How Much Jurisdictional Subsidiarity?’ (2004) 73 Nordic Journal of International Law 223.

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The CJEU’s jurisdiction is characterised by its exclusivity. A key rationale behind the CJEU’s insistence on its exclusive jurisdiction is to ensure a uniform interpretation of EU law. Hence no other court may be given jurisdiction to interpret EU law in a manner which would be binding on the EU or its institutions. The Court’s reasoning in Opinion 1/91 is instructive in this respect: [T]he jurisdiction conferred on the EEA Court … is likely adversely to affect the allocation of responsibilities defined in the Treaties and, hence, the autonomy of the [EU] legal order, respect for which must be assured by the Court of Justice pursuant to Article 164 of the EEC Treaty [now Article 19(1) of the Treaty on European Union (TEU)]. This exclusive jurisdiction of the Court of Justice is confirmed by Article [344 TFEU].3

In this paragraph the Court performed a leap, in finding that the autonomy of the EU legal order implies an exclusive jurisdiction of the CJEU. Thus it considers Article 344 TFEU, which is the only provision explicitly dealing with the exclusive character of the Court’s jurisdiction, merely to confirm this finding. Article 344 TFEU reads: ‘Member States undertake not to submit a dispute concerning the interpretation or application of the Treaties to any method of settlement other than those provided for therein.’ The excerpt from Opinion 1/91 already hints at the much wider extent of the CJEU’s exclusive jurisdiction beyond the Treaties stricto sensu and beyond disputes between Member States brought under Article 259 TFEU. Indeed, as Opinion 2/13 confirms, it extends to disputes between a Member State and the EU as well.4 At the same time the CJEU confirmed, as pointed out by Niilo Jääskinen and Alicja Sikora in chapter six of this volume, the ‘solemn principle’ that an agreement may create a judicial body responsible for interpreting the agreement. However, as these authors demonstrate by reference to Opinions 1/91 and 2/13, the Court is reluctant to accept this principle in practice. Of course, both opinions were concerned with rather elaborate situations in which the court concerned would have had jurisdiction to interpret EU law. Simpler mechanisms, where the court created only has jurisdiction over the interpretation of an agreement that does not replicate EU law, would be acceptable, however. But even in this case, dispute settlement between Member States would have to comply with Article 344 TFEU, as shown below. Hence, while the Court’s opinions considerably limit the leeway of the Member States and of the EU institutions to create dispute settlement mechanisms in such agreements, this is by no means impossible. The following discussion proceeds in four steps: first, it commences by very briefly outlining the CJEU’s exclusive jurisdiction over Union agreements, in particular mixed agreements; second, it explores whether Member States are barred from bringing proceedings over the Common Foreign and Security Policy, over

3 Opinion 1/91 Agreement on the European Economic Area, ECLI:EU:C:1991:490, [1991] ECR I-6079, para 35. 4  Opinion 2/13 Accession of the European Union to the European Convention for the Protection of Human Rights and Fundamental Freedoms, ECLI:EU:C:2014:2454, para 204.

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which the CJEU does not have jurisdiction; third, it considers restrictions on the Member States’ powers to bring cases against third countries; and, fourth, it concludes by contending that international courts may need to respect the exclusive jurisdiction of the CJEU, at least where disputes between two or more Member States or between Member States and the EU are concerned.

II.  The Exclusive Jurisdiction and Union Agreements A.  Union Agreements as an Integral Part of EU Law Since its decision in Haegeman5 the CJEU considers agreements concluded by the EU to become integral parts of EU law. For this reason the Court’s jurisdiction extends to them.6 In this context, mixed agreements, concluded by both the EU and the Member States, pose particular problems.7 If the mixed agreement itself provides for dispute settlement between the parties or if two Member States have subjected themselves to the jurisdiction of the International Court of Justice (ICJ) under Article 36(2) of the ICJ Statute,8 the potential for a dispute between two (or more) Member States, or indeed between Member States and the EU, over the obligations under the agreement becomes clear. The most famous example for this is the MOX Plant case, in which Ireland brought proceedings against the United Kingdom based on UNCLOS,9 which had been concluded as a mixed agreement. As is well known, the International Tribunal for the Law of the Sea (ITLOS) considered itself to have jurisdiction to decide upon provisional measures, which it denied on substantive grounds.10 The arbitral tribunal, asked to decide the merits of the case, was more doubtful on this point and suspended proceedings awaiting a decision by the CJEU over whether Ireland had violated its obligations under EU law by bringing the dispute before another court.11 The CJEU’s subsequent judgment confirmed that Ireland had been in breach of Article 344 TFEU by bringing the case under UNCLOS.12 The decision was 5 

Case 181/73 Haegeman v Belgium, ECLI:EU:C:1974:41, [1974] ECR 449. ibid para 5. On mixed agreements in general see eg P Eeckhout, EU External Relations Law (Oxford, Oxford University Press, 2011) 212 and P Koutrakos, EU International Relations Law 2nd edn (Oxford, Hart Publishing, 2015) 162–66. 8 Declarations under Art 36(2) ICJ Statute have been made by the following Member States: ­Austria, Belgium, Bulgaria, Cyprus, Denmark, Estonia, Finland, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, Netherlands, Poland, Portugal, Romania, Slovakia, Spain and the United Kingdom. 9  United Nations Convention on the Law of the Sea (adopted 10 December 1982, entered into force 16 November 1994) 1833 UNTS 3 (UNCLOS). 10  MOX Plant Case (Ireland v United Kingdom) (Provisional Measures) (2002) 41 ILM 405. 11  MOX Plant Case (Ireland v United Kingdom) (Order No 3 of 24 June 2003) (2003) 42 ILM 1187. 12  Case C-459/03 Commission v Ireland, ECLI:EU:C:2006:345, [2006] ECR I-4635. 6 

7 

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based on the notion that its exclusive jurisdiction extends to those provisions of a mixed agreement for which the EU has external competence. The question of which parts of a mixed agreement are covered by the EU’s competence is often a difficult one to answer. This is so in particular where, as with the competence concerning the environment in the MOX Plant case, the EU’s external competence to conclude the agreement is a shared competence.13 The MOX Plant decision suggests that the provisions of a mixed agreement for the conclusion of which the EU has only shared external competence come within the scope of EU law if, in the concrete situation, the EU had elected to exercise that external competence when concluding the mixed agreement.14 Thus situations are conceivable in which the EU may have had competence over parts of a mixed agreement but chose not to exercise this when concluding the agreement, so that those parts do not form part of the scope of EU law.15 While this approach might, in theory, suggest a degree of restraint as far as a finding of its own jurisdiction is concerned, the practical consequences are probably minimal. Moreover, this should also not distract from the broad general conception of the scope of EU competence and the jurisdiction of the CJEU, which goes along with it. The most important rationale for the CJEU’s broad approach to its jurisdiction is to ensure uniform interpretation of mixed agreements. This rationale pervades the case law, Advocates General’s opinions and the literature.16 This interest in a uniform interpretation stems partly from the fact that the EU and the Member States are jointly responsible for violations of mixed agreements.17 Given that the EU may therefore be held responsible by a third party for a violation of a mixed agreement caused by a Member State, this interest in a uniform interpretation seems justified. Based on this reason in isolation the EU would have an interest in a uniform application of all the provisions of a mixed agreement in order to avoid a situation in which the Member States adopt differing interpretations resulting in breaches of an agreement for which the EU has assumed international

13 

See Art 4 TFEU. reading of the earlier case law had also been suggested in Case C-459/03 Commission v Ireland, Opinion of AG Maduro, ECLI:EU:C:2006:42, para 33; for a detailed discussion see T Lock, The European Court of Justice and International Courts (Oxford, Oxford University Press, 2015) 103–08. 15  Eeckhout (n 7) 239. 16 It was first mentioned in Case 12/86 Demirel v Stadt Schwäbisch Gmünd, Opinion of AG ­Darmon, ECLI:EU:C:1987:232, para 15; Case C-53/96 Hermès International v FHT Marketing Choice BV, ECLI:EU:C:1998:292, [1998] ECR I-3603, para 32; Joined cases C-300/98 and C-392/98 Dior and Others, ECLI:EU:C:2000:688, [2000] ECR I-11307, para 37; Case C-431/05 Merck Genéricos—Produtos Farmacêuticos Lda v Merck & Co Inc and Merck Sharp & Dohme Lda, ECLI:EU:C:2007:496, [2007] ECR I-7001, para 37; Case C-240/09 Lesoochranárske zoskupenie VLK v Ministerstvo životného prostredia Slovenskej republiky, ECLI:EU:C:2011:125, [2011] ECR I-1255, para 42; see also A Dashwood, ‘Preliminary Rulings on the Interpretation of Mixed Agreements’ in D O’Keeffe (ed), Judicial Review in European Union Law: Liber Amicorum in Honour of Lord Slynn of Hadley (Alphen aan den Rijn, Kluwer, 2000) 174. 17 Case C-316/91 Parliament v Council Opinion of AG Jacobs, ECLI:EU:C:1993:872, para 69; ­Eeckhout (n 7) 239–40, 260ff. 14 This

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­responsibility.18 Taken to its logical conclusion, this would justify the Court’s ­jurisdiction over all parts of a mixed agreement. It is apparent that this would lead to a considerable expansion of EU competence since it would make even those parts of a mixed agreement that are exclusively within the competence of the Member States subject to the CJEU’s jurisdiction. Such a far-reaching jurisdiction would be hard to reconcile with the principle of conferred powers.19 This explains why the CJEU’s case law focuses on competence. This places a Member State that is considering bringing a dispute over a mixed agreement to an international court in a difficult position. After all, it will not only have to ascertain over which parts of the agreement the EU had competence but, where that competence is shared, it will also need to establish how far the EU had elected to exercise its shared competence. Moreover, such a unilateral and often primordial assessment carries a significant risk, since there is no guarantee that the European Commission as the ‘enforcer’ of EU law, and subsequently the CJEU, will agree. This danger of enforcement proceedings, of course, has serious practical repercussions for the freedom of choice of a Member State. While there may be other international treaties that foresee the exclusive jurisdiction of a specific forum for the settlement of disputes, there is usually no way of this ever being enforced. It thus seems that the safest approach for an EU Member State would be to inform the European Commission about its plans to bring a case with a potential EU law dimension before another court or tribunal and to seek dispensation. In fact, this was the strategy pursued by Belgium and the Netherlands in the Iron Rhine case on the reopening of an ancient railway line between Belgium and Germany via Netherlands territory, which potentially raised some points of EU environmental law, which could possibly have triggered Article 344 TFEU.20 Given that the Commission did not open proceedings against either Member State so that the arbitral tribunal was able to decide the case, it would seem these tactics can work.21 Where the European Commission does not agree with the assessment of the Member State concerned, it would be advisable for it to sue the other Member State in the CJEU, if only to ascertain whether the Court considers itself to have jurisdiction. This is cumbersome, but appears to be the only way to achieve legal certainty in this regard. Having briefly outlined the restrictions incumbent on the Member States ­arising from disputes over EU law proper and (mixed) EU agreements, the remainder of this chapter will show that the constraints on the free choice of Member States go even further.

18  See Case C-53/96 Hermès International v FHT Marketing Choice BV, Opinion of AG Tesauro, ECLI:EU:C:1997:539, para 20. 19  Art 4(1) TEU. 20  N Lavranos, ‘Das Rechtsprechungsmonopol des EuGH im Lichte der Proliferation internationaler Gerichte’ [2007] Europarecht 440, 452. 21  Belgium v Netherlands (Iron Rhine) Award of 24 May 2005, RIAA XVII 35–125.

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B. Exclusive Jurisdiction and Cases for Which the CJEU Would Not Be Competent Govaere asked the question whether the CJEU has more exclusive jurisdiction than the EU has external competence.22 In the same vein, one might even ask, somewhat counterintuitively, whether the CJEU has exclusive jurisdiction to decide disputes between EU Member States concerning agreements to which the EU is not a party. Three scenarios in which this could potentially happen can be distinguished. Two of these scenarios cover situations in which some or all Member States have concluded an agreement in an area for which the EU has external competence. In the first scenario, the agreement was concluded by the Member States before the EU assumed external competence covering the subject matter; the second concerns cases in which the EU is unable to conclude the agreement under international law because the treaty concerned is not open to the EU, so that the Member States act in its place. In the third scenario, Member States have expressly agreed to confer such jurisdiction on the CJEU.

i.  Substitution of the European Union for the Member States In the first scenario the Member States had concluded an agreement and subsequently lost the external competence for its subject matter to the EU. This was famously the case with the General Agreement on Tariffs and Trade (GATT) 1947, which the original six Member States had become parties to before they signed the Treaty of Rome and thereby transferred the exclusive external competence over the common commercial policy to the Community, which must now be read as the ‘Union’.23 The CJEU held in International Fruit that ‘in so far as under the EEC Treaty the Community has assumed the powers previously exercised by the Member States in the area governed by the [GATT 1947], the provisions of that agreement have the effect of binding the Community’.24 The Court’s key arguments to support this conclusion were first that by conferring this external power to the Union the Member States had shown their wish to bind the Union by the obligations under the GATT 194725 and, second, that the Union had already assumed the functions of a party under the GATT by appearing internationally as a party, which had been recognised by the other parties to it.26 As a consequence the Union had succeeded the Member States as parties to the GATT. Applying ­Haegeman,

22  I Govaere, ‘Beware of the Trojan Horse: Dispute Settlement in (Mixed) Agreements and the Autonomy of the EU Legal Order’ in C Hillion and P Koutrakos (eds), Mixed Agreements Revisited (Oxford, Hart Publishing, 2010) 187, 189. 23  See Art 207 TFEU. 24 Joined Cases 21-24/72 International Fruit Company, ECLI:EU:C:1972:115, [1972] ECR 1219, para 18. 25  ibid para 15. 26  ibid paras 14, 16–17.

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GATT thus was an integral part of EU law and the CJEU had jurisdiction to interpret it.27 This shows the possibility of the Court having exclusive jurisdiction to interpret agreements to which the Union is not formally a party. As subsequent cases show, it is very difficult to establish the conditions for a substitution of the EU for the Member States. The CJEU requires that a full transfer of powers previously exercised by the Member States must have occurred.28 It is not in itself sufficient that all Member States are party to the international treaty.29 The decision in Bogiatzi shows that a full transfer of powers has only occurred if there is no aspect of the international treaty concerned in respect of which the Union does not have competence, and in case of shared competence, fully exercised it. The case concerned the question whether the Warsaw Convention 1929 on the Unification of Certain Rules Relating to International Carriage by Air constituted an integral part of EU law. The Court examined how far existing EU legislation had exhausted the field to which the Warsaw Convention applies. It concluded that there were still areas covered by the Warsaw Convention not governed by EU law so that it did not have jurisdiction to interpret the Warsaw Convention.30 Thus as long as the Member States have retained some powers within the field of a treaty, substitution has not occurred.31 GATT 1947 remains the only agreement in respect of which the CJEU has ­explicitly recognised a substitution to have occurred. Apart from the Warsaw ­Convention the Court has considered and denied a substitution with respect to the Chicago Convention on International Civil Aviation,32 the Marpol ­Convention,33 the International Convention on Civil Liability for Oil Pollution Damage, the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage34 and the Convention on the Contract for the International Carriage of Goods by Road.35 It would not be correct, however, to conclude that the Court has given up on the possibility of substitution. Whenever the issue is raised it examines closely whether the conditions spelled out in International Fruit have been met. It is thus possible that a case will occur yielding the same outcome. In fact, as recently as in Opinion 1/13 the Court held that the EU had exclusive competence to decide on the acceptance of the accession of new states to the 1980 Hague Convention on the Civil Aspects of International

27 Joined Cases 267 to 269/81 Amministrazione delle Finanze dello Stato v SPI and SAMI, ECLI:EU:C:1983:78, [1983] ECR 801, paras 12–19; of course, the Court consistently held that the GATT 1947 did not have direct effect, International Fruit Company (n 24) paras 19–27. 28  Case C-308/06 Intertanko, ECLI:EU:C:2008:312, [2008] ECR I-4057, para 49. 29 ibid. 30  Case C-249/06 Commission v Sweden, ECLI:EU:C:2009:119, [2009] ECR I-1335, paras 28–34. 31  Case C-366/10 Air Transport Association of America, ECLI:EU:C:2011:864, [2011] ECR I-13755, para 70. 32 ibid. 33  Case C-379/92 Peralta, ECLI:EU:C:1994:296, paras 15–16; Intertanko (n 28) paras 46–49. 34  Case C-188/07 Commune de Mesquer v Total, ECLI:EU:C:2008:359, [2008] ECR I-4501. 35  Case C-533/08 TNT Express Netherlands BV v AXA Versicherung AG, ECLI:EU:C:2010:243, [2010] ECR I-4107, paras 62–63.

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Child Abduction.36 That Convention had been concluded by the Member States and the EU had only acquired its exclusive competence based on implied powers after the adoption of Regulation 2201/2003.37 Even though the Court did not spell it out precisely in these terms, the fact that it held the exclusive competence of the Union to cover the whole of the Convention suggests that a substitution had taken place.38 As far as issues of jurisdiction are concerned, the consequences of a substitution would be that a Member State would have to bring cases against another Member State concerning the interpretation of such a Treaty to the CJEU.

ii. Agreements Concluded by the Member States on Behalf of the European Union A further question is whether there is CJEU jurisdiction over agreements concluded by the Member States on behalf of the EU. The Member States conclude agreements on behalf of the Union where the agreement is not open to the Union, but the Union nonetheless has external competence to conclude it. This is for instance the case with the ILO Conventions. The EU cannot conclude these agreements as the ILO Constitution is not open to it.39 Yet in so far as the Union is competent to partly or fully conclude them, the CJEU accepts that the Union’s external competence may ‘be exercised through the medium of the Member States acting jointly in the [Union’s] interest’.40 Where this has happened, those parts of the agreement which come within the Union’s competence and which have therefore been concluded on the Union’s behalf by all the Member States can be considered integral parts of EU law, for the interpretation of which the CJEU enjoys exclusive jurisdiction.41 The Member States have also concluded agreements on behalf of the Union in other situations. One case was the European Road Transport Agreement (AETR), for the conclusion of which the CJEU had considered the Union to have an exclusive implied power.42 The situation was specific in that the agreement had already been negotiated to a large extent by the Member States before the CJEU was able to confirm the Union’s competence over it. Thus, the CJEU granted a request by the 36  Convention on the Civil Aspects of International Child Abduction (adopted 25 October 1980, entered into force 1 December 1983) 1343 UNTS 89 (Hague Convention). 37  Council Reg (EC) No 2201/2003 of 27 November 2003 concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility, repealing Reg (EC) No 1347/2000 [2003] OJ L338/1. 38 Opinion 1/13 Convention on the civil aspects of international child abduction, ECLI:EU: C:2014:2303, para 83. 39  It is only open to states, see Art 1 of the ILO Constitution (1948) UKTS 47. 40  Opinion 2/91 ILO, ECLI:EU:C:1993:106, [1993 ECR] I-1061, para 5. 41  This view is also advocated by I Govaere, J Capiau and A Vermeersch, ‘In-Between Seats: the Participation of the European Union in International Organizations’ (2004) 9 European Foreign Affairs Review 155, 175–76. 42  Case 22/70 AETR, ECLI:EU:C:1971:32, [1971] ECR 263, paras 15–31; for more detail on this ­decision see Niilo Jääskinen and Alicja Sikora, ch 6 in this volume.

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Council that the Member States should conclude the agreement, since the negotiations would have been jeopardised if the third parties had been informed of a new distribution of powers within the Union, resulting in the Union concluding the agreement rather than the Member States.43 For this rather pragmatic reason, the AETR agreement was concluded by the Member States in the interest of and on behalf of the Union.44 The consequences of this on the CJEU’s jurisdiction to interpret the AETR agreement became clear in Libor Cipra and Vlastimil Kvasnicka v Bezirkshauptmannschaft Mistelbach. The CJEU held that it had jurisdiction over its provisions as it formed part of EU law.45 Despite the Court’s reasoning pointing to the fact that an EU Regulation declared the agreement applicable in EU law,46 it is suggested here that even if this had not been the case, the AETR agreement would have had to be considered an integral part of EU law on the basis of the distribution of competences between the Union and its Member States. The only reason why the CJEU accepted that the Member States would act in a field occupied by the Union’s exclusive external competence was that they would conclude the agreement for the Union. Thus it is logical to give such agreements the same effects as pure Union agreements. Commission v Greece brought to the fore further consequences of Member States acting on behalf of the EU.47 The case placed restrictions on a Member State’s exercise of membership rights in the International Maritime Organization (IMO), to which the Member States have signed up but not the EU. Greece was found to have violated the duty of sincere cooperation laid down in Article 4(3) TEU by making a proposal to an IMO Committee concerning a subject matter for which the Union had external competence.48 The duty of sincere cooperation under EU law thus restricts the freedom enjoyed by Member States where they have signed up to a treaty on behalf of the Union. An argument can be made that the strict stance taken in Commission v Greece suggests that a unilateral instigation of legal proceedings by a Member State—be it against another Member State or a third country49—concerning a subject matter covered by EU law would equally be contrary to the duty of sincere cooperation. This argument finds some support in MOX Plant where the Court considered Article 344 TFEU to be a specific expression of the duty of cooperation. While that provision only applies to disputes between EU Member States or between Member States and the EU, it demonstrates more broadly that there is a link between the instigation of a dispute settlement procedure outside the EU and the duty of sincere cooperation.

43 

AETR ibid para 86. ibid para 90. 45 Case C-439/01 Libor Cipra and Vlastimil Kvasnicka v Bezirkshauptmannschaft Mistelbach, ECLI:EU:C:2003:31, [2003] ECR I-745, para 23. 46 ibid. 47  Case C-45/07 Commission v Greece, ECLI:EU:C:2009:81, [2009] ECR I-701. 48  ibid paras 30–31. 49  On this see below at s IV. 44 

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A ­Member State would therefore not be able to instigate international proceedings for the violation of such a treaty if it is likely that EU rules would be affected.50

iii. Agreements between Member States Conferring Jurisdiction on the Court Furthermore, the Court has jurisdiction where agreements concluded by the ­Member States expressly confer jurisdiction on it. In her opinion in the TNT Express case AG Kokott refers to two examples:51 the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters52 and the Convention on the Law Applicable to Contractual Obligations.53 In both conventions the Member States have conferred jurisdiction on the Court to decide on preliminary references made by the highest courts of the Member States on the interpretation of these Conventions. Of course, these cases specifically mention preliminary references, and therefore these two currently existing examples are not relevant when it comes to disputes between Member States. Nonetheless, it is not inconceivable that an agreement to that effect may one day be concluded and that the Court’s jurisdiction would entail jurisdiction over disputes between the parties to such an agreement. If that were so, the question would arise whether that jurisdiction would have to be considered exclusive. Given that jurisdiction conferred on the Court is not strictly speaking jurisdiction over the Treaties as would be required by Article 344 TFEU, there is some doubt. If, however, such an agreement were ever to be concluded, it would probably have a close connection with EU law so that the Court would not be able to decide a dispute arising under it without reference to EU law proper, in which case Article 344 TFEU would apply.54

III.  Exclusive Jurisdiction and the CFSP The following section will further show that the Member States are prevented from instigating proceedings over the Common Foreign and Security Policy (CFSP) 50 

Commission v Ireland (MOX Plant) (n 10) para 169. C-533/08 TNT Express Nederland BV v AXA Versicherung AG, Opinion of AG Kokott, ECLI:EU:C:2010:50 paras 66–67. 52  Protocol concerning the interpretation by the Court of Justice of the convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters [1975] OJ L204/28. 53  First Protocol on the interpretation by the Court of Justice of the European Communities of the Convention on the law applicable to contractual obligations, opened for signature in Rome on 19 June 1980 [1989] OJ L48/1. 54  AG Kokott (n 51) further contends that the Court has jurisdiction to interpret treaties which codify customary international law, see Case C-286/90 Anklagemyndigheden v Peter Michael Poulson and Diva Navigation Corp, ECLI:EU:C:1992:453, [1992] ECR I-6019, para 12; Case C-162/96 A Racke GmbH & Co v Hauptzollamt Mainz, ECLI:EU:C:1998:293, [1998] ECR I-3655, para 45; Intertanko (n 28) para 51. However, as she correctly notes, the Court only has jurisdiction in this respect when assessing the compatibility of actions of the Union’s institutions with Union law but not in respect of actions of the Member States. 51 Case

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before international courts even though the CJEU does not itself appear to have jurisdiction over all such disputes. This follows from Article 275 TFEU: The Court of Justice of the European Union shall not have jurisdiction with respect to the provisions relating to the common foreign and security policy nor with respect to acts adopted on the basis of those provisions. However, the Court shall have jurisdiction to monitor compliance with Article 40 of the Treaty on European Union and to rule on proceedings, brought in accordance with the conditions laid down in the fourth paragraph of Article 263 of this Treaty, reviewing the legality of decisions providing for restrictive measures against natural or legal persons adopted by the Council on the basis of Chapter 2 of Title V of the Treaty on European Union.55

This provision could lead one to conclude that the CJEU’s exclusive jurisdiction does not stand in the way of proceedings over the CFSP before an international court. After all, where the CJEU does not have jurisdiction, that jurisdiction can hardly be considered exclusive. It is possible, for instance, to conceive of a situation in which a Member State brings a case against other Member States before the ICJ alleging a violation of the procedural rules in the CFSP chapter of the TEU.56 The ICJ might derive its jurisdiction either from declarations made by both Member States involved according to Article 36(2) ICJ Statute or because they have accepted its jurisdiction ad hoc. In addition, it could be argued that the CFSP is traditionally portrayed as intergovernmental in nature,57 so there are no strong reasons under EU constitutional law why acts adopted under the CFSP should not be capable of being subjected to the jurisdiction of an ­international court. It is suggested here, however, that allowing an international court to decide CFSP matters would be in violation of the autonomy of the EU legal order. Any decision by an international court would result in a binding interpretation of EU law even in the absence of a parallel and competing jurisdiction of the CJEU. This is confirmed by the wording of Article 344 TFEU. There is no mention made in that article of the fact that the CJEU must instead be competent to hear the case. Its formulation is broader, and prevents all ‘disputes concerning the interpretation or application of the Treaties’ from being brought before another court. Hence Article 344 TFEU captures disputes over the CFSP. This argument is confirmed by the object and purpose of Article 275 TFEU. It seems that the Member States intended to exclude the CFSP from any court proceedings. In contrast to what they wanted to achieve by inserting Article 344 TFEU, they were less concerned with ensuring a uniform interpretation of the CFSP by the CJEU. Rather, their intention was to preserve the CFSP’s intergovernmental and essentially political nature.

55 

Art 275 TFEU is reinforced by Art 24(1) TEU. CFSP rules have been shown to have binding legal character by RA Wessel, ‘Resisting Legal Facts: Are CFSP Norms as Soft as They Seem?’ (2015) 20 European Foreign Affairs Review, Special Issue, 123 (130–37). 57  Eeckhout (n 7) 166. 56 

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In contrast to other areas of EU law, it was not the aim of the Member States to set up a permanent framework of mutual legal obligations and they were weary of the CJEU’s tendency to adopt an integrationist interpretation of the CFSP, which they considered to endanger their sovereign powers.58 The intergovernmental nature of the CFSP means that the interpretation of the CFSP provisions is conducted by the Member States themselves and not by a court. Article 275 TFEU thus reserves the CFSP for political rather than judicial conflict resolution.59 Two further arguments support this conclusion: the first is based on the Court’s jurisdiction under Article 40 TEU and the second concerns the duty of cooperation. First, according to Article 40 TEU the Court has jurisdiction to delineate the EU’s external powers under the CFSP from those under the TFEU. This jurisdiction existed in previous versions of the Treaties, but was modified in two ways by the Treaty of Lisbon. Ex Article 47 TEU stipulated that nothing in the former TEU, ie in particular the CFSP, must affect the former European Community’s powers under the former TEC. Current Article 40 TEU was amended so as to not only protect the Union’s powers under the TFEU, ie the former Community competences, but also to protect the Union’s powers under the CFSP. In the words of Article 40(2) TEU the implementation of the Union’s external policies under the TFEU ‘shall not affect the application of the procedures and the extent of the powers of the institutions laid down by the Treaties for the exercise of the Union competences under [the CFSP]’. According to the CJEU the key purpose of that provision was to prevent intergovernmental measures encroaching on the powers of the (then) European Community.60 The resulting bias towards the use of Community competences where a measure pursued both aims of the CFSP and aims of Community external policy61 led to a hierarchical relationship between the first and second pillar. The new Article 40 TEU makes this hierarchy obsolete. At the time of writing the CJEU has not yet developed a new approach for the delineation of the powers under the CFSP and TFEU.62 That delineation has additionally become more complex given that the TFEU no longer contains a separate set of CFSP objectives.63 Instead, the new TEU formulates principles applicable to all EU external action, ie including action taken under TFEU competences.64 According to Article 24 TEU the CFSP ‘shall cover all 58  E Denza, The Intergovernmental Pillars of the European Union (Oxford, Oxford University Press, 2002) 312. 59  M Pechstein, ‘Die Intergouvernementaltät der GASP nach Lissabon’ (2010) 65 Juristenzeitung 425, 430; in a similar vein, Wessel (n 56) 142, argues that ‘it remains difficult to see a role for the Court in pure CFSP situations’. 60  For example, in Case C-176/03 Commission v Council, ECLI:EU:C:2005:542, [2005] ECR I-7879, para 39 (this case concerned the former third pillar). 61  Case C-91/05 Commission v Council (ECOWAS), ECLI:EU:C:2008:288, [2008] ECR I-3651. 62 See M Cremona, ‘Defining Competence in EU External Relations: Lessons from the Treaty Reform Process’ in A Dashwood and M Maresceau (eds), Law and Practice of EU External Relations (Cambridge, Cambridge University Press, 2008) 70, 101 who proposes a ‘centre of gravity test’ instead. 63  See former Art 11 TEU. 64  Art 21 TEU.

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areas of foreign policy’, which does not allow for easy delineation. There is still no case law on Article 40 TEU, but there is some indication of which direction the CJEU might take. In Parliament v Council it did not follow the Advocate General’s suggestion that former Article 11 TEU should be used as a guideline in determining which objectives are traditionally assigned to the CFSP.65 Hillion correctly concluded that this decision in this case contains a ‘nascent judicial safeguard’ of CFSP integrity since the Court considered that an anti-terrorism measure had to be adopted under Article 215 TFEU rather than Article 75 TFEU.66 Considering that any use of the Union’s competence under Article 215 TFEU must be preceded by a decision adopted under the CFSP, Hillion rightly considers the Court’s stance to be protective of the CFSP.67 This conclusion is supported by a subsequent decision in which the CJEU ­protected an international agreement relating to the CFSP from being challenged by the European Parliament under Article 218(6) TFEU.68 The Parliament had unsuccessfully argued that the agreement did not exclusively relate to the CFSP, with the consequence that it should have been involved in the ratification process. The Court pointed out that the substantive legal basis for the measure was found in the CFSP so that the fact it incidentally pursued non-CFSP aims was not relevant.69 This suggests that the Court may take a similar stance on Article 40 TEU. The case also demonstrates that the Court’s jurisdiction over the CFSP under the Lisbon Treaty is broader than might appear from a first reading of Article 275 TFEU. In addition, the CJEU has jurisdiction to decide whether the Union or a Member State has violated its duty of sincere cooperation under Article 4(3) TEU. The duty applies throughout the Treaties and includes the CFSP. It has not yet been decided whether the Court’s jurisdiction extends to cases alleging a violation of that duty when it comes to measures of a Member State contradicting the CFSP. As discussed above, the Court imposes a far-reaching duty of cooperation on the Member States so that an extension to matters under the CFSP is likely.70 The duty’s reach is clear from the fact that the CJEU considers the duty to exist whether the Union’s competence is exclusive or shared.71 The Member States must even act in compliance with the duty of cooperation where the Commission has only 65 

Case C-130/10 Parliament v Council Opinion of AG Bot, ECLI:EU:C:2012:50, para 63. Hillion, ‘A Powerless Court? The European Court of Justice and the Common Foreign and Security Policy’ in M Cremona and A Thies (eds), The European Court of Justice and External Relations Law (Oxford, Hart Publishing, 2014) 47, 63. 67 ibid. 68  Case C-658/11 Parliament v Council, ECLI:EU:C:2014:2025. 69  ibid paras 46–63; the Parliament’s case was nonetheless successful as the Council had failed to comply with its duty to inform the Parliament under Art 218(10) TFEU. 70  C Hillion and R Wessel, ‘Restraining External Competences of EU Member States under CFSP’ in M Cremona and B Witte (eds), EU Foreign Relations Law (Oxford, Hart Publishing, 2008) 79, 119–20 had already concluded for the situation pre-Lisbon that the ‘potential impact of the loyalty principle … on Member States’ freedom under CFSP should not be underestimated’. 71  Case C-266/03 Commission v Luxembourg (Inland Waterways), ECLI:EU:C:2005:341, [2005] ECR I-4805, para 58. 66  C

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just received a negotiating mandate from the Council regarding the subject m ­ atter at issue.72 Thus it has effects long before the successful conclusion of an EU agreement and with it the existence of a duty to abide by that agreement under­ Article 216(2) TFEU. In Commission v Sweden the CJEU held that Sweden was in breach of its obligation to cooperate under Article 4(3) TEU by proposing to include the chemical substance PFOS in the annex to a mixed agreement.73 The agreement at issue was a mixed agreement that gave every party the right to make such proposals. However, the Swedish proposal was contrary to an existing EU strategy not to propose the inclusion of PFOS. Interestingly, this strategy had not been formulated as a formal and binding decision at EU level, but was nonetheless held to be binding on Sweden.74 The CJEU’s case law has therefore rightly been characterised as containing ‘a rising tendency towards legally prohibiting a growing category of Member State actions in the external sphere’.75 This reach of the duty of sincere cooperation thus appears broad enough to include a review of unilateral measures by the Member States contradicting a CFSP strategy. In concert with the Court’s extended jurisdiction over Article 40 TEU this suggests, in the words of Hillion, that it has a ‘broad margin of manoeuvre, inasmuch as it has become the authoritative exegetist of CFSP treaty norms and procedures’.76 This is thus an additional argument why the Treaties do not allow EU Member States to submit disputes over the CFSP to an international court. The Court confirmed this in Opinion 2/13 concerning the EU’s accession to the European Convention on Human Rights (ECHR).77 The draft accession agreement at issue in that Opinion would have enabled the European Court of Human Rights (ECtHR) to review CFSP measures as to their compliance with ECHR rights. Squarely opposing the possible argument made above that where the CJEU does not have jurisdiction, its jurisdiction cannot get in the way of another court’s, the CJEU stressed that because it did not have jurisdiction over all CFSP measures, accession to the ECHR would in effect entrust the ECtHR, as a non-EU body, with their judicial review. The Court considered this to infringe the autonomy of EU law and cited Opinion 1/09 as a relevant precedent.78 It is thus suggested that the Member States’ freedom of choice does not extend to CFSP matters. They cannot bring a dispute between them over CFSP matters before an international court without infringing their obligations under EU law.

72 

ibid para 60. Case C-246/07 Commission v Sweden, ECLI:EU:C:2010:203, [2010] ECR I-3317. ibid paras 76–89. 75  A Delgado Casteleiro and J Larik, ‘The Duty to Remain Silent: Limitless Loyalty in EU External Relations?’ (2011) 16 European Law Review 524, 530. 76  Hillion (n 66) 65. 77  Opinion 2/13 (n 4). 78 Opinion 1/09 Creation of a Unified Patent Litigation System, ECLI:EU:C:2011:123, [2011] ECR I-1137. 73  74 

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This is, of course, particularly remarkable given that the CFSP concerns q ­ uestions of external affairs and defence, which are very close to the core of Member State sovereignty. The CFSP purportedly takes account of this fact by being kept separate from the usual ‘Community method’. Yet this separateness does not give Member States the freedom to choose the way in which they resolve their disputes over such matters.

IV.  Exclusive Jurisdiction and Cases Against Third Countries Having argued that Article 344 TFEU restricts the possibility of Member States to instigate proceedings against each other, it could further be asked whether there are also limits on the right of Member States to bring a case against a third country. This may at first glance seem far-fetched, given that strictly speaking the exclusive jurisdiction of the CJEU could not be affected since the CJEU does not have jurisdiction over such disputes. As mentioned earlier, however, Article 344 TFEU constitutes a specific expression of the duty of cooperation with which the Member States are bound to comply. By virtue of that duty the Member States could be barred from bringing a dispute concerning provisions forming an integral part of EU law before an international court. It was explained above that those provisions of a mixed agreement for the conclusion of which the Union was competent are considered an integral part of EU law. The main purpose of the duty of cooperation is to ensure the unity of the international representation of the Union.79 As Commission v Greece suggests, unilateral action by a Member State concerning parts of a mixed agreement falling in the Union’s competence may thwart that aim.80 Judicial proceedings against a third country concerning a provision for which the EU has competence would most probably make resort to other forms of dispute settlement, such as negotiation, practically impossible and thus compromise the Union’s freedom to conduct its external relations. Restricting the right of Member States to bring a case against a third country before an international court would help to prevent an encroachment on the Union’s power to conduct its own external relations in accordance with decisions taken by its institutions. Support for this argument can be found in the Court’s case law on the duty of cooperation and in ­particular from the Open Skies cases,81 the cases of Commission v Luxembourg 79 

See Opinion 1/94 WTO, ECLI:EU:C:1994:384, [1994] ECR I-5267, para 118. Commission v Greece (n 47). C-466/98 Commission v United Kingdom, ECLI:EU:C:2002:624, [2002] ECR I-9427; Case C-467/98 Commission v Denmark, ECLI:EU:C:2002:625, [2002] ECR I-9519; Case C-468/98 Commission v Sweden (Open Skies), ECLI:EU:C:2002:626; Case C-469/98 Commission v Finland, 80 

81 Case

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and C ­ ommission v Germany on inland waterways,82 the IMO83 case and the PFOS case Commission v Sweden.84 In the Open Skies cases, the CJEU considered the negotiation and conclusion of bilateral agreements by various Member States in an area covered by Union competence as a violation of the duty of cooperation. The Court reiterated that the Union’s ‘tasks and the objectives of the Treaty would be compromised if Member States were able to enter into international commitments containing rules capable of affecting rules adopted by the [Union] or of altering their scope’.85 In the inland waterways cases, Germany and Luxembourg had concluded agreements with third countries on inland waterways. Here the Court clarified that the duty of cooperation does not depend on the exclusivity of the Union’s competence86 so that shared competence is sufficient to trigger the duty. In addition, the Court considered an undertaking by Germany to terminate any agreement once the EU had concluded its own agreement, as insufficient to ensure compliance with that duty.87 This reveals a very broad understanding of the duty of cooperation and highlights in particular that the Member States are subjected to special duties of action and abstention.88 Moreover, the Court stressed the need to cooperate and to consult with the Commission.89 These cases are also relevant for dispute settlement even though they are concerned with unilateral treaty making by Member States. It is suggested that the Court’s line of argument in these cases is also applicable when it comes to mixed agreements. Commission v Greece, discussed above, supports this conclusion. The Court reiterated a Member State could violate the duty of cooperation where it exercised its rights under a treaty if such exercise affected the Union’s competences.90 In addition, in Commission v Sweden, Sweden had violated its obligation to cooperate by making a unilateral proposal under a mixed environmental agreement.91 Moreover, in the MOX Plant case the Court held that the Member States are under a duty to inform and to consult the ­European Commission before instigating proceedings against other Member States.92 This suggests that the Court regards unilateral action by the Member States within ECLI:EU:C:2002:627, [2002] ECR I-9627; Case C-471/98 Commission v Belgium, ECLI:EU:C:2002:628, [2002] ECR I-9681; Case C-472/98 Commission v Luxembourg, ECLI:EU:C:2002:629, [2002] ECR I-9741; Case C-475/98 Commission v Austria, ECLI:EU:C:2002:630, [2002] ECR I-9797; Case C-476/98 Commission v Germany, ECLI:EU:C:2002:631, [2002] ECR I-9855. 82  Commission v Luxembourg (Inland Waterways) (n 71); Case C-433/03 Commission v Germany (Inland Waterways), ECLI:EU:C:2005:462, [2005] ECR I-6985. 83  Commission v Greece (n 47). 84  Commission v Sweden (PFOS) (n 73). 85  Commission v Sweden (Open Skies) (n 81) para 107. 86  Commission v Luxembourg (Inland Waterways) (n 71); Commission v Germany (Inland ­Waterways) (n 82) para 64. 87  Commission v Germany (Inland Waterways) (n 82) para 72. 88  ibid para 65. 89  ibid para 73. 90  Commission v Greece (n 47). 91  Commission v Sweden (PFOS) (n 81). 92  Commission v Ireland (MOX Plant) (n 10) para 179.

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the confines of a mixed agreement with suspicion. As Govaere has pointed out, it would be logical to extend this rationale to Member State action concerning third parties.93 There is thus a likelihood that, if a Member State were to bring a case against a third country concerning parts of a mixed agreement for which the Union has exclusive or shared competence, this would not be accepted by the Court.94 The question then is whether the duty of cooperation might go so far as to prevent a Member State from instigating proceedings against a third state for the violation of an agreement that was concluded by that Member State, but not by the Union. This would presuppose that an EU interest would be compromised by such proceedings. In light of the argument in the previous paragraphs this could be the case in situations of substitution and agreements concluded by the Member States on behalf of the Union. Moreover, it is possible to extend the notion underpinning the PFOS case Commission v Sweden that if there is an EU strategy in place, for example to deal in a certain way with a specific situation such as breach of a multilateral international agreement to which all Member States are parties, then the duty of loyal cooperation would stand in the way of a Member State starting court proceedings for that breach if such proceedings could be considered to thwart the common strategy. Taken to its logical conclusion, this would have to include strategies adopted under the CFSP.

V.  The Relevance of These Findings Under International Law The final question to be briefly discussed in this chapter is how far the situation under EU law, as described above, also matters under international law. In other words, is an international court that is seized by an EU Member State with a dispute in contravention to EU law, obliged to divest itself of the case because of the EU law rules on the exclusive jurisdiction of the CJEU and on the duty of cooperation in place? This would require the existence of a rule under international law to this effect. It is argued here that the principles underpinning the ICJ’s decision in the Northern Cameroons case could be brought to fruition.95 Cameroon had asked the ICJ to find that the UK had violated the Trusteeship Agreement concerning Cameroon, in particular because of its decision to administer the Northern Cameroons together with Nigeria. The key issue concerning the admissibility of the case was that the Trusteeship Agreement had been terminated by the General Assembly of the United Nations following two plebiscites in 93 

Govaere (n 22) 206. Of course, there is nothing to stop a third country from bringing a case concerning such provisions against a Member State, see Eeckhout (n 7) 240. 95  Case concerning the Northern Cameroons (Cameroon v United Kingdom) [1963] ICJ Rep 15. 94 

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Northern and Southern Cameroon respectively. The Northern Cameroons had decided to be joined to Nigeria whereas the Southern Cameroons had decided to join the Republic of Cameroon. Hence Cameroon in essence asked the ICJ to find violations of an agreement that was no longer in existence. The ICJ highlighted its judicial function in finding that the dispute was inadmissible:96 [E]ven if the Court, when seised, finds that it has jurisdiction, the Court is not compelled in every case to exercise that jurisdiction. There are inherent limitations on the exercise of the judicial function which the Court, as a court of justice, can never ignore. There may thus be an incompatibility between the desires of an applicant, or, indeed, of both parties to a case, on the one hand, and on the other hand the duty of the Court to maintain its judicial character. The Court itself, and not the parties, must be the guardian of the Court’s judicial integrity.97

This reveals that the ICJ accepts limits to its own jurisdiction flowing from its role as a court. It is clear from the judgment that even the parties’ wishes cannot overcome these limitations on the ICJ’s jurisdiction. This is what the ICJ meant in Nottebohm when saying that ‘the seising of the Court is one thing, the administration of justice is another’.98 The key argument for the ICJ’s finding of admissibility was that it was itself unable to ‘render a judgment capable of effective implementation’ holding that ‘the Court’s judgment must have some practical consequence in the sense that it can affect existing rights or obligations of the parties, thus removing legal uncertainty from their legal relations’.99 This it considered an essential element of the judicial function. In a similar vein, the Court decided in the Nuclear Tests Cases that no judgment was required because the claim before it no longer had any object. This was because France, as the respondent in this case, had completed the nuclear tests which New Zealand and Australia had claimed violated international law.100 Thus where a dispute ceases to exist, the ICJ’s decision serves no purpose and its judicial function no longer allows it to decide the dispute. It is suggested here that these reasons could inform an international court seized of a dispute between two Member States of the EU or indeed between a Member State and the Union if such a dispute were contrary to EU law. Such a violation could become the subject of infringement proceedings according to Article 258 TFEU, which, if successful, would require a Member State to ‘take the necessary measures to comply with the judgment of the Court’.101 Hence a Member State 96  ibid 30–31; the Court relied in particular on its judgment in the Haya de la Torre Case (Columbia v Peru) [1951] ICJ Rep 71, 78–79. 97  Case concerning the Northern Cameroons (n 95) 29. 98  Nottebohm Case (Liechtenstein v Guatemala) (Preliminary Objections) [1953] ICJ Rep 111, 122; R Kolb, ‘Article 38: General Principles of Procedural Law’ in A Zimmermann, C Tomuschat and K Oellers-Frahm (eds), The Statute of the Interational Court of Justice: A Commentary (Oxford, Oxford University Press, 2006) para 37. 99  Case concerning the Northern Cameroons (n 95), 33–34. 100  Nuclear Tests (Australia v France), Judgment [1974] ICJ Rep 253, para 57; Nuclear Tests (New Zealand v France), Judgment [1974] ICJ Rep 457, para 59. 101  Art 260 TFEU.

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must remove the violation. Where proceedings are still pending, it must terminate those proceedings. If the international court has passed its judgment, the Member State is not allowed to rely on this judgment or enforce it. This means that from EU law perspective a judgment by an international court in a dispute concerning EU law must be considered non-existent. Hence such proceedings before an international court would serve no purpose and, paraphrasing the words of the ICJ in Northern Cameroons, would have no practical consequence. An international court could therefore declare such a case inadmissible. It should be highlighted that this conclusion would only apply to intra-EU ­disputes, such as the MOX Plant case. There do not seem to be compelling reasons to extend it to the category of cases discussed above, in which a Member State acts in contravention to EU law by instigating a dispute against a third country. For such scenarios, it is submitted, there is currently no solution under international law.

VI.  Conclusion: The Not So Free Choice of EU Member States This chapter has shown that the CJEU’s exclusive jurisdiction is far-reaching. Not only does it cover disputes over the interpretation or application of the EU Treaties and acts adopted on their basis, but also agreements concluded by the EU Member States. Apart from the relatively well-known scenario of mixed agreements, which featured in MOX Plant, it was shown that the CJEU is also exclusively competent to decide cases regarding agreements concluded by the Member States if the EU has succeeded the Member States as a party to the agreement; if the Member States have concluded the agreement on behalf of the EU; and, perhaps less surprisingly, if the agreement expressly confers jurisdiction on the CJEU. In addition to this, the duty of sincere cooperation may considerably restrict the Member States’ ability to initiate cases in the area of CFSP and against third ­countries based on the provisions of mixed agreements. It remains to be assessed in how far this can be said to affect the sovereignty of the Member States to freely choose the forum before which to bring their dispute. Of course, the free choice principle, as laid down in the Friendly Relations Declaration, does not exclude the conferral of exclusive jurisdiction on an international court. It expressly stipulates that ‘a settlement procedure freely agreed to by States with regard to existing or future disputes to which they are parties shall not be regarded as incompatible with’ the free choice principle. Indeed, the Member States have agreed to be bound by the Treaties, and notably by Article 344 TFEU. However, the extent to which they are restricted by EU law is great and its limits are difficult to ascertain. Moreover, while in many cases Member States would be able to bring their dispute before the CJEU and thus before a third party adjudicator, there are instances in which this is not so. The most notable of

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these is the CFSP. Admittedly, based on a strict legal analysis, this does not result in a loss of sovereignty since, after all, the Member States can either collectively amend the Treaties to allow such proceedings to happen or a they can unilaterally withdraw from the Union. Nonetheless, it needs to be concluded that while a state is a member of the EU, EU law places considerable practical restrictions on the free choice of forum. These restrictions cannot easily be ignored given that the risk of being subjected to infringement proceedings if a Member State chooses to exercise this choice in contravention to its Treaty obligations under Article 344 TFEU are high, as the MOX Plant case demonstrates. That case also shows that even though a court seized with a dispute may not consider itself legally bound to divest itself of the dispute because of the CJEU’s competing jurisdiction, it might choose to suspend proceedings as an act of comity towards the CJEU until that Court has decided on the extent of its jurisdiction. Where the CJEU finds an infringement, it is in practice unlikely that the Member States concerned will continue their proceedings, as demonstrated by events in the aftermath of MOX Plant. In fact, it has been argued that international law suggests that an international court divest itself of such a dispute.

8 European Union Member States and State–State Arbitration: What’s Left? ANNE THIES

I. Introduction The European Union (EU) Member States have established the Court of Justice of the European Union (CJEU), which has jurisdiction for, inter alia, disputes between them on matters of EU law.1 At the same time, the EU Member States have retained access to the variety of dispute settlement means available under public international law, including arbitration, which potentially involves EU Member States and third states. Moreover, existing international agreements with third states continue to provide the basis for state–state as well as investor–state arbitration involving EU Member States. The existence of potentially overlapping and conflicting EU and international dispute settlement (IDS) systems, in which EU Member States can participate in principle, has raised important questions from an EU and public international law perspective regarding the EU Member States’ choice of arbitration as a means of IDS as well as the role of the CJEU and arbitral tribunals in accommodating Member States’ rights and obligations under EU and international law. Such questions concern the impact of EU membership and related EU law obligations on arbitral tribunals’ jurisdiction as well as the legal framework in which awards are rendered and enforced. At the same time, the legal uncertainty regarding the Member States’ capacity to be party to international arbitration and its implications for non-EU states and investors necessitate further examination of tools that might help to facilitate judicial dialogue, thereby limiting the risk of conflicting jurisprudence.

1  Art 19 Treaty on European Union (TEU); Arts 259, 273, 344 Treaty on the Functioning of the European Union (TFEU).

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This chapter aims to complement the current debate regarding the role of EU Member States, the CJEU and arbitral tribunals in international investment arbitration on the basis of Member States’ investment treaties, which has intensified because of the EU’s increased competence in the field of investment.2 It focuses on the choice of forum by Member States3 in the broader context of state–state arbitration as a means of IDS, thereby limiting its analysis to those scenarios in which EU Member States trigger IDS, whether in disputes between Member States or between a Member State and a third state—but not covering investor–state arbitration. More specifically, this chapter aims to further define the legal scope left to EU Member States in choosing state–state arbitration as a means of IDS. Elucidation of the legal constraints operating on the Member States when choosing international arbitration to settle an international dispute should increase legal certainty, in the interest of the effectiveness of both EU and international law. This chapter recognises that EU Member States face legal constraints under EU law regarding their choice of IDS. It focuses in its analysis on selected cases that illustrate the way in which the CJEU has approached Member States’ capacity to choose arbitration to settle international disputes, or to take unilateral external action comparable to IDS-related activities and thus allowing for application by analogy. As will be demonstrated, in the context of intra-EU state disputes, the discretion under international law to choose the means of IDS is significantly limited due to the exclusive jurisdiction of the CJEU to interpret EU law. Moreover, states’ capacity to choose arbitration for the settlement of disputes with non-EU states, and to fully implement arbitral awards in accordance with international law, is constrained due to obligations resulting from their EU membership (including loyalty obligations and the effectiveness and supremacy of EU law).

2  See Catherine Titi, ch 5 in this volume. See also SW Schill, ‘Luxembourg Limits: Conditions for Investor-State Dispute Settlement under Future EU Investment Agreements’ (2013) 10(2) Transnational Dispute Management 1; P Mariani, ‘The Future of BITs between EU Member States: Are IntraEU BITs Compatible with the Internal Market?’ in G Sacerdoti, P Accomci, M Valenti and A De Luca (eds), General Interests of Host States in International Investment Law (Cambridge, Cambridge University Press, 2014) 265–86; P Peters, ‘Dispute Settlement Arrangements in Investment Treaties’ (1991) 12 Netherlands Yearbook of International Law 91, 102–17 (on inter-state arbitration on the basis of investment treaties); E de Brabandere, Investment Treaty Arbitration as Public International Law: Procedural Aspects and Implications (Cambridge, Cambridge University Press, 2014); M Bungenberg, J Griebel and S Hindelang (eds), International Investment Law and EU Law (Berlin, Springer Verlag, 2011); S Hindelang, ‘Circumventing Primacy of EU Law and the CJEU’s Judicial Monopoly by Resorting to Dispute Resolution Mechanisms Provided for in Inter-se Treaties? The Case of Intra-EU Investment Arbitration’ (2012) 39 Legal Issues of Economic Integration 179. 3  See for a discussion of ‘venue choice’ by the Member States in their law-making, including the political and legal considerations related to the choice of EU or other law-making venues, and the argument that venue choice is an important element of legal agenda-setting in Europe today: B De Witte and A Thies, ‘Why Choose Europe? The Place of the European Union in the Architecture of International Legal Cooperation’ in S Blockmans, B Van Vooren and J Wouters (eds), The Legal Dimension of Global Governance: What Role for the EU? (Oxford, Oxford University Press, 2013) 23–38.

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At the same time, this chapter argues that the way in which some international arbitral tribunals have dealt with parties’ EU membership has the potential to create legal dilemmas for EU Member States (as members of different legal regimes) and arguably adds political constraints on the Member States as participants in IDS. The approach of some arbitral tribunals to the implications of parties’ EU membership can make it difficult for EU Member States to comply with both their EU law obligations and their obligations under other international treaties which may be invoked, which might affect their choice of arbitration in the future. Overall, the chapter concludes that the uncertainty resulting from the tension between the CJEU’s tendency to affirm its exclusive jurisdiction and the primacy of EU law on the one hand, and on the other hand the differing approaches of arbitral tribunals to the implications of states’ EU membership endangers the enforceability of individual arbitral awards. Further, it may also affect the Member States’ willingness to respect the principle of supremacy of EU law and the standing and credibility of EU Member States as parties to other international treaty regimes. The chapter is divided into three further sections, followed by some brief conclusions. First, it places EU Member States’ capacity to be party to international arbitration proceedings in the context of public international law on IDS. It then discusses the legal constraints on EU Member States in their choice of international arbitration from an EU law perspective. Subsequently, examples of arbitration proceedings and awards involving EU Member States are analysed, focusing on the way in which arbitral tribunals have taken account of states’ EU membership and EU law.

II.  Arbitration as a Means of IDS The principle of peaceful settlement of international disputes is laid down in Article 2(3) of the United Nations Charter (UNC)4 and forms part of customary international law, which means that it is binding for all states, even those that are not members of the UN.5 It has been discussed whether and to what extent there is an international legal obligation for states to seek to settle, or even actually to settle their international disputes.6 Peters has argued that the obligation to settle disputes peacefully contains a duty to cooperate with a view to a settlement and, more specifically, at least an obligation to negotiate.7 In any case, it is uncontroversial 4  According to Art 2(3) UNC: ‘All Members shall settle their international disputes by peaceful means in such a manner that international peace and security, and justice, are not endangered.’ 5  See ICJ, Case Concerning Military and Paramilitary Activities in and against Nicaragua (Nicaragua v USA) (Merits) [1986] ICJ Reports 14, para 290, available at www.icj-cij.org/docket/files/70/6503.pdf. 6  See eg RB Bilder, ‘An Overview of International Dispute Settlement’ (1986) 1 Emory Journal of International Dispute Resolution 1, 7ff. 7  A Peters, ‘International Dispute Settlement: A Network of Cooperational Duties’ (2003) 14(1) European Journal of International Law 1–34, 11, 29.

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that the main objective of the international legal framework for the settlement of disputes is that states should settle their disputes peacefully, while enjoying the sovereign right to choose suitable means as they (and other parties to an international dispute) see fit.8 Once states have agreed on diplomatic and/or judicial dispute settlement means, they need to act in good faith when seeking to settle their dispute.9 According to Article 33(1) UNC, states can settle their international disputes by negotiation, enquiry, mediation, conciliation, arbitration, judicial settlement, resort to regional agencies or arrangements, or another peaceful means of their own choice. Under this ‘principle of free choice’, states are entitled to give preference to one means of dispute settlement over another. According to the rules of public international law, states are also free to attempt the settlement of their dispute by employing more than one means of dispute settlement simultaneously, unless otherwise agreed.10 Such agreement is usually to be found in the context of a treaty regime that requires states to deal with their disputes in a specific way, possibly making the unsuccessful use of one means the pre-condition for the applicability of another.11 International arbitration has long been recognised as an effective and attractive means of IDS.12 Even though the overall number of state arbitrations has decreased after the Second World War, the frequent inclusion of arbitration clauses in treaties shows states’ commitment to the peaceful settlement of disputes.13 In principle, state arbitration proceedings allow states to keep control over the selection of arbitrators, the question/s to be dealt with by the tribunal and the level of public

8  Case Concerning Legality of the Use of Force Case (Yugoslavia v Belgium [and nine other NATO countries]) (Request for the Indication of Provisional Measures Order) (1999) ICJ Reports 124, 140, available at www.icj-cij.org/docket/files/105/7764.pdf. 9  Bilder (n 6) 12; Peters (n 7) 15f. 10  For the relationship between adjudication and negotiation in particular see JG Merrills, ‘The Mosaic of International Dispute Settlement Procedures: Complementary or Contradictory?’ (2007) Netherlands International Law Review 361–93. 11  ibid 363ff. For a decision of the International Court of Justice on negotiation as pre-requisite for adjudication see Application of the International Convention on the Elimination of All Forms of Racial Discrimination (Georgia v Russian Federation) (Request for the Indication of Provisional Measures Order) (2008) ICJ Reports 353, available at www.icj-cij.org/docket/files/140/14801.pdf, and (Preliminary Objections Judgment) (2011) ICJ Reports, 70, available at www.icj-cij.org/docket/files/140/ 16398.pdf. 12  See for an overview of how inter-state arbitration relates to conciliation and judicial settlement C Gray and B Kingsbury, ‘Inter-State Arbitration since 1945: Overview and Evaluation’ in MW Janis (ed), International Courts for the Twenty-First Century (Alphen aan den Rijn, Kluwer, 1992) 55–83, 55, with reference to the predominant approach to the interpretation of ‘arbitration’ being exemplified by the 1899 Hague Convention for the Pacific Settlement of International Disputes: ‘In questions of a legal nature, and especially in the interpretation or application of International Conventions, arbitration is recognised by the Signatory Powers as the most effective and at the same time the most equitable means of settling disputes which diplomacy has failed to settle.’ 13  Gray and Kingsbury, ibid 56ff, with further references.

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involvement. At the same time, arbitration has been categorised as a ‘quasi-judicial means’ of IDS, since it is undertaken on the basis of law and results in a binding award.14 State arbitration is often pre-chosen as compulsory means of dispute settlement in international treaties,15 but can also take place on an ad hoc basis upon agreement of the parties after a dispute has arisen.16 Most treaties that refer to arbitration as a means to settle disputes—usually related to the interpretation, application and performance of the treaty—make reference also to a set of arbitration rules to be applied when establishing an arbitral tribunal, undertaking an arbitration and enforcing an arbitral award. Such rules of procedure are usually not included in the treaty regime itself but are separate legal texts adopted by an international institution/organisation, applied in a variety of different arbitration contexts on the basis of such treaty references. The most prominent and most frequently applied sets of procedural rules are the UNCITRAL Arbitration Rules,17 the Optional Rules of the Permanent Court of Arbitration (PCA)18 and the Rules of Procedure for the Institution of

14  See already the International Law Commission’s Model Rules on Arbitral Procedure, which the UN General Assembly in resolution 1262 (XIII) of 14 November 1958 brought to the attention of the Member States for their consideration and use, according to which arbitration is undertaken on the basis of law (Arts 2 and 10) and results in a binding award (Art 30). 15  For the settlement of disputes on issues related to the law of the sea, states are deemed to have accepted arbitration, unless they declared their choice for a different means (Art 287(3) UNCLOS); arbitration is also the applicable means if state parties have chosen diverse procedures, unless they agree otherwise (Art 287(5) UNCLOS). According to Art 32(1) of the Convention for the Protection of the Marine Environment of the North-East Atlantic (OSPAR Convention), ‘[a]ny disputes between Contracting Parties relating to the interpretation or application of the Convention, which cannot be settled otherwise by the Contracting Parties concerned, for instance by means of inquiry or conciliation within the Commission, shall at the request of any of those Contracting Parties, be submitted to arbitration under the conditions laid down in this Article’. 16  For instance, Belgium and the Netherlands agreed through an exchange of diplomatic notes of 22 and 23 July 2003 ‘to submit [their] dispute concerning the reactivation of the Iron Rhine to an arbitral tribunal they are to set up under the auspices of the Permanent Court of Arbitration in The Hague’ and ‘to execute the Arbitral Tribunal’s decision as soon as possible’; see The Iron Rhine Arbitration (‘IJzeren Rijn;) (Belgium—Netherlands) Award of 2005 Permanent Court of Arbitration Award Series (TMC Asser, 2007) paras 1ff. On 4 November 2009, Slovenia and Croatia concluded an arbitration agreement to settle their territorial and maritime border dispute; the arbitration is still pending (https://pcacases. com/web/view/3). The Iran-US Claims Tribunal was established in 1981 to resolve claims by nationals of one state party against the other state party and certain claims between state parties in the form of binding arbitration; it has by now finalised over 3,900 cases (www.iusct.net/), which makes it a very particular ad hoc tribunal. 17 Originally designed for commercial arbitration, the UNCITRAL Arbitration Rules were first adopted in 1976 and revised in 2010 by the United Nations General Assembly in form of a Resolution; they ‘have been used for the settlement of a broad range of disputes, including disputes between private commercial parties where no arbitral institution is involved, investor-State disputes, State-to-State disputes and commercial disputes administered by arbitral institutions’. (See www.uncitral.org/uncitral/ en/uncitral_texts/arbitration/2010Arbitration_rules.html.) 18  The PCA is an international organisation with 116 Member States. The PCA has designed several sets of rules, depending on the nature of the parties to an arbitration (eg disputes between two states, between parties of which only one is a state, between international organisations and states). (See for an overview and links to sets of procedural rules, www.pca-cpa.org/showpage.asp?pag_id=1188.)

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Conciliation and Arbitration Proceedings of the International Centre for Settlement of Investment Disputes (ICSID).19 Moreover, institutions such as the PCA and ICSID also serve as a registry and provide logistical support and venues for arbitration.20 As stated above, according to Article 33(1) UNC, international law allows states to ‘resort to regional agencies or arrangements’. Yet, the UNC is silent with regard to the capacity of states to choose which IDS means is to be used as an alternative to established regional fora when seeking to settle inter-state disputes. As a consequence, it is for the UN Member States to agree in their regional arrangements on whether and, if so, how to limit their free choice of means under the UNC within their regional context. From an international law perspective, the principle of free choice of means does not prescribe per se any hierarchy or priority of one IDS means over another.21 Instead, international law leaves it to the states to agree on such hierarchy or priority where they see fit (eg in the context of founding treaties of international organisations or other treaty regimes). As a consequence, international law does not conflict with EU treaty law that establishes the main responsibility of the CJEU for dealing with matters of EU law.22 At the same time, neither the EU Treaties nor general public international law exclude the use of other IDS means for Member State disputes that are not about EU law. But who defines the reach of EU law? Who has the final say on the extent to which EU law is relevant in complex international disputes? While it might be easy to answer those questions in the context of intra-EU Member State disputes on matters arising under the EU Treaties, it is less so in cases involving matters arising under other international treaties, and where non-EU parties are involved in disputes. Section III assesses EU law and decisions by the CJEU on the Member States’ use of arbitration in different scenarios. Section IV discusses how arbitral tribunals have addressed these and other cases involving EU Member States.

19  ICSID Arbitration Rules were adopted on 25 September 1967 and were effective as of 1 January 1968; they have been amended three times since, and the current rules came into effect on 10 April 2006. (See https://icsid.worldbank.org/apps/ICSIDWEB/icsiddocs/Pages/ICSID-Convention-Arbitration-Rules.aspx.) 20 PCA: https://pca-cpa.org/en/services; ICSID: https://icsid.worldbank.org/en/pages/services/ default.aspx. 21  Art 52 UNC can be considered an exception in that it establishes that the Charter does not preclude ‘the existence of regional arrangements or agencies for dealing with such matters relating to the maintenance of international peace and security’ and that ‘[t]he Members of the United Nations entering into such arrangements or constituting such agencies shall make every effort to achieve pacific settlement of local disputes through such regional arrangements or by such regional agencies before referring them to the Security Council’. In other words, the Security Council can be addressed in matters relevant to international peace and security only if regional arrangements (including the CJEU) fail. 22  See n 1 above.

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III.  Legal Considerations from an EU Law Perspective Prior and subsequent to founding or acceding the EU, its Member States have committed to,23 and been involved in international arbitration.24 Yet, states’ EU membership and their EU law obligations have significantly shaped their capacity to make a free choice of the means of IDS for several reasons. First, the CJEU has affirmed its exclusive role for the settlement of inter-EU-state disputes, which the Member States have given to the Court for dealing with matters of EU law (Article 344 TFEU) but which the Court has arguably interpreted rather extensively, in particular when affirming the EU’s competence for relevant matters in the context of mixed agreements. Second, it is suggested here that the obligation for loyalty to the EU (in particular Article 4(3) TEU) constrains Member States’ scope for external action in certain instances, which can include the submission of disputes to arbitral tribunals that find their jurisdiction in international treaties. Third, as 23  The Treaty establishing the Benelux Economic Union of 1958 created a ‘College of Arbitrators … entrusted with the task of settling such disputes as may arise between the High Contracting Parties with regard to the application of the present Treaty and of Convention related to the aims of this Treaty’ (Art 41). In case of a dispute, each Contracting Party involved was to appoint one national arbitrator, while a third, and presiding, arbitrator would be appointed in rotation from a list established by the Committee of Ministers (Art 42). Though the College of Arbitrators would base its judgment on the rule of law, it could at any time submit a compromise to the approval of the parties to the dispute; moreover, the College of Arbitrators could pronounce judgment ex aequo et bono with the consent of the parties (Art 45). To the knowledge of the author, however, no case has ever been submitted to this arbitration procedure. Art 34 of the Protocol consolidating the Eurocontrol International Convention relating to Co-operation for the Safety of Air Navigation of 13 December 1960 (EUROCONTROL), as variously amended, states:

‘1. Any dispute arising between two or more Contracting Parties or between one or more Contracting Parties and the Organisation relating to the interpretation, application or performance of this Convention, including its existence, validity or termination, which cannot be settled within a period of six months by direct negotiation or by any other means, shall be referred to arbitration of the Permanent Court of Arbitration in The Hague in accordance with the Optional Rules for Arbitration of the said Court. 2. The number of arbitrators shall be three. 3. The place of arbitration shall be The Hague. The International Bureau of the Permanent Court of Arbitration shall serve as Registrar, and shall provide such administrative services as the Permanent Court of Arbitration shall direct. 4. The decisions of the Permanent Court of Arbitration shall be binding on the Parties to the dispute.’ Arbitration in Air, Space and Telecommunications Law: Enforcing Regulatory Measures edited by the International Bureau of the Permanent Court of Arbitration (Alphen aan den Rijn, Kluwer Law International, 2002). 24  For inter-state and investor-state arbitration, including those involving EU Member States, which were registered at PCA, see www.pca-cpa.org/showpage.asp?pag_id=1029. For an overview of the ICSID caseload involving EU Member States, based on ICSID cases registered as of 1 March 2014, see ICSID Caseload—Statistics (Special Focus—European Union) (ICSID, 2014) (icsid.worldbank.org/ apps/ICSIDWEB/resources/Documents/Stats%20EU%20Special%20Issue%20-%20Eng.pdf.) For a list of investment disputes of countries, including EU Member States, and links to relevant investment treaties see http://investmentpolicyhub.unctad.org/ISDS/FilterByCountry.

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a consequence of the principles of effectiveness and supremacy of EU law and relevant substantive EU law obligations (acquis communautaire), Member States are not only directly constrained in their choice of IDS means (‘existence of choice’), but in addition, they may also be obliged to introduce EU law as the applicable law into arbitration proceedings (‘exercise of choice’), and/or they may also face challenges regarding the enforceability and implementation of arbitral awards that conflict with EU law (‘consequences of choice’)—which might in turn affect their freedom of choice in the first place. For the purpose of this chapter, cases have been chosen for analysis in which the jurisdiction, relevance of EU law and/or compliance with arbitral awards conflicting with EU law was, or has been, controversial. While there is only one instance (to the author’s knowledge) of a case submitted to international arbitration by an EU Member State, triggering a CJEU ruling confirming its exclusive jurisdiction (MOX Plant),25 other cases have brought to light a (potential) conflict between Member States’ EU law obligations and their capacity to choose, undertake or implement arbitration as a means of IDS. Some of these cases also provide the basis for the analysis in the subsequent section, which aims to assess the approach of arbitral tribunals when dealing with cases involving EU Member States.

A.  Exclusive Jurisdiction of the CJEU and EU Competence EU Member States have agreed on limiting their free choice of means of IDS through the establishment of a regional court system and the exclusive jurisdiction of the CJEU for matters of EU law. They have established the CJEU to ‘ensure that in the interpretation and application of the Treaties the law is observed’, while acknowledging their domestic responsibility to ‘provide remedies sufficient to ensure effective legal protection in the fields covered by Union law’.26 The CJEU has been given the jurisdiction to deal, inter alia, with cases between Member States concerning their compliance with EU law obligations (Article 259 TFEU), and to provide preliminary rulings on the interpretation of the EU Treaties and the validity and interpretation of EU measures to national courts that need to apply EU law in domestic cases (Article 267 TFEU). Most importantly for the remaining scope and exercise of the free choice principle, the EU Member States have recognised the exclusive jurisdiction of the CJEU for intra-EU state–state disputes on matters of EU law by agreeing to refrain from ‘submit[ting] a dispute concerning the interpretation or application of the [EU] Treaties to any method of settlement other than those provided for therein’.27 Yet, the precise scope of the CJEU’s exclusive jurisdiction has been subject to debate.28

25 

Case C-459/03 Commission v Ireland, ECLI:EU:C:2006:345, [2006] ECR I-4635. Art 19 Treaty on European Union (TEU). 27  Art 344 TFEU. 28  See also Christophe Hillion and Rames A Wessel, ch 2 in this volume. 26 

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The CJEU was asked to rule on the scope of its exclusive jurisdiction under (what is now) Article 344 TFEU as a result of the arbitration proceeding in the MOX Plant case. The arbitration triggered by Ireland against the United Kingdom in 2001 was based on the 1982 United Nations Convention on the Law of the Sea (UNCLOS) and concerned the environmental impact on the marine environment of the Irish Sea of the operation of the UK’s MOX plant and related movements of radioactive substances.29 The Commission then brought an action against Ireland before the CJEU, claiming that by launching an arbitration against the UK Ireland had infringed its obligation under Article 344 TFEU; the arbitral tribunal suspended the arbitration proceeding to await the CJEU’s decision.30 The CJEU upheld the Commission’s claim. According to the CJEU, its exclusive jurisdiction covers the interpretation and application of the relevant aspects of UNCLOS in intra-EU disputes. The Court reasoned that the UNCLOS provisions relied on by Ireland had become an integral part of EU law through the EU’s exercise of its external competence in matters of environmental protection by becoming a party to the Convention and through the enactment of legislation.31 Thus, compliance with the Convention became a matter of EU law as well as international law and the substance of the dispute raised issues of compliance with EU secondary law. Given that the case involved two EU Member States, the Court held that the EU Treaties’ ‘system for the resolution of disputes … must in principle take precedence over that contained in … the Convention’ given that its jurisdiction over EU law is exclusive.32 The Court also noted that UNCLOS itself, in its Article 282, envisages the possibility of alternative regional dispute settlement.33 Ireland had thus infringed its obligations under EU law by bringing its case against the UK to an international arbitral tribunal established under UNCLOS instead of the Court itself. According to the Court, an arbitration undertaken by two EU Member States ‘involve[d] a manifest risk that the jurisdictional order laid down in the [EU] treaties, and consequently, the autonomy of the Community legal system may be adversely affected’.34 As a consequence, Ireland withdrew the case from arbitration.35 This case will provide an interesting case study for the respectful approach taken by arbitral tribunals towards the implications of parties’ EU membership for the use of arbitration under UNCLOS as between EU Member States and the binding nature of CJEU 29  The MOX Plant Case (Ireland v United Kingdom), Provisional measures (ITLOS, Case No 10), Request for Provisional Measures and Statement of Case submitted on behalf of Ireland of 9 November 2011; see for documents related to arbitration proceedings www.itlos.org/en/cases/list-of-cases/ case-no-10. 30  See for further discussion, s IV.A. 31 C-459/03 Commission v Ireland (n 25) paras 96–121. 32  ibid paras 122–39. 33  ibid paras 124–25. 34  ibid para 154. 35  The Tribunal took formally on record Ireland’s formal notification of the withdrawal of its claims against the UK of February 2007; see MOX Plant Case, Order 6—Termination of Proceedings, 6 June 2008.

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rulings (see section IV.A). Yet, for the purpose of identifying legal constraints on Member States under EU law regarding their free choice of arbitration as a means of IDS, it suffices to say here that the CJEU ruling was clear and set a precedent on the scope of the CJEU’s exclusive jurisdiction on matters of international treaty law that have become an integral part of the EU legal order. The ruling was nevertheless controversial, as UNCLOS had been concluded in the form of a mixed agreement, which in principle means that Member States kept competence for certain areas covered by UNCLOS, and the dispute concerned environmental policy, a shared competence. The subject matter of the dispute was considered by some to fall ‘only partly within the scope of EU law’, and it has been questioned whether a decision of an ‘international tribunal [with] specialist knowledge of the subject’ could form any ‘threat to the autonomy of the EU legal order’.36 The striking dimension of the case does not so much concern the scope of the CJEU’s jurisdiction, nor the finding that compliance with a mixed agreement is a matter of EU law, but rather that for the first time the corollary of the exclusive nature of the Court’s jurisdiction was applied, with the specific aim of preventing the use of state–state arbitration. There have, indeed, been other intra-EU Member State arbitration proceedings on the basis of international agreements that have not triggered actions before the CJEU. For instance, an arbitration proceeding brought by the Netherlands against France (Rhine Chlorides) in 1999 concerned the auditing of accounts in relation to the reduction of chloride discharges into the Rhine River on the basis of a Convention concluded by France, Germany, Luxembourg, the Netherlands and Switzerland.37 There have also been arbitration proceedings on an ad hoc basis, such as the arbitration between Belgium and the Netherlands regarding the reactivation of the railway ‘Iron Rhine’ and the related allocation of costs,38 and the pending proceedings between Slovenia and Croatia regarding territorial and maritime border issues.39 Interestingly, in the latter case the EU has not only refrained from questioning the jurisdiction of the arbitral tribunal but the European Commission has even supported Slovenia and Croatia in establishing the proceedings in order to allow for Croatia’s accession to the EU,40 and the parties have invited the European Commission ‘to provide secretarial support to the Arbitral Tribunal’ and 36  BD Witte, ‘A Selfish Court? The Court of Justice and the Design of International Dispute Settlement Beyond the European Union’ in M Cremona and A Thies (eds), The European Court of Justice and External Relations Law—Constitutional Challenges (Oxford, Hart Publishing, 2014) 33–46, 41. 37  Case Concerning the Auditing of Accounts between the Kingdom of the Netherlands and the French Republic Pursuant to the Additional Protocol of 25 September 1991 to the Convention on the Protection of the Rhine against Pollution by Chlorides of 3 December 1976 (The Netherlands v France), Arbitral Award of 12 March 2004 (unofficial English translation), available at www.pca-cpa.org. 38 See for a summary of the Iron Rhine (‘IJzeren Rijn’) Arbitration background and award, B MacMahon and FC Smith (eds), Permanent Court of Arbitration: summaries of awards 1999–2009 (The Hague, TMC Asser Press, 2010) 81–92. 39  See for the Arbitration Agreement between the Government of the Republic of Slovenia and the Government of the Republic of Croatia: www.vlada.si/fileadmin/dokumenti/si/projekti/2010/ Arbitrazni_sporazum/10.a_Arbitra%C5%BEni_sporazum_-_podpisan_EN.pdf. 40  F Hoffmeister, ‘The European Union and the Settlement of International Disputes’ (2012) 11(1) Chinese Journal of International Law 77 at fn 104.

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agreed on Brussels as the place of arbitration.41 It is noteworthy that even though the EU institutions may not have raised—at least not publicly—any concerns regarding the potential incompatibility between Member States’ participation in the above-mentioned arbitration proceedings and their EU law obligations, most of the established arbitral tribunals have engaged with EU law and its implications in the course of their proceedings (see section IV below). The reluctance of the EU institutions in most cases to challenge Member States’ choice of arbitration to settle their disputes can be explained by the division of competence between the EU and its Member States and related treaty membership on the one hand, and the expected limited impact of arbitral awards on the EU legal order more broadly on the other. The EU was not party to the international agreement invoked in the Rhine Chlorides arbitration, so the outcome of the arbitral proceedings was not expected to affect the Member States’ obligations under EU law. While the ad hoc Arbitration Agreement in the Iron Rhine case included both EU and international law as the basis for the Tribunal’s award, the dispute was of territorial relevance only to the Member States involved—arguably without having broader implications for the EU as a whole. The ad hoc Arbitration Agreement between Slovenia and Croatia refers to international law principles and does not mention EU law, which is not surprising given that Croatia was not a member of the EU at the time when the agreement was ratified.

B.  Loyalty Obligations and Choice of IDS Means The duty of cooperation has played an increasingly important role in recent years with regard to Member States’ legal constraints in the conduct of their external relations.42 According to Article 4(3) TEU, Member States not only need to ‘ensure fulfilment’ of their EU law obligations, but they also ‘shall facilitate the achievement of the Union's tasks and refrain from any measure which could jeopardise the attainment of the Union's objectives’.43 A unilateral decision by one

41  Art 6 of the Arbitration Agreement between the Government of the Republic of Slovenia and the Government of the Republic of Croatia (n 39). 42  See Christophe Hillion and Ramses A Wessel, ch 2 in this volume, as well as M Cremona, ‘Member States as Trustees of the Union Interest: Participating in International Agreements on Behalf of the European Union’ in A Arnull, C Barnard, M Dougan and E Spaventa (eds), A Constitutional Order of States? Essays in EU law in Honour of Alan Dashwood (Oxford, Hart Publishing, 2011) 435–57; P Eeckhout, EU External Relations Law 2nd edn (Oxford, Oxford University Press, 2011) 241ff; E Neframi, ‘The Duty of Loyalty: Rethinking its Scope through its Application in the Field of EU External Relations’ (2010) 47 CML Rev 323–59; A Thies, ‘Shared Competence and the EU Member States’ Obligation to Refrain from Unilateral Action: PFOS and Beyond’ in J Díez-Hochleitner, C Martínez Capdevila, I Blázquez Navarro and J Frutos Miranda (eds), Últimas tendencias en la jurisprudencia del Tribunal de Justicia de la Unión Europea—Recent trends in the case law of the Court of Justice of the European Union (2008–2011) (Madrid, La Ley-Grupo Wolters Kluwer, 2012) 703–28; A Thies, ‘General Principles in the Development of EU External Relations Law’ in Cremona and Thies (n 36) 139–63. 43  Art 4(3) TEU states that ‘[p]ursuant to the principle of sincere cooperation, the Union and the Member States shall, in full mutual respect, assist each other in carrying out tasks which flow from the

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EU Member State to open international proceedings against another Member State could conflict with such obligations. Moreover, seeking to settle an international dispute with non-EU Member States through international arbitration may infringe Article 4(3) TEU to the extent that the arbitral proceedings and award have implications for the Member State’s EU law obligations, the legal position of other Member States and/or the EU itself. In the MOX Plant case, discussed above with regard to the CJEU’s exclusive jurisdiction, the Commission also allege[d] that Ireland ha[d] failed to comply with its duty of cooperation under Article 10 EC [now Article 4(3) TEU] by exercising a competence which belongs to the Community and that it ha[d] failed in that duty under Articles 10 EC and 192 EA by failing first to inform or consult with the competent Community institutions.44

The CJEU held that it was unnecessary to find whether Ireland had infringed the duty of cooperation by bringing the proceedings before the arbitral tribunal, as it had already found this failure to infringe the more specific obligation under (now) Article 344 TFEU.45 But the Court agreed with the Commission that Ireland had infringed its ‘duty to inform and consult the competent Community institutions prior to instituting dispute-settlement proceedings concerning the MOX plant within the framework of the Convention’, which, within the framework of a mixed agreement, was part of the duty of close cooperation.46 According to the Court, Ireland’s omission to inform and consult was distinct from its triggering of the arbitration proceedings and had to be assessed separately.47 The Court reiterated that Member States had ‘to facilitate the achievement of the Community’s tasks and to abstain from any measure which could jeopardise the attainment of the objectives of the Treaty’.48 It also emphasised that Member States and the Community had ‘an obligation of close cooperation in fulfilling the commitments undertaken by them under joint competence when they conclude a mixed agreement’.49 The Court added that this was in particular the position in the case of a dispute which, as in the present case, relate[d] essentially to undertakings resulting from a mixed agreement which relates to an area,

Treaties. The Member States shall take any appropriate measure, general or particular, to ensure fulfilment of the obligations arising out of the Treaties or resulting from the acts of the institutions of the Union. The Member States shall facilitate the achievement of the Union’s tasks and refrain from any measure which could jeopardise the attainment of the Union's objectives.’ 44 C-459/03

Commission v Ireland (n 25) paras 59, 158. ibid paras 168–70, 171. ibid paras 179, 182. Emphasis added. 47  ibid para 173. 48  ibid para 174, with reference to Opinion 1/03, ECLI:EU:C:2006:81, [2006] ECR I-1145, para 119, and similar obligations under the Treaty establishing the European Atomic Energy Community (EA Treaty) by virtue of Art 192 EA. 49 C-459/03 Commission v Ireland (n 25) para 175, with reference to Joined Cases C-300/98 and C-392/98 Dior and Others [2000] ECR I-11307, para 36. 45  46 

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namely the protection and preservation of the marine environment, in which the respective areas of competence of the Community and the member states are liable to be closely interrelated.50

The Court continued by stating that ‘the act of submitting a dispute of this nature to a judicial forum such as the Arbitral Tribunal involve[d] the risk that a judicial forum other than the Court will rule on the scope of obligations imposed on the member states pursuant to Community law’,51 and that Ireland had been aware of the Commission’s view on the Court’s exclusive jurisdiction for the MOX Plant case.52 It can be concluded from the CJEU’s MOX Plant ruling that the duty of cooperation indeed imposes obligations on Member States that can affect the exercise of their free choice of means of IDS. The actual implications of this conclusion were limited in the context of the intra-EU Member State MOX Plant dispute, as the exclusive jurisdiction of the CJEU had already completely prohibited the use of arbitration—and led to Ireland’s withdrawal of its arbitration request. Yet the impact of the duty of cooperation could be more far-reaching in the context of, for instance, a dispute between an EU Member State and a non-EU state. In the context of other external action, Member State obligations under Article 4(3) TEU have recently included the obligation to refrain entirely from unilateral external action where such action could have implications for the scope of EU law. In the PFOS case, Sweden infringed Article 4(3) TEU by formally proposing that certain chemicals should be added to a list annexed to the Stockholm Convention on Persistent Organic Pollutants. Because the Convention is a mixed agreement, Sweden’s action had potential implications for the EU as a party to the Convention and therefore for the scope of EU law.53 While no international judicial body was competing with the CJEU in the PFOS case, the reasoning on which the recognition of Member State obligations was based resonates with the Court’s reasoning in MOX Plant, where it was the potential impact of the Arbitral Tribunal’s ruling on the scope of Member States’ EU law obligations that justified the finding of Member State obligations under Article 4(3) TEU. It is likely that an arbitral award in the context of a mixed agreement would have such an effect, as mixed agreements become an integral part of the EU legal order—and thus create obligations on Member States under EU law in addition to their international obligations resulting directly from the international agreement.54 An authoritative interpretation of an international convention, to which not only EU Member States but also the EU itself is a party, would have implications for EU law. It might also be 50 C-459/03

Commission v Ireland (n 25) para 176. ibid para 177. 52  ibid para 178, referring to the Commission’s services letter of 8 October 2001 contending that the dispute constituted pursuant to the Convention for the Protection of the Marine Environment of the North-East Atlantic, was a matter falling within the exclusive jurisdiction of the Court. 53  Case C-246/07 Commission v Sweden, ECLI:EU:C:2010:203, [2010] ECR I-3317, paras 100ff. 54  According to Art 216(2) TFEU, ‘[a]greements concluded by the Union are binding upon the institutions of the Union and on its Member States’. 51 

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necessary, in such a case, for the arbitral tribunal to rule on whether a specific obligation under the mixed agreement would fall within the scope of EU or Member State competence. Moreover, where EU measures have been taken to pursue EU objectives or related initiatives, constraints on the Member States’ use of unilateral IDS measures may be justified in the interest of EU effectiveness, and to protect its international position.55 It could, for instance, be questioned whether the decision of the Netherlands to initiate arbitration proceedings on the basis of UNCLOS against the Russian Federation on 4 October 2013, which led to an arbitral award on 14 August 2015,56 infringed its EU law obligations under the principle of sincere cooperation. First, the Tribunal’s legal interpretation of UNCLOS provisions could possibly also determine EU obligations under UNCLOS. Second, it could be argued that unilaterally bringing an action against an important global actor without coordinating such action with the EU—or even asking the EU to bring an action on the Netherland’s behalf—could potentially damage the EU’s position as a diplomatic entity in its relations with Russia (eg ongoing treaty negotiations or other diplomatic affairs). As argued before, however, in order to establish legal obligations for the Member State concerned it would be necessary to demonstrate that the EU institutions had already adopted relevant legal instruments, had defined conflicting external objectives or had triggered related activities.57 The dispute brought by the Netherlands against Russia concerned the ‘boarding and detention of the vessel Arctic Sunrise in the exclusive economic zone of the Russian Federation and the detention of persons on board the vessel by the authorities of the Russian Federation’ (‘Arctic Sunrise’).58 The Arctic Sunrise is a vessel flying a Dutch flag and chartered and operated by Greenpeace, which used the vessel to stage a protest action at the Russian offshore oil production platform Prirazlomnaya, located in the Barents Sea in Russia’s exclusive economic zone. According to the Arbitral Tribunal, Russia’s measures against the Arctic Sunrise were not justifiable under UNCLOS, Russia had failed to comply fully with the International Tribunal of the Law of the Sea (ITLOS) order regarding the release of the vessel, and was now under the obligation to restitute seized property and to pay damages to the Netherlands.59 The subject matter dealt with by the Arbitral Tribunal did not therefore fall within the competences transferred by the Member States to the EU (such as sea fishing

55  See for further discussion of Member State obligations on the basis of EU effectiveness considerations and the principle of sincere cooperation in the interest of the protection of EU law and the EU’s actorness, A Thies, ‘The Search for Effectiveness and the Need for Loyalty in EU External Action’ in M Cremona, Structural Principles in EU External Relations Law (Oxford, Hart Publishing, 2017, forthcoming). 56  PCA Case 2014-02, The Arctic Sunrise Arbitration (Netherlands v Russia), Award on the Merits of 14 August 2015, available at www.pcacases.com/web/sendAttach/1438. 57  Thies (n 55). 58  ITLOS Order, 22 November 2013, 2. 59  Above n 56.

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and the protection of marine environment).60 Where the ITLOS is concerned with a matter of exclusive EU competence, such as illegal, unreported and unregulated fishing, then participation in its proceedings is clearly a matter for the EU.61 In contrast, issues related to the detention of a ship and persons on board, such as in the Arctic Sunrise case, remain a national prerogative, and the desire to strengthen the unity of the EU in international fora does not in itself justify legal obligations for Member States. So far, the CJEU has linked the constraints imposed on Member States in their own international room for manoeuvre to EU law and the EU legal order, rather than recognising the autonomy of the EU as a global actor as per se justifying such constraints.62 A wider reading of Member State obligations, based upon ensuring the effectiveness of EU measures, could also impact the Member States’ capacity to act as respondent in international arbitration proceedings. For instance, increased exclusive EU competence in the area of investment (Articles 3, 206, 207 TFEU) might oblige Member States to consult prior to, or even involve or promote the involvement of EU institutions during, proceedings brought by third states on the basis of existing arbitration agreements where such participation is required to ensure the effectiveness of EU law and/or objectives under Article 4(3) TEU.63

C.  Effectiveness and Supremacy of EU Law In addition to the exclusive jurisdiction of the CJEU as regards matters of EU law and the principle of sincere cooperation, the principles of effectiveness and supremacy of EU law also impose constraints on Member States in IDS. It should be remembered that this chapter is not concerned with international arbitration between private actors (‘commercial arbitration’) or with investor–state arbitration, but with state–state arbitration that involves at least one EU Member State. The case law requiring Member States—more specifically their domestic courts— to involve the CJEU through preliminary rulings under Article 267 TFEU so as to clarify the interpretation and validity of EU law in order to either assist arbitral tribunals during pending proceedings or to deal with the annulment or recognition of arbitral awards, is therefore of limited relevance here.64 60 See for the Declaration on Competences made by the European Community upon signature 7 December 1984: www.un.org/depts/los/convention_agreements/convention_declarations. htm#European Community Upon signature; see for rules on EU coordination in international Seabed Authority ratification UNCLOS, Art 2 of Council Decision No 98/392, [1998] OJ L 179, and its Annex III. 61  In Case C-73/14 Council of the European Union v European Commission, ECLI:EU:C:2015:663, Judgment of the Court (Grand Chamber) of 6 October 2015, the dispute concerned the institutional balance of competence to present the Union position to ITLOS. 62  Thies (n 55). 63  See n 2 above for reference to literature on the role of EU Member States in international investment arbitration. 64  Case 102/81 Nordsee Deutsche Hochseefischerei GmbH v Reederei Mond Hochseefischerei Nordstern AG & Co KG and Reederei Friedrich Busse Hochseefischerei Nordstern AG & Co KG, ECLI:EU:C:1982:107,

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Member States remain bound by their EU law obligations when taking external action, including when acting in the context of international arbitration, including investment arbitration.65 Although it might be questioned what implications EU law (and in particular the primacy of EU law over national/international law) might have on the scope of jurisdiction of arbitral tribunals under international law, primacy obligations as a matter of EU law can expose Member States to a legal dilemma. In cases brought by the Commission against Austria, Sweden and Finland, the CJEU held that EU Member States had infringed their treaty obligation under Article 351(2) TFEU by not making their bilateral investment treaties (BITs) with third countries compatible with the EU Treaties.66 The BITs had guaranteed to the investors of the other party, without undue delay, the free transfer of capital and payments connected with an investment.67 Guaranteeing such free flow of capital was considered to be incompatible with the power of the Council to restrict, in certain circumstances (eg in the implementation of counter-terrorism measures), the movement of capital and payments between Member States and third countries.68 The CJEU referred to the need to ensure the effectiveness of the Treaty provisions conferring on the Council the power to take such restrictive measures.69 These cases did not explicitly prevent Member States from exercising their free choice of IDS means, and the CJEU’s ruling did not have any direct implications for the existence and validity of the agreements under international law. However, the CJEU’s ruling emphasised the Member States’ obligation under EU law to give priority to EU law over their international law obligations under the BITs on the ground that the BIT obligation might pose difficulties for a future exercise of EU

[1982] ECR 1095; confirmed eg in Case C-126/97 Eco Swiss China Time Ltd v Benetton International NV, ECLI:EU:C:1999:269, [1999] ECR I-3055, para 41 (competition law case); Case C-168/05 Elisa María Mostaza Claro v Centro Móvil Milenium SL, ECLI:EU:C:2006:675, [2006] ECR I-10421, paras 35ff (consumer protection case); see for further discussion of this case law, making, inter alia, the case for investment tribunals to be in a position to trigger preliminary ruling procedures under Art 267 TFEU, J Basedow, ‘EU Law in International Arbitration: Referrals to the European Court of Justice’ (2015) 32 Journal of International Arbitration 367, 376–81; H Lenk, ‘Preliminary References and Investment Tribunals: Is the Luxembourg Court Extending a Helping Hand?’, blog entry of 29 March 2016 on EU Law Analysis, see http://eulawanalysis.blogspot.co.uk/2016/03/preliminary-references-and-investment.html, with reference also to JP Gaffney, ‘Should Investment Treaty Tribunals Be Permitted to Request Preliminary Rulings From the Court of Justice of the European Union?’ (2013) 2 Transnational Dispute Management (2013), www.transnational-dispute-management.com, www.transnational-dispute-management.com/article.asp?key=1944. 65  See for reference to recent cases brought by investors on the basis of intra-EU BITs, Hindelang (n 2) fn 8. 66  Case C-205/06 Commission v Austria, ECLI:EU:C:2009:118, [2009] ECR I-1301; Case C-249/06 Commission v Sweden, ECLI:EU:C:2009:119, [2009] ECR I-1335; Case C-118/07 Commission v Finland, ECLI:EU:C:2009:715, [2009] ECR I-10889. 67  Case C-205/06 Commission v Austria (n 66) paras 3, 24f. 68  (Now) Arts 57(2) EC, 59 EC and 60(1) EC; Case C-205/06, Commission v Austria (n 66) paras 27ff. 69  Case C-205/06 Commission v Austria (n 66) paras 36ff, 45; Case C‑249/06 Commission v Sweden (n 66) paras 37ff, 46.

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powers. From an EU law perspective, it can be argued that the Court also indirectly challenged the BITs’ provisions granting jurisdiction to an arbitral tribunal dealing with matters of capital flow.70 As a consequence, the Member States’ capacity to trigger an arbitration proceeding under the agreements in compliance with its EU law obligations seems at least questionable.

IV.  Arbitral Tribunals’ Accommodation of Parties’ EU Membership and Law As we have seen, the Member States of the EU have committed to and been involved in international arbitration.71 As discussed above (see section II), public international law gives states the full range of IDS options, while recognising limitations on that choice flowing from international agreements, which include the EU Treaties. What are the implications of that observation for the legal framework in which arbitral tribunals deal with submitted disputes? To what extent can arbitral tribunals choose to ignore the primacy of EU law established within the EU legal order? To what extent should arbitral tribunals accommodate their parties’ regional obligations and EU interests? Have, or should, references to the CJEU regarding the interpretation and validity of EU law become an option for arbitral tribunals to facilitate compatibility of EU law and arbitral awards? Under what circumstances is the EU entitled to intervene (as a third party) in Member State arbitration in order to strengthen the recognition and awareness of EU law on the international stage, and thereby help to reduce conflicting obligations for EU Member States? In light of the dynamic nature of international and EU law as well as the diversity of arbitration scenarios it seems impossible to find conclusive answers to all these questions. However, this section discusses some examples of the way in which arbitral tribunals have addressed the (potential) impact on the cases brought before them of EU membership and the parties’ legal obligations under EU law, and/or the degree to which they have allowed for EU involvement to clarify matters of EU law in order to avoid legal dilemmas for their EU Member State parties to arbitration. The discussion distinguishes intra-EU state–state arbitration from arbitration between EU Member States and third states. The purpose of this analysis is twofold: on the one hand, it helps to identify the kinds of dispute that EU Member States have considered to be suitable for settlement by arbitration; on the other hand, it allows some observations on the extent to which arbitral tribunals have 70  See eg Art 10 of the assessed 1985 BIT between Austria and China (BGBl 537/1986)—that has remained in force since 1986—which provides for arbitration, if disputes regarding the interpretation of the agreement cannot be resolved within six months through friendly negotiation; for the full text (in German) see http://investmentpolicyhub.unctad.org/Download/TreatyFile/179. 71  See n 25 above.

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exercised their jurisdiction in a legal vacuum, which poses both legal and political challenges for Member States’ choice of IDS means in the future.

A.  State–State Arbitration Between EU Member States The MOX Plant case discussed earlier constitutes an important example of selfrestraint of an arbitral tribunal in the interest of the effectiveness of EU law (here in the form of international obligations under mixed agreements) in the relations between EU Member States, mutual respect and the prevention of conflicting decisions by different IDS institutions. As discussed above, Ireland had relied on the 1982 United Nations Convention on the Law of the Sea (UNCLOS) when initiating an arbitration proceeding against the UK and asking the International Tribunal of the Law of the Sea (ITLOS) to prescribe provisional measures in order to prevent the operation of the MOX Plant and to halt movements of radioactive substances.72 ITLOS issued a provisional measure order and requested both parties to cooperate and to enter into consultation regarding the exchange of information as well as the monitoring of risks or effects related to the operation of the MOX Plant for the Irish Sea, and to devise measures to prevent pollution of the marine environment.73 However when the UK and the European Commission raised jurisdictional challenges in the light of the parties’ EU membership,74 the arbitral tribunal suspended the proceedings.75 The Tribunal—being aware that UNCLOS is a mixed agreement and its binding effect on Member States as both international and EU law76—acknowledged that the CJEU might take the position that it falls within its exclusive competence to interpret and apply the invoked UNCLOS provisions as between EU Member States, which would preclude the Tribunal’s own jurisdiction in the case by virtue of Article 282 UNCLOS.77 The Tribunal also noted that

72 

See n 25 above. The MOX Plant Case (Ireland v United Kingdom), Provisional Measures, Order 2001/5 of 13 November 2001 (www.itlos.org/fileadmin/itlos/documents/cases/case_no_10/2001-5.13.11.01.E.pdf). 74  The European Commission stated in a Parliamentary Answer that it was considering bringing an infringement action against Ireland, as the invoked UNCLOS provisions had to be regarded as (then) EC law, given UNCLOS’ nature as mixed agreement; see the European Parliament Plenary Session, Oral question by Proinsias De Rossa (H-0256/03), Sitting of Thursday, 15 May 2003. 75  MOX Plant case, Order No 3, Suspension of Proceedings on Jurisdiction and Merits, and Request for Further Provisional Measures, 24 June 2003, 26 ILR 259 (2005); 42 ILM 1187 (2003); also available at www.pca-cpa.org. The Order followed and incorporated the Statement of the President of the ITLOS Tribunal of 13 June 2003 (www.pcacases.com/web/sendAttach/867). 76  According to Art 216(2) TFEU, ‘[a]greements concluded by the Union are binding upon the institutions of the Union and on its Member States’. 77  ibid paras 21, 22. Art 282 UNCLOS states that ‘[i]f the States Parties which are parties to a dispute concerning the interpretation or application of this Convention have agreed, through a general, regional or bilateral agreement or otherwise, that such dispute shall, at the request of any party to the dispute, be submitted to a procedure that entails a binding decision, that procedure shall apply in lieu of the procedures provided for in this Part, unless the parties to the dispute otherwise agree’. 73 

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‘whatever the Parties may agree in these proceedings as to the scope and effects of European Community law applicable in the present dispute, the question is ultimately not for them to decide but is rather to be decided within the institutions of the European Communities, and particularly by the European Court of Justice’, and that its own decisions would be final and binding on the parties.78 Hence, the Tribunal concluded that: In the circumstances, and bearing in mind considerations of mutual respect and comity which should prevail between judicial institutions both of which may be called upon to determine rights and obligations as between two States, the Tribunal considers that it would be inappropriate for it to proceed further with hearing the Parties on the merits of the dispute in the absence of a resolution of the problems referred to. Moreover, a procedure that might result in two conflicting decisions on the same issue would not be helpful to the resolution of the dispute between the Parties.79

After the CJEU had ruled on its exclusive jurisdiction regarding the interpretation and application of UNCLOS in intra-EU disputes, because UNCLOS had become an integral part of EU law,80 Ireland withdrew the case from arbitration.81 As a consequence, the Arbitral Tribunal did not issue an award on the merits of the MOX Plant case. It should be highlighted again that in the particular case of MOX Plant the agreement on the basis of which the arbitration proceedings took place (ie UNCLOS) is of a mixed nature, which means that both EU Member States and the EU itself are parties to the agreement. It was known to the Arbitral Tribunal that such international agreement had become an integral part of the EU legal order and could therefore be dealt with by the EU judiciary. However, in the context of intra-EU state–state arbitration based on other international agreements of the Member States—which have not been concluded as mixed agreements and therefore not become part of the EU legal order—arbitral tribunals have taken diverging approaches regarding their engagement with EU law and/or the implications of the parties’ EU membership. In 1999, the Netherlands initiated arbitration proceedings against France (‘Rhine Chlorides’).82 The case concerned the auditing of accounts in relation to the reduction of chloride discharges into the Rhine River and was based on the 1976 Convention on the Protection of the Rhine against Pollution by Chlorides,83 which had been adopted by France, Germany, Luxembourg, the Netherlands and Switzerland in order to reduce the level of chloride ions in the Rhine, and on 78 

ibid paras 26, 27. ibid para 28. See also President’s Statement (n 75 above), para 11. Case C-459/03 Commission v Ireland (n 25). 81 The Tribunal took formally on record Ireland’s formal notification of the withdrawal of its claims against the UK of February 2007; see MOX Plant Case, Order 6—Termination of Proceedings, 6 June 2008. 82  Case Concerning the Auditing of Accounts between the Kingdom of the Netherlands and the French Republic (n 37). 83  1404 United Nations Treaty Series 59 (1985). 79  80 

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the 1991 Additional Protocol,84 which had established the obligation on France to undertake certain measures, costs being shared between four of the five states to improve the quality of the Rhine’s waters. The dispute brought by the Netherlands concerned the interpretation and implementation of the pertinent cost-sharing formula and the methodology of the calculation to be used in the final auditing of financial contributions to be paid in advance by the Netherlands to France.85 The parties appointed arbitrators and agreed that the International Bureau of the PCA would serve as Registry of the Tribunal. After a hearing in closed session in 2002 at the International Conference Centre in Paris and an exchange of submissions and documents, the Tribunal rendered its award on 12 March 2004 after having applied international rules on treaty interpretation under the Vienna Convention on the Law of Treaties and international customary law. The case ‘highlighted the economic aspects of environmental protection and the management of international watercourses’.86 The Tribunal did not make reference to any EU law regulating the parties’ relationship nor to EU law obligations towards each other. In addition to arbitration that was initiated on the basis of existing treaty obligations, EU Member States have also agreed to submit bilateral intra-EU state–state disputes to arbitration on an ad hoc basis. Belgium and the Netherlands concluded an Arbitration Agreement in July 2003 to settle their dispute regarding the reactivation of the railway ‘Iron Rhine’ and the related allocation of costs. The Arbitral Tribunal was requested by Belgium and the Netherlands to ‘render its decision on the basis of international law, including European law if necessary, while taking into account the Parties’ obligations under [what is now Article 344 TFEU]’. The parties agreed on rules of procedure for the arbitration on the basis of the PCA Optional Rules for Arbitrating Disputes between Two States, and five arbitrators were appointed.87 The Tribunal acknowledged that EU Member States might be in breach of EU law,88 if they submit a dispute that requires the interpretation or application of EU law to a ‘non-[EU]’ tribunal.89 The Tribunal observed that the EU legal order entails the possibility and, under certain circumstances, the obligation for a national court to request the ‘authoritative adjudication’ by the CJEU by initiating a preliminary reference procedure, ‘if it considers that a decision on the question [of the interpretation or validity of EU law] is necessary to enable it

84 

1840 UNTS 423 (1994). further discussion see L Boisson De Chazournes, ‘The Rhine Chlorides Arbitration Concerning the Auditing of Accounts (Netherlands—France)—Its Contribution to International Law’ in Belinda McMahon (ed), The Rhine Chlorides Arbitration Concerning the Auditing of Accounts (Netherlands–France) Award of 2004 (The Hague, TMC Asser Press, 2008) 1–15. 86  ibid 15. 87  See for a summary of the Iron Rhine (‘IJzeren Rijn’) Arbitration background and Award, B MacMahon and FC Smith (eds), Permanent Court of Arbitration: summaries of awards 1999–2009 (The Hague, TMC Asser Press, 2010) 81–92. 88  According to (now) Art 344 TFEU, ‘Member States undertake not to submit a dispute concerning the interpretation or application of the Treaties to any method of settlement other than those provided for therein’. 89  Iron Rhine Award (n 16) para 101. 85  For

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to give judgment’ (Article 267 TFEU).90 The Tribunal considered itself to be in a ‘position analogous to that of a [EU] domestic court’91 and applied the case law on national courts’ obligation to submit questions to the CJEU in order to assess whether ruling in the present case would require the involvement of the CJEU. According to the Tribunal, ‘not all mention of [EU] law brings with it the duty to refer’.92 As a consequence, it assessed the impact the application of EU law ‘in two areas, namely that of trans-European rail networks and that of protection of the environment’,93 would have on its decision. The Tribunal concluded that there was no need for it to engage in the interpretation of EU law in order to decide the case. More specifically, it held that the invoked EU law neither added rights or obligations to those included in the applicable international treaty,94 nor did it affect its interpretation and application of relevant national law.95 As a consequence, there was no obligation on the parties to submit the case to the CJEU under (now) Article 344 TFEU.96 The Tribunal rendered its award on 20 September 2005. In December 2008, the EU accession negotiations with Croatia had come to a standstill because of an unresolved territorial and maritime border dispute between the Republic of Croatia and the Republic of Slovenia.97 With the help of the European Commission the two states concluded on 4 November 2009 an agreement to submit their dispute to arbitration.98 Separating the border dispute from other issues related to Croatia’s future EU membership allowed the accession negotiations to continue, the accession treaty to be signed in December 2011, and Croatia to become an EU Member State as of 1 July 2013.99 The first procedural arbitration meeting was held on 13 April 2012, the oral hearing took place in June 2014 and, at the time of writing, the Arbitral Tribunal is holding its deliberation. According to Article 3(1) of the Arbitration Agreement, the Arbitral Tribunal ‘shall determine (a) the course of the maritime and land boundary between the Republic of Slovenia and the Republic of Croatia; (b) Slovenia’s junction to the High Sea; (c) the regime for the use of the relevant maritime areas’. Under Article 4 of the Arbitration Agreement, the Arbitral Tribunal has been requested to apply (a) the rules and principles of international law for the determinations referred to in Article 3(1)(a); (b) international law, equity and the principle of good neighbourly relations in order to achieve a fair and just result by taking into account all relevant circumstances for the determinations referred to in Article 3(1)(b) and (c).100 90 

ibid para 102. ibid para 103. 92  ibid para 104, citing Case 283/81 Srl CILFIT and Lanificio di Gavardo SpA v Ministero della Sanità, ECLI:EU:C:1982:335, [1982] ECR 3415, paras 10–11. 93  Iron Rhine Award (n 16) paras 106ff. 94  ibid para 119. 95  ibid para 137. 96  ibid para 137. 97  Hoffmeister (n 40) fn 104. 98 ibid. 99 ibid. 100  See n 39 above. 91 

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The parties have invited the European Commission ‘to provide secretarial support to the Arbitral Tribunal’ and agreed on Brussels as the place of arbitration.101 However the Agreement makes no reference to the applicability of EU law and provides that ‘[n]o document presented in the EU accession negotiations unilaterally shall prejudice the Arbitral Tribunal when performing its tasks or commit either side on the dispute’.102 It remains to be seen whether the arbitral tribunal will make any reference to EU law when deciding the case.103 EU law does not provide any rules regarding its Member States’ borders.104 Yet, following the accession of Croatia subsequent to the conclusion of the Arbitration Agreement, the relationship between Slovenia and Croatia is regulated by, inter alia, the EU market freedoms and detailed EU rules on fishery. It is therefore questionable whether all aspects included in the rules of the arbitration—and hence the arbitral award— will be of practical relevance, given the prevailing nature of EU law in intra-EU inter-state relations.

B. State–State Arbitration Between EU Member State and Non-EU State In the context of recent UNCLOS arbitration proceedings between EU Member States and third states, however, arbitral tribunals have not engaged with any of the implications their decisions might have on the EU and other (not-involved) EU Member States. Neither in the case Netherlands v RF (Arctic Sunrise) regarding the ‘boarding and detention of the vessel Arctic Sunrise in the exclusive economic zone of the Russian Federation and the detention of persons on board the vessel by the authorities of the Russian Federation’,105 nor in the case brought by Mauritius against the UK regarding the ‘establishment by the United Kingdom of a marine Protected Area around the Chagos Archipelago’,106 did the arbitral tribunals make any reference to the fact that one of the parties to the dispute was a member of the EU. Similar to the arbitration proceedings between EU Member States discussed earlier, this can be explained by the limited territorial relevance of the disputes 101 

ibid Art 6. ibid Art 8. 103  EU law was not mentioned in the Tribunal’s partial award of 30 June 2016, in which the Tribunal affirmed its jurisdiction and concluded that the ex parte communications of Slovenia with the (resigned) arbitrator did not constitute a breach of the Arbitration Agreement that would make the continuation of the proceedings impossible (see for Press Release https://pcacases.com/web/ sendAttach/1785). 104  Instead, the EU Treaties make reference to the ‘competence of the Member States concerning the geographical demarcation of their borders, in accordance with international law’, which needs to remain unaffected by eg the EU’s development of a policy with a view to border control, etc (see Art 77 TFEU). 105  ITLOS Order, 22 November 2013, 2. 106  See for the award in Chagos Marine Protected Area Arbitration (Mauritius v United Kingdom) of 18 March 2015: https://pcacases.com/web/view/11; see for comment by Michael Waibel: www.ejiltalk. org/mauritius-v-uk-chagos-marine-protected-area-unlawful. 102 

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(in particular in the Chagos case) and the awareness of the arbitral tribunals of the division of competence between the EU and its Member States in the fields covered by UNCLOS—as well as the lack of jurisdiction of the CJEU for disputes between EU Member States and third countries. It had been claimed that state-to-state arbitration under BITs could not be considered part of a Member State’s domestic judicial system and a referral to the CJEU under Article 267 TFEU would therefore be excluded.107 State-to-state arbitration under BITs would need to be considered as part of those IDS means (together with ITLOS and the European Court of Human Rights) that ‘are meant to do justice between states and other subjects of international law’.108 However not all state-to-state arbitration might be excluded from seeking guidance from the CJEU regarding the interpretation and validity of EU law. The 2014 Association Agreement between the European Union and its Member States, of the one part, and Ukraine, of the other part, seems to be the first international agreement with a non-EU state that includes provision for a preliminary reference to the CJEU during an inter-state arbitration. In the context of disputes relating to regulatory approximation, arbitration panels are obliged to suspend their proceedings in order to refer a ‘question of interpretation of a provision of EU law’ to the CJEU, the ruling of which will be binding on the arbitration panel.109 The situation is different from commercial and investment arbitration proceedings, in that association agreements rely significantly on EU law, arguably extending the EU acquis to territory outside the EU. It is therefore not surprising that the EU has been willing to allocate the task of the agreement’s interpretation to the CJEU.

V. Conclusion The growing role of the EU as a global actor has increased its involvement as party to, and facilitator of IDS.110 But the EU is not in a position to solve the Member 107  Basedow (n 64) 376–81, 378. For further discussion of preliminary rulings in the context of investor–state arbitration see eg A Dimopoulos, ‘The Validity and Applicability of International Investment Agreements Between EU Member States Under EU and International Law’ (2011) 48 CML Rev 63–93; Von Papp, ‘Clash of “Autonomous Legal Orders”: Can EU Member State Courts Bridge the Jurisdictional Divide Between Investment Tribunals and the ECJ? A Plea for Direct Referral from Investment Tribunals to the ECJ’ (2013) 50 CML Rev 1039–81; Gaffney (n 64); Lenk (n 64). 108  Basedow (n 64) 376–81, 378. 109  See Ch 14 on Dispute Settlement, in particular Art 322(2); http://eeas.europa.eu/ukraine/assoagreement/assoagreement-2013_en.htm; http://eeas.europa.eu/ukraine/docs/association_agreement_ ukraine_2014_en.pdf. 110  See the chapter by Christophe Hillion and Ramses A Wessel, ch 2 in this volume. See also Hoffmeister (n 40); A Rosas, ‘The European Union and International Dispute Settlement’ in L Boisson de Chazournes, C Romano and R Mackenzie (eds), International Organizations and International Dispute Settlement: Trends and Prospects (New York, Transnational Publishers Inc, 2002) 49; A Rosas, ‘International Dispute Settlement—EU Practices and Procedures’ (2003) 46 German Yearbook of International Law 284.

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States’ dilemma regarding IDS discussed in this chapter. The EU neither holds the competence to fully replace Member States on the international scene, nor would such substitution be satisfactory for non-EU parties that are interacting only with individual Member States, for instance where disputes concern territorial or bilateral investment issues. The chapter has shown that although international arbitration remains an option for EU Member States under international law, which can be attractive in the light of, inter alia, Member States’ control over the scope of the submitted dispute, possibly parts of the applicable law, the bench of arbitrators and the overall level of confidentiality to be applied during the arbitration, this option is nevertheless constrained: by the exclusive jurisdiction of the CJEU as far as disputes concerning the interpretation or application of the treaties (Article 344 TFEU) is concerned, together with the exclusive competence of the EU in a growing number of fields. Moreover, the reach of EU law—both substantive EU rules and the loyalty obligations of the Member States—affects the way international arbitration is triggered, undertaken and enforced. The approaches taken by arbitral tribunals with regard to states’ EU membership and the implications of EU law for their own jurisdiction have been diverse. The arbitral tribunal in the MOX Plant (Ireland v UK) case suspended the proceedings to leave it to the CJEU to determine which of the invoked UNCLOS provisions constituted an integral part of EU law, their interpretation then falling within the exclusive jurisdiction of the CJEU. The Tribunal emphasised the interest in avoiding diverging rulings in the interest of a peaceful settlement of the dispute, and the need for courts and tribunals to show ‘mutual respect and comity’. Yet, in the context of other disputes, arbitral tribunals have been less deferential towards the CJEU and the EU Member States’ interest in making their legal obligations under international treaties compatible with their EU membership obligations. Arbitral tribunals have not yet established a shared practice regarding the actual role of the EU in Member State arbitration (eg the possibility of intervention in the interest of clarifying the content and reach of EU law through preliminary rulings or amicus curiae briefs).111 On the one hand, further involvement of the EU could help in ensuring the effectiveness of EU law while maintaining Member States’ forum choice for the settlement of state–state disputes as well as their standing

111  See—but in relation to investor–state arbitration—the Micula case, in which the EU Commission was granted amicus curiae capacity to ‘bring a factual and legal perspective that could assist the Tribunal in the adjudication of the Parties’ rights’ (para 37), being asked to focus on ‘facts within its own knowledge and to European law rather than to any other facts or legal matters at issues in this arbitration’ (para 36), Ioan Micula, Viorel Micula and others v Romania (ICSID Case No ARB/05/20) para 27. The Tribunal treated EU law as fact and considered it inappropriate to base its decision on EU law ‘that may come to apply after the Awards has been rendered’ and ‘thus [did] not address the Parties’ and the Commission’s arguments on enforceability of the Award’ (340). Moreover, it emphasised that in any case its award would be binding under ICSID (341). See also Achmea BV (formerly Eureko BV) v Slovak Republic, UNCITRAL PCA Case No 2008-13; AES Summit Generation v Republic of Hungary (ICSID Case No ARB/07/22); Electrabel v Republic of Hungary (ICSID Case No ARB/07/19).

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under international treaties. On the other hand, it is difficult to determine the extent to which the EU should be involved in cases that fall largely within areas of retained state sovereignty. At the same time, Member States are obliged to take their EU law obligations seriously when agreeing with non-EU states on arbitration, and this obligation could include efforts to make relevant EU law more explicitly part of the law that builds the basis for the arbitral award.

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Part III

Implementation and Effects of IDS Rulings in the EU Legal Order

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9 International Rulings and the EU Legal Order: Autonomy as Legitimacy? CHRISTINA ECKES*

I. Introduction In its settled case law, the Court of Justice of the European Union (CJEU) defends the autonomy of the EU legal order from national and international law. The latter has recently been reconfirmed in the Court’s opinion on the EU’s planned accession to the European Convention on Human Rights (ECHR).1 At the same time, political forces within the EU wish to commit the EU to a growing number of different forms of international dispute settlement (IDS) mechanisms. The Lisbon Treaty has, as is well known, made EU accession to the ECHR possible and, arguably, made it an obligation of the EU institutions. It has also extended the EU’s competences to allow it to conclude international agreements concerning foreign direct investment2 and hence opened up the possibility to set up Investor–State Dispute Settlement (ISDS) mechanisms.3 The two most prominent and topical examples of IDS mechanisms to which the EU is in the process of committing are, hence, the European Court of Human Rights (ECtHR) and ISDS mechanisms. *  I would like to thank Ramses Wessel, Tomi Tuominen, Annette Schrauwen, Anne Thies and the participants of the ACELG seminar of 4 November 2015, as well as the anonymous reviewers of the CLEER working paper for their helpful comments on an earlier draft. All remaining errors are of course my own. 1  Opinion 2/13 Accession of the European Union to the European Convention for the Protection of Human Rights and Fundamental Freedoms, ECLI:EU:C:2014:2454 (hereinafter ‘Opinion 2/13’). 2  Consolidated Version of the Treaty on the Functioning of the European Union [2008] OJ C115/47 (hereinafter ‘TFEU’), Art 207(4). 3  This is, in any event, the interpretation of the Commission. See in this context the pending Opinion 2/15 Request for an Opinion Submitted by the European Commission Pursuant to Article 218(11) TFEU [2015] OJ C363/18 (hereinafter ‘Opinion 2/15’) on the EU’s competence to conclude the Free Trade Agreement with Singapore (SFTA). Member States have concluded about 1,500 bilateral investment treaties, all of which contain similar provisions on investment protection and ISDS. The EU has, so far, only concluded a Free Trade Agreement with Canada (CETA) and SFTA with ISDS. Based on two criteria (market potential and need for better protection of foreign investments) the Commission has compiled a list of five countries and one regional entity (Canada, China, India, Mercosur, Russia and Singapore), which will be privileged partners for the negotiation of the first investment agreements.

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The latter may in the future be replaced by an ‘Investment Court System’ as ­proposed by the Commission in September 2015.4 Most recently, the EU has agreed ISDS in the context of Free Trade Agreements with Canada (CETA) and Singapore (SFTA).5 The negotiations of an investment dispute settlement mechanism in the context of Transatlantic Trade and Investment Partnership (TTIP) are still ongoing.6 The process of EU accession to the ECHR, after the finalisation of the draft accession agreement in 2013, has for the moment ground to a (temporary) halt as a result of the negative opinion of the CJEU in December 2014. Both ISDS (and the proposed Investment Court ­System) and the EU’s accession to the ECHR are highly controversial.7 Many fear that ISDS will interfere with the internal policy making process, circumvent the existing constitutional structures of the domestic polity and lack the independence of domestic or international courts. The ECtHR and EU accession to the ECHR, by contrast, enjoy a reasonably high level of public support. The CJEU fears, however, that accession may undermine the autonomy of the EU legal order. This chapter investigates the influence that the EU’s participation in IDS has on the autonomy and as a consequence on the legitimacy of the EU legal order. It argues in particular that (a certain degree of) autonomy is necessary for the forms of legitimacy, on which EU law and the CJEU traditionally rely, such as, for example, procedural and reason-based legitimacy.8 This does not exclude the possibility that other forms of legitimacy may replace them, but it supports the argument that if participation in certain IDS mechanisms reduces the autonomy of EU law and of the CJEU, on face value this also reduces the legitimacy of EU law. This raises the question of whether participation in IDS mechanisms is more problematic for the EU than for nation states. It ultimately also raises the question of whether the EU is well-placed to meet the challenges of the increasingly interwoven (quasi-) judicial landscape of a globalised world. This chapter is structured as follows. Section II sketches different conceptions of legitimacy, links them to autonomy and introduces the autonomy of EU law, as it is understood by the CJEU. This lays the groundwork for the discussion that follows on how the EU’s autonomy and legitimacy are affected by participation in 4  See both the Directives for the negotiation on the Transatlantic Trade and Investment Partnership between the European Union and the United States of America of 17 June 2013, available at: http:// data.consilium.europa.eu/doc/document/ST-11103-2013-DCL-1/en/pdf and Commission proposal on investment protection and the investment court system (ICS), published on 16 September 2015, available at: http://europa.eu/rapid/press-release_IP-15-5651_en.htm (with further links). 5  Neither of the two agreements has entered into force at the time of writing. The EP voted in favour of CETA on 15 February 2017; yet national parliaments must still approve CETA before it can take full effect. A request for an opinion of the CJEU is pending on the EU’s competences to sign and ratify the SFTA. Only after the Court has given its opinion will the approval procedure be launched. 6  See n 4 above. 7  Commission consultation on ISDS resulted in 149,399 online contributions, the absolute m ­ ajority of which were critical or even hostile. The CJEU annulled the draft accession agreement for being incompatible with EU law, see Opinion 2/13 (n 1). See also D Halberstam, ‘“It’s the Autonomy, S­ tupid!” A Modest Defense of Opinion 2/13 on EU Accession to the ECHR, and the Way Forward’ (2015) 16 German Law Journal 105. 8  See s II.A.

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IDS mechanisms. Section III categorises different IDS to which the EU is subject and zooms in on the two above-mentioned types of IDS mechanisms: the ECtHR after the EU’s accession to the ECHR and the ISDS/Investment Court System. ­Section IV discusses how these two IDS mechanisms affect the CJEU’s position and the autonomy and legitimacy of EU law. Section V concludes.

II.  Legitimacy, Autonomy and the Autonomy of EU Law This section does three things. First, it differentiates between different forms of legitimacy. Second, it explains how they relate to autonomy. Third, it outlines how the CJEU and the EU legal system rely on the different forms of legitimacy and how the CJEU conceives of the autonomy of the EU legal order. This lays the groundwork for the discussion in the following sections on how different IDS mechanisms impact on the EU’s autonomy and legitimacy.

A. Legitimacy Legitimacy is the most common answer to the question of political justification, that is, how can the exercise of public power be justified to those who disagree on reasonable grounds? Different theorists have argued about how legitimacy is ­‘created’ and of what it consists. A first distinction should be made between legitimacy in the normative sense and legitimacy in the sociological sense. The former implies ideas about the moral rightness or wrongness of some action or institution. The latter refers to legitimacy beliefs, that is, the attitudes of people. It does not entail a direct moral judgment.9 While a certain disenchantment with supranational and international structures, such as the EU and the Council of Europe, can be identified by a simple study of national media and politics, this enquiry is not an empirical one. This chapter will not investigate the sociological legitimacy of EU law. This also explains why recognition is here seen as necessary for the authority of EU law, that is, its effect and ability to ensure compliance, but it is not taken account of as a direct source of legitimacy.10 Normative legitimacy can be conferred in different ways. The public will confer democratic legitimacy.11 The law confers legal legitimacy.12 The reliability of the

9  For a different view see J-R Sieckmann, The Logic of Autonomy: Law, Morality and Autonomous Reasoning (Oxford, Hart Publishing, 2012). 10  See s II.B. 11  For an instructive view see AE Stie, ‘Evaluating the Democratic Legitimacy of Institutionalised Decision-making Procedures. A Deliberative Perspective’, Fourth Pan-European Conference on EU Politics, Riga 25–28 September 2008: www.jhubc.it/ecpr-riga/virtualpaperroom/062.pdf. 12  Above all, see J Raz, The Authority of Law—Essays on Law and Morality (Oxford, Oxford U ­ niversity Press, 2009).

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process that produces a decision confers procedural legitimacy.13 Finally, ­legitimacy can be drawn from reason (reason-based legitimacy), which is not based on actual support but on the fact that citizens ‘may reasonably be expected to endorse’ the foundations of a decision.14 Legitimacy can, further, be evaluated in terms of whether it meets either a ­certain procedural or substantive standard. This allows us to distinguish a proceduralist and a substantivist conception of democratic legitimacy; a proceduralist and a substantivist account of reason-based legitimacy; and so forth. Yet, while the procedural and the substantive standard of evaluation are different they should not be seen as unrelated. Procedures cannot be pointless, arbitrary or unjustifiable. They would not confer legitimacy to the outcome. They must serve a substantive purpose, such as ensuring democratic participation, rational decision making, equality or autonomy. The different sources of legitimacy stand in a complementary relationship to each other. The modern constitutional state relies on a combination of these sources, including centrally democratic legitimacy. Modern democracy theory has further moved towards a deliberative rather than a crudely majoritarian understanding of democracy.15 Deliberative democracy is the banner used for a number of democracy theories. Their core-distinguishing feature is that they do not focus on aggregation of individual pre-political preferences but on a process of open debate leading to an agreed policy (the collective will). Hence, deliberative democracy should not be understood as divorced from or even transcending politics. It is rather the best self-understanding of representative democracy. This results in an essential tension between democratic legitimacy and judicial review, which will be further explored in the following section with reference to the collective autonomy of a polity.

B.  Legitimacy and Autonomy All of the normative conceptions of legitimacy presuppose a certain degree of autonomy of the structure in which public power is exercised. Autonomy literally comes from auto (self) and nomy (law) and means ‘one who gives oneself one’s own law’. Individual or private autonomy and collective or public autonomy should be distinguished. Kant’s philosophy laid the groundwork for the modern 13 R Barnett, Restoring the Lost Constitution: The Presumption of Liberty (Princeton, Princeton ­ niversity Press, 2013). Barnett argues that the legitimacy of a Constitution depends on providing U procedures that reliably result in just outcomes. 14  J Rawls, Political Liberalism (New York, Columbia University Press, 2005) 137: ‘Our exercise of political power is fully proper only when it is exercised in accordance with a constitution the essentials of which all citizens as free and equal may reasonably be expected to endorse in the light of principles and ideals acceptable to their common human reason.’ 15 J Elster (ed), Deliberative Democracy (Cambridge, Cambridge University Press, 1998) and JS Dryzek, Deliberative Democracy and Beyond: Liberals, Critics, Contestations (Oxford, Oxford ­University Press, 2002).

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understanding of individual autonomy or autonomous agency.16 He understood autonomy as the capability to recognise morality and to act accordingly, assuming that individuals are autonomous when they operate on the basis of the understanding that they are capable of steering their own actions following reason and transcending the empirical circumstances of nature.17 Drawing on the writings of Rousseau18 and Habermas,19 collective autonomy of a polity is here understood as both analogous to and dependent on individual autonomy. In analogy to individual autonomy, collective autonomy does not require that it must be free of all legal or factual constraints but it must be able to form a collective will based on the assumption that it can steer its own course of action. The polity can consequently commit to external legal constraints without losing its autonomy; yet, it must remain able to form a collective will that aims to determine the political course that the policy takes.20 Depending on individual autonomy, collective will-forming requires that the individual participants actually possess the liberty to make decisions and determine their actions. Constitutional and judicial review by unelected judges stands in essential tension with, and may even pose a threat to, autonomous will-forming. Yet it also forms part of the construction that ensures collective autonomy. It ensures that the collective will is formed pursuant to pre-established (constitutional) rules, including both procedural and substantive rules that allow the equal and free participation of all in the collective will-forming.21 Constitutional and judicial review are, hence, a functional and fundamental requirement. On the one hand, constitutional and judicial review protect the framework conditions for collective will-forming and, on the other hand, they ensure that all participants are treated as individually autonomous. Informative in this regard is Habermas’ procedural account of democratic legitimacy, which presumes that a collective will can only be formed in a legally structured political community.22 In this legally structured political community, courts guarantee equal subjective liberties, equal 16  I Kant, Grundlegung zur Metaphysik der Sitten und Kritik der Praktischen Vernunft (Frankfurt, Suhrkamp, 2000). 17 Kant, ibid. See Habermas, who draws on this analogy for his understanding of sovereignty. J Habermas, Between Facts and Norms. Contributions to a Discourse Theory of Law and Democracy ­(Cambridge, Polity, 1996). 18  See J-J Rousseau, Discourse on Political Economy and Social Contract (Oxford, Oxford University Press, 1994). Rousseau understands decisions to express the collective will when they have been adopted following procedures that allow all participants to understand themselves as subject only to laws that they have given themselves. 19  Habermas (n 17) 110: ‘only those statutes may claim legitimacy that can meet with the assent of all citizens in a discursive process of legislation that in turn has been legally constituted’ and 449: ‘citizens should always be able to understand themselves also as the authors of the law to which they are subject as addressees’. 20  This presupposes the distinction introduced by Rousseau between the will of all (aggregation of all individual wills) and the collective will (common will formed in a deliberative process). 21  This follows roughly Habermas (n 17). See for a detailed analysis of Habermas’ stand on democracy and judicial review, C Zürn, ‘Deliberative Democracy and Constitutional Review’ (2002) 21 Law and Philosophy 467. 22  See Habermas (n 17) 448.

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­ embership rights and legal protection of these rights.23 Constitutionalism and m the rule of law are a precondition for democratic legitimacy. The contribution of courts and the law to deliberative democratic legitimacy is thus ambiguous. They are not necessarily seen as limiting democracy, but can also be viewed as reinforcing it. Much depends on the institutional design, the specific issue at stake, and the yardstick that the court both formally and actually uses. While courts may be counter-majoritarian they also engender or preserve deliberation, for example by reducing coercion and protecting space for participation (eg protecting human rights) or by directly protecting deliberative space (eg through media laws). In fact, the same court may be seen at times as limiting or as furthering democracy.24 Furthermore, besides (at least potentially) engendering an environment contributive to deliberation, certain institutions, such as domestic courts, are constructed in a way that allows them to deliberate more comprehensively about certain choices and take more adequate account of detailed and specialised information than voters. They are also obliged to offer a fuller and better-argued justification for their choices than politicians are. Traditionally, the judiciary thus draws legitimacy from its constitutional mandate (legal legitimacy), the predetermined procedures it follows (procedural legitimacy) and from the convincing quality of its legal reasoning (reason-based legitimacy). Reason-based legitimacy results from judges construing (interpreting and constructing)25 the law before them through hermeneutics, in a way that ensures that their judicial decisions sit coherently with the ‘relevant’ existing legal propositions.26

C.  The Autonomy of EU Law The CJEU argues, essentially, that the autonomy of the EU legal order requires two things: first, the Court itself must be in the position to determine the content, validity and reach of EU law and, second, this determination must be made within the logic of the EU legal order rather than being dependent on any form of recognition by national or international law.27 At the same time, the authority 23 See, for a detailed account and analysis of the extent and intensity of constitutional review ­foreseen by Habermas, Zürn (n 21). 24  This is the common understanding of the role of the US Supreme Court, which is viewed as ­having done one and the other in different periods. See also the ability and inability of the Italian Constitutional Court to apply constitutional checks on Berlusconi (F Hoffmeister, ‘Enforcing the EU Charter of Fundamental Rights in Member States: How Far are Rome, Budapest and Bucharest from Brussels?’ in A von Bogdandy and P Sonnevend, Constitutional Crisis in the European Constitutional Area (Oxford, Hart Publishing, 2015) 195, 206–10). 25 R Poscher, ‘Hermeneutics, Jurisprudence and Law’ in J Malpas and H-H Gander (eds), The ­Routledge Companion to Philosophical Hermeneutics (London, Routledge, 2015) 451–65. 26  N MacCormick, Rhetoric and The Rule of Law (Oxford, Oxford University Press, 2005) 189 et seq; N MacCormick, Legal Reasoning and Legal Theory (Oxford, Clarendon Press, 1978) 152, 195. 27  C Eckes, ‘The European Court of Justice and (Quasi-)Judicial Bodies of International Organisations’ in RA Wessel and S Blockmans (eds), Between Autonomy and Dependence (New York, Springer Science & Business Media, 2012) Ch 5, 85–113.

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and effectiveness of decisions of the CJEU and of EU law depend on recognition by national governments, parliaments and judges, as well as individuals.28 Recognition may take place in different ways, for example, practical recognition when judges apply, and governments follow, EU law, or formal recognition that national law validates or incorporates EU law. Under the banner of protecting the autonomy (and arguably the legitimacy) of the EU legal order, the CJEU has several times defended its monopoly to determine the relationships between the different legal spheres of national, European and international law authoritatively for the EU legal order. Internally, the CJEU insists on an autonomous interpretation of EU law, independent from the legal concepts used by the different national legal orders of the Member States.29 The main purpose of this internal autonomy is to guarantee the effectiveness and uniform application of EU law across the EU in the different national contexts. Externally, the autonomy of the EU legal order has been most relevant in the CJEU’s rulings and opinions on international commitments of the EU and its Member States. In this context, the autonomy of the EU legal order serves a number of different purposes: the protection of fundamental rights,30 the protection of the political institutions’ scope of manoeuvre,31 independence from international law,32 and above all the protection of the CJEU’s monopoly to interpret EU law.33 The CJEU’s concept of autonomy covers institutional procedural and substantive interpretative issues, which both need to remain subject to the independent determination of the CJEU. Ultimately, the different purposes of external autonomy melt into the main objective: to protect the monopolist position of the CJEU as the final arbiter not only of the relation between EU law and international law, but also of all relations within the EU legal order, be they inter-institutional, or between the Member States and the EU, or between individuals and the EU and, to a more limited extent, between individuals and the Member States. Time and again, the Court has defended its own judicial monopoly by declaring envisaged international agreements that would commit the EU to IDS to be incompatible with the EU Treaties.34 This has made it difficult for the political 28  Moreover the CJEU accepts public international law to fill the cracks of EU law if the l­atter does not comprehensively regulate the field, see eg Case 41/74 Yvonne van Duyn v Home Office, ECLI:EU:C:1974:133, [1974] ECR 1337, referring to the international duty of states to receive back their own nationals, but see also Case C-364/10 Hungary v Slovak Republic, ECLI:EU:C:2012:630, considering the application of diplomatic law between Member States. 29  Established in Case 26/62 Van Gend en Loos, ECLI:EU:C:1963:1, [1963] ECR 1. 30  Joined Cases C-402/05 P and C-415/05P Kadi and AlBarakaat, ECLI:EU:C:2008:461, [2008] ECR I-6351. 31  Case C-149/96, Portugal v Council, ECLI:EU:C:1999:574, [1999] ECR I-8395. 32  The CJEU approaches the ECHR as a source of inspiration of the general principles of EU law. 33 Opinion 1/91, EEA, ECLI:EU:C:1991:490, [1991] ECR I-6079; Opinion 2/94 Accession to the ECHR [1996] ECR I-1759; Opinion 1/00 ECAA, ECLI:EU:C:2002:231, [2002] ECR I-3493; Opinion 1/09 Unified Patent Litigation System, ECLI:EU:C:2011:123, [2011] ECR I-1137; Opinion 2/13 (n 1). 34  ibid. See also N Jaaskinen and A Sikora, ‘The Exclusive Jurisdiction of the Court of Justice of the European Union and the Unity of the EU Legal Order’ in M Cremona, A Thies and RA Wessel (eds), The EU and International Dispute Settlement (Oxford, Hart Publishing, 2016).

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actors to submit the EU to binding IDS mechanisms. It also opens up a discussion regarding the reasons for which the courts of one legal system should deny political actors the choice of submitting the domestic legal order to the binding force of rulings of external judicial bodies. This is the core question underlying the discussion of whether the CJEU’s aim and manner of protecting the autonomy of the EU legal order is legitimate. The focus of this chapter lies on the impact that international rulings may have on the ability of the EU to take autonomous decisions that can draw from the above explained forms of legitimacy. First, the internal political and legislative process within the EU offers (limited and often criticised)35 democratic and procedural legitimacy through the participation of the European Parliament, citizens’ consultations and indirect democratic control of national representatives through national structures. In this regard, review by the CJEU may be seen as particularly problematic because it has a stronger entrenching force than ordinary judicial review. The other EU institutions are bound by the decisions of the Court. If the Member States wish to rein in a decision of the CJEU, they will need to amend the Treaties, which involves a long and complex procedure requiring ratification in all 28 Member States. Second, the EU courts and national courts offer legal legitimacy by ensuring that the exercise of public power complies with EU law. And, third, decisions of the EU courts and national courts offer, if they are well-reasoned, reason-based legitimacy. The Lisbon Treaty has introduced a new appointment procedure for judges to the CJEU,36 which aims to ensure their judicial qualification and, ultimately, their ability to offer reason-based legitimacy. Both the institutional position of the judiciary and its reasoning must, within the framework of the law, be relatively autonomous to be able to offer independent justification through legal, procedural, reason-based legitimacy.

III.  IDS Mechanisms The EU is the largest trading block in the world. It has concluded many trade agreements and will continue to do so. With its new post-Lisbon competences these will cover matters of investment. In October 2015, the Commission presented its new trade and investment strategy, in which it addressed common criticisms and emphasised that EU trade policy should become more ‘responsible’, meaning it will be more effective, more transparent and will protect not only the EU’s interests, but also its values.37 The Commission further declared its 35  See literature on the democratic deficit of the EU, eg A Follesdal and S Hix, ‘Why There is a Democratic Deficit in the EU: A Response to Majone and Moravcsik’ (2006) 44(3) Journal of Common Market Studies 533–62. 36  Arts 253–55 TFEU. 37  Commission, ‘EU’s new trade and investment strategy of October 2015’, Foreword by C Malmström, http://trade.ec.europa.eu/doclib/docs/2015/october/tradoc_153846.pdf.

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c­ onviction that multilateralism, and in particular the use of IDS including in free trade agreements (FTAs), is one way of achieving these aims. The EU participates in a variety of IDS mechanisms, which are institutionally and contextually very different. For this reason they also raise different ­problems as regards their potential impact on the autonomy and legitimacy of the EU legal order. Section III.A aims to group IDS in categories and identify which IDS ­features may be particularly problematic for the EU legal order. Section III.B focuses in on the ECtHR and ISDS as two topical IDS mechanisms, which are potentially ­problematic from an EU perspective.

A.  Different Categories of IDS Mechanisms The EU has long been subject to the World Trade Organization (WTO) dispute settlement mechanism. The Agreement Establishing the WTO is a mixed agreement. Both the EU and all its Member States are parties. Within the WTO however, this mixed nature has, in practice, been replaced by a dominance of the EU. However, it should not be forgotten that the EU and the General Agreement on Tariffs and Trade (GATT) did not ‘fall in love at first sight’. Indeed, the GATT’s most important principle of non-discrimination, the most-favoured-nation rule, and European integration stand, at least in principle, in open conflict with each other.38 Today, however, any broader legal concerns as to the general compatibility of the EU’s WTO membership with EU law are history. Indeed, the EU rates amongst the most active users of the WTO dispute settlement mechanism. It routinely acts as a respondent, including in cases brought by a third state against an EU Member State.39 At the same time, it is well known that the CJEU holds decisions of the WTO dispute settlement body at arm’s length by not conferring direct effect on them.40 They are hence binding but cannot be enforced against EU law by private parties. For the UN Convention on the Law of the Sea (UNCLOS) and the International Tribunal for the Law of the Sea (ITLOS) the CJEU chose a similar route, accepting that the EU is bound but denying direct effect. Since 1998 the EU has been a contracting party to UNCLOS. While the EU (then the European Community)

38  The most-favoured-nation rule is based on equal treatment and aims to reduce barriers to trade between all parties, while regional integration aims to create privileged relations for a group of countries. As a matter of principle this has not changed even though Art XXIV GATT has solved the legal problem. 39  See C Eckes, ‘The European Court of Justice and (Quasi-) Judicial Bodies of International Organizations’ in RA Wessel and S Blockmans (eds), Between Autonomy and Dependence (The Hague, Asser Press, 2013) 85–109; Disputes by Country/Territory (World Trade Organization) www.wto.org/english/ tratop_e/dispu_e/dispu_by_country_e.htm. 40  ibid. See also: A Thies, ‘EU Membership of the WTO: International Trade Disputes and Judicial Protection of Individuals by EU Courts’ (2013) 2(2) Global Constitutionalism 237.

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had a rather reserved attitude towards the ITLOS at the beginning,41 by 2000 Chile and the EU had already agreed to establish a special Chamber of ITLOS.42 Yet since UNCLOS does not have direct effect,43 it may be expected that ITLOS rulings would also be denied direct effect. The EU successfully participates in some IDS mechanisms, while others are seen as problematic by the CJEU, for example the ECtHR and, potentially, certain ISD mechanisms. Three criteria seem to allow different IDS mechanisms to be distinguished. First, a distinction can be made between IDS mechanisms that deal with disputes between states (or the EU) and those receiving complaints by individuals. The EU is not, so far, subject to any binding IDS mechanism that receives complaints from individuals. Indeed, the EU’s own history of integration, which has largely been triggered by decentralised enforcement of EU law by individuals, is a testimony to the force that individual complaint mechanisms may have. Furthermore, it would be more difficult to keep decisions of IDS mechanisms that rule on complaints from individuals at arm’s length by denying direct effect to them. Moreover, challenges brought by individuals concern specific legal situations rather than general policies. While a specific ruling may have a powerful influence on general policies, a specific violation of an individual right cannot easily be ‘taken account of ’, it must actually be specifically addressed. Adapting the interpretation of law may not be enough: specific changes may be necessary to remedy the violation. Hence, IDS mechanisms that receive complaints by individuals are prima facie more problematic for the autonomy of the EU legal order than intergovernmental IDS. Second, a distinction may be made with regard to the subject matter of the judicial dispute. Human rights are, for many reasons, a particularly intense interference with the autonomy or sovereignty of a polity. First, human rights are by definition a ‘horizontal’ policy, ie they deploy their effect across all substantive policy areas. This raises particular problems with regard to containing the effect of any given ruling, including on the division of competence within a multilayered context. Second, judicial review of human rights constitutes constitutional review as opposed to ordinary judicial review. From a democratic perspective, constitutional review by unelected judges is particularly problematic, because human rights are necessarily formulated in a very open manner and require interpreting and filling in based on value choices. Third, human rights have a cultural dimension. While a general convergence and integration of human rights norms between different legal contexts may be observed,44 the differences are often what go to the 41  The Commission proposed to the Council in 1999 that no preference should be expressed for any of the three dispute settlement procedures provided for in UNCLOS, namely ITLOS, an arbitral tribunal or a special arbitral tribunal. The Council never formally decided on the line proposed by the Commission, and the Commission withdrew the proposal in 2004. 42  Earlier that year the EU had brought the case before the WTO. Both cases remain suspended at the time of writing. 43  Case C-308/06 Intertanko, ECLI:EU:C:2008:312, [2008] ECR I-4057. 44  See perhaps E de Wet and J Vidmar, ‘Conflicts between International Paradigms: Hierarchy versus Systemic Integration’ (2013) 2 Global Constitutionalism 196.

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core of what a polity sees as defining its identity.45 Fourth, minimum standards of human rights are difficult to maintain. They often result in a specific determination of how to strike the balance between different rights and, hence, this will determine relatively precisely the scope of manoeuvre left for public policy. This all makes them particularly problematic for the autonomy of the domestic policy maker. It also explains why they have played and continue to play an important role in the debate on EU legal integration. On the one hand, national courts have pressured the EU to protect fundamental rights as a condition for them to accept the primacy of EU law. On the other hand, EU fundamental rights protection is a way of constitutionalising the European legal order, which is largely perceived as happening at the expense of national sovereignty. Fundamental rights remain the subject of continuous tug-of-war matches between the CJEU and the G ­ erman Federal Constitutional Court (GFCC).46 Again, the EU’s own history may be a warning to the transformative potential of fundamental rights. The CJEU could reasonably expect greater pressure from the highest national courts if it was legally bound and had to enforce external determinations of fundamental rights standards that clashed with the internal, national and/or European interpretations of these rights. Finally, a distinction should be made based on the institutional setup of the different IDS mechanisms. Some follow a quasi-judicial model of adjudication with institutional safeguards of independence of the judges and a stare decisis system.47 Some act as a mechanism of last resort by requiring the exhaustion of domestic remedies before actually admitting a case.48 The institutional set up may impact on the autonomy and legitimacy of the domestic legal order in a nuanced manner. Quasi-judicial models ensure a higher level of legal and procedural legitimacy of the rulings of the IDS mechanism, while the exhaustion requirement allows

45  For example regarding issues such as abortion in the public debate surrounding the Constitutional Treaty. 46  In 2013, for example, the CJEU decided Case C-617/10 Åklagaren v Hans Åkerberg Fransson, ECLI:EU:C:2013:105, paras 19–21, explaining that the EU Charter of Fundamental Rights is applicable to Member States’ actions within the ‘scope of EU law’. The GFCC in Counter-Terrorism Database, Judgment of 24 April 2013, 1 BvR 1215/07, warned the CJEU not to interpret ‘scope of EU law’ too broadly (s C, last para: ‘for the questions … which only concern German fundamental rights, the European Court of Justice is not the lawful judge according to Art 101 sec 1 GG. The ECJ’s decision in the case Åkerberg Fransson … does not change this conclusion. As part of a cooperative relationship between the Federal Constitutional Court and the European Court of Justice (cf BVerfGE 126, 286 ), this decision must not be read in a way that would view it as an apparent ultra vires act or as if it endangered the protection and enforcement of the fundamental rights in the Member States (Art 23 sec 1 sentence 1 GG) in a way that questioned the identity of the Basic Law’s constitutional order (cf BVerfGE 89, 155 ; 123, 267 ; 125, 260 ; 126, 286 ; 129, 78 ). The decision must thus not be understood and applied in such a way that absolutely any connection of a provision’s subject-matter to the merely abstract scope of Union law, or merely incidental effects on Union law, would be sufficient for binding the Member States by the Union’s fundamental rights set forth in the EUCFR.’). The CJEU confirmed its position in Case C-418/11 Texdata Software, ECLI:EU:C:2013:588, paras 72–73. 47  For example, the ECtHR and the WTO Appellate Body. 48  For example, the ECtHR.

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domestic courts a first shot at determining not only the dispute at hand but also the relationship between different legal spheres, and hence allows them to determine the hierarchy of legal relations. The latter does not guarantee deference of the IDS mechanism to the domestic judiciary, but it may allow it to take place in practice. The following section will examine in more detail two examples of IDS mechanisms to which the Member States and the EU institutions aim to commit the EU. These have both been seen as highly problematic either by the CJEU or— where the Court has not yet had the opportunity to rule—by a variety of societal actors and public opinion.

B.  Two Particularly Problematic Examples of IDS Mechanisms Two IDS mechanisms that the EU has recently agreed, or attempted to agree, are particularly problematic for the autonomy and legitimacy of the EU legal order. One is the EU’s submission to the binding judicial authority of the ECtHR, ie EU accession to the ECHR, and the other is ISDS (‘the Investment Court System’). Both are IDS mechanisms that would allow individuals to bring legal challenges against the EU. In this regard, they are often compared.49 Both deal with indeterminate rights and interests. At the same time, they are fundamentally different with regard to their institutional set up and objectives.

i.  The ECtHR Post Accession to the ECHR The ECtHR rules on human rights violations in all policy fields. After accession, this would cover all EU policies, including those falling within the highly politicised ex-Union pillars, now called the Area of Freedom, Security and Justice (AFSJ) and the Common Foreign and Security Policy (CFSP). The ECtHR’s review would also extend to secondary EU law adopted pursuant to the legislative procedures of the EU. It would thus constitute classic constitutional review, which can be particularly problematic from a democratic perspective. In order to ensure the political autonomy of the polity, ie the ability of citizens to make their own laws through deliberative democratic processes, constitutional review should not replace the choices of the legislator with those of the unelected judiciary. Habermas considers constitutional review as contributing to the democratic process and not paternalistic to the extent that it enforces procedures and ensures the effective exercise of participation rights, rather than reviewing the content of socio-economic rights.50 The ECtHR largely aims to protect the autonomous political choices of the Contracting Parties with the legal concept of a ‘margin of appreciation’ which reserves space for political decisions in which judicial review will not interfere. The margin 49 S Schill, ‘International Investment Law and Comparative Public Law—An Introduction’ in S Schill, International Investment Law and Comparative Public Law (Oxford, Oxford University Press, 2010) 16. 50  Habermas (n 17) 242–66.

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of appreciation aims to strike the delicate balance of ensuring effective protection of human rights without imposing paternalistic choices. As regards value choices, the EU’s position is not essentially different from the position of states. The margin of appreciation may equally ensure the EU’s autonomy to make substantive value choices. The great difference between the position of the EU and a state pertains to the ECtHR’s ability to make a binding determination of the hierarchical relations between different legal norms, and thus interfere with the power relations within the EU. In Opinion 2/13, the CJEU found that the agreement setting out the legal framework for EU accession to the ECHR was incompatible with EU law, essentially because it endangered the autonomy of the EU legal order.51 Indeed, the CJEU treats the concern over autonomy as a second-order reason in the Razian sense of a meta-consideration that displaces all first-order reasons.52 In other words, in the view of the CJEU, the protection of the autonomy of the EU legal order must be ensured, not on a balance of interests but as an absolute value. As explained above, the CJEU understands the autonomy of EU law to mean that EU law is valid in itself without the intervention or recognition of national or international law. The CJEU regards protecting the autonomy of the EU legal order as identical to protecting its own ability to maintain from the authoritative perspective of EU law that EU law ‘stems from an independent source of law’.53 This unilateral claim of the CJEU, while remaining unconfirmed by national courts, is central to the balance of powers within the EU legal order. The mutually agreed suspension of the decision over the ‘last word’ between the CJEU on the one hand and national constitutional and supreme courts on the other depends on the ability of each of the judicial actors (the CJEU and the national constitutional courts) to make their own claims within the logic of their own legal order. If the CJEU’s absolute claim of original validity of EU law could be challenged, not only from the perspective of national and international law, but within the logic of EU law, this would allow national courts to end the suspension and make a universally valid claim. The core question is hence whether the autonomy threat, as the Court perceives it, is realistic. If this is answered in the positive, the CJEU should, within the framework of its legal mandate under the EU treaties, be seen as correct in protecting the autonomy of the EU legal order, on which its legitimacy and ultimately its existence depends.

51  See also Jaaskinen and Sikora (n 34); T Lock, ‘The Not So Free Choice of EU Member States in International Dispute Settlement’ in M Cremona, A Thies and RA Wessel (eds), The EU and International Dispute Settlement (Oxford, Hart Publishing, 2016). 52  Raz calls first-order considerations: ‘reasons for action’ that have been drawn directly from ‘considerations of interest, desire or morality’ and second-order considerations: ‘reason[s] to act on or refrain from acting on a reason’, see J Raz, Practical Reason and Norms (Oxford, Oxford University Press, 1975) at 34 and 39, respectively. Raz’s framework of first and second-order considerations is often used in the human rights context as an argument against balancing and a justification for giving rights priority over other considerations, see, for example, RH Pildes, ‘Avoiding Balancing: The Role of Exclusionary Reasons in Constitutional Law’ (1994) 45 Hastings Law Journal 711. 53  Opinion 2/13 (n 1), para 166. Emphasis added.

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Essentially, accession could be a threat for the EU’s autonomy for three interconnected reasons. First, the ECtHR enjoys an exceptional status within the EU legal order. It is not only one of the sources of the general principles of EU law, but has over time been vested with an elevated status that requires it to interpret the EU Treaties in conformity with the ECHR. Second, EU law is of international origin. This makes the relationship between the ECHR and EU law different from the relationship between the ECHR and national law in that the ‘domestic nature’ and hence the foundations of the EU legal order are essentially contested and contestable. From the perspective of international law and the ECtHR, all states are monolithic while the EU can ultimately be dissolved into its Member States. Third, the EU is a compound rather than unitary actor, with numerous internal parts, ie the Member States, which all possess full international personality and may equally contest the original validity of EU law. As to the first point, the ECHR enjoys a supreme status within EU law. Within the EU legal order, the constitutional status of the ECHR is codified in Article 6(3) of the Treaty on European Union (TEU), which refers to the ECHR, together with the constitutional traditions of the Member States, as the core source for the EU’s general principles. Furthermore, Articles 52(3) and 53 of the EU Charter of Fundamental Rights (CFR) underline the particular relevance of the ECHR for the interpretation of the Charter. They declare that a fundamental right, which is recognised both by the Charter and by the ECHR, has the same meaning and scope as laid down by the ECHR and that nothing in the Charter may adversely affect rights protected under the Convention. Furthermore, even though only the Preamble, not the main text,54 of the Charter refers to the case law of the ECtHR the CJEU ruled in J McB v LE that where rights in the Charter correspond to rights in the ECHR the Court of Justice should follow the ECtHR’s case law.55 Moreover, EU fundamental rights, which are not only inspired but interpreted in line with the ECHR and the case law of the ECtHR, are part of the ‘foundations’ of EU law. In the case of Kadi I the Court ruled that these foundations constitute a layer of law that is hierarchically superior to the rules expressed in thet.56 That particular case concerned the right of Member States to derogate from EU law under Article 351 TFEU, which the Court held to be limited by these foundations. As a consequence, the foundations are vested with a status supreme to ‘ordinary’ primary law. This reading of the legal hierarchy between the foundations of the Union, based inter alia on the ECHR and EU primary law, is confirmed by the Cresson and

54  Charter of Fundamental Rights of European Union [2000] OJ C364/1, Art 52(3) (hereinafter ‘Charter of Fundamental Rights’). 55  Case C-400/10 PPU JMcB v LE, ECLI:EU:C:2010:582, [2010] ECR I-8965, para 53. The explanations to the Charter provide a list of ‘corresponding rights’. This appears to offer a good basis for interpretation of the scope of the CJEU’s ruling. 56  Kadi (n 30) paras 303–04.

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Ocalan cases.57 In both cases, the CJEU held that EU primary law must be read in the light of the ECHR. Post accession, the ECHR would be legally binding on the EU and the EU institutions, both under international and EU law. Furthermore, the ECtHR’s rulings in cases to which the EU is a party would become directly binding on the EU. Yet in practice, national courts take account of the ECtHR’s case law more broadly, not only in cases to which their state was a party. For the Member States, in addition to their international legal obligations, the ECHR would become binding within the scope and as a matter of EU law. The EU courts, as well as national courts, would have to enforce the ECHR and the binding decision of the ECtHR above EU law.58 At the same time, the CJEU would, of course, continue to hold the monopoly of judicial interpretation over the EU fundamental rights and the foundations of EU law. Technically, this would allow the CJEU to insist on an interpretation that differs from the position of the ECtHR. Yet in the light of the clear choices of Article 6(3) TEU and Articles 52(3) and 53 CFR, it would be difficult for the CJEU to change its position on the elevated status of the ECHR. As to the second and third points, the ‘domestic’ nature of the EU legal order, its ‘separateness’ from international law and its ‘original validity’ claim are constructions of the CJEU. The CJEU and most EU legal scholars conceive of the EU legal order as a (quasi-)constitutional system.59 By contrast, international law and international legal scholars understand EU law as a special and potentially self-contained subsystem of public international law.60 The EU’s claim to autonomy from international law is further legally limited by the fact that the Member States collectively have the power to amend the treaty framework. Moreover, while the primacy of EU law is in practice widely accepted, national constitutional and supreme courts, national governments and national legal scholars dispute the Court’s original validity claim. This constellation, in which the international legal framework imposes limits and national actors call the autonomy of EU law into question, makes the EU legal order as constructed by the CJEU essentially contested and contestable. In practice, the different essentially irreconcilable positions have amounted to a delicate system of checks by national constitutional and supreme courts and balances of different political forces, in which all actors ‘bark but not bite’.61 This delicate equilibrium of irreconcilable claims to sovereignty and 57  Case C-432/04 Commission of the European Communities v Édith Cresson, ECLI:EU:C:2006:455, [2006] ECR I-6387, para 112; Case C-229/05 P Osman Ocalan, on behalf of the Kurdistan Workers’ Party (PKK) and Serif Vanly, on behalf of the Kurdistan National Congress (KNK) v Council of the European Union, ECLI:EU:C:2007:32, [2007] ECR I-439, conclusion in para 83. 58  Art 46(1) ECHR; see the discussion of the status of the ECHR within the EU legal order above. 59  For the CJEU, see Kadi (n 30); Case 294/83 Parti écologiste ‘Les Verts’ v European Parliament, ECLI:EU:C:1986:166, [1986] ECR-1339. For legal scholars, see eg R Schütze, European Constitutional Law (Cambridge, Cambridge University Press, 2012). 60  See eg the attempts to accommodate the EU in the ARIO. 61  See differently: N Petersen, ‘Karlsruhe Not Only Barks, But Finally Bites—Some Remarks on the OMT Decision of the German Constitutional Court’ (2015) 15 German Law Journal 321.

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a­ utonomy functions because none of the parties hold the monopoly of interpreting the nature of EU law or the relationship between the different legal spheres. Each actor can only make claims, which are valid within the logic of their own legal order. This would change after accession. The ECtHR sees the EU as an ‘international organization’ to which the states ‘have transferred part of their sovereignty’.62 It refers to EU law as ‘international legal obligations’ of the contracting parties.63 Indeed, the core of its argument in Bosphorus, justifying the presumption of equivalent protection, is based on a view of the CJEU as an ‘international machinery for supervising fundamental rights’.64 Hence, the international nature of EU law is closely interlinked with the ECtHR’s deference to the CJEU. Indeed, the ECtHR accepts ‘that compliance with European Union law by a Contracting Party constitutes a legitimate general-interest objective’.65 Post accession, the Bosphorus doctrine would, logically, no longer be applicable,66 but this does not mean that it should be expected that the ECtHR would also change its reading of EU law as international law. Member States and, in particular, national courts, can rely on international law (including rulings of the ECtHR) in order to challenge the CJEU’s construction of the EU legal order. Indeed, rulings of the ECtHR that challenge the CJEU’s perspective of the EU as an autonomous legal order would, after accession, be a powerful tool in the hands of the Member States and national courts which could be used to challenge the EU legal order from within. This view of the EU law as international law, with the attached consequences both for the relation between EU law and international law and EU law and national law, would be binding on the CJEU. This would potentially allow national courts to drive a wedge into the judicial construction of the EU as an autonomous legal order. The situation of the EU is also very different from the situation of federal states. While federate units may politically challenge the federal level, they are part of a hierarchical legal structure that cannot be essentially contested within its own logic. Moreover, they do not—as long as they are part of the federation—enjoy an independent status as subjects of international law for purposes of state responsibility. On the contrary, under international law and in IDS mechanisms (including the ECtHR) federate states are treated as one unitary unit. Federate units cannot act independently of their federal level on the international plane, nor can they independently be held responsible pursuant to the rules of state responsibility. 62  Bosphorus Hava Yollari Turizm veTicaret AS v Ireland (App No 45036/98) (2006) 42 EHRR 1, para 154 and following case law. 63 ibid. 64  For example Michaud v France (Application no 12323/11) (ECtHR, 6 December 2012). 65  Bosphorus (n 62), paras 150–51. 66  C Eckes, ‘EU Accession to the ECHR: Between Autonomy and Adaptation’ (2013) 76 The Modern Law Review 254. Considering the application of Bosphorus post-accession as uncertain: L Besselink, ‘The Protection of Fundamental Rights post-Lisbon: The Interaction between the EU Charter of Fundamental Rights, the European Convention on Human Rights (ECHR) and National Constitutions’ (FIDE, 2012) www.fide2012.eu/index.php?doc_id=94.

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This also means that they cannot actively rely on international law to challenge the status or existence of the federal level. By way of conclusion, after accession the ECtHR would exercise constitutional review over fundamental political choices made by the EU institutions. Human rights under the ECHR not only allow the ECtHR to make value choices, but with their indeterminacy they even require such choices. Yet, even more relevant for the autonomy of the EU is the fact that the ECtHR would also rule on the relationship between legal spheres, which is interpreted very differently by the ECtHR (EU law as international law subject to the rules of international law) and the CJEU (autonomous domestic legal order). Post accession, the ECtHR would offer a different interpretation of the relationship between EU law and international law that would be binding on the EU and the CJEU, potentially even with an elevated status within the EU legal order, and that would allow national courts to challenge the core relationship between national, international and EU law from within the logic of EU law. This would allow national courts to undermine the monopoly of legal interpretation of the CJEU over EU law. I should add that I do not argue here that the CJEU’s reading of the original validity of EU law is any more convincing than the national or international narrative. I simply point out that accession, because it allows national courts to rely on international law and the case law of the ECtHR which at present enjoys an elevated status within the EU legal order, would impact on the delicate equilibrium of irreconcilable claims to sovereignty and autonomy within the EU legal order. I agree with the CJEU that making the ECHR and the case law of the ECtHR directly binding on the EU, ie accession, has the potential to undermine the status quo of suspended irreconcilable claims to sovereignty and autonomy. This would challenge the CJEU’s ability to interpret EU law as if the EU legal order was a domestic and autonomous legal order, because the Court would be bound by an external legal source enjoying an elevated status within its own legal order, which would be legally binding (cases to which the EU is a party) or at least authoritatively determinative (all case law of the ECtHR) for both the EU and its Member States. This would have consequences for the EU legal order, which could no longer determine its own course as if it was autonomous, as the CJEU currently interprets EU law. It would, ultimately, undermine the democratic legitimacy of EU secondary law. Finally, it would be enough to threaten the system if following accession a number of national supreme or constitutional courts, such as Germany, Poland or the Czech Republic, relied on rulings of the ECtHR to make a credible and serious threat that they would withdraw their support of the supreme effects of EU law within the national legal order. Hence, the fact that some national systems do not pose this threat and may not be in the position to tip the balance of powers, for example those that do not possess a constitutional court, such as the ­Netherlands and Sweden, does not challenge the thesis that accession is a threat to EU ­autonomy. Furthermore, these systems may pose other problems, such as in the Netherlands the ECHR enjoys a high status and direct effect and can directly be used to challenge Dutch law.

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ii. Investor–State Dispute Settlement and the Proposed Investment Court System ISDS mechanisms ‘increasingly develop into a mechanism of global governance with arbitral tribunals crafting and concretising treaty-overarching standards of investment protection with prospective effects on host states and investors’,67 as well as public policy-makers. Their effects on governance are precisely the reason why they should be evaluated against the fundamental procedural and substantive values of modern constitutional law. Their very purpose is to manage political risks, or more specifically to limit the regulatory powers of the host state, in order to protect foreign investors from arbitrary or discriminatory actions but arguably also beyond. Traditional ISDS mechanisms, as agreed by the member states in approximately 1,500 bilateral investment agreements (BITs) and by the EU in CETA and SFTA, lack an institutional connection to the domestic judiciary and do not possess any comparable constitutional guarantees of rights, principles, democratic legitimacy or independence.68 They are usually ad hoc mechanisms that are not part of any institutional structure that could ensure internal coherence. This leads to arbitrators taking quite different, sometimes opposing positions on fundamental questions of law and interpretation. ISDS hence cannot draw from the same reason-based legitimacy as courts.69 At the same time and despite these inconsistencies, investment arbitration is continuing to grow into a quasi-precedent system that creates treaty-overarching standards of investment law,70 which is then an even more powerful threat to domestic policy choices. ISDS allows reasoning and the taking of binding decisions outside of any constitutional framework, usually without requiring exhaustion of domestic remedies and with very limited possibilities to appeal the ISDS decisions within the domestic judicial system. It determines questions that touch upon the value choices and the social fabric of society in isolation and without being subject to further checks. This has a more indirect impact on reason-based legitimacy. It is an inherent ­function of law to frame disputes.71 Law determines what are legally relevant and irrelevant facts and only the former have a direct impact on the ruling. Because of its disconnection from permanent judicial systems, ISDS mechanisms determine the common interest within the framework of investment law and in some ­isolation from other value choices. Common goods, constitutional values 67 

Schill (n 49) 4. on conflicts of interests of ad hoc appointed arbitrators who want to continue a career in any given commercial environment or within the arbitration business itself: P Eberhardt and C Olivet, ‘Profiting from Injustice’ (Transnational Institute and Corporate Europe Observatory, 2012) http://­ corporateeurope.org/sites/default/files/profiting-from-crisis_0.pdf. 69  As explained in s II.A above. 70  Schill (n 49) 20. 71 See on the phenomenon of framing, eg M Lopez-Santana, ‘The Domestic Implications of ­European Soft Law: Framing and Transmitting Change in Employment Policy’ (2006) 13 Journal of European Public Policy 481. 68  See

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and objectives often compete on an unequal footing with international trade and investment since they may not easily fit into, or are given a lower relevance in, this framework. This may in principle affect all policy choices to protect noninvestment values, such as public health, the environment or labour standards. It constitutes a shift towards extra-state, private and commercial justice. ISDS mechanisms are not generally obliged to proceed in public.72 Yet both the ISDS procedure itself, and the costly awards that may be granted to the investor, may have a regulatory chill on decision-makers at different levels—local, regional, national and European. This potentially paralysing effect is arguably greater than the effect of the threat of legal proceedings, because of the high costs involved and because the protection of public interests may come under much greater pressure than would be the case in ordinary court proceedings. International investment arbitration is a party-owned process without public participation channels. It rebalances the separation of power not only in favour of the executive, but also in favour of ‘party autonomy’. The latter seems odd in view of the fact that, rather than dealing with commercial disputes between private parties, ISDS concerns state–investor relationships and public policy choices. The focus on party autonomy, for example in appointing the arbitrators, arguably, structurally places the private party, which will typically be a large multinational in an ISDS dispute, in a stronger position than it would have within the domestic court system. This privileges foreign investors as compared to other parties affected by domestic policy choices. Additionally, investment treaties usually leave broad interpretative leeway to arbitrators. In the SFTA, for example, investors can bring claims that the state’s conduct breached ‘fair and equitable treatment’, ‘due process’, or ‘legitimate expectation’ or that it amounted to a ‘denial of justice in criminal, civil and administrative proceedings’, ‘manifestly arbitrary conduct’, or ‘harassment, coercion, abuse of power or similar bad faith conduct’.73 A claim that has been interpreted very widely in the past,74 and which the SFTA consciously aimed to limit, is protection from ‘indirect expropriation’. In a dispute between Mexico and the US landfill company Metalclad, the arbitrators were confronted with a decision of provincial authorities to deny permission to construct an underwater waste-disposal system

72  See, however, Art X.33 ‘Transparency of Proceedings’ of CETA, requiring, in principle, public hearings, and Art 9.22 and Art 2 of Annex 9-G of SFTA, requiring, in principle, public hearings with a wide clause to protect confidential information. 73  Ch 9 ‘Investment Protection’ and Annexes 9 A-C of SFTA. See also S 4: Investment Protection (Arts X.9-13) of CETA. 74  Metalclad Corporation v The United Mexican States, ICSID Case No ARB(AF)/97/1 and the claims brought by Philip Morrison and the pharmaceutical company Eli Lilly in Australia, Canada and ­Uruguay (Philip Morris Asia Ltd v Australia, PCA Case No 2012-12; Philip Morris Brands Sarl et al v Uruguay, ICSID Case No ARB/10/7; Eli Lilly v Canada, ICSID Case No UNCT/14/2). Examples illustrating the opposite can be given, see, for example, Methanex v US, in which an ISDS panel underscored the right of governments to regulate for public purposes, including regulation that imposes economic burdens on foreign investors (www.state.gov/s/l/c5818.htm, accessed 28 October 2015), but this does not falsify the potential impact of ISDS on domestic policy making.

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because of a risk that it might affect water quality in that area. The arbitrators defined indirect expropriation to cover covert or incidental interference with the use of property which has the effect of depriving the owner, in whole or in significant part, of the use or reasonably-to-be expected economic benefit of property even if not necessarily to the obvious benefit of the host State.75

Metalclad was awarded 15.6 million dollars. In the EU legal system, by contrast, the CJEU has been very reluctant to protect future business interests as part of the right to property.76 In another, and ongoing, dispute, Vattenfall has challenged the German political decision to shut down all nuclear power plants on German territory. It has brought claims both before the International Centre for Settlement of Investment Disputes (ICSID)77 and the German Federal Constitutional Court (GFCC).78 The EU Commission has chosen to support Germany in the ICSID process as amicus curiae, because it considers it a breach of EU law that a company from one Member State should bring a claim against another Member State to an IDS mechanism, rather than to the CJEU.79 The Commission seems to understand EU law to regulate such disputes exhaustively and hence sees the involvement of an ISD mechanism as a threat to the authority and, ultimately, the autonomy of EU law. As stated above, the Commission is at the same time involved in negotiating further agreements with ISDS. In order to tackle some of the criticisms against traditional ISDS mechanisms, in September 2015 the Commission presented its proposal to move to an ‘Investment Court System’ that would replace existing ISDS mechanisms in all ongoing and future EU investment negotiations, including TTIP.80 This public Investment Court System would be composed of a tribunal of first instance and an appeal tribunal, operating with independent judges with high legal qualifications comparable to those required for the members of permanent international courts, such as the International Court of Justice and the WTO Appellate Body. It would, further, be subject to a code of conduct to avoid conflicts of interest.81 The ability of investors to take a case before the tribunal would be ‘precisely defined’ and limited to cases such as targeted discrimination

75  Metalclad Corporation v United Mexican States, ICSID Case No ARB(AF)/97/1 (Award) (2001) 40 ILM 36 para 103. 76  Case 44/79 Liselotte Hauer v Land Rheinland-Pfalz, ECLI:EU:C:1979:290, [1979] ECR 3727. 77  ARB/12/12, submitted on 31 May 2012. 78  Together with two German energy providers, E.on and RWE, who could not bring a claim before ICSID because they did not qualify as foreign investors. The hearing before the GFCC took place on 15 March 2016. In principle the two procedures run in parallel. It is possible that the rulings may not even refer to each other. 79  www.sueddeutsche.de/wirtschaft/rueckschlag-fuer-vattenfall-klage-ein-freund-wie-einfeind-1.2662865. 80  Commission proposal on investment protection and the investment court system (ICS) (n 4). On face value this departs from the Negotiation directives (n 4). 81  See also Commission, ‘EU’s new trade and investment strategy’ (n 37) 21.

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on the base of gender, race, religion or nationality; expropriation without compensation; or denial of justice. Governments’ right to regulate would be enshrined and guaranteed in the provisions of the trade and investment agreements. The proceedings would be transparent, hearings open and comments available online; moreover, parties with an interest in the dispute would have a right to intervene.82 The Commission’s proposal is part and parcel of a broader trend towards judicialisation of adjudication in EU FTAs83 and would move ISDS from being an extra-judicial arbitration mechanism into the realm of the judiciary. The Commission’s proposal cannot dispel all doubts of the legitimacy of the system; for example, the framing issue and the subordination of non-investment related public policy choices remain problematic. It would, however, improve the coherence of approach and the independence of arbitrators. It would also reduce the private autonomy bias of arbitration that is part of the current system. The latter would help to frame investor–state disputes as what they are: a claim by an individual that the public exercise of power was incompatible with the principles and norms by which the public authority was bound. This is, and should be, different from finding a pragmatic outcome for a dispute between two private parties. This framing is crucial to justify the situation where, ultimately, public taxpayer money may be used to pay large awards to private parties. The proposed Investment Court System would remain separate from domestic judicial structures, including the CJEU. Yet, even without being in a position formally to review the final awards, domestic courts would presumably have some influence in deciding how to give effect to these awards, since they would not necessarily have direct effect within the domestic legal order.84 Not only the complete lack of trust of the public in ISDS,85 but also the criticism of many scholars,86 as well as the European Parliament87 and the EU 82 

Commission proposal (n 4). already I Garcia Bercero, ‘Dispute Settlement in European Union Free Trade Agreements: Lessons Learned?’ in L Bartels, Federico Ortino, Regional Trade Agreements and the WTO Legal System (Oxford, Oxford University Press, 2006). The author is now the chief negotiator of TTIP. 84  See, however, the formulation of Art 30(2) ‘Enforcement of awards’ of the Commission’s proposal of 16 September 2015, requiring that ‘Each Party shall recognize an award rendered pursuant to this Agreement as binding enforce the pecuniary obligation within its territory as if it were a final judgment of a court in that Party’. Available at http://trade.ec.europa.eu/doclib/docs/2015/september/ tradoc_153807.pdf. 85  See the Commission proposal (n 4). 86  For example, B Choudhury, ‘Recapturing Public Power: Is Investment Arbitration’s Engagement with the Public Interest Contributing to the Democratic Deficit?’ (2008) 41 Vanderbilt Journal of Transnational Law 775; D Schneiderman, Constitutionalizing Economic Globalization: Investment Rules and Democracy’s Promise (Cambridge, Cambridge University Press, 2008). 87  European Parliament Report on the Future of European Investment Policy (2010/2203(INI)) www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//NONSGML+REPORT+A7-20110070+0+DOC+PDF+V0//EN, see G: ‘whereas after the first dispute settlement cases of the 1990s, and in spite of generally positive experiences, a number of problems became clear because of the use of vague language in agreements being left open for interpretation, particularly concerning the possibility of conflict between private interests and the regulatory tasks of public authorities, for example in cases where the adoption of legitimate legislation led to a state being condemned by international arbitrators for a breach of the principle of “fair and equitable treatment”’. See for a rather positive assessment of 83  See

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­Commission,88 seem to make it ill-advised to continue setting up traditional ISDS. This is the case for the EU, at least, which is arguably in a more difficult position than states with regard to ISDS. The legitimacy concerns that ISDS raises with regard to deliberative democracy, as well as the economic framing of disputes, meet two weak spots of the EU. The difficulty of democratically legitimising decisions within the compound multi-level structure of the EU are well known89 and the EU has long been criticised for prioritising the liberalist ­economic p ­ erspective.90 Hence, where EU agreements set up ISDS, which result in less transparency and an economic bias, this weakens the EU’s legitimacy in areas where it is already challenged. This may be one of the reasons why the Commission has expressed its intention more clearly than the EU Member States, setting out its aim to improve transparency and independence of investment arbitration, make it subject to stricter rules, protect domestic value choices and bring it closer to the domestic judiciary. Moreover, investment arbitration may interfere with the autonomy of EU law where it has the potential to undermine the CJEU’s exclusive competence to give a ‘definite’ interpretation of EU law. Investment arbitration does not usually require the exhaustion of local judicial remedies. This may result in a situation in which the CJEU has not had the opportunity to rule on the EU law issues at stake. Yet the imposition of investment awards, even though it concerns questions of responsibility rather than competence, may require considering the competence division between the EU and the Member States, including under the international investment agreement, which is commonly a mixed agreement that specifically avoids a clear determination of the division of internal competence.91 Hence, even though the interpretation of EU law in the context of investment arbitration is not directly authoritative or binding within the EU legal order, it applies pressure to define competences, whose definition has been consciously left open by the choice for mixed agreements. A solution to avoid rulings on the division of competence might be to proceduralise competence decisions92 or to require the investment arbitrators to request guidance from the CJEU in cases where an interpretation of EU law is necessary. Moreover, it may be difficult to deny direct effect

ISDS, PJ Kuijper, I Pernice, S Hindelang, M Schwarz and M Reuling, ‘Investor-State Dispute Settlement (ISDS) Provisions in the EU’s International Investment Agreements’, study of 4 September 2014, ­written for the European Parliament (EXPO/B/INTA/2014/08-09-10). 88 

See the Commission proposal (n 4). See literature on the EU’s democratic deficit (n 35). 90  Recently: G Davies, ‘Democracy and Legitimacy in the Shadow of Purposive Competence’ (2015) 21 European Law Journal 2. 91  Opinion 2/15 (n 3) in which the Commission asks the Court whether the Union has the requisite competence to sign and conclude alone the Free Trade Agreement with Singapore. 92  An attempt to proceduralise the competence question is the Declaration of Transparency under Art 26.3.b(ii) of the Energy Charter Treaty which reads: ‘The Communities and the Member States will, if necessary, determine among them who is the respondent party to arbitration proceedings initiated by an Investor of another Contracting Party. In such case, upon the request of the Investor, the Communities and the Member States concerned will make such determination within a period of 30 days.’ 89 

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to ISDS r­ ulings in order to limit their internal enforceability within the EU legal order, both in the light of the settled case law of the CJEU and in the light of the Commission’s proposal.93 ISDS arbitrators may consider EU law as public international law, domestic law or possibly even as a fact.94 An example where ISDS arbitration even explicitly found EU law to be subordinate to international investment law is the AES case, in which Hungary claimed that the tariff reductions that allegedly infringed the fair and equitable treatment standard of an investment treaty were required by EU law.95 EU policies potentially challenged before ISDS mechanisms may be expected to be largely the ‘less political’ regulatory policies of the former Community pillar, such as internal market or competition law policies. Yet, ISDS also deals with fundamental societal choices and open-textured norms. The direct threat to the autonomy of the EU legal order may even be greater since ISDS does not coherently apply any specific legal institution, equivalent to the margin of appreciation applied by the ECtHR, that protects the political discretion in a predictable way. The following section will examine the impact of ISDS on the legitimacy and autonomy of the EU legal order, including a comparison of the impact of ISDS with the potential impact of EU accession to the ECHR.

IV.  Consequences of Participating in IDS A. Institutional (Self-)conception of the CJEU as a Domestic Court While from an external perspective the CJEU is regularly seen as an international tribunal,96 the Court claims that the autonomy of the EU legal order vis-à-vis international law depends on its ability to rule as a domestic court. This is also a question of legitimacy for the EU legal order. AG Jacobs, for example, concluded in 2002 in Unión de Pequeños Agricultores (UPA) that: It may also be noted that although the European Communities originate in a set of ­Treaties concluded by the Member States in the context of public international law, the Community legal order has developed in such a way that it would no longer be accurate

93 

See n 4 above. The latter is how the ECtHR sees domestic law. 95  AES v Hungary, ICSID Case No ARB/07/22 (Award) (23 September 2010), para 7.6.6; see M Parish, ‘International Courts and the European Legal Order’ (2012) 23 European Journal of International Law 141, 148. 96  Stephen Wiles, ‘International Tribunals: What is the ECJ’ (Harvard Law School Library) http:// guides.library.harvard.edu/content.php?pid=100079&sid=754878. See also above on the ECtHR’s ­perspective on the CJEU in Bosphorus (n 62). 94 

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to describe it as a system of intergovernmental cooperation, nor would it be appropriate to describe the Court of Justice as an international tribunal.97  

As is well-known, AG Jacobs made in this opinion a strong plea to reverse the settled case law and interpret individual standing less restrictively, but failed to persuade the Court. Yet his opinion remains ‘a coherent, exhaustive, and thoughtful attempt to plug what many critics regard as a serious gap in the system of judicial remedies established by the [European] Treat[ies]’.98 What is interesting in the present context is that AG Jacobs came to the conclusion that, already in 2002, the Community was firmly established and its legislative process, to a large extent based on the adoption of measures by majority voting in the Council of Ministers and the European Parliament, [was] sufficiently robust to withstand judicial scrutiny at the instigation of individuals … [Union] law now affects the interests of individuals directly, frequently and deeply; there is therefore a correspondingly greater need for effective judicial protection against unlawful action.99

The AG hence concluded that because the EU exercised such far-reaching powers that interfered with the rights of individuals, a domestic, and hence a more robust, judicial structure was necessary. The CJEU could no longer legitimately be seen as an international court. Twelve years later, the now President of the CJEU argued, a week before the Court issued Opinion 2/13, that the CJEU should be seen as a supreme court in that it combines the roles of a highest national court and a constitutional court.100 Yet the fact that arguments about the nature of the CJEU are still made, as well as the fact that as recently as 2011 the Publications Office of the EU itself labelled the CJEU an international court,101 demonstrate that the CJEU’s nature as a domestic court is not beyond doubt, including within the EU itself. Opinion 2/13 and the draft agreement on the EU’s accession to the ECHR are equally illustrative of this continuous difficulty in placing the CJEU within the existing categories of domestic or international judicial body. In the context of Opinion 2/13, the Commission argued in favour of seeing the CJEU as a domestic court. It submitted that ‘[w]ith regard … to the prior exhaustion of domestic remedies, … the draft agreement guarantees that remedies before the Courts of the EU 97  Case C-50/00 P Union de Pequeños Agricultores v Council (UPA) [2002] ECR I-6677, Opinion of AG Jacobs, para 78. 98 R Greaves, ‘A Commentary on Selected Opinions of Advocate General Jacobs’ (2005) 29 Fordham International Law Journal 713. 99  Case C-50/00 P, UPA, Opinion of AG Jacobs (n 97) para 77. 100  Koen Lenaerts, blog of 10 December 2014: ‘Deswegen muss man den EuGH richtigerweise als einen Supreme Court betrachten, also eine Mischung von oberstem Gericht und Verfassungsgericht’, available at: http://verfassungsblog.de/dass-der-eugh-als-internationales-gericht-angesehen-wird-istein-grosses-missverstaendnis-interview-mit-prof-dr-koen-lenaerts. 101 ‘European and International Courts’ (Publications Office, 25 February 2011) http://eur-lex. europa.eu/legal-content/EN/ALL/?uri=URISERV:l16007. ‘There are many courts that operate at international level, and it is not always easy to distinguish their jurisdiction. The aim of this summary is to present the European courts and to distinguish between those which are part of the European Union and those which belong to other international organisations.’

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must be exhausted before an application against an act on the part of the EU can be validly brought before the ECtHR’ and that ‘the second indent in Article 1(5) of the draft agreement states that the term “domestic” in Article 35(1) ECHR is to be understood as relating also, mutatis mutandis, to the internal legal order of the EU’.102 Moreover, it referred to Article 5 of the draft agreement, which ‘states that proceedings before the Courts of the EU are not to be understood as constituting “procedures of international investigation or settlement”’,103 nor, in fact, as means of dispute settlement within the meaning of Article 55 of the ECHR. Hence, the Commission also argued in favour of treating the CJEU as a domestic court. At the same time, the accession agreement places the CJEU in a special position as compared to domestic courts. The prior involvement procedure, which allows the ECHR to hold proceedings to ask for the CJEU’s interpretation of EU law, treats the CJEU differently from the constitutional courts of the other contracting parties, which do not enjoy such privilege. This complicated approach of treating the CJEU as a domestic court, while ensuring special privileges, is an acknowledgement of the compound judicial structure of the EU, in which the CJEU stands in a cooperating rather than hierarchical relationship with national courts. While national constitutional courts have the last word on the validity of rulings of ordinary national courts, the CJEU depends on the willingness of national courts to recognise and follow its decisions. Indeed, the CJEU found the accession agreement to be incompatible with EU law because it treated the EU too much like a state,104 which might have endangered the CJEU’s ability to call upon Member States to comply with the EU principle of mutual trust. The nature of the CJEU as a domestic court thus remains contested, both from an internal or from an external perspective. To allow an external body to determine that the CJEU is an international tribunal would take away the CJEU’s ‘wiggle room’ to decide which role it takes vis-à-vis international law but also visà-vis national courts. As pointed out by AG Jacobs, but also visible in the Kadi cases in which the CJEU defended EU fundamental rights standards against external interference,105 the ability of the Court to take the role of a domestic court is relevant to the level of fundamental rights protection that the Court can offer. It may also be necessary to ensure the legitimacy of the EU legal order, in the light of its extensive and intensive powers, and to protect it from external interference. If the Court lost this ability, national constitutional and supreme courts might challenge its position (even more strongly). At the same time, since the CJEU does not possess the institutional position of a domestic court (it cannot annul the 102 

Opinion 2/13 (n 1), para 89.

103 ibid.

104  K Lenaerts, ‘The Principle of Mutual Recognition in the Area of Freedom, Security and Justice’, The Fourth Annual Sir Jeremy Lever Lecture, All Souls College, University of Oxford, 30 January 2015, http://1exagu1grkmq3k572418odoooym.wpengine.netdna-cdn.com/wp-content/uploads/2015/02/ The-Principle-of-Mutual-Recognition-in-the-area-of-Freedom-Security-and-Justice.pdf. 105 C Eckes, ‘Protecting Supremacy from External Influences: A Precondition for a European ­Constitutional Legal Order?’ (2012) 18 European Law Journal 230.

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decisions of national courts), it remains in a somewhat vulnerable position. This is why the CJEU could not accept being treated as ‘other’ domestic courts under the accession agreement and why it protects its judicial monopoly and the autonomy of the EU legal order so vigorously.

B.  EU Autonomy and Legitimacy: Contested and Under Pressure Autonomy and legitimacy are interlinked, in that autonomy is a necessary precondition for the sources of legitimacy on which the EU relies.106 The autonomy of the EU legal order is essentially contested. The legitimacy of the will forming and decision making within the EU also remains more strongly contested than the will forming and decision making in States. The combination of these factors justifies the belief of the CJEU that the protection of the autonomy of the EU legal order is a second-order reason which justifies opposing interference with its judicial monopoly as necessary to protect the autonomy of the EU legal order without further balancing it against other reasons. The EU is here in a different position than the Member States. IDS mechanisms are particularly problematic for the EU’s autonomy if they constitute constitutional review, bind the EU at a superior level or suffer from legitimacy problems themselves. Two IDS have been identified as particularly problematic: the ECtHR after EU accession to the ECHR and ISDS mechanisms. ISDS mechanisms are problematic for two central reasons: they may undermine the democratic legitimacy of the exercise of public power and the legal and reasonbased legitimacy of judicial decision making. ISDS does not offer an authoritative and binding interpretation of domestic law, including EU law. The obligation to pay monetary compensation is not a declaration of invalidity of a domestic ­policy.107 Also, in contrast to the importance of the ECHR and the ECtHR case law for the interpretation of EU law, rulings of ISDS mechanisms do not benefit from any particular status or authority within the EU legal order. Yet, in the case of the EU, which often struggles to build up sociological legitimacy even though it has certain levels of other types of legitimacy, this may be particularly problematic. If the EU sets up ISDS mechanisms in international agreements with third states this may ultimately result in a lowering of the EU’s own legitimacy. Within the EU, in particular, the low legitimacy of ISDS decisions may have more threatening consequences for the EU’s own feeble democratic legitimacy than it would have for a state. IDS mechanisms, which are themselves very controversial as to their legitimacy, may directly undermine the legitimacy of domestic legal orders, which have to take account and potentially even give effect to these decisions. Moreover,

106 

See s II above. may be different for restitution or specific performance (see A Dimopoulos, EU Foreign Investment Law (Oxford, Oxford University Press, 2011) 119). 107  This

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interference with the autonomy of the EU legal order would additionally hamper the EU’s capacity to build up other types of legitimacy. The EU’s accession to the ECHR is more difficult to challenge on normative grounds. With all its flaws, the ECHR tames nationalist excesses, promotes human rights and creates a community of values.108 It exerts an independent external check on human rights that contributes as a matter of principle to the legitimacy of the decision-making within a polity. Indeed, in abstract, accession seems like a way to bolster the CJEU’s legitimacy: it offers an external control, which in most cases will result in a confirmation of the CJEU’s rulings. Moreover, the ECtHR has demonstrated high deference to the CJEU in the past. Yet, as we have seen above, accession may expose an already vulnerable flank of the EU legal order for constitutional courts to finally bite. In both contexts—ISDS and the ECtHR—the EU will act alongside its Member States rather than taking over their position. The enormous costs of ISDS109 make it unlikely that the EU will assume full responsibility as it does, for example, in the WTO dispute settlement mechanism.110 Similarly, the political cost of being found in violation of the ECHR make it unlikely that the EU will widely assume responsibility for acts of the Member States.

V. Conclusions Several scholars and philosophers have suggested more broadly that the EU could be the natural response to the challenges that states face because of g­ lobalisation.111 However, this chapter argues that the EU’s particular nature may also stand in the way of closer international judicial cooperation. The Court’s fear of the undermining effect of international rulings is symptomatic in this regard. The autonomy of the EU legal order is not absolute—quite the opposite. This insight is central to understanding the CJEU’s position and to understand its autonomy concern as fear of losing authority and legitimacy. Within the EU, a continuous unresolved constitutional limbo situation ensures the functioning of

108  Groundbreaking in this regard: El-Masri v the Former Yugoslav Republic of Macedonia (App No 39630/09) (ECtHR, 13 December 2012); Al Nashiri v Poland (App No 28761/11) (ECtHR, 16 February 2015) and Husayn (Abu Zubaydah) v Poland (App No 7511/13) (ECtHR, 24 July 2014). 109  A Dimopoulos, ‘The Involvement of the EU in Investor-State Dispute Settlement: A Question of Responsibilities’ (2014) 51 Common Market Law Review 1671. 110  See eg EC-LAN (WTO Panel Report of 22 June 1998, WT/DS62/R, WT/DS67/R, WT/DS68/R); EC-Asbestos (WTO Appellate Body Report of 12 March 2001, WT/DS135/AB/R); EC-Biotech (WTO Panel Report of 29 September 2006, WT/DS291, 292, 293/R). 111  U Beck, ‘Europa als Antwort auf die Globalisierung’ in H-U Joerges (ed), Der Kampf um den Euro. Wie riskant ist die Währungsunion? (Hamburg, Hoffmann & Campe, 1998) 19–23; P Bofinger, J Habermas and J Nida-Rümelin, ‘Einspruch gegen die Fassadendemokratie’ Frankfurter Allgemeinen Zeitung (Frankfurt, 3 August 2012) www.faz.net/aktuell/feuilleton/kurswechsel-fuer-europa-einspruch-gegen-die-fassadendemokratie-11842820.html.

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the compound legal order. I have here defended the CJEU’s perspective as correct from the viewpoint of EU law as interpreted by the CJEU. This does not mean that the Court’s perspective is ‘an absolute truth’. Indeed, the CJEU’s concern with autonomy is reasonable, because the autonomy of the EU legal order has been, and can be, challenged from the perspectives of international law and most national constitutions. The Court’s particular concern with regard to the EU’s accession to the ECHR is further justified because of the exceptional status and impact of the ECtHR’s rulings within the EU legal order that, if exploited by national courts, threatens the delicate power equilibrium within the EU. ISDS does not enjoy this exceptional status but threatens to undermine the EU’s and a state’s legitimacy in a similar way. However, the EU may nonetheless be more vulnerable to this threat to its legitimacy. The EU’s democratic weakness and its difficulty in overcoming its historic economic bias are the reasons why undemocratic ISDS decisions that prioritise interests of big multinational investors are more damaging to the legitimacy of the EU than they are to the legitimacy of a state. In Opinion 2/13, the CJEU, building on its prior case law, established a high bar for EU commitment to IDS mechanisms. If old-style ISDS was challenged before the CJEU it might encounter the same fate. The CJEU essentially aims to protect the autonomy of the EU legal order from external interference by protecting its own monopoly of jurisdiction over EU law. This conception has been discussed in this chapter. Prima facie it may seem an overly narrow conception of autonomy. Yet the developed understanding of collective autonomy as legitimacy relies on protection by the judiciary. In this understanding the reason-based legitimacy of the judicial branch requires (a certain) autonomy from the outside, and also the democratic, procedural and legal legitimacy of a polity requires protection by the judiciary of procedures and value choices. In the specific context of the EU the role of the CJEU as guardian of the autonomy of the EU may be problematic from a democratic perspective.112 It is essential to protect the EU’s autonomy, and ultimately legitimacy, from interference by the Member States. This is particularly true if the EU legal order is to commit to a binding external judicial mechanism that could be used by the Member States, through their national courts, to c­ hallenge the EU’s autonomy from within.113 On face value, the position of this chapter may seem contradictory in the light of the pluralist debate. On the one hand, it defends the CJEU’s position by pointing out the persuasive power of the Court’s legitimacy and autonomy concerns with regard to the EU’s participation in certain IDS mechanisms. On the other, it may be seen as defending a constitutionalist perspective with regard to the EU internally by attaching high value to the CJEU’s monopoly of jurisdiction over EU law and by emphasising the potential threat resulting from the ability of national

112  113 

See s II.A above. See s III.B.i above.

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courts to challenge the authority of the CJEU from within. However, the constitutional pluralism within the EU legal order is precisely the reason why the EU should fear binding authoritative determinations from the outside of its substantive foundations, the nature of the EU legal order or the role of the CJEU. The very fact that EU law and the CJEU struggle on a daily basis to maintain recognition of its authority by internal judicial and political actors makes the CJEU’s concern with autonomy from outside claims so convincing. The EU legal order is, more than any state including federal states, vulnerable to a challenge by an internal actor relying on international law binding on the EU.

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10 The Effects of International Dispute Settlement Decisions in EU Law ANDRÉS DELGADO CASTELEIRO*

I. Introduction The proliferation of International Dispute Settlement (IDS) systems1 over the last years constitutes a challenge to the traditional thinking on the relations between EU and international law. As new international courts and tribunals continue to be created, with their decisions permeating into the EU legal order in novel and unforeseen ways, the question of the effects of such decisions is a fundamental topic when attempting to understand how their place within the EU’s sources of law is evolving.2 Moreover, in parallel to the multiplication of IDS systems, questions concerning their legitimacy and their inclusion in new EU international agreements have come to the forefront of the public debate and are facing strong contestation from civil society3

*  I would like to thank Marise Cremona, Anne Thies and Ramses A Wessel for their comments, ­suggestions and patience. All errors and mistakes remain my own. 1  For an overview of IDS as a unified object of study see JG Merrill, International Dispute S ­ ettlement (Cambridge, Cambridge University Press, 2007); J Collier and V Lowe, The Settlement of Disputes in International Law—Institutions and Procedures (Oxford, Oxford University Press, 1999); T Schultz, ‘Editorial’ (2010) 1 Journal of International Dispute Settlement 1; J Crawford, ‘Continuity and ­Discontinuity in International Dispute Settlement: An Inaugural Lecture’ (2010) 1 Journal of International D ­ ispute Settlement 3; B Kingsbury, ‘Foreword: Is the Proliferation of International Courts and Tribunals a Systemic Problem?’ (1999) 31 NYU Journal of International Law & Politics 679. 2  So far the only monograph dedicated to the effects of the decisions of international courts continues to be N Lavranos, Legal Interactions between Decisions of International Organizations and European Law (Groningen, Europa Law, 2004). For a recent overview of the interactions between the EU law and international courts not focusing on the effects of the decisions of the latter see T Lock, The European Court of Justice and International Courts (Oxford, Oxford University Press, 2016). 3  The European Commission has identified that the public consultation held on the inclusion of an Investor–State Dispute Settlement System in the Transatlantic Trade and Investment Partnership (TTIP) Agreement mobilised an unprecedented level of responses. Those responses show a widespread opposition to Investor–State dispute settlement (ISDS) in TTIP or in general. See European

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as well as academics.4 Against this backdrop, a better understanding of the role that IDS decisions play in the EU legal order has become even more necessary now that the constellation of IDS is under a more detailed scrutiny. To put it simply, only by understanding the role that IDS decisions play in EU law will it be possible to comprehend fully their powers and reach. Inevitably, any examination of the role of IDS in the EU leads to the question of the effect assigned to IDS decisions by EU law. This chapter aims to show how the current debates concerning the direct effect of IDS decisions5 do not completely grasp the nuances of their effects within the EU legal order. The effects of those decisions are no longer a straightforward issue based on their ability to be invoked by individuals. Instead, current issues concerning the relationship of IDS systems with EU law go beyond the question of whether individuals can bring actions based on breaches of decisions of international courts and touch upon the very nature and, in particular, the purpose of those decisions. First, this chapter focuses on the incorporation of IDS decisions into EU law. More specifically, it examines their hierarchical position and the jurisdiction of the Court of Justice of the European Union (CJEU) to adjudicate on issues concerning those IDS decisions. Second, the chapter moves to analyse whether IDS decisions have direct effect and the conditions that are required for those decisions to be invoked in the EU Courts. Third, an account of the issue of the primacy of IDS decisions vis-à-vis Member States and EU law is given. The final section provides some conclusions as to how the effect of IDS decisions in EU law might challenge our traditional understanding of the effects of international law in the EU legal order.

­Commission. Report, Online public consultation on investment protection and investor-to-state dispute settlement (ISDS) in the Transatlantic Trade and Investment Partnership Agreement (TTIP), SWD (2015) 3 final. Available at: http://trade.ec.europa.eu/doclib/docs/2015/january/tradoc_153044.pdf. 4  For a general debate on the legitimacy of IDSS see A Von Bogdandy and I Venzke, ‘In Whose Name? An Investigation of International Courts’ Public Authority and Its Democratic Justification’ (2012) 1 European Journal of International Law 7. On the contestation of legal scholars to the inclusion of IDS in new EU International Agreements see the following letter: www.kent.ac.uk/law/isds_treaty_ consultation.html. For more positive attitudes towards IDS see JHH Weiler, ‘Guest Editorial: Ten Years of ESIL—Reflections; European Hypocrisy: TTIP and ISDS; Masthead Changes; Roll of Honour; In this Issue; Christmas Reading? Christmas Gifts? Some Suggestions from the Editor-in-Chief ’ (2014) 4 European Journal of International Law 961. L Pantaleo, ‘Il TTIP e la risoluzione delle controversie tra investitore e Stato: ipocrisia, schizofrenia o preoccupazioni giustificate?’ (2015), at www.sidiblog. org/2015/02/04/il-ttip-e-la-risoluzione-delle-controversie-tra-investitore-e-stato-ipocrisia-schizofrenia-o-preoccupazioni-giustificate/. 5  A Tancredi, ‘On the Absence of Direct Effect of the WTO Dispute Settlement Body’s Decisions in the EU Legal Order’ in E Cannizzaro et al (eds), International Law as the Law of the European Union (Leiden, Martinus Nijhoff, 2012) 249–68; BI Bonafé, ‘Direct Effect of International Agreement in the EU Legal Order: Does it Depend on the Existence of an International Dispute Settlement Mechanism?’ in Cannizzaro et al, ibid 229–48; Lavranos (n 2).

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II.  The Incorporation of IDS Decisions into EU Law Like any other legal system, it is for the EU to determine what is ‘the law of the land’ and what effects this law has within the EU’s legal order.6 Yet, as with many other fundamental principles governing the EU, the EU treaties do not contain much guidance on the role that international law and, by extension, its different sources would play within the EU legal order.7 Article 216 of the Treaty on the Functioning of the European Union (TFEU) gives very little information, as it merely provides that agreements concluded by the EU will be binding on the institutions and the Member States. Thus, the exact scope and implications of this provision, and whether it applies to other sources of international law8 have been left for the CJEU to decide. First, this section focuses on how IDS decisions become the law of the EU land. Second, it examines whether there are some preliminary requisites that IDS must comply with so as to be incorporated into EU law. Finally, it touches upon how the incorporation of IDS decisions puts them under the jurisdiction of the CJEU.

A. The Automatic Incorporation and Assimilation of IDS into the EU Legal Order The sparse wording of Article 216 TFEU remains silent on the effects of the ­decisions of a body set up by an international agreement concluded by the EU. In Opinion 1/91, the Court answered that question by extending its ­monist approach,9 6  Case C-402/05 P and C-415/05 P Yassin Abdullah Kadi, Al Barakaat International Foundation v Council of the European Union and Commission of the European Communities, Opinion of AG Maduro, ECLI:EU:C:2008:11, para 21; Case C-149/96 Portugal v Council, ECLI:EU:C:1999:574, [1999] ECR I-8395, para 34; J Klabbers, The European Union in International Law (Paris, Pedone, 2012) 71; P Eeckhout, EU External Relations Law (Oxford, Oxford University Press, 2011) 324. 7  RA Wessel, Close Encounters of the Third Kind: The Interface between the EU and International Law after the Lisbon Treaty (SIEPS Report, 2013) 30. R Holdgaard, ‘Principles of Reception of International Law in Community Law’ (2006) 1 Yearbook of European Law 263. 8  Art 38(1) Statute of the International Court of Justice: ‘The Court, whose function is to decide in accordance with international law such disputes as are submitted to it, shall apply:

a. international conventions, whether general or particular, establishing rules expressly recognized by the contesting states; b. international custom, as evidence of a general practice accepted as law; c. the general principles of law recognized by civilized nations; d. subject to the provisions of Article 59, judicial decisions and the teachings of the most highly qualified publicists of the various nations, as subsidiary means for the determination of rules of law.’ 9  A Rosas, ‘The European Court of Justice and Public International Law’ in J Wouters et al (eds), The Europeanisation of International Law (The Hague, TMC Asser Press, 2009) 75; E Cannizzaro, ‘The Neo-Monism of the European Legal Order’ in Cannizazaro et al (n 5) 35–59. For a critique of the use of monism and dualism as categories to characterise the relationship between national and

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coined in Haegeman10 in relation to international agreements, to d ­ ecisions of an IDS system: Where, however, an international agreement provides for its own system of courts, including a court with jurisdiction to settle disputes between the Contracting Parties to the agreement, and, as a result, to interpret its provisions, the decisions of that court will be binding on the [Union] institutions, including the Court of Justice. Those decisions will also be binding in the event that the Court of Justice is called upon to rule, by way of preliminary ruling or in a direct action, on the interpretation of the international agreement, in so far as that agreement is an integral part of the [Union] legal order.11

In other words, EU law incorporates the decisions of IDS in the same way as international agreements. Moreover, as is the case with international agreements, IDS decisions are assimilated to EU acts, meaning that the Court will interpret and apply them as if they were EU law. This linkage between an international agreement and its IDS features consistently in the Court’s case law.12 By contrast to international agreements or customary international law, although they are sources of international law,13 IDS decisions are subsidiary in nature. As Thirlway explains: ‘The judge … will not assert that the rule stated is law because [she] has stated it, [she] will state it because [she] considers that it derives from one of the three principal sources [of international law].’14 Therefore, linking the effects of IDS decisions to the international agreement that created them is the logical starting point to examine the effects that IDS decisions have under EU law. The CJEU’s position seems to respond to the subsidiary nature of IDS decisions. As the EU does not require an act of incorporation for an international agreement, the decisions of the bodies set up by that agreement should be approached in the same way.

B. The Position of IDS Decisions Within the Hierarchy of EU Sources The fact that IDS decisions are automatically incorporated into the EU legal order does not settle their hierarchical position within EU law. Furthermore, from the outset the CJEU has been clear that the fact that an international agreement provides for an IDS is not enough to establish its incompatibility with the international law: A Von Bogdandy, ‘Pluralism, Direct Effect, and the Ultimate Say: On the Relationship between International and Domestic Constitutional Law’ (2008) 3–4 International Journal of Constitutional Law 397. Klabbers (n 6) 71. 10 

Case 181/73 Haegeman, ECLI:EU:C:1974:41, [1974] ECR 449. Opinion 1/91 Re: European Economic Area Agreement, ECLI:EU:C:1991:490, [1991] ECR I-6079, para 39. 12  ibid para 37. 13  See n 8 above. 14  H Thirlway, ‘The Sources of International Law’ in MD Evans (ed), International Law (Oxford, Oxford University Press, 2014) 105. 11 

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EU treaties.15 However, while IDS are not prima facie incompatible with EU law, the Court has established clear limits on how IDS decisions might interact with the EU treaties. First, as Opinion 2/13 highlights, international agreements concluded by the EU are placed below the EU treaties in the hierarchy of EU sources.16 While the Opinion follows the traditional case law in that regard,17 it confirms that18 the decisions of the European Court of Human Rights could not affect EU primary law.19 When an international agreement is incompatible with the foundations of the EU legal order that agreement may enter into force, but the EU will not be able to become a party to the agreement unless it is suitably amended. Otherwise put, from an EU law perspective, in case of a conflict between the EU treaties and an international agreement the former will prevail, which in practical terms amounts to situating international agreements to which the EU is party below the EU treaties.20 Second, Opinion 2/13 seems to confirm some of the criticisms towards the practice of the CJEU regarding the compatibility of IDS decisions with the EU treaties.21 As highlighted by the introductory chapter in this book, an international agreement containing IDS would rarely pass the test of compatibility with the EU treaties at its first attempt.22 While this does not necessarily mean that an agreement containing an IDS arrangement will be declared incompatible with the EU legal order by default, so far only those agreements where the judicial or adjudicatory nature of the IDS has been watered down in favour of diplomatic and political mechanisms, such as joint committees, have explicitly been declared to be 15  Opinion 2/13 Re: Accession of the European Union to the ECHR, ECLI:EU:C:2014:2454, para 182. Opinion 1/91 (n 11), para 40. On Opinion 2/13 see E Spaventa, ‘A Very Fearful Court? The P ­ rotection of Fundamental Rights in the European Union after Opinion 2/13’ (2015) 1 Maastricht Journal of ­European and Comparative Law 35; E Nanopoulos, ‘Killing Two Birds with One Stone? The Court of Justice’s Opinion on the EU’s Accession to the ECHR’ (2015) 75 Cambridge Law Journal 185; B De Witte and S Imamović, ‘Opinion 2/13 on Accession to the ECHR: Defending the EU Legal Order against a Foreign Human Rights Court’ (2015) 4 European Law Review 683; J Martín y Pérez de ­Nanclares, ‘El TJUE pierde el rumbo en el dictamen 2/13: merece todavía la pena la adhesión de la UE al CEDH?’ (2015) 52 Revista de Derecho Comunitario Europeo 825. 16  Opinion 2/13 (n 15), para 201. O Danic, ‘Les conventions conclues par les Communautés et/ ou l’Union’ in M Benlolo-Carabot et al (eds), Union Européenne et Droit International (Paris, Pedone, 2012) 612. 17  Opinion 2/94 Re: Accession to the ECHR, ECLI:EU:C:1996:384; Opinion 1/91 (n 11); Opinion 1/09 Re: European Patent Court, ECLI:EU:C:2011:123, [2011] ECR I-1137; Opinion 1/92 Re: European Economic Area, ECLI:EU:C:1992:189, [1992] ECR I-2821; Kadi (n 6). 18  Opinion 2/13 (n 15), para 183. 19  ibid para 182. 20  Opinion 1/91 (n 11), para 37. See also B Van Vooren and RA Wessel, EU External Relations Law. Text, Cases and Materials (Cambridge, Cambridge University Press, 2014) 221. 21  B De Witte, ‘A Selfish Court? The Court of Justice and the Design of International Dispute ­Settlement beyond the European Union’ in M Cremona and A Thies (eds), The European Court of Justice and External Relations Law (Oxford, Hart Publishing, 2014) 33–46. Contra: I Govaere, ‘Beware of the Trojan Horse: Dispute Settlement in (Mixed) Agreements and the Autonomy of the EU Legal Order’ in C Hillion and P Koutrakos (eds), Mixed Agreements Revisited. The EU and its Member States in the World (Oxford, Hart Publishing, 2010) 187–207. 22  See Opinion 1/00 Re: European Common Aviation Area, ECLI:EU:C:2002:231, [2002] ECR I-3493. Opinion 1/91 (n 11), Opinion 1/92 (n 17), Opinion 1/09 (n 17), Opinion 2/13 (n 15). See De Witte (n 21).

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compatible with the EU treaties.23 Moreover, as Bronckers observes, the decisions of the bodies envisaged, for instance in the EEA Agreement, cannot not be considered decisions of IDS bodies, but just ‘an attempt at dispute settlement through political means’.24 For instance, Article 111 of the EEA Agreement establishes the EEA Joint Committee as the relevant body in charge of settling any dispute over the interpretation or application of the EEA Agreement. Yet, the EEA Joint Committee consists of representatives of the contracting parties and takes its decisions by agreement.25 Moreover, the political nature of the EEA Joint Committee is further anchored, in that the absence of an agreement to settle the dispute would allow contracting parties to adopt safeguard measures to remedy the possible imbalances that the divergence in interpretation or application of the EEA might bring about.26 Be that as it may, Opinion 2/13 and its predecessors show how the compatibility between the international agreement providing for IDS and the EU Treaties is a necessary preliminary step to the analysis of the effects of IDS decisions in the EU. While it might be obvious that IDS decisions will have effects within the EU legal order only if the EU is bound by the international agreement setting up an IDS, it must be stressed that the Court has established a high threshold for agreements with IDS to be compatible with the EU treaties and thus become binding as a ­matter of EU law.27

C.  The Jurisdiction of the CJEU and IDS Decisions If IDS decisions were considered part of the EU legal order, one of the main consequences would be the extension of the jurisdiction of the CJEU to the interpretation and application of IDS decisions.28 Following the Court’s expansion of its jurisdiction to cover the Association Council Decisions of the EC-Turkey Association Agreement in Sevince, in principle the CJEU’s jurisdiction would also cover IDS decisions.29 The rationale underpinning the expansive view that the Court has 23  Compare the proposal for an EEA Court enshrined in the EEA Agreement discussed in Opinion 1/91, with the Joint Committee discussed in Opinion 1/92. B Brandtner, ‘The “Drama” of the EEA Comments on Opinions 1/91 and 1/92’ (1992) 3 European Journal of International Law 300. 24 M Bronckers, ‘The Relationship of the EC Courts with Other International Tribunal: Non-­ Committal, Respectful or Submissive?’ (2007) 3 Common Market Law Review 608. 25  Art 94 EEA Agreement. 26  Art 111(3) EEA Agreement. 27  cf Case C-366/10 Air Transport Association of America and Others, ECLI:EU:C:2011:637, AG Opinion, para 49. International agreements can be relied upon as a benchmark against which the validity of acts of EU institutions can be reviewed, subject to two conditions (i) the European Union must be bound by the agreement concerned; (ii) the nature and the broad logic of the agreement concerned must not preclude such a review of validity and, in addition, its provisions must appear, as regards their content, to be unconditional and sufficiently precise. 28  Haegeman (n 10). 29 RA Wessel and S Blockmans, ‘The Legal Status and Influence of Decisions of International Organizations and other Bodies in the European Union’ in P Eeckhout and M Lopez-Escudero (eds), The European Union’s External Action in Times of Crisis (Oxford, Hart Publishing, 2016) 22.

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on its jurisdiction over international agreements30 is rooted in the need to ensure the uniform application throughout the Union of all provisions forming part of the EU legal system. The need of uniformity, which stems from the function performed by the CJEU by virtue of Article 267 TFEU (preliminary references), entails that the interpretation of an international agreement thereof does not vary within the Member States.31 Because of this need for uniformity, the CJEU has broadened the scope of its jurisdiction not only in terms of the instruments which it can interpret (international agreements, IDS decisions) but also to include the interpretation of obligations falling outside the EU’s competence.32 This expansion of its jurisdiction to cover all aspects of a mixed agreement, and regardless of the competences involved in the specific situation,33 has been subject to criticism for its broad construction and ill-defined limits.34 More importantly for this chapter is the fact that, regardless of the lack of clarity of the CJEU’s approach to its jurisdiction, the Court has explicitly broadened its jurisdiction to encompass the World Trade Organization35 and also the Aarhus Convention,36 which are both agreements with IDS systems embedded within them. For instance, in the LZ judgment the Court established that where a provision of an international agreement can apply both to situations falling within the scope of national law and to situations falling within the scope of EU law, it is clearly in the interest of the latter that, in order to forestall future differences of interpretation, the provision should be interpreted uniformly, whatever the circumstances in which it is to apply.37 IDS decisions will most certainly test the limits of the uniformity rationale underpinning the Court’s construction of its jurisdiction. While there is no doubt that the CJEU would have jurisdiction to interpret and set the effects of those IDS decisions in which the EU was a party to the dispute, could it do in relation to IDS decisions where only an EU member state intervened? As the case law currently stands, it is not entirely clear whether its jurisdiction would also extend to those IDS decisions adopted under a mixed agreement but in which only an EU Member State intervened. Would the CJEU have the power to interpret a decision not binding on the EU? The current approach, described above, would favour such ­possibility. Moreover, the CJEU’s case law on the primacy of mixed agreements

30  cf P Koutrakos, ‘Intepretation of Mixed Agreements’ in Hillion and Koutrakos (n 21) 116–137; E Neframi, ‘Mixed Agreements as a Source of European Union Law’ in Cannizzaro et al (n 5) 325. 31  Case C-192/89 Sevince, ECLI:EU:C:1990:322, [1990] ECR I-3461, para 11. 32  Neframi (n 30) 327. 33  Case C-239/03 Commission v France (Ètang de Berre), ECLI:EU:C:2004:598, [2004] ECR I-9325; Case C-13/00 Ireland v Commission (Berne Convention), ECLI:EU:C:2002:184, [2002] ECR I-2943. 34  P Koutrakos, EU International Relations Law (Oxford, Hart Publishing, 2015) 242. 35  Case C-300/98 and C 392/98 Parfums Christian Dior and Others, ECLI:EU:C:2000:688, [2000] ECR I-11307; Case C-53/96 Hermès, ECLI:EU:C:1998:292, [1998] ECR I-3603; Case C-431/05 Merck Genéricos—Productos Farmacéiticos v Merck & Co, ECLI:EU:C:2007:496, [2007] ECR I-7001. 36 Case C-240/09 Lesoochranárske zoskupenie VLK v Ministerstvo zivotného prostredia Slovenskej republiky, ECLI:EU:C:2011:125, [2011] ECR I-1255. 37  ibid para 42.

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would also favour a broad approach to the jurisdiction of the CJEU over IDS ­decisions adopted within a mixed agreement but against a Member State action.38

III.  The Direct Effect of IDS Decisions Logically, the incorporation and assimilation of IDS decisions to EU acts39 would entail the extension of the main characteristics of an EU act to IDS decisions: primacy and direct effect.40 However, when speaking about direct effect other requisites must be met if an IDS decision is to be invoked. This section shows how those requisites, as construed by the Court, preclude IDS decisions from having direct effect. The first part of this section focuses on the current approach to the direct effect of IDS decisions by the CJEU. The second part examines how the new Free Trade Agreements with the EU might further reinforce that approach. The third part shows how, even when speaking about Investor–State Dispute Settlement (ISDS), the effects of those decisions will be rather limited. The fourth part focuses on the role of the other institutions in giving effect to IDS decisions.

A.  The CJEU’s Current Approach to the Effect of IDS Decisions The Court has designed a two-stage test by which the Court decides whether an international agreement and an IDS decision can have direct effect. The first part of the test focuses on the analysis of the international agreement as a whole, whereas the second part of the test applies the classical criteria for direct effect under EU law to the provision of the international agreement being invoked.41 The first part of the test reflects the political nature of a decision on the effects of an agreement.42 The analysis of the nature and the broad logic of the a­ greement43 boils down to a consideration of two main factors. On one hand, it will consider

38 

See s IV.A below. Case C-104/81 Kupferberg, ECLI:EU:C:1982:362, [1982] ECR 3641, para 13. 40  M Mendez, The Legal Effects of EU Agreements (Oxford, Oxford University Press, 2013) 64. Contra R Schütze, Foreign Affairs and the EU Constitution (Cambridge, Cambridge University Press, 2014) 356. Surprisingly Schütze argues that the assimilation of international agreements to Union acts is not complete. In his view: ‘Only where an international norm fulfils the “same function” as the internal European norm, will the Court project the ‘internal pre-emptive effect to the international treaty. It is therefore not correct to assume that international treaties are fully assimilated to internal European regulations because they form an “integral part” of the European legal order.’ 41  See Case 22-24/72 International Fruit Company, ECLI:EU:C:1972:115, [1972] ECR 1219. For a more recent application of the test to a wider range of sources of international law see Case C-366/10 Air Transport Association of America and Others, ECLI:EU:C:2011:864, [2011] I-13755. 42  Schütze (n 40) 52. 43  Case C-308/06 The Queen on the application of Intertanko and Others v Secretary of State for ­Transport, ECLI:EU:C:2008:312, [2008] ECR I-4057, para 45. 39 

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whether the EU institutions have agreed with the third states concerned the effect the provisions of the agreement are to have on the internal legal order of the contracting parties.44 On the other hand, it will look at whether the agreement as a whole was designed to establish rules intended to apply directly and immediately to individuals and to confer upon them rights or freedoms capable of being relied upon against states.45 In other words, the Court will look into whether the contracting parties to an agreement decided, either expressly or implicitly, that it would confer rights on other subjects besides the contracting parties. Furthermore, since the Court has linked the effects of IDS decisions to the effects of the international agreement that established the IDS, insofar as the agreement is not capable of having direct effect as a whole, the decisions of its IDS will not have direct effect either. So far, the Court has only approached the issue of the direct effect of IDS decisions in relation to the decisions of the WTO Dispute Settlement Mechanism (WTO DSM). For instance, in FIAMM the Court was clear when it held that: A [WTO DSM] decision, which has no object other than to rule on whether a WTO member’s conduct is consistent with the obligations entered into by it within the context of the WTO, cannot in principle be fundamentally distinguished from the substantive rules which convey such obligations and by reference to which such a review is carried out, at least when it is a question of determining whether or not an infringement of those rules or that decision can be relied upon before the Community courts for the purpose of reviewing the legality of the conduct of the Community institutions.46

While traditional accounts of how the Court has approached the issue of the direct effect of international agreements argued that direct effect was the general rule,47 when it comes to IDS the opposite picture seems to emerge. For instance, in Intertanko the CJEU recognised that the United Nations Convention of the Law of the Seas (UNCLOS) does not establish rules intended to apply directly and immediately to individuals.48 Therefore, applying the rationale that the CJEU used in FIAMM, the decisions from any of the IDS mechanisms envisaged in Part XV of 44 

Case C-366/10 Air Transport Association of America and Others (n 41), para 51. Intertanko (n 43) para 66. Joined Cases C–120/06 P and 121/06 P Fabbrica italiana accumulatori motocarri Montecchio SpA (FIAMM) and Others v Council and Commission and Giorgio Fedon & Figli SpA and Others v Concil and Commission, ECLI:EU:C:2008:476 para 128. See also, Case C-94/02 P Établissements Biret et Cie SA, ECLI:EU:C:2003:518 para 77; Case C-377/02 Léon Van Parys NV v Belgisch Interventie- en ­Restitutiebureau (BIRB), ECLI:EU:C:2005:121; Case C-306/13 LVP, ECLI:EU:C:2014:2465. 47  K Lenaerts and T Corthaut, ‘Of Birds and Hedges: the Role of Primacy in Invoking Norms of EU Law’ (2006) 3 European Law Review 287; F Jacobs, ‘Direct Effect and Interpretation of International Agreements in the Recent Case Law of the European Court of Justice’ in A Dashwood and M Maresceau (eds), Law and Practice of EU External Relations. Salient Features of a Changing Landscape (Cambridge, Cambridge University Press, 2011) 13; J Klabbers, ‘International Law in Community Law: The Law and Politics of Direct Effect’ (2001) 1 Yearbook of European Law 263; Mendez (n 40). 48  Intertanko (n 43), para 64. For a critical commentary of the CJEU’s approach see P E ­ eckhout, ‘Case C-308/06, The Queen on the application of Intertanko and Others, v Secretary of State for Transport, judgment of the Court of Justice (Grand Chamber) of 3 of June 2008, nyr’ (2009) 46 Common Market Law Review 2055. 45  46 

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­ NCLOS, including the decisions of the International Tribunal for the Law of the U Seas (ITLOS), are not capable of having direct effect in the EU.

B. The Effects of the IDS Decisions of the New Free Trade Agreements (FTAs) Concluded by the EU The new FTAs would seem to further anchor the idea that IDS decisions will not be considered by the Court as being among the rules used to assess the validity of EU law. Even though there have not been any cases on whether the IDS decisions adopted under the new FTAs can be invoked by individuals, it seems unlikely that the Court will consider those decisions to be directly effective. There are two main reasons to believe that the new FTAs, and the IDS established therein, have the potential to alter the common narratives on the direct effect of international law. First, the new FTAs have IDS chapters among their provisions. These chapters create quasi-judicial dispute settlement mechanisms for trade disputes that are largely based on the WTO Dispute Settlement Understanding.49 Therefore, given the stance of the Court regarding the decisions of the WTO DSM and their linkage to the (lack of) direct effect of the WTO Agreements, could the decisions of these IDS have direct effect? In order to answer that question, it must be considered whether the FTAs are capable of having direct effect. The new FTAs put great weight on what the parties intended and are explicit in precluding the direct effect of its provisions. For instance, the EU–Peru and Colombia FTA provides in its Article 336 concerning the rights and obligations under the agreement that ‘[n]othing in this Agreement shall be construed as conferring rights or imposing obligations on persons, other than those created between the Parties under public international law’.50 This provision clearly shows that the parties intended to exclude direct effect of the agreement. Second, as Semertzi rightly shows, it is not only the fact that the new FTAs explicitly preclude direct effect but also that those FTAs incorporate, to varying degrees, WTO provisions51 that explains why these agreements would not confer rights.52 49  A Semertzi, ‘The Preclusion of Direct Effect in the Recently Concluded EU Free Trade ­Agreements’ (2014) 51 Common Market Law Review 1126. 50  Trade Agreement concluded between the European Union and its Member States, of the one part, and Colombia and Peru, of the other part. 21 December 2012, OJ L-354. 51  Semertzi (n 49) 1126. 52  Both the CJEU (see above) and the WTO DSM have been clear on the lack of direct effect of the WTO Agreements and decisions of its DSM. See WTO. Report United States—Sections 301–310 of the Trade Act 1974, WT/DS152/R, 22 December 1999, at 7.72. Neither the GATT nor the WTO has so far been interpreted by GATT/WTO institutions as a legal order producing direct effect; the GATT/ WTO did not create a new legal order the subjects of which comprise both contracting parties or Members and their nationals. Contra: S Griller, ‘Judicial Enforceability of WTO Law in the European Union’ (2000) 2 Journal of International Economic Law 441. EU Petersmann, ‘From “Negative” to ­“Positive” Integration in the WTO: Time for “Mainstreaming Human Rights” into WTO Law?’ (2000) 37 C ­ ommon Market Law Review 1375.

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Therefore, given the explicit linkage made by the Court between the lack of direct effect of an international agreement and the lack of direct effect of a decision of IDS established by that international agreement, the IDS decisions of the new FTAs are not likely to be considered capable of having direct effect by the CJEU. Furthermore, some FTAs go as far as to explicitly exclude direct effect of the ruling of its IDS. For instance, the EU–South Korea FTA envisages that: ‘Any ruling of the arbitration panel shall be binding on the Parties and shall not create any rights or obligations for natural or legal persons.’53 All in all, it would seem rather unlikely that the CJEU would depart from its deferential approach towards the will of the parties to an international agreement when dealing with the effects of a decision of an IDS. Not only are the nature of the obligations that the IDS will have to interpret and apply not capable of creating rights, but the text of those agreements is extremely clear about this issue, even explicitly mentioning in certain FTAs the lack of direct effect of the decisions of their IDS.

C. Investor–State Dispute Settlement (ISDS) and the No-direct Effect Rule: Does It Really Matter? Yet, the exact scope of the no-direct effect rule will most likely be challenged in relation to the most recent FTAs, as these agreements also include provisions excluding the direct effect of the agreement54 while also envisaging investment chapters with a separate ISDS applying only to that chapter. Inasmuch as those investment chapters cover the treatment to be afforded to foreign investors, those provisions in substance apply directly and immediately to individuals and confer upon them rights or freedoms capable of being relied upon against states.55 Therefore, the question arises of whether an arbitral award interpreting the obligations contained in the said investment chapter could have direct effect. It is submitted that the no-direct effect provisions of these FTAs would apply regardless of the actual substance of the IDS decision. Two main reasons would back this point of view. First, the Court’s case law on direct effect gives great weight to the will of the parties. As Kuijper recognises, there is an element of institutional balance in the reasoning of the Court that is necessary given the interests of the other ­political actors in the issue of direct effect of international agreements.56 The ­institutional balance considerations mean that the Court limits the extent to which IDS 53 

Art 14.17(2) EU–South Korea FTA. instance, the EU–Singapore FTA in its art 17.15 entitled ‘No Direct Effect’ emphasises that ‘[f]or greater certainty, nothing in this Agreement shall be construed as conferring rights or imposing obligations on persons, other than those created between the Parties under public international law’. 55  A Dimopoulos, EU Foreign Investment Law (Oxford, Oxford University Press, 2011) 304. 56  PJ Kuijper and M Bronckers, ‘WTO Law in the European Court of Justice’ (2005) Common ­Market Law Review 1321. 54  For

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­ ecisions might be invoked by any applicant besides the EU institutions.57 Thus, it d would be unlikely that the CJEU would disregard the explicit and unequivocal will of the parties and establish the direct effect of an arbitral award. Second, the nature of an award would make it rather unlikely to be considered as having direct effect in the sense that it would also entail assessing the validity of the norm which breached a provision of the investment chapter of an FTA.58 The Investment Court System established under either CETA, the EU–Singapore FTA or the Transatlantic Trade and Investment Partnership (TTIP) would only deal with the liabilities stemming from the breach.59 The arbitral awards adopted under the ISDS of these FTAS would thus not deal with the validity of the act being reviewed but just with the pecuniary damage that the foreign investor has ­suffered.60 ­Therefore, the effects of that award would not be capable of conferring rights to other individuals besides the actual foreign investor that succeeded in obtaining a remedy from the arbitral tribunal inasmuch as she would be the only one entitled to liability. Further, the ‘right’ that this award would recognise would only entail the payment of compensation or restitution of property, not the general disapplication of the act or its eventual annulment. In addition, the provisions on enforcement of awards contained in the new FTAs would further reinforce the limited effects of those arbitral awards. The new FTAs establish that those awards will be subject to the specific rules of either the International Centre of the Settlement of Investment Disputes (ICSID) and/or the New York Convention on the Recognition and Enforcement of Arbitral Awards.61 While both of these regimes provide for avenues for the award to be enforced at a national level, they are mainly concerned with the pecuniary aspects of the award.62 For instance, Article 54 ICSID limits the enforcement of ICSID arbitral awards to its pecuniary obligations.63 Overall, it appears that it would be rather unlikely that the CJEU would recognise the direct effect of IDS decisions. First, the CJEU has consistently held that the decisions of the WTO DSM do not have direct effect. Second, even though the 57 

Case C-149/96 Portugal v Council, ECLI:EU:C:1999:574, [1999] ECR I-8395, para 34. The link between direct effect and validity of an EU norm can be easily seen in: Portugal v Council (n 57) para 47. Koutrakos (n 30) 235. Klabbers (n 47) 270. 59  See Art 8.39 CETA, Art 9.24 EU–Singapore FTA, Art 28 of the EU’s proposal for Investment Protection and Resolution of Investment Disputes. Available at: http://trade.ec.europa.eu/doclib/ docs/2015/november/tradoc_153955.pdf. 60  A Van Aaken, ‘Primary and Secondary Remedies in International Investment Law and National State Liability: A Functional and Comparative View’ in SW Schill (ed), International Investment Law and Comparative Public Law (Oxford, Oxford University Press, 2010) 747. 61  Art 8.41 CETA, art 9.27 EU–Singapore FTA. 62  R Dolzer and C Schreuer, Principles of International Investment Law (Oxford, Oxford University Press, 2012) 310. 63  SA Alexandrov, ‘Enforcement of ICSID Awards: Articles 53 and 54 of The ICSID Convention’ in C Binder et al (eds), International Investment Law for the 21st Century: Essays in Honour of Christoph Schreuer (Oxford, Oxford University Press, 2009) 336. ‘This is an understandable limitation in light of the fact that Article 54 was principally intended as a mechanism for enforcement of awards in third States, which could not be expected to attempt to enforce injunctive or declaratory provisions of an award.’ 58 

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new FTAS contain IDS, they are tailored following the WTO DSM template. Third, those FTAs explicitly exclude the possibility of direct effect even for IDS decisions. Finally, even in those situations (ISDS) where a stronger case for direct effect could be made (arbitral awards in ISDS scenarios), the nature of the award (dealing only with pecuniary liability) would preclude that possibility.

D.  Giving Effect to IDS Decisions through the Political Process Having shown that, on the basis of current EU practice, it would seem unlikely that the CJEU will recognise the direct effect of IDS decisions, this section follows up by arguing that there are other ways for those decisions to obtain effect in the EU legal order. Whereas respect for the institutional balance and the democratic legitimacy would further justify the approach of the Court to the issues of direct effect,64 the main consequence of the Court’s attitude seems to run contrary to a judicialisation of the question. In fact, if the Court’s practice remained the same, the other EU institutions would be the main gatekeepers of IDS in the EU.65 In a nutshell, it is only inasmuch as the EU institutions agree to implement those IDS decisions that they will become ‘the law of the EU land’. So far, the trend has been on an ad hoc basis and following, to a certain extent, the logic of the exceptions to the no-direct effect rule of WTO law.66 For instance, the recent modifications to the Seals regulation67 were adopted to comply with the WTO panel report on the EC—Seals product dispute and the relevant AB reports.68 The explanatory memorandum of the Commission proposal stated that: The purpose of this legislative proposal is to implement the DSB recommendations and rulings with regard to the [Seals] Regulation. It also creates the legal basis for bringing Regulation (EU) No 737/2010 in compliance with the said rulings.69

Consequently, if either a Member State or an individual considers that this regulation, once it is adopted, does not comply with the WTO rulings and recommendations, could they question the validity of the regulation by invoking the relevant WTO reports and rulings? In principle, this express reference to the WTO DSM decisions could be seen as a way to demonstrate that this regulation meets the threshold set by the Court for 64 

Kuijper and Bronckers (n 56) 1321. On the idea of the Court as a gatekeeper see F Snyder, ‘The Gatekeepers: The European Courts and WTO Law’ (2003) Common Market Law Review 313. 66 Case 70/87 Fediol v Commission, ECLI:EU:C:1989:254, [1989] ECR 1781; C-69/89 Nakajima v Council [1988], ECLI:EU:C:1991:186, [1991] ECR I-2069. 67  Reg (EU) 2015/1775 of the European Parliament and of the Council of 6 October 2015 amending Reg (EC) No 1007/2009 on trade in seal products and repealing Commission Reg (EU) No 737 [2010] OJ L262/1. 68 WTO. Report EC—Measures Prohibiting the Importation and Marketing of Seal Products, WT/ DS400/R of 25 November 2013, WT/DS400/AB/R of 22 May 2014. 69 Proposal for a Reg of the European Parliament and of the Council amending Reg (EC) No 1007/2009 on trade in seal products. COM (2015) 45 final. 65 

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the exceptions to the no-direct effect rule and thus could be invoked by i­ ndividuals and EU Member States. However, the WTO DSM rulings and reports on EC—Seals, although mentioned in the Commission proposal, were dropped when adopting the regulation. Furthermore, in light of recent case law, it seems unlikely that the Court would accept that individuals can invoke any of the EC—Seals report or rulings that the amendments to the Seals regulation aim to implement. For instance, in LVP an express reference in the recitals of the Bananas regulation to an Arbitrators’ award adopted within the framework of the WTO Bananas ­dispute was not enough to meet the threshold for the exception to be triggered.70 The Court has adopted a rather narrow view of what could fall within these exceptions, restricting it to very specific issues having to do with the implementation of the Anti-Dumping Agreement (ADA) stricto sensu.71 While the no-direct effect rule of the WTO DSM makes sense given the structure of the WTO Agreements and the link between them and its WTO DSM,72 the narrow construction of the exceptions to that rule gives too much leeway to the EU institutions. If the EU institutions make clear when adopting a piece of EU legislation that one of the reasons for the adoption of this legislation is to implement an IDS decision, it should be possible for that legislation to be reviewed in light of the IDS decision.73 In contrast to the decisions of the WTO DSM, where the EU institutions seem to favour an ad hoc approach, the EU institutions have set up a permanent internal legal framework designed to give effect to the arbitral awards adopted under the investment chapters of the new FTAs. As mentioned above, if the new FTAs and its ISDS decisions do not have direct effect, how are the remedies granted by those ISDS are going to be recognised at EU level? The EU has put in place the internal legal framework to deal with this question. Regulation 912/201474 would allow for compensation stemming from an award adopted by an ISDS to be implemented in the EU legal order. Article 18 provides: ‘Where an award has been rendered against the Union, that award should be paid without delay. The Commission should make arrangements for the payment of such awards, unless a Member State has already accepted financial responsibility.’ Moreover, given the pecuniary nature of the award, it seems consistent that Regulation 912/2014 would limit its scope so as to only create an EU obligation to

70 

LVP (n 14) para 59. Case C-21/14 Commission v Rusal Arrmenal, ECLI:EU:C:2015:494 para 47. In this case, the Court understood that those parts of the EU Anti-Dumping reg that are not implementing the ADA cannot be reviewed in light of the latter. 72  A Antoniadis, ‘The Chiquita and Van Parys Judgments: Rules, Exceptions and the Law’ (2005) 32 Legal Issues of Economic Integration 470. 73  Contra: ibid 471. 74  Reg (EU) No 912/2014 of the European Parliament and of the Council of 23 July 2014 establishing a framework for managing financial responsibility linked to investor-to-state dispute settlement tribunals established by international agreements to which the European Union is party [2014] OJ L257/121. 71 

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compensate the investor while leaving the validity of the rule that gave rise to the compensation untouched. The new arrangements currently being put in place in the EU’s treaty-­making practice in relation to the (lack of) direct effect of its provisions have two ­interrelated consequences. First, they institutionalise the issue of the effects of IDS decisions. By establishing that the agreement and IDS decisions do not have direct effect, the parties are giving plenty of room for the EU institutions (mainly the Council and the Commission) to decide how the IDS decisions will be implemented in the EU. As regards the decisions of the WTO DSM, the CJEU has been quite clear in safeguarding that policy space, even if that means that individuals in the EU will suffer the consequences of the EU’s approach to compliance with the WTO DSM.75 In relation to the effects of the decisions of the IDS set up by the new FTAs, so far no claims have yet been brought within that framework. Second, the lack of direct effect of FTAs does not only preclude individuals and Member States from challenging the validity of EU acts in light of an IDS decision, it would also further reduce the role of the CJEU when it comes to IDS decisions. Inasmuch as those agreements do not have direct effect, the Court’s role in dealing with the EU’s compliance with IDS would be more limited than at present.

IV.  Incorporation as Double Primacy? IDS Decisions and Their Primacy over EU and National Law The incorporation of an IDS decision into the EU legal order means its ­assimilation to an EU act. This principle of assimilation means that the main EU constitutional principles (primacy and direct effect) would also apply in relation to IDS. In contrast to the principle of direct effect which requires, as has been explained, certain pre-requisites to be triggered, the principle of primacy does not necessitate the triggering of any pre-requisite. Primacy might be seen as nothing more than a rule solving a normative conflict within the EU legal order.76 The principle of ­primacy articulates the hierarchy of EU sources in a twofold manner when it comes to international law. First, in relation to international agreements and IDS ­decisions, primacy also reinforces a certain view of the balance of powers between the EU institutions and the Member States, especially when the different effects that ­primacy has vis-à-vis the Member States and vis-à-vis the institutions are considered. Second, primacy would also apply in principle to solve conflict between EU law and IDS decisions.

75  A Thies, International Trade Disputes and EU Liability (Cambridge, Cambridge University Press, 2013) 188. 76  Van Vooren and Wessel (n 20) 221. Lenaerts and Corthaut (n 47) 288.

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A.  Primacy vis-à-vis Member States’ Law The first dimension would concern the primacy of IDS decisions vis-à-vis national law. The main rationale as established in Kupferberg was that Member States also fulfil an obligation vis-à-vis the EU.77 If Member States were to disregard the agreement that the EU had concluded, the EU would incur international ­responsibility.78 Likewise, if Member States were to disregard an IDS decision binding on the EU, the latter could be held internationally responsible. Therefore, inasmuch as the principle of primacy applying to international agreements safeguards the EU’s compliance with its international obligations, any Member State action contradicting an IDS decision binding on the EU would need to be set aside. This primacy of international law via EU law vis-à-vis national law is easily seen in the multiple infringement proceedings that the Commission has brought against EU Member States over their failure to implement and comply with international agreements.79 Thus, even though infringement proceedings concerning the lack of compliance with an IDS decision have yet to arise, the case law applicable to international agreements will most likely apply also to decisions of an IDS binding on the EU. Since IDS decisions binding on the EU form an integral part of the EU legal order and therefore are assimilated to EU legal acts,80 the Court would most surely establish that in case of a conflict between an IDS decision binding on the EU and a Member State provision that the former would prevail. A more interesting question in this regard would be whether Member States would also have an obligation, not only as matter of international law but also as a matter of EU law, to comply not only with IDS decisions binding on the EU, but also those IDS decisions binding on them stemming from a mixed agreement. For instance, would France be under an EU obligation to comply with a decision of an IDS set up by a mixed agreement when that IDS decision was brought against France? In principle, if the IDS decision holds that France breached a provision of an international agreement, would France have an obligation under Article 216 TFEU to comply with that IDS decision? It could be argued that, insofar as the IDS decision concerns an area that falls outside the realm of EU competence, the Member State would not be bound as matter of EU law. This stance could be based on that fact that the Court in ­Commission v Ireland (Berne Convention) ruled that mixed agreements have the

77  Kupferberg (n 39) para 13. Case 12/86 Meryem Demirel v Stadt Schwäbisch Gmünd, ECLI:EU:C:1987:400, [1987] ECR 3719. 78  Klabbers (n 47) 281. A Antoniadis, ‘The European Union and WTO Law: a Nexus of R ­ eactive, Coactive, and Proactive Approaches’ (2007) 1 World Trade Review 66. A Rosas, ‘International ­Responsibility of the EU and the European Court of Justice’ in MD Evans and P Koutrakos (eds), The International Responsbility of the European Union. European and International Perspectives (Oxford, Hart Publishing, 2013) 152. 79  Commission v France (Ètang de Berre) (n 33); Ireland v Commission (Berne Convention) (n 33); Case C-61/94 Commission v Germany (International Dairy Arrangement), ECLI:EU:C:1996:313. 80  Opinion 1/91 (n 11) para 37.

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same status in the EU legal order as purely EU agreements, insofar as these provisions fall within the scope of EU competence.81 The Court held that by not ratifying the Berne Convention Protection of Literary and Artistic Works, Ireland had breached the EEA Agreement.82 Therefore, given that an IDS decision against a Member State concerns issues that fall outside EU competence, the Member State would not have to comply with this obligation as matter of EU law. However, it is also possible that the CJEU would regard complying with an IDS decision binding on a Member State as fulfilling an obligation vis-à-vis the EU as well. The Court in Merck Genéricos seems to point in this direction. Though the case concerned the interpretation of Article 33 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), it nevertheless gives insight not only as regards the scope of the CJEU’s jurisdiction on matters covered by TRIPS83 but also parts of a mixed agreement will be considered matters of EU law. The Court was quite clear when establishing that the WTO Agreement, of which the TRIPs Agreement forms part, has been signed by the [Union] and subsequently approved by Decision 94/800. Therefore, according to settled case-law, the provisions of that convention now form an integral part of the [Union] legal order.84

The qualifying sentence that usually followed this pronouncement in other cases85 (‘in so far as the provisions fall within the scope of Community competence’) was dropped from the Court’s reasoning. Therefore, while it might be true that a slight change in the wording like this should not be exaggerated,86 one cannot but wonder whether if read jointly with other cases concerning the unity of the international representation of the EU,87 and summed with the fact that the EU has assumed responsibility for the performance of the agreement as a whole,88 the EU needs to make sure that it keeps its promise on its side,89 Member States included.

B. Interpreted in a Manner that is Consistent with an IDS Decision: Primacy of IDS Decisions vis-à-vis EU Law The second dimension of the primacy of IDS decisions concerns the validity of EU secondary legislation in light of the former. While the dichotomous relation 81  Ireland v Commission (Berne Convention) (n 33) para 20; R Holdgard, External Relations Law of the European Community. Legal Reasoning and Legal Discourses (Alphen aan den Rijn, Wolter Kluwer, 2008) 220. 82  Ireland v Commission (Berne Convention) (n 33) para 21. 83  For an analysis of its implication for the Court’s jurisdiction, see Koutrakos (n 30) 130. 84  Merck Genéricos—Productos Farmacéiticos v Merck & Co (n 35) para 31. 85  Ireland v Commission (Berne Convention) (n 33) para 31; Demirel (n 77) para 10; Commission v France (Ètang de Berre) (n 33) para 25. 86  Koutrakos (n 30) 133. 87  Case C-246/07 Commission v Sweden (PFOS), ECLI:EU:C:2010:203, [2010] ECR I-3317. 88  Kupferberg (n 39) para 13. 89  Klabbers (n 47) 281.

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between the EU treaties and secondary legislation does not deal appropriately with normative conflicts within EU legislation,90 international agreements and by extension IDS decisions do not fall within that binary hierarchy of EU law. Furthermore, as Wessel rightly identifies, the status of an international rule as an integral part of EU law does not completely settle its hierarchical position in relation to other sources of Union law.91 So far, it seems clear from the Court’s case law that international law is placed below the treaties in a hypothetical ranking of sources of EU law. Yet, its position vis-à-vis EU secondary legislation is not as straightforward as has often been assumed, at least in practice. The reading of the primacy of international law over EU law that the Court made in Germany v Commission (IDA) was far more nuanced than current statements on the same subject matter: ‘The primacy of international agreements concluded by the Community over provisions of secondary Community legislation means that such provisions must, so far as is possible, be interpreted in a manner that is consistent with those agreements.’92 The use of terms like ‘so far as possible’, ‘interpreted’ and ‘consistent’ would call for a relative understanding of the primacy of international agreements more in tune with the duty of consistent interpretation than with the Simmenthal ­rationale93 informing primacy vis-à-vis Member States’ law. Otherwise put, an alternative reading of IDA could show how the CJEU coined a relative notion of primacy by which the validity of EU law would not be put into question. That relative notion of primacy seems to have been somehow lost in most recent case law. For instance, in the Vereniging Milieudefensie and Stichting Stop Luchtverontreiniging Utrecht case the Court asserted: ‘Pursuant to Article 300(7) EC (now Article 216(2) TFEU), international agreements concluded by the European Union bind its institutions and consequently prevail over the acts laid down by those institutions.’94 Yet, taking into account this reading of IDA, what are the exact consequences of that relative supremacy? An absolute primacy rule would determine the i­ nvalidity of the EU law vis-à-vis the hierarchical superior IDS decision. Alternatively,

90  While it is true that after the Lisbon Treaty, there is a certain sense of hierarchy within the EU legal order, this stems more from issues having to do with implementing acts and the delegation of legislative functions, than from issues concerning the (lack) of hierarchy between the different legislative acts. See Lenaerts and Corthaut (n 47) 298. P Craig and G de Búrca, EU Law. Text, Cases and Materials 3rd edn (Oxford, Oxford University Press, 2015) 109. 91 RA Wessel, ‘Reconsidering the Relationship between International and EU law: Towards a ­Content-based Approach?’ in Cannizzaro et al (n 5) 13. 92  Commission v Germany (International Dairy Arrangement) (n 79) para 52. 93  Case 106/77 Amministrazione delle Finanze dello Stato v Simmenthal SpA, ECLI:EU:C:1978:49, [1978] ECR 629. 94  Case C-401/12 P, C-402/12 P, C-403/12 P Vereniging Milieudefensie and Stichting Stop Luchtverontreiniging Utrecht, ECLI:EU:C:2015:209, para 52. cf Intertanko (n 43) para 43. Air Transport Association of America and Others (n 41) para 51. Eeckhout (n 6) 325. Schütze (n 40) 35.

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r­ elative primacy would entail that the superiorly hierarchical IDS decision would only serve as an interpretative guideline, eventually allowing for liability to arise.95 Even though the CJEU might not have openly embraced an idea of relative ­primacy,96 that does not mean the Court has not interpreted EU law in the light of international law.97 Moreover, the General Court has interpreted EU legislation in light of IDS decisions.98 However, while in theory the duty of consistent interpretation applies to international obligations as well, in practice the CJEU has yet to provide an example in relation to IDS. For instance, in Ikea Wholesale,99 the Court had the opportunity to interpret EU law in light of the decisions of the Appellate Body of the WTO in the Bed Linen dispute100 but, somehow, it is unclear whether or not it did so.101

95  An example of how relative primacy would work can be seen in s 3(1) of the UK Human Rights Act: ‘(1) So far as it is possible to do so, primary legislation and subordinate legislation must be read and given effect in a way which is compatible with the Convention rights. (2) This section—

(a) applies to primary legislation and subordinate legislation whenever enacted; (b) does not affect the validity, continuing operation or enforcement of any incompatible ­primary legislation; and (c) does not affect the validity, continuing operation or enforcement of any i­ ncompatible subordinate legislation if (disregarding any possibility of revocation) primary ­legislation prevents removal of the incompatibility.’ According to this provision, while the ECHR would not affect the validity of UK legislation, the reading of that legislation must n ­ evertheless be done in a manner that is consistent with the ECHR. 96  Compare the recent statements of the Court with their actual application (Intertanko (n 43) para 43; Air Transport Association of America and Others (n 41) para 51). Koutrakos provides a comprehensive catalogue of the instances where the Court has reiterated this principle: Koutrakos (n 34) 219. The CJEU has given primacy to a provision of an international agreement over a provision of internal EU law in very limited instances. More specifically, the Court has only invalidated EU law when that piece of EU legislation was intended to give effect to an international provision. Besides Case C-76/00 Petrotub v Council, ECLI:EU:C:2003:4, [2003] ECR I-79, it is almost impossible to find more than a handful of cases where a piece of EU secondary legislation has been invalidated due to its ­incompatibility with an international obligation. While de Búrca also mentions another four cases where international agreements were given primacy over EU law: G De Búrca, ‘International Law Before the Courts: The EU and the US Compared’ (2015) 3 Virginia Journal of International Law 685, 706. However, those cases were not dealing with issues of validity but more with issues of interpretation, and yet in some of those cases, it is unsure whether the interpretation in light of the international agreements took place. For instance, in Case C‑549/07 Friederike Wallentin-Hermann v Alitalia—Linee Aeree Italiane SpA, ECLI:EU:C:2008:771, [2008] ECR I-11061, one of the examples put forward, the Court understood that the Montreal Convention for the Unification of Certain Rules for International Carriage by Air was not decisive for the interpretation a provision of Reg No 261/2004 (para 34). 97  For an overview of the application of the duty of consistent interpretation see F Casolari, ‘Giving Indirect Effect to International Law within the EU Legal Order: The Doctrine of Consistent Interpretation’ in Cannizzaro et al (n 5) 395. 98  G Gattinara, ‘Consistent Intepretation of WTO Rulings in the EU Legal Order?’ in Cannizzaro et al (n 5) 269. 99  Case C-351/04 Ikea Wholesale Ltd v Commissioners of Customs & Excise, ECLI:EU:C:2007:547, [2007] ECR I-7723. 100  WTO Report, European Communities—Anti-dumping duties on Imports of Cotton-Type Bed Linen from India. AB WT/DS141/AB/R of 1 March 2001 and WT/DS141/R of 30 October 2000. 101  On the view that it did: Gattinara (n 98). On the contrary view: P Eeckhout, ‘Human Rights and the Autonomy of EU Law: Pluralism or Integration?’ (2013) Current Legal Problems 169.

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Moreover, outside the realm of the WTO practice, the Court has yet to interpret EU legislation in the light of the decisions of other IDS systems. In Vereniging Milieudefensie and Stichting Stop Luchtverontreiniging Utrecht,102 concerning the implementation of the Aarhus Convention in the EU legal order, the reports from its Compliance Committee (ACCC)103 could have played a role. The case concerned an appeal by which the EU institutions argued, inter alia, that the General Court had erred in law by reviewing the validity of the Aarhus Regulation104 since Article 9(3) of the Aarhus Convention does not have direct effect.105 In his opinion, AG Jääskinen argued that when interpreting EU law in light of the Aarhus Convention ‘reference should also be made to the position adopted by the Aarhus Convention Compliance Committee’.106 Yet the Court did not made any reference to the communications of the ACCC. Interestingly, as AG Jääskinen has pointed out, the ACCC had expressed some doubts as to the EU’s compliance with the conditions laid down in Article 9(3) of the Aarhus Convention.107 More specifically, the ACCC considered that in relation to the Court’s rules on standing,108 ‘a new direction of the jurisprudence of the EU Courts should be established in order to ensure compliance with the Convention’.109 102 

See n 94. the Aarhus Convention Compliance Committee as an IDS see J JendrośKa, ‘Aarhus Convention Compliance Committee: Origins, Status and Activities’ (2011) 4 Journal for Environmental & Planning Law 301; J JendrośKa, ‘Recent Case-Law of the Aarhus Convention Compliance Committee’ (2011) 3 Journal for Environmental & Planning Law 375; V Koester, ‘The Compliance Committee of the Aarhus Convention—An Overview of Procedures and Jurisprudence’ (2007) 2–3 Environmental Policy and Law 83–96; A Pigrau Solé and S Borrás Pentinat, ‘Diez Años del Convenio de Aarhus sobre acceso a la información, la participación y el acceso a la justicia en materia de medio ambiente’ in A Pigrau Solé (ed), Accesso a la información, participación y acceso a la justicia en materia de medio ambiente, diez años del Convenio de Aarhus (Barcelona, Atelier, 2008); C Pitea, ‘The Non-Compliance Procedure of the Aarhus Convention: Between Environmental and Human Rights Control Mechanisms’ (2006) Italian Yearbook of International Law 85–116. 104  Reg of the European Parliament and of the Council of 6 September 2006 on the application of the provisions of the Aarhus Convention to Community institutions and bodies [2006] OJ L264/13. 105  LZ (n 36). 106  C-401/12 P, C-402/12 P, C-403/12 P Vereniging Milieudefensie and Stichting Stop Luchtverontreiniging Utrecht, AG Opinion, para 114. 107  ibid para 114, AG Opinion. 108  In particular, the communication focuses on the impact that the restrictive interpretation of the rules on standing of Article 263(4) TFEU has on the Access to environmental justice by NGOS. On the Plaumman test and its problematic application see R Schütze, European Union Law (Cambridge, Cambridge University Press, 2015) 357. 109  ACCC, Findings and recommendations with regard to communication ACCC/C/2008/32 (Part I) concerning compliance by the European Union. Adopted on 14 April 2011, ECE/MP.PP/C.1/2011/4/ Add. 1 para 97. The findings of the ACCC are particularly interesting because, on the one hand, the communication of the ACCC, which in principle forms an integral part of the EU Legal Order, is challenging a long held interpretation of a provision of the EU Treaties—ie the standing rules on Art 263 TFEU. On the other hand, the Court has consistently held that international agreements, and consequently IDS decisions, cannot affect the validity of the Treaties. Moreover, the General Court in Inuit has acknowledged that consistent interpretation cannot be used when interpreting Treaty provisions. Case T-81/10 Inuit Tapiriit Kanatam v Council, ECLI:EU:T:2011:419, [2011] ECR II-5599, paras 52–54. cf Mendez (n 40) 264. 103  On

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Since the EU will continue to conclude more international agreements with IDS provisions, at some point the Court will have to clarify some of the uncertainties on the effects of the primacy of IDS decisions. While the Court’s approach to the issue of the primacy of international law may be open to criticism,110 in p ­ rinciple the broad wording or programmatic nature of most international ­obligations might be the reason for not invalidating a piece of EU legislation in light of the former. Still, as IDS decisions begin to render the international obligations more concrete, the exact effects of the primacy of international law will need to be ­further specified.

V. Conclusions This chapter has shown how IDS decisions are incorporated into the EU legal order, what their hierarchical position is within EU law and what effects they will have once they have been considered an integral part of the EU legal order. This chapter has also shown that being an integral part of the EU legal order does not necessarily entail the extension of direct effect and primacy. Instead, these attributes will be based on the nature of the obligations contained in the IDS decision. Thus where, for instance, an IDS decision deals only with the pecuniary consequences of a breach of an international agreement (as will happen with the decision of the Investment Court), it will not be directly effective and will not be used to assess the validity of an EU act. The new FTAs highlight the fact that the dichotomous account of the legal effect of international law based on the special nature of both EU Association Agreements and the WTO is no longer tenable.111 The wide range of effects of international law in the EU legal order has already underlined this.112 At the same time, the new FTAs include WTO-like obligations, no-direct effect provisions and IDS provisions, challenging the traditional understanding on how the international law interacts with EU law. Finally, on the institutional side, it can be seen that the new FTAs aim at the dejudicialisation of the issue of the effects of international law. The EU institutions in their treaty-making practice are trying to make clear to the CJEU the effects that were agreed in the negotiations for those IDS. If the CJEU’s case law on the WTO was a way to preserve a certain institutional balance when it comes to the WTO, the new FTAs seem to further confirm that not all the effects of IDS decisions are for the Court to decide.

110 

Mendez (n 40) 103. On the special nature of the WTO as a self-contained regime see B Simma and D Pulkowski, ‘Of Planets and the Universe: Self-Contained Regimes in International Law’ (2006) 3 European Journal of International Law 519. 112  For recent analysis of this shift see Cannizzaro (n 9). 111 

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11 The Position of European Citizens in International Dispute Settlement ERNST-ULRICH PETERSMANN

I.  Introduction: Individuals and International Dispute Settlement The European Union (EU) participates in international dispute settlement proceedings mainly in the context of UN agreements (eg the International Tribunal for the Law of the Sea), World Trade Organization (WTO) agreements (the WTO dispute settlement system) and EU trade and investment agreements (eg third party intervention by the EU in investor–state arbitration). All these UN, WTO trade and investment agreements are approved by national and European parliaments so as to protect the transnational transactions (eg trade, investments, shipping) of EU citizens, for instance by providing ‘security and predictability to the multilateral trading system’ (Article 3 Dispute Settlement Understanding (DSU)), reducing private transaction costs and protecting individual rights and market access in the global division of labour. The EU Trade Barriers Regulation offers legal procedures empowering EU citizens to request diplomatic and legal protection by the EU vis-à-vis ‘illicit trade barriers’ by third countries. A large part of the more than 600 complaints submitted by General Agreement on Tariffs and Trade (GATT)/WTO members continues to be triggered indirectly by requests from industries on the basis of domestic legal safeguards, as reflected in the names of many GATT/WTO disputes (eg ‘Kodak/Fuji’, ‘Havana Club’, ‘EU bananas’, ‘Boeing/ Airbus aircraft disputes’ and disputes over genetically modified organisms). More importantly, the ‘dispute settlement system of the WTO’ (Article 3 DSU) prescribes and protects judicial remedies also for individuals and non-governmental actors in domestic legal systems, for instance in the field of GATT (Article X), the WTO Antidumping Agreement (Article 13), the WTO Agreement on Customs Valuation (Article 11), the Agreement on Pre-shipment Inspection (Article 4), the Agreement on Subsidies and Countervailing Measures (Article 23), the

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General Agreement on Trade in Services (Article VI GATS), the Agreement on Trade-Related Intellectual Property Rights (Articles 41–50, 59 TRIPS) and the Agreement on Government Procurement (Article XX). Violations of international trade, investment, transport and communication rules often affect the freedoms and welfare of EU citizens—for instance, the ‘freedom to conduct a business in accordance with Union law and national laws’ (Article 16 EU Charter of Fundamental Rights (EUCFR)) and the ‘right to own, use, dispose of and bequeath his or her lawfully acquired possessions’ (Article 17 EUCFR). Hence, judicial protection of ‘consistent interpretations’ of multilevel economic regulations and individual rights to invoke in domestic courts international rules protecting equal freedoms, non-discrimination and rule of law have been among the most successful EU principles for promoting rule of law inside and beyond the EU. Inside the European Economic Area (EEA) and in other EU free trade agreements (FTAs) with European countries, the ‘direct applicability’ of precise and unconditional trade rules has entailed that international trade disputes among states have rarely arisen in the Court of Justice of the European Union (CJEU) and the European Free Trade Association (EFTA) Court due to their avoidance through decentralised, de-politicised rule-enforcement by self-interested citizens. ‘Direct applicability’ of WTO rules in domestic legal systems (as required by Article XX of the WTO Agreement on Government Procurement), ‘consistent interpretation’ of WTO rules or their ‘indirect applicability’ by domestic courts (as justifiable by the above-mentioned WTO guarantees of judicial remedies and by Article XIV:4 WTO Agreement on good faith-implementation of WTO obligations) could similarly promote decentralised implementation of WTO rules by economic operators and domestic institutions, thereby preventing and de-politicising power-oriented dispute settlement proceedings with third WTO members.1 More importantly, rights-based participation of citizens in providing public goods (PGs) also promotes ‘participatory’ and ‘deliberative democracy’ and ‘republican virtues’; by empowering citizens to challenge abuses of public and private powers and related ‘governance failures’ as well as ‘market failures’, it helps to ‘constitutionalise’ and ‘socialise’ law, for example by empowering citizens as ‘republican guardians’ to transform the ‘law in the books’ into ‘law in action’ and social reality. Citizenship is a key element of the European integration process. According to Article 2 of the Treaty on European Union (TEU), the ‘Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights’. Hence, national and EU citizens are recognised in the EU as the legal subjects, constituent powers and ‘democratic principals’ vis-à-vis all constituted, limited government powers. Also ‘in its relations with the wider world, the Union shall uphold and promote its values … and contribute to the

1  cf EU Petersmann, The GATT/WTO Dispute Settlement System (Alphen aan den Rijn, Kluwer, 1997) 233 ff; C Heidfeld, Die denzentrale Durchsetzung des WTO-Rechts in der EU (Baden Baden, Nomos, 2012).

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protection of its citizens’ through, inter alia, ‘strict observance and the development of international law’ in order to protect international PGs as specified in Article 3 TEU. This emphasis on ‘freedom’ and multilevel protection of the ‘rule of law’ reflects the insight that equal freedoms of citizens—as the ‘first principle of justice’ according to Kantian and Rawlsian constitutional theories—cannot remain effective inside democracies without multilevel constitutional protection of equal freedoms in transnational and international human interactions as well. For instance, discriminatory import restrictions in violation of WTO rules are bound to discriminate between domestic importers and consumers by distorting market access, prices and market shares. Hence, it is because ‘(t)he problem of establishing a perfect civil constitution is subordinate to the problem of a law-governed external relationship with other states, and cannot be solved unless the latter is also solved’,2 that the Union’s action on the international scene shall be guided by the principles which have inspired its own creation, development and enlargement, and which it seeks to advance in the wider world: democracy, the rule of law, the universality and indivisibility of human rights and fundamental freedoms, respect for human dignity, the principles of equality and solidarity.3

The fundamental rights protected in the EUCFR and the related common market freedoms limit internal and external EU powers, including the EU’s external trade and investment restrictions. The EU’s customs union obligations under WTO law (eg Article XXIV) and EU law (Articles 30 ff of the Treaty on the Functioning of the European Union (TFEU)), the corresponding transnational rights of citizens (eg the ‘freedom to conduct a business in accordance with Union law’ pursuant to Article 16 EUCFR, individual judicial remedies pursuant to Article 47 EUCFR) and the constitutional commitments to ‘protection of its citizens’ and ‘free and fair trade’ in external relations (Article 3 TEU) can—and should—be construed as protecting also freedom and judicial remedies of EU citizens beyond EU borders, for instance by prohibiting discriminatory non-tariff trade barriers which would violate GATT/WTO obligations of the EU and its Member States. Empirical evidence confirms that the successful internal development of the EU (eg its common market law) was largely due to its multilevel judicial protection of fundamental freedoms, rule of law and democratic governance. Also the EU’s ‘foreign policy constitution’—as laid down, inter alia, in Articles 2, 3, 21 TEU and in the EUCFR—requires multilevel judicial protection of equal freedoms, ‘strict observance of international law’ and democratic governance so as to realise the explicit EU objective ‘to advance in the wider world: democracy, the rule of law …

2  I Kant, ‘Idea for a Universal History with a Cosmopolitan Purpose’ in H Reiss (ed), I Kant’s Political Writings (Cambridge, Cambridge University Press, 1991) 41, 47. 3  Art 21 TEU.

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and … human rights and fundamental freedoms’.4 Just as constitutional theories of justice and EU law recognise citizens as ‘agents of justice’ whose ‘inalienable rights’ and ‘constitutional contracts’ constitute limited government powers based on principles of ‘conferral’, ‘subsidiarity’ and ‘proportionality’ (as recognised in Article 5 TEU and in the EUCFR), the universal recognition of human rights by all UN Member States likewise requires interpreting international treaties and settling related disputes ‘in conformity with the principles of justice’, including also ‘human rights and fundamental freedoms for all’, as explicitly recognised in the 1969 Vienna Convention on the Law of Treaties (VCLT) (cf its Preamble and Article 31). Articles 2, 3, 21 TEU and the EUCFR justify legal presumptions that EU citizens are entitled to protection of their equal freedoms through ‘strict observance of international law’, including international dispute settlement (IDS) obligations of the EU and judicial remedies for ‘everyone’ (Article 47 EUCFR) against disproportionate restrictions and other violations of individual rights. In view of this, to what extent can it be justified that EU institutions assert freedoms to violate international treaty and dispute settlement obligations which national and European parliaments have approved for the benefit of EU citizens without conferring any powers on EU institutions to ignore ‘strict observance of international law’? UN and WTO institutions cooperate with non-governmental organisations (NGOs), national parliamentarians, business, the media and civil society in multilevel governance of PGs because UN and WTO ‘decisions affect the lives of ordinary men and women all over the world’;5 collective protection of global PGs depends on ‘public–private partnerships’ and on governmental cooperation with ‘intermediaries’ (eg based on limited delegation of powers, co-optation and ‘orchestration’ of joint projects). Is it proportionate and legally justifiable that EU trade politicians, since 2006, have systematically excluded individual rights and effective judicial remedies of citizens in FTAs concluded by the EU? The following Sections II to V argue that the fundamental rights of EU citizens require stronger legal and judicial protection in the EU’s external trade and investment regulations and related dispute settlement procedures so as to hold the limited powers of multilevel governance institutions legally, democratically and judicially more accountable vis-à-vis citizens as ‘democratic principals’ and ‘agents of justice’.

4  cf EU Petersmann, ‘The Foreign Policy Constitution of the European Union: A Kantian Perspective’ in U Immenga et al (eds), Festschrift für Ernst-Joachim Mestmäcker (Baden Baden, Nomos, 1996) 433–47; EU Petersmann, ‘Integrating Human Rights into EU Trade Relations—The EU as a Global Role Model?’ in T Takacs, A Ott and A Dimopoulos (eds), Linking Trade and Non-Commercial Interests: The EU as a Global Role Model? (CLEER Working Papers 2013/4) 15–26. 5  WTO Director-General M Moore in his opening speech to the first ‘Public Forum’ inside the WTO, which continues to be annually organised in the WTO since 2001 with participation of thousands of civil society representatives and NGOs; cf The WTO at 20: Challenges and Achievements (WTO, 2015) 81.

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II.  Protecting Individual Rights in the Multilevel WTO Dispute Settlement System The illegal EU import restrictions on bananas from 1992–2012—in spite of 15 GATT and WTO dispute settlement findings confirming their inconsistency with the GATT/WTO legal obligations of the EU—and the continuing EU import restrictions on biotech products and hormone-fed beef in violation of repeated WTO dispute settlement findings, illustrate the political weakness of EU institutions. They have violated their international and EU obligations of ‘strict observance of international law’ seemingly in response to interest-group pressures for illegal ‘protection rents’ (eg annually about 5 billion US dollars due to price increases for bananas) and for disregard for science-based risk-assessment obligations (eg for GMOs and growth hormones for beef). The EU’s return to WTO-consistent banana trading policies by the end of 2012 further confirmed that such trade-distorting, illegal restrictions of EU traders and consumers were neither consistent with ‘the principle of proportionality’ (Article 5 TEU) nor ‘necessary … to protect the rights and freedoms of others’ (Article 52 EUCFR). In the more than 60 complaints by adversely affected EU traders seeking judicial remedies in national courts and in the CJEU against the illegal banana trade restrictions and their redistribution of market shares and ‘protection rents’ for the benefit of EU importers of bananas from former colonies of some EU Member States, the CJEU accepted the EU Commission’s claim of ‘freedom of manoeuver’6 to violate international treaty obligations at the expense of EU citizens. The CJEU has also denied judicial remedies for third EU citizens who were adversely affected by lawful reprisals from WTO trading partners and requested compensation for the injury caused to EU ‘retaliation victims’ in response to arbitrary EU violations of WTO obligations.7 The CJEU extended its refusal to review the legality of EU acts in the light of the EU’s WTO obligations to other multilateral treaty and dispute settlement obligations of the EU as well (eg under the Law of the Sea Convention and the International Civil Aviation Organization), thereby confirming the 6  The tem ‘freedom of manoeuvre’ continues to be used by both the political EU institutions and the CJEU (eg in Joined cases C-120 and C-121/06 P FIAMM, ECLI:EU:C:2008:476, [2008] ECR I-6513, para 119) as the main justification for their disregard of legally binding UN conventions, WTO rules and WTO dispute settlement rulings. The most recent CJEU judgment (Case C-21/14 P Rusal, ECLI:EU:C:2015:494, judgment of 16 July 2015) justifies ‘the settled case-law of the Court that, given their nature and purpose, those (WTO) agreements are not in principle among the rules in the light of which the Court is to review the legality of measures adopted by the EU institutions’ also by the ‘lack of reciprocity’ by the EU’s most important trading partners (paras 38–39). 7  On the CJEU jurisprudence (eg in the FIAMM case (n 6)) denying individual rights (eg of ‘violation victims’) to invoke WTO rules in national and EU courts subject to the limited ‘Nakajima/Fediol exceptions’ (based on the ‘implementation principle’) that have only very rarely been applied, and on the judicial denial of claims (eg by ‘retaliation victims’) to compensation even in case of severe damage caused by EU breaches of WTO obligations, see A Thies, International Trade Disputes and EU Liability (Cambridge, Cambridge University Press, 2013).

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increasing reluctance by the CJEU to accept the jurisdiction of other international courts as a legal limitation on the jurisprudence of the CJEU.8 Past arguments invented by EU politicians for justifying their non-compliance with GATT/WTO legal and dispute settlement obligations and for preventing citizens from invoking GATT/WTO rules in domestic courts—such as the alleged indeterminacy of GATT obligations, the existence of GATT safeguard clauses, the reciprocity of trade liberalisation in GATT, and the political possibility of avoiding trade sanctions by third countries through voluntarily agreed compensation— lacked any convincing legal reasoning.9 They have been progressively abandoned in favour of political claims by EU institutions that the ‘nature and purpose of WTO law’ justify ‘freedom of manoeuver’ to violate WTO rules. Yet, such claims are inconsistent with — the unconditional GATT/WTO obligations to terminate illegal measures (eg as specified in the customary rules on state responsibility and enforced through the WTO DSU); — the deliberate lack of conferral of EU powers to engage in welfare-reducing violations of WTO rules, which all national parliaments and the European Parliament approved for the benefit of EU citizens so as to protect rule of law inside and beyond the EU; — the legal primacy of international agreements concluded by the EU—as ‘integral’ and ‘integrating parts’10 of the EU legal system—over other ‘secondary EU law’; — the often precise and unconditional nature of WTO guarantees of freedom of trade, non-discrimination and rule of law; and — the multilevel ‘nature and purpose’ of the GATT/WTO dispute settlement system, as illustrated by the explicit GATT/WTO legal obligations to protect legal and judicial remedies against GATT/WTO violations in domestic jurisdictions in order to provide ‘security and predictability’ for traders.11 The GATT/WTO jurisprudence of the CJEU further disregards: — the ‘constitutional mandate’ of EU courts (eg as specified in Articles 19 and 21 TEU) to ‘ensure that in the implementation and application of the Treaties 8  cf B de Witte, ‘A Selfish Court? The Court of Justice and the Design of International Dispute Settlement Beyond the European Union’ in M Cremona and A Thies (eds), The European Court of Justice and External Relations Law. Constitutional Challenges (Oxford, Hart Publishing, 2014) 33–46. 9  cf EU Petersmann, ‘Application of GATT by the Court of Justice of the European Communities’ (1983) 20 Common Market Law Reports 397. 10 This legal term for the ‘domestic law effects’ of international agreements concluded by the then European Community was coined by the CJEU in its Case 181/73, Haegeman v Belgium, ECLI:EU:C:1974:41, [1974] ECR 449. 11  cf EU Petersmann, ‘Why Do the EU and its Court of Justice Fail to Protect the “Strict Observance of International Law” (Article 3 TEU) in the World Trading System and in other Areas of Multilevel Governance of International Public Goods?’ in C Herrmann, B Simma and R Streinz (eds), European Yearbook of International Economic Law—Liber Amicorum for Horst G Krenzler (New York, Springer, 2015) 145–89.

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the law is observed’ so as to ‘ensure effective legal protection’ in the EU’s participation in multilevel governance of international PGs, like a rules-based world trading system; and — the ‘democratic’ and ‘republican functions’ of international ‘PGs treaties’, which, as increasing globalisation transforms national into global PGs that can be collectively supplied only through international treaties and their coherent domestic implementation, are taking over some of the functions of democratic legislation so as to protect ‘aggregate PGs’ for the benefit of citizens, for example by requiring ‘(e)ach Member (to) ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided in the annexed Agreements’ (Article XVI:4 WTO Agreement). According to the settled case law of the CJEU, ‘the principle of proportionality requires that acts of the EU institutions be appropriate for attaining the legitimate objectives pursued by the legislation at issue and do not go beyond what is necessary in order to achieve those objectives’.12 EU compliance with WTO guarantees of equal freedoms, non-discriminatory trade conditions and ‘strict observance of international law’ in mutually beneficial trade transactions offers more efficient, lawful policy instruments than discriminatory, welfare-reducing and illegal EU trade distortions in violation of WTO rules. At least in the trade policy area, EU constitutional law and the large ‘policy space’ reserved to the EU and EU Member States by their WTO obligations exclude ‘political question justifications’ of EU violations of WTO law that unnecessarily undermine the international ‘aggregate PG’ of a rules-based world trading and dispute settlement system to the detriment of EU citizens. The fact that, since 2006, the political EU institutions have systematically attempted to limit the rights and judicial remedies of EU citizens under FTAs13 confirms the broader political agenda behind the ‘legal disempowerment’ of EU citizens in EU external relations. The additional fact that the European Parliament has apparently never discussed this systemic exclusion of rights and judicial remedies of EU citizens under FTAs and other ‘PGs treaties’ illustrates the ineffectiveness of parliamentary control and defence of citizen interests in the trade policy area. Contrary to the claims by the EU institutions, the ‘nature and purpose’ of WTO rules requires ‘providing security and predictability to the multilateral trading system’ (Article 3 DSU) and individual access to justice for private economic actors that are adversely affected by illegal EU disregard for WTO law and dispute settlement rulings. When the GATT Secretariat hired me in 1981 as the first ‘legal officer’ ever employed by GATT, I was told that the GATT Director-Generals had so far not dared to establish a ‘GATT Office of Legal Affairs’ due to the opposition from the (then) European Community (EC) and its preference for political (ie power-oriented) rather than judicial settlement of the many GATT challenges 12 

cf Case C-59/11 Kokopelli EU:C:2012:447, and the case law cited in para 38. cf A Semertzi, ‘The Preclusion of Direct Effect in the Recently Concluded EU Free Trade Agreements’ (2014) 51 Common Market Law Review 1125–58. 13 

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of EC restrictions/distortions in agricultural trade. In the early 1980s, lawyers from the EC Legal Services were not allowed to participate in GATT panel procedures; and EC Trade Commissioner Willy de Clerq continued to give speeches stating that ‘GATT must never be transformed into a trade court’. Even after the successful conclusion of the Uruguay Round negotiations on the WTO and its DSU establishing a worldwide, compulsory jurisdiction for the settlement of WTO disputes, the EC Council Decision of 22 December 1994 on the conclusion of the WTO agreements claimed that ‘by its nature, the Agreement establishing the World Trade Organization, including the Annexes thereto, is not susceptible to being directly invoked in Community or Member State courts’.14 Just as, during the 1980s, EU trade politicians responded to industry pressures by concluding dozens of secretive ‘voluntary export restraint agreements’ in violation of GATT and EU law, the 20 years (1991–2012) of illegal EU import restrictions on bananas reflected the unwillingness of EU trade politicians—as inside a ‘banana republic’—to defend the rule of law vis-à-vis rent-seeking pressure groups. Other persistent violations of EU law, for example of the budget and debt disciplines imposed by Article 126 TFEU for the European Economic and Monetary Union, or of the ‘Schengen procedures’ for foreign asylum seekers and economic migrants, reveal systemic rule-of-law problems of periodically elected politicians inside the EU. The more the EU ‘law in the books’ is persistently violated, the weaker political institutions become (eg due to their ‘capture’ by rent-seeking interest groups that they have to satisfy to secure majority support), and the more EU citizens complain about the ‘democratic deficit’ of illegal EU actions that ignore the rules adopted by national and European parliaments for the benefit of citizens.15 Section III discusses how this disregard for fundamental rights and remedies of EU citizens has prompted increasing parliamentary and civil society opposition against EU FTAs and their provisions for investor–state arbitration in relations among transatlantic democracies.

III.  The EU’s Constitutional Requirement to Protect Citizens in IDS Similar to the definition of ‘constitutional democracies’ by their protection of human and fundamental rights, rule of law and democratic governance, the 14 

cf Petersmann (n 1) 21. cf J Zalc, ‘Overcoming Democratic Breakdown in the EU’, Fondation Robert Schuman, European Issues No 333 of 18 November 2014, at 1: according to the ‘Euro-barometer’ statistics, confidence of EU citizens in the EU was at its lowest ebb in 2014, the distance between EU institutions and EU citizens having continuously widened. This was illustrated by the low turnout and participation by citizens in the 2014 elections of the European Parliament: ‘citizens believe that their voices are not taken into account by the EU, which they consider to be removed from their concerns and lacking in transparency’. The ‘Brexit’ referendum of June 2016 in the UK and increasing disregard for fundamental rights in some EU Member States (like Hungary and Poland) reflect the continuing ‘legitimacy crises’ inside the EU. 15 

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explicit extension of this ‘constitutional trias’ to the EU’s external actions (eg in Articles 3 and 21 TEU, and the EUCFR) can be construed as a ‘foreign policy constitution’ of the EU that is supplemented by additional constitutional limitations of EU foreign policy powers, for instance: —— in the national and EU legal systems (eg the principles of conferral, subsidiarity, proportionality, human rights and ‘the constitutional traditions common to the Member States’ as ‘general principles of the Union’s law’ pursuant to Articles 5 and 6 TEU); and also —— in international law in view of the EU obligations under UN, WTO and regional law to protect equal freedoms, rule of law and other international PGs beyond states, with legal primacy of such international law obligations— as an ‘integral part’ of the EU legal system—over unilateral EU secondary legislation. The deliberate non-conferral of EU powers to violate international treaties protecting international PGs reflects the insight that ‘strict observance of international law’ (Article 3 TEU) is a necessary policy objective for protecting ‘aggregate PGs’ inside and beyond the EU.16 The lack of an EU mandate to violate EU agreements (eg the WTO Agreement) ratified by national and EU parliaments for the benefit of citizens also follows from the principle of proportionality, according to which ‘the content and form of Union action shall not exceed what is necessary to achieve the objectives of the Treaties’ (Article 5(4) TEU). Just as —— the EU’s multilevel legal protection of human rights in its external relations (eg by including ‘human rights clauses’ into more than 130 trade and cooperation agreements with third countries) strengthens civil society struggles for human rights and rule of law in transnational relations; and —— the multilevel judicial protection of human rights and rule of law (eg by means of the Kadi-jurisprudence of the CJEU and the ‘Solange-jurisprudence’ of national constitutional courts and of the European Court of Human Rights (ECtHR)) limits power politics by ‘cosmopolitan constitutionalism’, so can multilevel judicial cooperation in IDS protect equal rights of EU citizens to ‘strict observance of international law’ within a framework of ‘republican constitutionalism’ limiting EU violations of international treaties protecting PGs, as demanded by citizens and their democratic institutions.

16  cf also Art 5(2) TEU: ‘under the principle of conferral, the Union shall act only within the limits of the competences conferred upon it by the Member States in the Treaties to attain the objectives set out therein. Competences not conferred upon the Union in the Treaties remain with the member States’. On multilevel governance of transnational ‘aggregate PGs’ see EU Petersmann, Multilevel Constitutionalism for Multilevel Governance of Public Goods. Methodology Problems in International Law (Oxford, Hart Publishing, 2016).

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A. EU Constitutional Safeguards of Individual Freedoms Do Not Depend on Reciprocity EU constitutional guarantees to ‘everyone’ of ‘an effective remedy before a tribunal’ are not conditioned on reciprocity (cf Article 47 EUCFR). Human rights law (HRL) and European constitutional law provide that ‘(a)ny limitation on the exercise of the rights and freedoms recognized by this Charter must be provided for by law and respect the essence of those rights and freedoms’ subject to constitutional safeguards of ‘necessity’ and ‘proportionality’ (Article 52 EUCFR). This constitutional justification must be respected by national and EU institutions also in the external relations law of the EU whenever individual freedoms, such as the economic freedoms ‘to choose an occupation’ (Article 15), ‘to conduct a business in accordance with Union law’ (Article 16), and to own and use private property (Article 17 EUCFR), are protected by EU constitutional law across national and EU frontiers. In a multilevel rule of law community with constitutionally limited powers committed to ‘protection of its citizens’ and ‘strict observance of international law’ also in the EU’s external relations (Article 3 TEU), the ‘consistent interpretation’ requirements of EU law and international law require national and EU courts to protect transnational rights of citizens with due regard to IDS rulings binding on the EU and its Member States, as recognised in the jurisprudence of national constitutional courts requiring interpretation of fundamental rights with due regard to their interpretation and protection by the CJEU and by the ECtHR.17 The shared legal obligations and ‘constitutional functions’ of national, EU and international dispute settlement bodies to interpret treaties and settle related disputes ‘in conformity with the principles of justice and international law’, including also ‘universal respect for human rights and fundamental freedoms for all’ (Preamble and Article 31 VCLT), require multilevel judicial comity in their common mission of administrating justice, including ‘individual justice’ for citizens participating in mutually beneficial transnational cooperation and protection of PGs. EU law requires balancing state-centered and person-oriented ‘principles of justice’ with due respect for ‘due process of law’ guarantees and judicial remedies in the EU’s external relations so as to ‘support democracy, the rule of law, human rights’ and ‘consistency’ between its internal and external actions, as required by Article 21 TEU and by its call to protect civil society cooperation and democratic self-government among free and equal citizens beyond national frontiers, notably in the global division of labour and in related ‘compliance communities’ benefiting from transnational rule of law. As: —— EU citizens and national ‘peoples’ remain the ‘constituent power’ and ‘democratic principals’ in the EU;

17 

cf the judgment by the German Constitutional Court in Görgülü v Germany (2004) 2 BvR 1481/04.

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—— the European Parliament exercises only limited legislative, budgetary and political powers (cf Article 14 TEU), and —— ‘the Union is founded on the indivisible, universal values of human dignity, freedom, equality and solidarity’, ‘the principles of democracy and the rule of law’, and ‘places the individual at the heart of its activities’ (Preamble EUCFR), ‘constitutional’ and ‘cosmopolitan interpretations’ of EU law ‘fit better’ with its multilevel constitutional structures than statist, power-oriented paradigms of foreign politics. EU trade diplomats put forward the policy argument that they exclude individual rights to invoke FTA provisions and WTO legal obligations in domestic courts in view of the similar practices in the EU’s trading partners like Canada, Singapore and the US. This is inconsistent with the EU’s ‘foreign policy constitution’, just as EU denial of protection of human rights and labour rights in the context of FTAs cannot be justified on the ground that foreign trading partners (like the US) have not ratified many of the UN human rights and ILO labour rights conventions that have been ratified by EU Member States.

B. The EU’s Obligation to Protect Equal Freedoms, Rule of Law and Effective Judicial Remedies in IDS Various provisions in the treaties underline the obligations of the EU that are relevant for the protection of citizens’ rights. Arguably, these obligations are equally relevant in situations of IDS. Article 2 TEU and the EUCFR prioritise human dignity and equal freedoms as foundational values of the EU. EU constitutional law—and also its rule-of-law requirements—can be construed in conformity with liberal constitutional theories (eg from Kant to Rawls) as protecting equal freedoms as ‘first principle of justice’; limitations of the rights to dignity, freedom, equality, solidarity, citizen rights and rights to access to justice protected by the EUCFR ‘may be made only if they are necessary and genuinely meet objectives of general interest recognized by the Union or the need to protect the rights and freedoms of others’ (Article 52 EUCFR). Hence, ‘(e)veryone whose rights and freedoms guaranteed by the law of the Union are violated has the right to an effective remedy before a tribunal’ (Article 47 EUCFR). Also, the institutional guarantees in Article 19 TEU—ie the ‘Court of Justice of the European Union … shall ensure that in the interpretation and application of the Treaties the law is observed … Member States shall provide remedies sufficient to ensure effective legal protection in the fields covered by Union law’—must serve the equal freedoms and other rights of citizens as the ‘democratic principals’ of all EU institutions. Citizens, not EU trade diplomats, are the ‘agents of justice’ and ‘democratic principals’ of EU law and the main economic actors and beneficiaries of the WTO trading and legal system. They should

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be recognised by the EU institutions as being entitled to ‘strict observance of international law’ and of IDS rulings protecting transnational rule of law in the collective supply of PGs for the benefit of citizens. The republican history of European democracies teaches that PGs (res publica) depend on the empowerment of citizens to participate in the collective supply of PGs, for instance by holding government agents accountable for illegal interferences into ‘negative’ and ‘positive freedoms’ of citizens so as to prevent arbitrary domination. Article 3 TEU states that the ‘Union’s aim is to promote peace, its values and the well-being of its peoples’ and specifies these objectives by a list of PGs (like the internal market, the ‘area of freedom, security and justice’, a ‘highly competitive social market economy’, an economic and monetary union). This reflects the republican nature of EU law, ie citizens and peoples confer limited powers to EU institutions in order to protect PGs beneficial for all EU citizens. Articles 3 and 21 TEU explicitly commit the EU to ‘republican constitutionalism’ (eg ‘democracy, the rule of law, human rights and fundamental freedoms’ and other specific PGs) in its external relations. Similarly, the EU’s specific foreign policy mandates emphasise the need to respect ‘uniform principles’ (Article 207 TFEU) and to define agreed PGs such as ‘progressive abolition of restrictions on international trade and on foreign investments’ (Article 206 TFEU) in the context of the EU’s common commercial policy, or ‘reduction and … eradication of poverty’ as a ‘primary objective’ of the EU’s development cooperation policy (Article 208 TFEU). International agreements concluded by the EU (eg the WTO Agreement) are approved by parliaments for the benefit of citizens in order to protect international PGs. This entails that political and academic claims—such as that ‘the EU’s external objectives lack a telos’ and ‘the EU’s external policy objectives are non-teleological, non-prioritised, open-ended, and concerned more with policy orientation than goal-setting’18— are inconsistent with the text, context and declared objectives of EU constitutional law. The more that the EU engages in ‘Hobbesian power politics’, the more even EU lawyers question whether the EU’s ‘cosmopolitan foreign policy constitution’ reflects ‘unrealistic idealism’.19 Similarly, some political scientists argue that the EU has evolved into a ‘civilian normative power’ that is progressively transforming the ‘Westphalian system’ of ‘international law among sovereign states’ for the benefit of more than 500 million EU citizens cooperating in the common market and in a transnational rule of law system protecting human rights, democratic peace, a ‘social market economy’ and other PGs. However, other observers describe the reality of the EU’s external policies as ‘power politics in disguise’.20

18  cf M Cremona, ‘A Reticent Court? Policy Objectives and the Court of Justice’ in Cremona and Thies (n 8) 29, 31. 19  cf B de Witte, ‘Too Much Constitutional Law in the EU’s Foreign Relations?’ in M Cremona and B de Witte (eds), EU Foreign Relations Law—Constitutional Fundamentals (Oxford, Hart Publishing, 2008) 3 ff. 20  cf T Forsberg, ‘Normative Power Europe, Once Again: A Conceptual Analysis of an Ideal Type’ (2011) 49 Journal of Common Market Studies 1183 ff; EU Petersmann, ‘How to Evaluate the EU as a Normative Power in Multilevel Governance of Public Goods?’ in C Kaddous (ed), The EU in International Organizations and Global Governance (Oxford, Hart Publishing, 2015) 237–62.

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C. Increasing Disempowerment of EU Citizens in the EU’s External Relations and IDS? Empirical evidence suggests that inadequate protection of rule of law inside some EU Member States (like Bulgaria, Greece and Romania), in some areas of EU integration (like the Euro-zone, illegal financial disbursements by EU institutions as annually documented by the EU Court of Auditors), and in some external EU policies (eg persistent disregard for some WTO legal obligations and for the ‘Schengen rules’ regarding treatment of foreign immigrants and asylum seekers) undermines the trust of EU citizens in the democratic legitimacy of EU law. Persistent EU violations of IDS rulings against the EU (eg in the GATT/WTO ‘banana disputes’ 1992–2012) and EU denial of effective judicial remedies of citizens reflect the prevailing ‘political realism’ advocated by EU politicians in order to limit their own accountability. This chapter has argued that, as such welfare-reducing treaty violations are neither ‘necessary’ nor ‘proportionate’ instruments for realising legitimate EU policy objectives, citizens and courts of justice must continue to challenge the widening gap between the ‘EU law in the books’ and actual EU legal practices, so as to enhance the EU’s ‘democratic capabilities’ to comply with the rule of law. ‘Democratic capabilities’ depend on the ‘public reason’ prevailing in political institutions. Rights-based empowerment of citizens is not only a matter of justice and of promoting ‘republican virtues’ and ‘democratic vigilance’ against abuses of governance powers. ‘Countervailing rights’ of adversely affected citizens are also the most efficient, decentralised instrument for counteracting the rule violations which EU institutions ignore. Constitutional rules cannot become effective unless they are transformed into democratic legislation, effective administration and judicial protection of individual rights of citizens. Persistent violations of the budget and debt disciplines in Article 126 TFEU undermined the EU’s ‘monetary constitution’, and persistent violations of the ‘Schengen procedures’ continue to erode the EU’s ‘area of freedom, security and justice’. In the same way, persistent EU violations of IDS obligations (notably under WTO law) undermine the ‘foreign policy constitution’ of the EU and, thereby, also the related international PGs (eg a non-discriminatory world trading, legal and dispute settlement system protecting individual access to justice and compliance with WTO law). The extension of ‘EU power politics’ (ie top-down restrictions of equal freedoms of citizens without constitutional justification and without effective judicial remedies) to the dispute settlement systems of UN agreements (eg the Law of the Sea Convention, the International Air Transport Agreement) and to newly negotiated FTAs reveals a ‘systemic disregard for EU citizens’. For instance, after five years of secretive FTA negotiations with Canada, EU citizens could discover on page 470 of this ‘Comprehensive Economic and Trade Agreement’ (CETA) published on 26 September 2014 that, according to Article 14.16, ‘nothing in this Agreement shall be construed as conferring rights … on persons other than those created between the Parties under public international law, nor as permitting this Agreement

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to be directly invoked in the domestic legal systems of the Parties’. Such ‘anti-citizen clauses’ (as confirmed in Article 30.6 of the revised CETA text of 2016) and investor–state arbitration privileges for foreign investors—even in FTAs among democracies—deny citizens any effective legal and judicial remedies in domestic courts against treaty violations which adversely affect citizens. Judicial challenges of illegal import restrictions—which enabled citizens to protect transnational rule of law inside the EU and the EEA—are persistently excluded in the EU’s FTAs with non-European countries, notwithstanding the rights of citizens ‘to an effective remedy and to a fair trial’ as protected in Article 47 EUCFR. Affording only foreign investors ‘judicial privileges’ in the form of investor–state arbitration or alternative international investment tribunals entails ‘negative discrimination’ of EU citizens and a ‘re-feudalisation’ of the EU’s commercial and investment policies, thereby undermining transnational rule of law and judicial remedies for adversely affected EU citizens. As CETA regulates also specific product, production and consumer protection standards, the lack of effective judicial accountability and remedies risks distorting trade and competition and harming important consumer interests, as illustrated by persistent violations of automobile and environmental emission standards. In response to questions of why, since 2006, EU FTAs exclude private rights of citizens and ‘direct applicability’ of FTA provisions, EU trade diplomats admit their self-interest in following the power-oriented trade policy traditions of third states so as to avoid legal, judicial and democratic accountability of EU trade diplomats vis-à-vis EU citizens.21 Yet, such EU power politics is inconsistent with Articles 2, 3 and 21 TEU and with the ‘principal-agent-relationship’ underlying EU constitutional law aimed at protecting rights of citizens, including their modern entitlement ‘to a social and international order in which the rights and freedoms set forth in this Declaration can be fully realized’ (Article 28 of the 1948 Universal Declaration of Human Rights (UDHR)). References to foreign power politics by the EU’s trading partners (eg the US) do not justify denying constitutional rights of EU citizens in the different context of multilevel EU governance of PGs. In contrast to the EU’s trading partners outside Europe, national constitutions in EU Member States are increasingly transformed into ‘cosmopolitan constitutions’ recognising and protecting transnational rights of citizens and of democratic parliaments in their transnational cooperation in European integration.22 The functionally limited, multilevel foreign policy constitution of the EU, as an international organisation with limited powers, differs from that of foreign countries in three important ways: —— The external relations powers of the EU are constitutionally restrained to collective supply of enumerated PGs (eg in Articles 2, 3 and 21 TEU). While 21  cf EU Petersmann, ‘Transformative Transatlantic Free Trade Agreements without Rights and Remedies of Citizens?’ (2015) Journal of International Economic Law 579 ff. 22  For a survey see J Larik, Worldly Ambitions. Foreign Policy Objectives in European Constitutional Law, Florence: EUI doctoral thesis 2013, ch II; A Somek, The Cosmopolitan Constitution (Oxford, Oxford University Press, 2014).

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‘parliamentary sovereignty’ and monarchical governance remain possible inside nation states (like the UK), the EU is functionally limited to ‘multilevel, republican governance’ for the benefit of EU citizens as ‘democratic principals’ in internal as well as external EU relations. —— EU law rightly recognises that collective supply of international PGs (eg those listed in Article 21 TEU) protecting the equal rights of EU citizens depends on ‘strict observance of international law’ and EU participation in international agreements that ‘are binding upon the institutions of the Union and on its Member States’ (Article 216 TFEU). —— The EU is constitutionally committed to ‘the protection of its citizens’ and ‘protection of human rights’ (Article 3 TEU), which also limits the exercise of its foreign relations powers in IDS. This cosmopolitan constitutionalism reflects Europe’s long-standing, constitutional experience that collective protection of PGs depends on republican rights of citizens to hold government agents legally, democratically and judicially accountable.23

IV. From International to Multilevel Dispute Settlement in the EU’s External Relations Law? Sections I to III of this chapter have concluded that the cosmopolitan functions of EU external relations law and its constitutional limitation to ‘strict observance of international law’ (Article 3 TEU) require limiting path-dependent, state-centered IDS conceptions by multilevel, person-oriented dispute settlement protecting the constitutional rights of EU citizens. In citizen-driven areas of transnational economic, democratic and civil society cooperation, the EU’s subsidiarity requirement— ie ‘to ensure that decisions are taken as closely as possible to the citizens of the Union’ (cf Article 1 and the TEU Protocol on the Application of the Principles of Subsidiarity and Proportionality)—reflects the historical lessons from centuries of civil society struggles for republican constitutionalism, ie that multilevel judicial cooperation in commercial, common market, human rights and criminal law and adjudication can protect equal rights of citizens, judicial remedies and transnational rule of law more effectively across national frontiers than intergovernmental power politics. The customary law requirement to interpret treaties, and settle related disputes, ‘in conformity with the principles of justice and international law’, including

23  On the diverse legal traditions of republicanism and of its core values—such as liberty (nondomination), republican virtues of active citizenry finding self-realisation in political participation and collective supply of PGs, communitarianism, political equality, deliberative democracy, see Petersmann (n 16); S Besson and J Luis Marti (eds), Legal Republicanism: National and International Perspectives (Oxford, Oxford University Press, 2009).

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also ‘human rights and fundamental freedoms for all’ (cf Preamble and Article 31:3 VCLT), requires interpreting the foreign relations law of the EU consistently with the fact that ‘human rights and fundamental freedoms for all’ (eg individual access to justice), rule of law, democratic governance and ‘consistent interpretation’ requirements have become integral principles of national, EU and UN legal obligations of EU Member States. Even if third UN/WTO Member States do not effectively protect such ‘principles of justice’ inside their domestic legal systems, the EU’s unique multilevel constitutionalism requires ‘strict observance of international law’ for the benefit of EU citizens. Articles 3 and 21 TEU call on EU institutions to exercise leadership for mutually coherent, multilevel ‘rule of law policies’, including EU respect for the GATT/WTO legal requirements of multilevel, legal and judicial protection of economic freedoms, non-discrimination, rule of law and access to justice at both international and national levels of governance.24 As national and EU parliaments ratify UN and WTO agreements as representatives of EU citizens entitled to rules-based, democratic protection of PGs, the coherence and ‘consistent interpretation’ requirements of national, EU and also UN/WTO legal systems should be construed in the EU external relations law for the benefit of EU citizens, for instance as empowering and protecting EU citizens in their ‘cosmopolitan roles’ as producers, workers, investors, traders and consumers cooperating in the global division of labour and benefiting from nondiscriminatory conditions of competition promoting consumer welfare. For the reasons explained by the CJEU (eg in the Kupferberg and Kadi cases), EU compliance with welfare-increasing trade and human rights obligations protecting equal freedoms as ‘first principle of justice’ should not be made conditional on whether third countries offer the same judicial remedies inside third countries. Such judicial protection of domestic citizens does not affect the EU powers under international law (eg WTO law) to suspend treaty obligations in response to treaty violations by third states.25

A. Need for Person- rather than State-centred ‘Proportionality Balancing’ in IDS The universal recognition of human rights and ‘democratic constitutionalism’ prompt ever more national and international courts to limit ‘power-oriented conceptions’ of ‘international law among states’ by person-oriented ‘proportionality 24  cf Petersmann (n 1) 194 ff, 233 ff. The recent CJEU judgment in Case C-21/14 (n 6) confirmed that the ‘Fediol’- and ‘Nakajima’-exceptions of applying precise and unconditional WTO obligations— provided the EU legislator has specifically transformed them into EU law or ordered their internal applicability—continue to be construed very restrictively by EU courts. Most European lawyers ignore the multilevel nature of the WTO dispute settlement system and the customary law requirement of interpreting treaties ‘in conformity with principles of justice’. 25  cf Reg (EU) No 654/2014 of 15 May 2014 concerning the exercise of the Union’s rights for the application and enforcement of international trade rules [2014] OJ L189/50.

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balancing’ protecting rights of citizens and democratic self-determination. Examples include, inter alia: — the ICJ jurisprudence on interpreting Article 36 of the Vienna Convention on Consular Relations as conferring on individuals the right to receive consular assistance and justifying legally binding ‘provisional measures’ by the ICJ in order to protect human rights pending the ICJ decision on the merits;26 — the annulment of investment arbitral awards interpreting treaty provisions on ‘necessity’ in the light of the restrictive customary rules on state responsibility by ICSID annulment committees on the ground that ‘proportionality balancing’—as a ‘general principle of law’—offers a more appropriate legal methodology for balancing all public and private interests involved on the basis of ‘suitability’, ‘necessity’ and ‘proportionality stricto sensu’, as practised by ever more national and international courts throughout the world;27 — the WTO jurisprudence balancing rights of governments with rights of exporters to ‘fair price comparisons’ in the calculation of antidumping duties28 and, more generally, to ‘basic fairness and due process’ in the administration of trade regulations;29 and — the jurisprudence of regional economic and human rights courts (like the CJEU, the EFTA Court and the ECtHR) reviewing economic restrictions in the light of human rights and fundamental freedoms of adversely affected citizens.30 The increasing cooperation between national and international courts—for instance, in the context of preliminary ruling procedures (eg in the EU), preliminary advisory opinion procedures (eg in the EEA and in the South-American Common Market (MERCOSUR)), recognition and enforcement of arbitral awards and foreign judgments based on worldwide and regional treaties, related judicial dialogues, comity and judicial restraint—responds to this need for protecting individual rights in IDS by judicial ‘balancing’ of state-centred and person-centred interpretations of multilevel regulation of PGs with due regard to the constitutional requirement of interpreting treaties and settling related disputes ‘in conformity with the principles of justice’, including ‘human rights and fundamental freedoms for all’. Even if citizens and governments often disagree on how to define procedural and substantive ‘principles of justice’, the increasing number of national and international courts of justice, as exemplars of transparent and principle-oriented ‘public reasoning’, must promote ‘public reason’ by reviewing 26 

cf eg LaGrand, Germany v USA, Judgment of 27 June 2001, ICJ Reports 2001, at 466 ff. cf A Stone Sweet and G della Cananea, ‘Proportionality, General Principles of Law, and InvestorState Arbitration: A Response to José Alvarez’ (2014) 46 New York University Journal of International Law and Politics 911. 28  On the ‘zeroing jurisprudence’ of the WTO Appellate Body see: WT/DS294/AB/R, adopted on 9 May 2006; WT/DS322/AB/R, adopted 23 January 2007. 29  US—Shrimps, WT/DS58/AB/R, adopted on 6 November 1998. 30  See the overview of case law in EU Petersmann, International Economic Law in the 21st Century. Constitutional Pluralism and Multilevel Governance of Interdependent Public Goods (Oxford, Hart Publishing, 2012) ch VIII. 27 

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power-oriented ‘intergovernmentalism’ and majority politics, including through ‘judicial dialogues’ and justification of judgments vis-à-vis citizens in terms of ‘principles of justice’ explaining the impact of human rights on multilevel governance of international PGs and related IDS.

B. Promoting ‘Republican Compliance Communities’ Through ‘Cosmopolitan Constitutionalism’ Perhaps the most important political and legal lessons from the 2,500 years of civil society struggles since the ancient Athenian democracy and Roman republic remains that democratic participation in ‘republican constitutionalism’ promotes not only the ‘input-legitimacy’ of the ‘law in the books’, but also the ‘outputlegitimacy’ and effectiveness of the ‘law in action’ and protection of PGs. Also in international commercial, trade and investment law, criminal and maritime law, HRL and intellectual property law and adjudication, the increasing number of international courts and of their case-load31 were responses to demands from civil society and related ‘legal communities’ for limiting ‘governance failures’ through international courts, whose protection of legal remedies of citizens enhanced transnational rule of law and other ‘principles of justice’. Empowering citizens to participate in transnational supply of ‘aggregate PGs’ (eg as producers, traders, investors, consumers, Internet users, human rights and regional integration advocates) and to enforce their private and public rights (eg citizenship rights to participate in the election and work of national and regional parliaments, individual access to international courts of justice) has proven to be the most important driving force for ‘constitutionalising’ legal systems by transforming constitutional and legislative rules and principles into multilevel administrative and judicial cooperation (eg among national courts, the CJEU, the EFTA Court, the ECtHR and transnational arbitration) and collective protection of transnational PGs.32 As violations of the law create adverse ‘externalities’, countervailing rights and judicial remedies of adversely affected citizens tend to be the most efficient legal methods for preventing and ‘internalising’ such adverse effects, promoting legal 31  cf G De Baere and J Wouters (eds), The Contribution of International and Supranational Courts to the Rule of Law (Cheltenham, Edward Elgar, 2015); K Alter, The New Terrain of International Law: International Courts in International Politics (Princeton, Princeton University Press, 2013). 32  On the increasing recognition of transnational economic, labour, social and political citizenship rights (eg in the EU, the EEA, the Andean Community, MERCOSUR, the Central American Common Market, the Economic Community of West-African States, the Gulf Cooperation Council) and of regional parliamentary institutions see C Closa and D Vintila, Supranational Citizenship: Rights in Regional Integration Organizations (unpublished conference paper, EUI Florence 2015). EU citizenship, free movement of persons beyond state borders (eg due to liberalisation of services), multilevel parliamentarianism, and recognition of transnational rights of migrants (eg to take up employment and receive social security benefits while residing in another common market member country) are no longer ‘unique European experiments’ in rights-based integration law. Their ‘enabling’, ‘legitimating’, ‘enforcement’ and ‘republican functions’ (eg as decentralised means for limiting implementation deficits of PGs regimes) are increasingly recognised in African, Latin American and Central American integration regimes.

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accountability and ‘republican values’ like rule of law protecting equal freedoms of citizens. Linking IDS in the external relations of the EU to regional and domestic legal and judicial remedies of citizens is—as rightly prescribed in Article 3 TEU— the most effective constitutional approach to protecting rule of law in multilevel governance of PGs. By invoking their rights of ‘access to justice’,33 to justification of governmental restrictions of equal freedoms,34 and to mutually consistent interpretation and multilevel protection of ‘PGs agreements’ ratified by parliaments, citizens and courts of justice can limit majoritarian power politics and engage in impartial and independent, judicial dialogues about how to protect transnational PGs in multilevel governance of PGs.

V.  Conclusion: The EU’s ‘Cosmopolitan Foreign Policy Constitution’ Requires ‘Protection of its Citizens’ in IDS In its Opinion 2/13 on EU accession to the European Convention on Human Rights, the CJEU emphasised the need for protecting ‘the autonomy of EU law in the interpretation and application of fundamental rights’: ‘fundamental rights, as recognized in particular in the Charter, must be interpreted and applied within the EU in accordance with the constitutional framework’ of EU law.35 This contribution has argued that the EU’s rights-based ‘foreign policy constitution’ also requires autonomous ‘protection of its citizens’ (Article 3 TEU) through interpreting IDS in multilevel governance of transnational ‘aggregate PGs’ as protecting individual rights in conformity with the multilevel guarantees of individual ‘access to justice’ in EU law, WTO law and UN law even if third states do not reciprocate due to state-centered conceptions of IDS. As discussed in section IV, courts of justice increasingly acknowledge that the universal recognition of human rights, constitutionalism (eg ‘proportionality principles’) and duties to protect international PGs justify ‘constitutional interpretations’ of treaty rules as protecting also rights of citizens in IDS: [T]he fact that certain provisions of the Treaty are formally addressed to the Member States does not prevent rights from being conferred at the same time on any individual who has an interest in compliance with the obligations thus laid down.36 33  cf R Forst, The Right to Justification. Elements of a Constructivist Theory of Justice (New York, Columbia University Press, 2012); AA Cançado Trindade, The Access of Individuals to International Justice (Oxford, Oxford University Press, 2011). 34  See Art 52 of the EUCFR and, similarly, Art 29(2) UDHR: ‘In the exercise of his rights and freedoms, everyone shall be subject only to such limitations as are determined by law for the purpose of securing due recognition and respect for the rights and freedoms of others and of meeting the just requirements of morality, public order and the general welfare in a democratic society.’ 35  Opinion 2/13 of the Court of 18 December 2014, ECLI:EU:C:2014:2454, paras 177–78. 36  cf Case 43/75 Defrenne v Sabena, ECLI:EU:C:1976:56, [1976] ECR 455, para 31; Case C-281/98, Angonese, ECLI:EU:C:2000:296, [2000] ECR I-4139.

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Just as collective protection of transnational PGs inside the EU has depended on multilevel judicial protection of rule of law and fundamental rights of citizens, the transformation of ever more national and regional PGs into global ‘aggregate PGs’ (like a rules-based, liberal world trading system) requires extending ‘republican’ and ‘cosmopolitan constitutionalism’ to multilevel governance of PGs, including judicial protection of transnational rule of law and of constitutional rights of citizens through IDS. The EU’s ‘cosmopolitan foreign policy constitution’ recognises these constitutional needs. EU practices, however, fail to prevent EU politicians and government executives from pursuing rational self-interests in limiting their legal, democratic and judicial accountability vis-à-vis citizens in the foreign policy area. EU lawyers and courts of justice unduly neglect the customary law requirement of limiting state-centred ‘principles of justice’ by protection of constitutional and cosmopolitan rights of citizens in mutually beneficial, international cooperation.37 The more that international PGs and related rights of citizens can be protected only through international agreements ‘binding upon the institutions of the Union and on its Member States’ (Article 216 TFEU), the stronger becomes the need for limiting ‘collective action problems’ by corresponding rights of citizens to judicial protection of transnational rule of law in conformity with ‘PGs treaties’ approved by parliaments in order to extend principles of equal freedoms, non-discrimination and judicial protection of rule of law to mutually beneficial, transnational cooperation among citizens (like the WTO Agreement protecting a rules-based global division of labour). Article 21 TEU and other external relations provisions acknowledge that collective supply of global ‘aggregate PGs’ depends on multilevel respect for ‘intermediate PGs’ like ‘democracy, the rule of law, human rights and the principles of international law’ (Articles 2, 21 TEU) in order to coherently protect the EU’s ‘values, fundamental interests, security, independence and integrity’ (Article 21). These values include multilevel legal and judicial protection of cosmopolitan rights of EU citizens, as recognised in the individual ‘freedom to conduct a business in accordance with Union law’ (Article 16 EUCFR) and everyone’s ‘right to an effective remedy’ (Article 47 EUCFR). Hence, similar to the multilevel, legal and judicial protection of ‘market freedoms’ inside federal states and for the benefit of ‘market citizens’ inside the EU and EEA, HRL and EU law require protecting EU citizens and their cosmopolitan rights also in multilevel governance of ‘aggregate PGs’ beyond Europe.38

37  cf n 6 and eg H Ruiz Fabri, ‘Is There a Case—Legally and Politically—for Direct Effect of WTO Obligations?’ in Jean Monnet Working Paper 9/2014 (discussing ‘direct effect’ of WTO rules without regard to EU law, the WTO guarantees of individual access to justice and the customary rules of treaty interpretation). 38  cf EU Petersmann, Constitutional Functions and Constitutional Problems of International Economic Law: International and Domestic Foreign Trade Law and Policy in the United States, the European Community and Switzerland (Fribourg University Press/Boulder Publishers, 1991); this book explained why the constitutional legitimacy of multilevel guarantees of equal freedoms, non-discrimination,

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Apologetic ‘Hobbesian claims’—such as that authoritarian top-down governance is justified by the incapacity of human beings to maintain peaceful, democratic order (homo homini lupus est), like claims by ‘radical puralists’ that ‘law is incapable of providing convincing justifications to the solution of normative problems’39—are inconsistent with EU law and HRL, both of which have refuted Koskenniemi’s assertion that ‘no coherent normative practice arises from the assumptions on which we identify international law’.40 The ‘new strategy’ advocated by EU trade commissioner Malmström in response to the EU citizen protests against the secretive FTA negotiations confirms, once again, that struggles for justice by EU citizens may contribute to transforming an ‘international community of states’ (Article 53 VCLT) into a cosmopolitan community of citizens, peoples and democratic governments respecting their legal duties to ‘uphold and promote’ the EU’s internal values and ‘contribute to the protection of its citizens’ (Article 3(5) TEU) also in multilevel governance of global PGs. European integration law reflects the unique experience that democratic protection of national and European PGs was most successful if it combined constitutional, representative, participatory and deliberative democracy in ways holding legislative, administrative and judicial government institutions democratically, legally and judicially accountable vis-à-vis citizens as ‘agents of justice’ and democratic holders of ‘constituent powers’. Also, UN institutions now acknowledge that human rights must be part of the rule of law inside and among UN Member States so that all persons and multilevel governance institutions are accountable to laws that are publicly promulgated, equally enforced and independently adjudicated.41 UN, WTO and EU diplomats justifying their ‘disconnected intergovernmentalism’ by the need to treat citizens as mere objects of international law should read the ‘French Declaration of the Rights of Man and the Citizen’ of 1789, as subsequently confirmed by the Constitutions of the 4th and 5th French Republics: ‘ignorance, forgetfulness, or contempt of human rights are the sole causes of public misfortune and government depravity’ (Preamble); ‘statute law is entitled to forbid only actions harmful to society’ (section 5). In order to

rule of law and access to justice in national, regional and worldwide economic law was enhanced by their mutually consistent protection as rights of citizens. Connecting multilevel legal principles by acknowledging their complementary ‘constitutional functions’ (or what Anne Peters calls ‘compensatory constitutionalism’)—eg for protecting equal freedoms and transnational rule of law—can transform the ‘disconnected UN/WTO governance’ without preventing legitimately diverse ‘constitutional interpretations’ at national levels (eg due to the reality that German and EU constitutional law protects ‘equal freedoms’ more comprehensively than ‘common law freedoms’ in Anglo-Saxon democracies based on ‘parliamentary sovereignty’). 39  cf M Koskenniemi, From Apologia to Utopia: The Structure of International Legal Argument (Cambridge, Cambridge University Press, 2005) 69. 40 ibid. 41  cf the UN General Assembly Resolution on ‘The Rule of Law at the National and International Levels’ (A/RES/67/97, 2012), and the report by the UN Secretary-General on ‘The Rule of Law and Transitional Justice in Conflict and Post-Conflict Societies’ (UN Doc S/2004/616).

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enable citizens to defend their reasonable self-interests, multilevel dispute settlement systems (eg in UN, WTO and other trade agreements of the EU) must be legally presumed to protect equal rights and ‘access to justice’ for the benefit of EU citizens at all levels of multilevel governance so that EU citizens can hold multilevel governance institutions legally, democratically and judicially more accountable and protect their cosmopolitan rights, transnational rule of law and other PGs more effectively.

Part IV

The EU as a Party to International Dispute Settlement: Case Studies

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12 The EU and its Member States in WTO Dispute Settlement: A ‘Competence Model’ or a Case Apart for Managing International Responsibility? GRACIA MARÍN DURÁN*

I. Introduction The aim of this chapter is to examine and assess the participation of the European Union (EU) and its Member States (MS) in the dispute settlement system of the World Trade Organization (WTO), with a focus on one legally and politically important question: how their unique position as full WTO members has affected their respective responsibility for the performance of WTO obligations. As is the case for any other ‘mixed’ agreement, this joint EU/MS membership of the WTO inevitably prompts the question of ‘who is responsible’ towards third parties for breaches of WTO law. The question of the EU’s international responsibility visà-vis that of its Member States has been the subject of intense study in the past years,1 partly due to the increasingly prominent role of the EU on the international scene but also due to the work of the International Law Commission (ILC) on the Articles on the Responsibility of International Organisations (ARIO).2 And yet, within this broader debate, the WTO is often presented in the academic literature as providing both an ‘exceptional’ and ‘exemplary’ case study.

*  A first draft of the chapter was presented at the Joint Workshop organised by the European University Institute, the ESIL Interest Group on ‘The EU as a Global Actor’ and the Centre for the Law of the EU External Relations (CLEER) on ‘The EU and International Dispute Settlement’, 19–20 February 2015. I am most grateful to the editors, as well as Bruno de Witte, Andres Delgado Casteleiro, Piet Eeckhout, Lothar Ehring and Mikko Huttunen, for their useful comments on previous drafts and insightful discussions on the topic. All opinions and any errors remain my own. 1  See eg E Evans and P Koutrakos (eds), The International Responsibility of the European Union— European and International Perspectives (Oxford, Hart Publishing, 2013); and further references in s II. 2  Draft Articles on the Responsibility of International Organizations, annexed to UNGA Res 66/100, UN Doc A/Res/66/100, 27 February 2012 (hereinafter, ‘ARIO’).

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Not only is the WTO one of the rare international fora in which the EU can fully participate as a party in dispute settlement proceedings,3 but the Union—perhaps not surprisingly as one of the world’s leading trade powers—has actually been one of the dominant players in the WTO dispute settlement system: out of the total 514 disputes that have been brought for resolution to the WTO since 1995, the EU (alone) has participated in 323 of them.4 Therefore, in the context of the WTO dispute settlement system, the question of EU/MS international responsibility is not only of theoretical significance, but also highly relevant in practice. Moreover, the active participation of the EU in the WTO dispute settlement system has been praised as constituting an example of its international actorness and leadership: in fact, it has been eager to come forward as single litigant and to assume sole responsibility in WTO disputes, even for alleged breaches by its Member States. Against this background, it has been argued that WTO dispute settlement practice shows how the duty of cooperation (Article 4(3) of the Treaty on European Union (TEU)) has allowed the EU to speak with one unified voice, with that voice being the European Commission as spokesperson for the Union.5 While generally upholding this prevailing view that the EU’s participation in the WTO dispute settlement system has been a ‘success story’, this chapter will offer a more nuanced assessment of the Union’s eagerness to assume lead responsibility for breaches of WTO law, in terms of both the degree of third party acceptance and the relative impact of EU internal rules. After outlining the theoretical questions of international responsibility stemming from the parallel EU/MS membership of the WTO (section II), the chapter will proceed to analyse how this issue has been tackled in the practice of the WTO dispute settlement system. Drawing upon this indepth analysis of practice, two main arguments will be advanced. First, the extent to which the EU’s assertion of exclusive participation and responsibility has been accepted by other WTO members and dispute settlement organs ought to be qualified, particularly in light of more recent, post-Lisbon, WTO disputes (section III). Second, the approach to EU/MS international responsibility which has been witnessed in the WTO dispute settlement system has not just been determined by the EU internal rules—ie a pure ‘competence model’, whereby the exclusive (external) competence of the EU for virtually all WTO matters will implicate its exclusive

3 

See Christophe Hillion and Ramses A Wessel, ch 2 in this volume. See WTO, ‘Disputes by Country/Territory’, at: www.wto.org/english/tratop_e/dispu_e/dispu_by_ country_e.htm, accessed 1 December 2016. 5  See eg A Delgado Casteleiro and J Larik, ‘The ‘Odd Couple’: Responsibility of the EU at the WTO’ in Evans and Koutrakos (n 1) 252 and 254–55; P Eeckhout, ‘The EU and its Member States in the WTO—Issues of Responsibility’ in L Bartels and F Ortino (eds), Regional Trade Agreements and the WTO Legal System (Oxford, Oxford University Press, 2006) 6–7. That being said, EU Member States have of course continued to exert considerable influence over the conduct of WTO litigation through internal institutional structures (notably, the Council and the Trade Policy Committee; see Arts 207(3) and 218(9) TFEU), and worked closely with the European Commission in preparing the ‘Union’s defence’: see PJ Kuijper, ‘International Responsibility for EU Mixed Agreements’ in C Hillion and P Koutrakos (eds), Mixed Agreements Revisited: The EU and Its Member States in the World (Oxford, Hart Publishing, 2010) 224. 4 

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responsibility in all instances.6 Rather, the specificity of the WTO dispute settlement system has exercised considerable influence on whether and how EU competence rules are relevant to the determination of EU (sole or joint) responsibility for breaches of WTO law. This is so, most significantly, for the WTO rules on remedies which embody the very purpose of assigning responsibility for an internationally wrongful act in this specific treaty context. Accordingly, it is suggested that this ‘competence/remedy’ model for managing EU/MS international responsibility in the WTO, which combines both internal and external legal factors, may remain a case apart, unique to that dispute settlement regime (section IV). The final section concludes (section V).

II.  EU/MS Joint Membership in WTO—Questions of Responsibility in Theory A.  WTO Agreement as a ‘Mixed’ Agreement As is well-known, the (umbrella) Agreement establishing the World Trade Organization (or WTO Agreement)7 was jointly concluded by the EU and its Member States following the famous Opinion 1/94,8 where the European Court of Justice (CJEU) ruled that the EU9 had exclusive competence to conclude only the multilateral agreements on trade in goods (Annex 1A), whereas such external competence was shared with the Member States in relation to the General Agreement on

6  This ‘competence model’, with specific reference to the WTO dispute settlement system, is proposed in PJ Kuijper and E Paasivirta, ‘EU International Responsibility and its Attribution: From the Inside Looking Out’ in Evans and Koutrakos (n 1) 54–63, and further discussed in s IV.A. 7  Marrakesh Agreement Establishing the World Trade Organization, 15 April 1994, 1867 UNTS 154 (hereinafter, ‘WTO Agreement’), which serves as an umbrella agreement for: (i) 13 multilateral agreements on trade in goods (Annex 1A); (ii) General Agreement on Trade in Services (Annex 1B); Agreement on Trade-Related Aspects of Intellectual Property Rights (Annex 1C); Understanding on the Rules and Procedures Governing the Settlement of Disputes (Annex 2); Trade Policy Review Mechanism (Annex 3); and several plurilateral agreements (Annex 4). 8  Opinion 1/94 (re WTO Agreement) ECLI:EU:C:1994:384, [1994] ECR I-5267. Note that, while the Court’s exclusive jurisdiction (under now Art 344 TFEU) is increasingly presented as a constraint on the EU’s participation in international dispute settlement, it was seemingly not a concern for the Court when accepting the joint EU/MS membership of the WTO in Opinion 1/94 (n 8), even though there is no explicit limitation to the exclusive jurisdiction of the WTO dispute settlement organs (Art 23 DSU). Thus, a dispute between the EU Member States, or between the EU and the Member States, could theoretically be brought before the WTO dispute settlement organs (eg one Member State challenging the WTO legality of another Member States’ measure implementing an EU Directive). However, this has never been an issue in WTO dispute settlement practice since 1995 (see s III.A) and will not therefore be discussed here. 9  For the benefit of simplification, this chapter will refer to the European Union only, even though Opinion 1/94 concerned the then ‘European Community’, and indeed it is the ‘European Communities’ that formally became a member of the WTO (see n 11).

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Trade in Services (GATS) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).10 This is reflected in Article XI:1 WTO Agreement, which refers to the EU and its Member States as full ‘original members’ in their own right.11 Like for any other so-called ‘mixed’ agreement, this joint EU/ MS membership of WTO inevitably prompts the question as to ‘who is responsible’ towards third parties in situations of non-performance. However, the WTO Agreement is somehow unusual when compared to other multilateral ‘mixed’ agreements, in that it does not contain any ‘Declaration of Competences’,12 and thus there is no indication as to which part of the WTO Agreement (and its covered agreements) binds the EU and which the Member States. In other words, there is no express delimitation of their respective responsibility in relation to the performance of WTO obligations.13 Against this silence in the WTO Agreement, the general rules of international responsibility as codified by the International Law Commission14 provide that the existence of an internationally wrongful act entailing international responsibility depends on the twin conditions of breach of an international obligation and attribution of conduct.15 Applying this to our case study raises, in turn, two questions: (i) how to apportion international obligations as between the EU and its Member States under a ‘mixed’ treaty such as the WTO Agreement; and (ii) when will conduct16 of the EU Member States which violates WTO law be attributed to the Union (and vice versa). A sticking point in the discussions leading up to the drafting of the ARIO was, however, whether the ‘rules of the organisation’— and, in particular, the delimitation of powers—should play a role in determining the respective international responsibility of an international organisation and its 10  For a detailed discussion, see inter alia JH Bourgeois, ‘The EC in the WTO and Advisory Opinion 1/94: An Echternach Procession’ (1995) 32 Common Market Law Review 763; A Burnside, ‘The Scope of the Common Commercial Policy Post Opinion 1/94: Clouds and Silver Linings’ in A Dashwood and C Hillion (eds), The General Law of EC External Relations (London, Sweet & Maxwell, 2000); N Emiliou, ‘The Death of Exclusive Competences?’ (1996) 21 European Law Review 294. 11  Art XI:1 WTO Agreement, reads: ‘The contracting parties to GATT 1947 as of the date of entry into force of this Agreement, and the European Communities, which accept this Agreement and the Multilateral Trade Agreements and for which Schedules of Concessions and Commitments are annexed to GATT 1994 and for which Schedules of Specific Commitments are annexed to GATS shall become original Members of the WTO.’ (emphasis added). 12  For a critical review, see A Delgado Casteleiro, ‘EU Declarations of Competence to Multilateral Agreements: A Useful Reference Base?’ (2012) 17(4) European Foreign Affairs Review 491; J Heliskoski, ‘EU Declarations of Competence and International Responsibility’ in Evans and Koutrakos (n 1). 13  cf with United Nations Convention on the Law of the Sea, 10 December 1982, 1833 UNTS 3, Annex IX, Arts 5 and 6, whereby the extent of the respective powers of an international organisation and its Member States (as notified under the Convention) determines the extent of their respective responsibilities for breaches of the Convention. 14  Arts on Responsibility of States for Internationally Wrongful Acts, annexed to UNGA Res 56/83, UN Doc A/RES/56/83, 12 December 2001 (hereinafter, ‘ARS’); and ARIO (n 2). 15  Art 2 ARS; Art 4 ARIO. 16  In this chapter, the term ‘conduct’ is interchangeably used with the term ‘measure’, which in the context of the WTO dispute settlement system equally means ‘any act or omission attributable to a WTO Member’: US—Corrosion-Resistant Steel Sunset Review, Report of the Appellate Body, WT/DS244/AB/R, adopted 9 January 2004, para 81.

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members. While it is not the purpose of this chapter to paint a complete portrait of this theoretical debate,17 the main contrasting positions will be briefly outlined below as a backdrop to the subsequent analysis of practice in the WTO dispute settlement system.

B.  Question of Apportionment of Obligations As they currently stand, the general rules of international responsibility do not specifically address the question of how to determine the respective obligations of an international organisation and its members in cases where both are parties to an international treaty, such as the WTO Agreement for the EU and its Member States.18 In this respect, the European Commission’s position, as elaborated in its submissions on the ARIO to the ILC, has been that the question of apportionment of international obligations should be ‘entirely determined by the rules of the organisation, since these rules define the tasks and powers of the organisation which possesses its own international legal personality, vis-à-vis those of the member States’.19 Moreover, the EU takes the view that apportionment of obligations ‘is really the primary question’ and should be clearly distinguished from the secondary question of attribution of conduct.20 Applying this line of reasoning to the case of the WTO, this would mean looking at EU rules on the division of external (ie treaty-making) powers in order to determine whether a particular WTO obligation has been entered into by the EU or its Member States. However, given the dynamic and blurry delineation of external competences, it is hardly realistic to expect WTO dispute settlement organs to engage with such complex questions of EU law, nor does it seem desirable from the perspective of safeguarding the ‘autonomy’ of the EU legal order.21 Arguably, this issue has now become less complicated with the entry into force of the Lisbon

17  See further, J d’Aspremont, ‘A European Law of International Responsibility? The Articles on the Responsibility of International Organisations and the EU’ in V Kosta, N Skoutaris and V Tzevelekos (eds), The EU Accession to the ECHR (Oxford, Hart Publishing, 2014); F Hoffmeister, ‘Litigating against the European Union and Its Member States—Who Responds under the ICL’s Draft Articles on International Responsibility of International Organizations?’ (2010) 21(3) European Journal of International Law 723; E Paasivirta and PJ Kuijper, ‘Does One Size Fit All? The European Community and the Responsibility of International Organizations’ (2005) XVVI Netherlands Yearbook of International Law 169; S Talmon, ‘Responsibility of International Organisations: Does the European Community require Special Treatment?’ in M Ragazzi (ed), International Responsibility Today: Essays in memory of Oscar Schachter (Leiden, Martinus Nijhoff, 2005). 18  See Art 11 ARIO; Arts 12–13 ARA. 19 ILC, ‘Responsibility of International Organisations—Comments and Observations received from International Organisations’, Doc A/CN.4/545, dated 25 July 2004 (hereinafter ‘ARIO Comments 2004’), at 26 (para 2). This seems also the view taken by Advocate General Mischo in Case C-13/00 Commission v Ireland [2002] ECR I-2923, para 30 of the Opinion; as well as by Paasivirta and Kuijper (n 17) 216. 20  ARIO Comments 2004 (n 19) 26 (para 3). 21  For a similar view, see Eeckhout (n 5) 9.

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Treaty,22 by virtue of which the EU has acquired exclusive external competence for quasi all matters presently regulated by WTO law.23 Following the Commission’s view, this would imply that, as the sole bearer of WTO obligations in a postLisbon setting, only the EU is capable of incurring international responsibility in the WTO. If this is so, there will be no need to consider the question of attribution: for the Commission, it is impossible that a wrongful act can still be attributed to the EU Member States, once it has been established they are no longer carriers of the relevant WTO obligations.24 Even if one accepts that this proposition is true as a matter of EU (competence) law, it is not equally valid under public international law.25 From an international law perspective, so long as both the EU and its Member States remain parties to the WTO Agreement (and its covered agreements), the presumption is that they are each bound by all obligations therein26 and may not invoke internal rules as justification for non-performance,27 unless it is otherwise agreed in the treaty or in situations covered by Article 46 VCLTIO. However, as already mentioned, there is no ‘Declaration of Competences’ or any other textual basis in the WTO Agreement for apportioning obligations and responsibility as between the EU and its Member States.28 In addition, it is doubtful that Article 46 22 

Art 3(1)(e) TFEU. Except for transport services (Art 207(5) TFEU). With regards to the TRIPS Agreement, see Case C-414/11 Daiichi Sankyo and Sanofi-Aventis Deutschland, ECLI:EU:C:2013:520, judgment of 18 July 2013, paras 45–61, where the Court upheld the Commission’s view that, following the entry into force of the Lisbon Treaty, the TRIPS Agreement as a whole now falls within the EU’s exclusive external competence under the CCP, even though the specific subject of patentability at issue (Art 27 TRIPS) is covered by shared competence in the field of the internal market (Arts 114 and 118 TFEU). More generally, see P Eeckhout, EU External Relations Law 2nd edn (Oxford, Oxford University Press, 2011) ch 2; and F Hoffmeister, ‘The European Union’s Common Commercial Policy a year after Lisbon—Sea Change or Business as Usual?’ in P Koutrakos (ed), The European Union’s External Relations a Year after Lisbon (CLEER Working Paper 2011/3) 83–84. 24  ARIO Comments 2004 (n 19), at 26, paras 4–5, applying this reasoning to customs matters. 25 See on this point, Advisory Opinion of Advocate General Tesauro in Case C-53/96 Hermes International v FHT Marketing, ECLI:EU:C:1998:292, [1998] ECR I-3603, para 14: ‘This is how matters stand on the Community side but it must not be forgotten that both the Community and the Member States signed all the WTO agreements and are therefore contracting parties vis-à-vis contracting nonmember States. And while it is true that the approval of those agreements on behalf of the Community is restricted to “matters within its competence”, it is also true that the Final Act and the WTO Agreement contain no provisions on competence and the Community and its Member States are cited as original members of equal standing. In these circumstances, it should be recognised that the Member States and the Community constitute, vis-à-vis contracting non-member States, a single contracting party or at least contracting parties bearing equal responsibility in the event of failure to implement the agreement. This clearly means that, in that event, the division of competence is a purely internal matter.’ 26  This flows from the principle of pacta sunt servanda in Art 26 of the Vienna Convention on the Law of Treaties between States and International Organisations or between International Organisations, 21 March 1986 (not yet in force) (hereinafter, ‘VCLTIO’). 27  Art 27 VCLTIO. 28  The only caveat to be noted in this regard is the GATS Schedule of Specific Commitments: the EU schedule currently in force (GATS/SC/31) only covers the 12 Member States in 1994, while the consolidated schedule negotiated following subsequent EU enlargements has not yet entered into force: see WTO, ‘Communication from the European Communities and its Member States—Draft 23 

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VCLTIO could be invoked in this case:29 given the ambiguity as to the division of competences between the EU and its Member States prevailing at the time when the WTO Agreement was concluded, a violation of the rules of the organisation could not have been ‘manifest’ (ie objectively evident) to third parties.30 Consequently, the majority of the academic literature adopts the view that the EU and its Member States are jointly bound by all provisions of WTO law.31 But does this mean there would be joint responsibility of the EU and its Member States for breaches of WTO law in each and every case? That is not a foregone conclusion: being bound by the same WTO obligation is a necessary, but not a sufficient, condition for the joint responsibility of the EU and its Member States.32 In the logic of the system of international responsibility as codified by the ILC, breach of an obligation needs to be supplemented by attribution, and therefore the key question is whether the WTO-infringing conduct is attributable to the EU and/or its Member States.

Consolidated GATS Schedule’ (S/C/W/273), 9 October 2006. At the time of writing, the 16 Member States that acceded to the EU after 1994 are still bound by their individual Schedules of Specific Commitments, which has implications not only for their market access obligations (Art XVI GATS), but also other obligations in the GATS that are applicable only to the extent that a WTO member has undertaken specific commitments in its Schedule (notably, Art XVII GATS on national treatment, as well as eg Art VI:1 and VI:5 GATS on domestic regulation). 29  Art 46(2) VCLTIO provides: ‘An international organization may not invoke the fact that its consent to be bound by a treaty has been expressed in violation of the rules of the organization regarding competence to conclude treaties as invalidating its consent unless that violation was manifest and concerned a rule of fundamental importance.’ Art 46(3) VCLTIO further states: ‘A violation is manifest if it would be objectively evident to any State or any international organization conducting itself in the matter in accordance with the normal practice of States and, where appropriate, of international organizations and in good faith.’ (Emphasis added.) 30  For a similar view, see Eeckhout (n 5) 3 noting that, due to the sequence of events, some WTO members may in fact have signed and approved the WTO Agreement before Opinion 1/94 (n 8) was delivered; and E Steinberger, ‘The WTO Treaty as a Mixed Agreement: Problems with the EC’s and the Member States’ Membership of the WTO’ (2006) 17(4) European Journal of International Law 837, 842–48 and 856–57. For a different view, see M Björklund, ‘Responsibility of the EC and the Member States for Mixed Agreements—Should Non-Member Parties Care? (2001) 70(30) Nordic Journal of International Law 373, 388–402. 31  See inter alia, M Cremona, ‘External Relations of the EU and the Member States: Competence, Mixed Agreements, International Responsibility and Effects of International Law, EUI Working Papers Law No 2006/22; G Gaja, ‘The European Community’s Rights and Obligations under Mixed Agreements’ in D O’Keeffe and HG Schermers (eds), Mixed Agreements (Alphen aan den Rijn, Kluwer, 1983); E Neframi, ‘International Responsibility of the European Community and of Member States under Mixed Agreements’ in E Cannizzaro (ed), The European Union as an Actor in International Relations (Alphen aan den Rijn, Kluwer, 2002); J Heliskoski, ‘Joint Competence of the European Community and its Member States and the Dispute Settlement Practice of the World Trade Organization’ (1999–2000) 2 Cambridge Yearbook of European Legal Studies 80; A Rosas, ‘The European Union and International Dispute Settlement’ in L Boisson de Chazournes, C Romano and R Mackenzie (eds), International Organisations and International Dispute Settlement: Trends and Prospects (Leiden, Brill, 2002). 32  A Nollkaemper, ‘Joint Responsibility between the EU and Member States for Non-Performance of Obligations under Multilateral Environmental Agreements’ in E Morgera (ed), The External Environmental Policy of the European Union: EU and International Perspectives (Cambridge, Cambridge University Press, 2013) 330.

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C.  Question of Attribution of Conduct Unlike for the issue of apportionment, the general rules of international responsibility deal specifically with the attribution of conduct to an international organisation.33 Article 6 ARIO provides that conduct of an organ or agent of an international organisation shall be attributed to it, while Article 7 ARIO extends such an attribution to the organisation for the conduct of an organ of a state in cases where it is ‘placed at the disposal of ’ the organisation and if the latter exercises ‘effective control’ over such conduct. However, the European Commission and some scholars have argued that these attribution rules are not flexible enough to accommodate the distinctive traits of the Union’s constitutional structure and functioning.34 This concern is not entirely misplaced, as applying the ARIO rules on attribution to the EU/MS relationship would considerably limit the situations in which the Union incurs (sole) responsibility for breaches of WTO law.35 Due to the multilevel and decentralised implementation of most areas of EU law (ie so-called ‘executive federalism’),36 EU organs directly implement only a limited (even if important) segment of the common commercial policy (CCP)—ie trade defence measures,37 which are clearly attributable to the Union via Article 6 ARIO. For other areas of the CCP, the EU is largely dependent on its Member States to execute EU law, and thus national authorities are likely to be more visible to third parties as the factual actor of an alleged WTO breach. Customs administration constitutes the most obvious example of this special character of the Union’s ‘executive federalism’: even though this is a core EU exclusive competence, there is no EU customs service but 28 national customs administrations that implement (directly applicable) EU customs legislation. As the European Commission aptly noted in its comments to the ILC: The fact that the implementation of [EU] law, even in areas of its exclusive competence, is normally carried out by the member States and their authorities, poses the question as to … when the [EU] as such is responsible not only for acts committed by its organs, but also for actions of the member States and their authorities.38 33 

Ch II ARIO. See eg Kuijper and Paasivirta (n 6) 69. 35  Note, however, that Ch IV ARIO provides for a number of situations in which the responsibility of an international organization may arise in connection with the act of a state, presumably without attribution, including where the international organisation ‘aids or assist’ a State in the commission of an internationally wrongful act (Art 14) or ‘circumvents one of its international obligations’ through decisions or authorisations addressed to its members (Art 17), which could arguably be applicable to the EU/MS relationship. However, unlike Arts 6–7 ARIO where responsibility through attribution seems to be a ‘black-or-white’ question (ie either the organisation or the state), Ch IV ARIO appears to create an additional layer of responsibility for the organisation without prejudice to that of the state (Art 19), leading therefore to joint responsibility. See further, Hoffmeister (n 17) 727 and Nollkaemper (n 32) 323–24. 36  On this so-called ‘executive federalism’, see R Schütze, ‘From Rome to Lisbon: “Executive Federalism” in the (New) European Union’ (2010) 47 Common Market Law Review 1385. 37  Art 291(2) TFEU; see Hoffmeister (n 17) 740. 38  ARIO Comments 2004 (n 19) 29 (para 3). 34 

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Yet, it is commonly accepted that Article 7 ARIO does not provide an appropriate basis for attributing acts of the Member States when implementing EU law to the EU itself: its ‘normative control’39 over the conduct of the Member States is generally considered to fall short of the ‘effective control’ test in that provision.40 Alternatively, the EU would need to constantly rely on the exception provided for in Article 9 ARIO so as to ‘acknowledge and adopt’ conduct of its Member States as its own.41 That being so, it is understandable to some extent that the European Commission pressed for a special rule of attribution of internationally wrongful acts during the ILC codification process,42 which was initially opposed by the Special Rapporteur Gaja and eventually led to the introduction of Article 64 ARIO on lex specialis, leaving open the possibility that the general rules on responsibility may be set aside in the case of the EU and its Member States.43 As seen earlier for the question of apportionment, the EU considers that attribution of conduct should equally reflect the internal division of competences. Drawing on its statements in the WTO case EC—Computer Equipment (1998) discussed below,44 the Commission posits that acts of Member States’ authorities when implementing EU law in a field of EU exclusive (external) competence should be attributed to the EU itself.45 According to Hoffmeister, this would logically follow from Article 2(1) of the Treaty on the Functioning of the European Union (TFEU) because in areas of exclusive EU external competence such as the CCP, only the Union may legislate while the Member States are only able to do so if empowered by the Union or for

39  Hoffmeister (n 17) 742, suggests that there are two conditions for determining ‘normative control’ of the Union for the purpose of international responsibility: (i) EU law governs the substantive legality of member state action; (ii) this is ultimately controlled by the EU judiciary. This approach is borrowed by Kuijper and Paasivirta (n 6) 55; and Nollkaemper (n 32) 335. 40  ILC, ‘Draft Articles on the Responsibility of International Organisations, with Commentaries’ (2011), Commentary to Art 7, reflecting it was mainly intended to codify rules on the responsibility of international organisations for military operations using forces of its members. See also, Hoffmeister (n 17) 726–27; Nollkaemper (n 32) 331. Kuijper and Paasivirta (n 17) 192, are further critical of the suggestion that, in cases where Member States’ authorities implement EU law, such organs are ‘placed at the disposal’ of the EU: this ‘grates the ears of the average [EU] lawyer, since it is inherent in the [EU] legal order, and in particular in the primacy of [EU] law, that Member States’ legislative, administrative and judicial organs carry out and implement [EU] law.’ 41  Art 9 ARIO provides: ‘Conduct which is not attributable to an international organization under articles 6 to 8 shall nevertheless be considered an act of that organization under international law if and to the extent that the organization acknowledges and adopts the conduct in question as its own.’ For a criticism, see Paasivirta and Kuijper (n 17) 217. 42  For a more detailed account, see Hoffmeister (n 17) 728–29. 43  Art 64 ARIO provides: ‘These draft articles do not apply where and to the extent that the conditions for the existence of an internationally wrongful act or the content or implementation of the international responsibility of an international organization … are governed by special rules of international law. Such special rules of international law may be contained in the rules of the organization applicable to the relations between an international organization and its members.’ (emphasis added). The commentary thereto explicitly records that there is a variety of opinions concerning the possible existence of a special rule with respect to the attribution to the EU of conduct of the Member States when they implement binding acts of the Union. 44  See s III.A for further discussion. 45  ARIO Comments 2004 (n 19) (para 5).

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the implementation of Union acts.46 Indeed, a number of scholars have suggested that, if necessary, Article 64 ARIO should be invoked to defend this competencebased approach to attribution and international responsibility.47 The problem of attribution of Member States’ conduct to the Union should be further refined, though. In support of its position, the Commission often relies on the example of customs legislation, which is a purely external matter and extensively harmonised though EU Regulations that are binding in their entirety and directly applicable in the Member States.48 Put differently, EU customs legislation clearly instructs what the Member States have to do and they have no choice but to implement it. In these particular circumstances where Member States’ conduct is strictly confined to implementing EU law, it is not difficult to accept that national customs authorities act de facto as organs of the Union. Yet, this perfect example of EU executive federalism is not necessarily applicable to all areas covered by WTO law. Part of the reason for this is that, unlike Hoffmeister suggests, the exclusive EU external competence under the CCP is not matched by an exclusive EU competence to legislate internally. As Eeckhout rightly notes, the taxation of products provides a case in point: externally, such taxation is subject to Article III General Agreement on Tariffs and Trade (GATT) falling under exclusive EU competence, whereas internally Member States retain competence for certain forms of taxation that are not harmonised or even regulated at EU level.49 When Member States impose such taxes through independent national legislation, can they still be regarded as functionally acting as organs of the EU? Similar doubts may arise in other ‘grey areas’ where, even though Member States do act within the scope of EU law, the degree of the Union’s normative control over their conduct is more limited than in the context of implementing EU Regulations. One example is state aid, which is subject to WTO disciplines on subsidies: unlike classical executive federalism, EU Member States are not here acting to execute a certain harmonised EU rule but, rather, individually providing aid within certain boundaries set by EU law.50 In addition, the link between Member States’ conduct and EU law may not always be straightforward when they act to implement EU Directives, as these are only binding with respect to the aim(s) pursued but leave some discretion as to the form and method of implementation,51 and thus a varied application is likely to result across EU Member States.­ 46 

Hoffmeister (n 17) 743; Arts 2(1) and 3(1)(e) TFEU. Kuijper and Paasivirta (n 6) 69; and Hoffmeister (n 17) 745–46. 48  Art 288 TFEU. 49  Eeckhout (n 5) 10. 50  Arts 107(2) and (3) TFEU stipulate the conditions under which state aid, otherwise prohibited under Art 107(1) TFEU, may be considered ‘compatible with the internal market’. Art 108(3) TFEU requires Member States, as a general rule, to notify new state aid measures to the Commission and they may only put these measures into effect after obtaining the Commission’s approval. However, there are some exceptions to this requirement of prior notification/approval (eg state aid covered by the so-called ‘Block Exemption’ Regulations and de minimis aid). For an overview, see P Craig and G de Bùrca, EU Law: Text, Cases and Materials 5th edn (Oxford, Oxford University Press, 2011) 1087–106. 51  Art 288 TFEU. 47 

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Moreover, particularly in the fields of consumer and environmental protection, it is not uncommon for the EU to adopt so-called minimum harmonisation Directives setting out standards that national legislations must meet but may exceed if a given Member State so desires:52 one significant example in light of the on-going WTO dispute Australia—Tobacco Plain Packaging53 are the UK and Irish legislations on standardised packaging of tobacco products,54 which go beyond the requirements of the EU Tobacco Products Directive.55 The question thus arises as to whether such a restricted EU normative authority over Member States’ conduct may be enough to attribute it to the Union for the purposes of international responsibility.56 Against this background, the next section turns to analyse how the WTO dispute settlement system has tackled the joint membership of the EU and its Member States. To what extent have these theoretical questions of responsibility been a controversial issue in practice? Or conversely, have third parties in the WTO de facto accepted the EU’s assertion of exclusive responsibility for breaches of WTO law, even by its Member States?

III.  EU/MS International Responsibility in the WTO—A Controversial Issue in Practice? A.  The Broad Picture As reflected in Table 1, the ‘mixed’ EU/MS membership of the WTO appears hardly visible in dispute settlement practice.

52 

This is in line with Arts 169(4) and 193 TFEU. Measures Concerning Trademarks, Geographical Indications and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging, Procedural Arrangement between Australia and Ukraine, Honduras, the Dominican Republic, Cuba and Indonesia, WT/DS434/12, WT/DS435/17, WT/DS441/16, WT/DS458/15, WT/DS467/16, dated 28 April 2014. 54 WTO Committee on Technical Barriers to Trade, ‘Notification by the United Kingdom’ (G/TBT/N/GBR/24/Add.1), dated 2 October 2015; ‘Notification by Ireland’ (G/TBT/N/IRL/1/ Add.2), dated 20 June 2016. 55  Dir 2014/40/EU of the European Parliament and of the Council on the approximation of the laws, regulations and administrative provisions of the member states concerning the manufacture, presentation and sale of tobacco and related products and repealing Directive 2001/37/EC [2014] OJ L127/1. Art 24(2) specifically allows that Member States may introduce further requirements in relation to the standardisation of the packaging of tobacco products, provided they are justified on grounds of public health, are proportionate and are not a means of arbitrary discrimination or disguised restriction on trade between Member States. 56  This seems to be the position taken by Hoffmeister (n 17) 746, suggesting the following special rule of attribution: ‘The conduct of a State that executes the law or acts under the normative control of a regional economic integration organization may be considered an act of that organization under international law, taking account of the nature of the organization’s external competence and its international obligations in the field where the conduct occurred.’ (Emphasis added.) 53 Australia—Certain

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Table 1:  EU/MS Practice in WTO Dispute Settlement (1995–2016)

EU

Complainant

Respondent

Third Party

Total

97

681

158

323

–

142

–

14

13

104

–

11

(individual claims) EU/MS (joint/parallel claims) MS (individual claims) 1

This number seeks to capture the number of WTO disputes in which the EU sole responsibility was invoked by the third parties concerned. It thus reflects the total ‘request for consultations’ (ie this being the first step in WTO dispute settlement procedures; Article 4 of the Dispute Settlement Understanding—DSU) addressed exclusively to the EU. Note, however, that in some of these cases, a ‘mutually agreed solution’ was reached by parties to the dispute, while a considerable number of other cases have been formally pending for years at consultations stage. 2 This number seeks to capture the number of WTO disputes in which the ‘joint’ responsibility of the EU and its member states was invoked by the third parties concerned. It thus reflects the total ‘request for consultations’ addressed to the EU jointly with one or more of its member states (eg European Communities and its Member States—Tariff Treatment of Certain Information Technology Products, WT/DS375-377), and those addressed to the EU in parallel to claims on the same subject matter addressed to MS (eg EC—Customs Classification of Computer Equipment, WT/DS62, in which the US also brought separate claims against Ireland (WT/DS68) and the UK (WT/DS67)). 3 See n 60. 4 This number reflects the total ‘request for consultations’ addressed only to individual EU member states (see n 61), even though the EU may have intervened as a party to negotiate a ‘mutually agreed solution’ to the dispute (see nn 78–80).

At first glance, the EU undoubtedly stands out as one of the most active users of the WTO dispute settlement system: out of the total 514 disputes that have been brought for resolution to the WTO since 1995,57 the Union (alone) has participated either as a complainant (97), a respondent (68) or third party (158) in 323 of them. By way of comparison, the United States (US), as the other key player in the WTO dispute settlement system, has participated in a total of 373 WTO cases.58 In contrast, the EU Member States (individually) have played a minimal and passive role in WTO dispute settlement:59 to date, none has initiated a dispute against a third country60 or intervened as a third party in any WTO case, while only some 57 See WTO, ‘Chronological List of Dispute Cases’, at: www.wto.org/english/tratop_e/dispu_e/ dispu_status_e.htm, accessed 1 December 2016. 58  See WTO, ‘Disputes by Country/Territory’, at: www.wto.org/english/tratop_e/dispu_e/dispu_by_ country_e.htm, accessed 1 December 2016. 59  The lack of active litigation by EU Member States in the WTO dispute settlement system may be due to purely political/institutional reasons, but may also be explained by legal constraints resulting from EU law, and in particular the duty of cooperation (Art 4(3) TEU): for a discussion, see Delgado Casteleiro and Larik (n 5) 251–52. 60  To date, the only EU Member State to have initiated WTO dispute settlement procedures is Denmark, but in respect of the Faroe Island and against the EU: European Union—Measures on AtlantoScandian Herring, Request for Consultations by Denmark in respect of the Faroe Island, WT/DS469/1,

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have been targeted as individual respondents by another WTO member (ie the US in all 10 cases where this has occurred).61 However, for the purpose of our discussion, it appears pertinent to examine more in depth the statistics concerning passive litigation—ie EU/MS acting as a respondent jointly or individually—as an indicator of how the question of EU/MS international responsibility has been approached by third parties and dispute settlement organs in the WTO. In doing so, it seems also interesting to break down such statistics into the pre-Lisbon and post-Lisbon period62 as a means to gauging whether, and if so how, the internal transfer of exclusive competence to the EU for all CCP matters has affected the approach to EU/MS international responsibility in WTO dispute settlement practice.

B. Pre-Lisbon Practice—Pragmatic Approach to EU (Exclusive) Responsibility A glimpse at Table 2 would seem to support the view that, ‘[i]n fact, the whole discussion on the [joint responsibility] of the EU and its Member States in the WTO is put aside in favour of the sole responsibility of the Union in the WTO dispute settlement system’,63 particularly during the pre-Lisbon period.

dated 7 November 2013. On 21 August 2014, the parties informed the Dispute Settlement Body that the matter raised in this dispute was settled: European Union—Measures on Atlanto-Scandian Herring, Joint Communication from Denmark in respect of the Faroe Island and the European Union, WT/DS469/3, dated 25 August 2014. 61  Namely: Belgium (Belgium—Measures Affecting Commercial Telephone Directory Services, Request for Consultations by the United States, WT/DS80/1, dated 13 May 1997; Belgium—Certain Income Tax Measures Constituting Subsidies, Request for Consultations by the United States, WT/DS127/1, dated 11 May 1998; Belgium—Administration of Measures Establishing Customs Duties for Rice, Request for Consultations by the United States, WT/DS210/1, dated 19 October 2000); Denmark (Denmark— Measures Affecting the Enforcement of Intellectual Property Rights, Request for Consultations by the United States, WT/DS83/1, 21 May 1997); France (France—Certain Income Tax Measures Constituting Subsidies, Request for Consultations by the United States, WT/DS131/1, dated 11 May 1998); Greece (Greece—Certain Income Tax Measures Constituting Subsidies, Request for Consultations by the United States, WT/DS129/1, dated 11 May 1998); Ireland (Ireland—Certain Income Tax Measures Constituting Subsidies, Request for Consultations by the United States, WT/DS130/1, dated 11 May 1998); Netherlands (Netherlands—Certain Income Tax Measures Constituting Subsidies, Request for Consultations, WT/DS128/1, dated 11 May 1998); Portugal (Portugal—Patent Protection under the Industrial Property, Request for Consultations by the United States, WT/DS37/1, dated 6 May 1996) Sweden (Sweden—Measures Affecting the Enforcement of Intellectual Property Rights, Request for Consultations by the United States, WT/DS86/1, dated 2 June 1997). 62  The Treaty of Lisbon was signed on 13 December 2007 and entered into force on 1 December 2009. Thus, in Table 2, ‘pre-Lisbon’ period refers to all WTO disputes initiated between 1 January 1995 and 1 January 2008, whereas ‘post-Lisbon period’ to those initiated between 1 January 2008 and 1 March 2015. The underlying assumption made here is that, in these latter cases, the Lisbon-based change in the internal division of EU/MS external competences for trade matters could have influenced the approach to international responsibility at the consultations stage or/and in Panel/Appellate Body proceedings. 63  Delgado Casteleiro and Larik (n 5) 238.

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Table 2:  EU/MS as Respondents in WTO Dispute Settlement (1995–2016)

EU (individual claims) EU/MS

Respondent Pre-Lisbon

Respondent Post-Lisbon

54

14

5

9

10

0

(joint/separate claims) MS (individual claims)

Evidently, the vast majority of WTO disputes (54) during the pre-Lisbon period were brought against the EU alone. In all instances, the Union (through the European Commission) has been eager to come forward as lead litigant and to assume exclusive responsibility for all alleged breaches of WTO law, including in the field of the TRIPS agreement that still fell within EU/MS shared competence at that time.64 Yet, one should not be bewildered by this wide targeting of the EU as single respondent, given that most of these complaints concerned only legal acts of the EU institutions,65 which are clearly attributable to the Union pursuant to ­Article 6(1) ARIO.66 Nonetheless, in some cases, claims directed against the EU alone have 64 Notably: European Communities—Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs, Report of the Panel, WT/DS174/R, adopted 20 April 2005, paras 7.97–7.98 and 7.722–7.727, involving TRIPS claims against Council Reg (EEC) No 2081/92 and related implementing and enforcement measures, and where the Panel accepted the EU’s explanation of ‘what amounts to its sui generis domestic constitutional arrangements that [EU] laws are generally not executed through authorities at [EU] level but rather through recourse to the authorities of its Member States which, in such a situation, act as de facto organs of the [EU] for which the EU would be responsible under WTO law and international law in general’. This allowed the Panel to refute the US allegation that there was an infringement of the most-favoured-nation treatment obligation in Art 4 TRIPS, when EU Member States are executing the Union-wide system on the protection of geographical indications as established by the challenged EU Regulation. However, this case did not directly address the question of EU/MS international responsibility, as the US raised violation claims against the EU only, and no specific measure by the EU Member States was identified. 65 With the exception of the following disputes: European Communities—Trade Description of Scallops, Notification of Mutually Agreed Solution from Canada and the European Union, WT/DS7/12, dated 19 July 1996 and European Communities—Trade Description of Scallops, Notification of Mutually Agreed Solution from Peru, Chile the European Union, WT/DS12/12, WT/DS14/11, dated 19 July 1996, concerning a French Order on the official names and permitted trade descriptions of scallops in France; European Communities—Measures Affecting Butter Products, Notification of a Mutually Agreed Solution from New Zealand and the European Union, WT/DS72/7, dated 18 November 1999, concerning decisions by the European Commission and the United Kingdom’s Customs and Excise Department excluding certain types of New Zealand’s butter from eligibility for its country-specific tariff quota established in the EU’s Schedule; European Communities—Certain Measures Prohibiting the Importation and Marketing of Seal Products, Communication from Canada, WT/DS369/3, dated 3 December 2014, concerning certain measures taken by Belgium and the Netherlands regarding the importation, transportation, manufacturing, marketing and sale of seal products and withdrawn following repeal of such measures. In addition, see cases discussed at nn 67, 70 and 71. 66 It will suffice to cite the well-known WT/DS26 and WT/DS48 European Communities— Measures Concerning Meat and Meat Products (Hormones) involving (inter alia) claims under GATT, SPS, TBT against Council Dir (EEC) No 602/81, Council Dir (EEC) No 146/88 and Council Dir (EEC) No 299/88; WT/DS27 European Communities—Regime for the Importation, Sale and Distribution of Bananas, involving (inter alia) claims under the GATT, GATS and Import Licensing Agreement against

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involved also measures of its Member States, not only when implementing EU law sensu stricto, but when acting under the normative umbrella of the EU in a broader sense. A well-known example is the EC—Biotech Products (2006) dispute, where the contested measures included national safeguard measures prohibiting the import and/or marketing of specific biotech products, which had been taken by six Member States in reliance on the possibility provided for in the relevant EU legislation.67 Even if the degree of EU normative control in respect of these safeguard measures was somehow restricted (ie to authorisation),68 the WTO Panel accepted the EU standing as single respondent and bearing sole responsibility for these measures, based on two ‘pragmatic’ considerations: It is important to note that even though the member State safeguard measures were introduced by the relevant member States and are applicable only in the territory of the member States concerned, the [EU] as a whole is the responding party in respect of the member State safeguard measures. This is a direct consequence of the fact that the Complaining Parties have directed their complaints against the [EU], and not individual [EU] member States. The [EU] never contested that, for the purposes of this dispute, the challenged member State measures are attributable to it under international law and hence can be considered [EU] measures …69

In support of this pragmatic approach, the Panel referred to the earlier EC— Asbestos (2001) case, where the EU was targeted as sole defendant—and potentially solely responsible if a breach of the WTO law had been established (quod non)—of the French decree banning asbestos and asbestos-containing products at issue in the dispute, even though the link between this national measure and EU legislation was not readily obvious.70 Another less cited but also important Council Reg (EEC) No 404/93; WT/DS265, WT/DS266 and WT/283 European Communities—Export Subsidies on Sugar, involving claims under the Agriculture and SCM Agreements against Council Reg (EC) No 1260/2001 and related measures; as well as various WTO cases concerning EU trade defence measures (eg WT/DS141 European Communities—Anti-Dumping Duties on Imports of Cotton-type Bed Linen from India, involving claims under the Anti-Dumping Agreement; and WT/DS326 and WT/DS328 European Communities—Definitive Safeguard Measures on Salmon, involving claims under the Agreement on Safeguards). 67 European Communities—Measures Affecting the Approval and Marketing of Biotech Products (hereinafter, ‘EC—Biotech Products (2006)’), Report of the Panel, WT/DS291/DS/292/DS293/R, adopted 21 November 2006, paras 2.1–2.5. 68  See Art 23 of Dir (EC) No 2001/18 and Art 12 of Reg (EC) No 258/97 permitting, under certain conditions, EU Member States to adopt safeguard measures in respect of biotech products that have obtained approval for EU-wide marketing. In such cases, the Member State concerned must inform other EU Member States and the Commission of the action it has taken and a decision on the safeguard measure must then be taken at EU level within a prescribed time period. However, it has been reported that the safeguard measures at issue in this dispute had not been approved by the EU, nor had the European Commission open infringement procedures against the Member States concerned, which in practice were arguably free from EU’s normative control: see A Delgado Casteleiro, The International Responsibility of the European Union: From Competence to Normative Control (PhD thesis, European University Institute, 2011) 200. 69  Panel Report in EC—Biotech Products (2006) (n 67), para 7.101 (emphasis added). 70  European Communities—Measures Affecting Asbestos and Products Containing Asbestos (hereinafter, ‘EC—Asbestos (2001)’), Report of the Panel, WT/DS/135/R, adopted (as modified) 5 April 2001, paras 3.32–3.35. While the EU had adopted a series of Directives on the matter since 1980, it was only

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case is EC—Commercial Vessels (2005) concerning the ‘grey area’ of state aid. Here, the challenged measures included national aid schemes adopted by five EU Member States pursuant to an EU Regulation (providing for a temporary defensive mechanism for the shipbuilding sector), which had been explicitly authorised by the European Commission.71 After formally noting that Korea had made the Panel request with respect to the EU only,72 the Panel accepted the EU’s sole responsibility for the national aid schemes, emphasising two key elements: (i) the EU Regulation and Commission’s decisions were the ‘legal authority’ under which EU Member States provided aid; and (ii) in the event of a finding of WTO-inconsistency, the EU had declared to assume responsibility for ‘any actions that may be required to bring into conformity the measures at issue’, removing thereby the ‘legal basis for granting any further aid’.73 Turning to the 10 WTO disputes against individual Member States, these were all brought (perhaps non-coincidentally) by the US and date back to the early years of the WTO dispute settlement system (1995–2000). Some of these cases concerned claims under the GATS and TRIPS, and to some extent may be genuinely motivated by the lack of legal clarity, which prevailed at that time following Opinion 1/94, as to the exact division of external competences—and thus, respective obligations—between the EU and its Member States in these fields of WTO law.74 However, others involved claims in areas that were unequivocally held in Opinion 1/94 to fully fall under EU exclusive external competence (ie the GATT and the Subsidies and Countervailing Measures (SCM) Agreement),75 and may well have been motivated by a strategic attempt to weaken European unity in May 1999 (ie three years after the adoption of the French decree) that it decided to introduce an EU-wide ban on all types of asbestos (including chrysotile asbestos at issue) with effect from 1 January 2005. 71  European Communities—Measures Affecting Trade in Commercial Vessels (hereinafter, ‘EC— Commercial Vessels (2005)’), Report of the Panel, WT/DS301/R, adopted 20 June 2005, paras 7.36–7.51. The five EU Member States concerned were Denmark, Germany, France, the Netherlands and Spain. 72  ibid para 7.33. 73  ibid paras 7.33 and 7.53, and fn 156. The Panel found that, ‘[i]n light of these elements, we would find it sufficient, in the circumstances of this case, to address our recommendation to bring the measures at issue into conformity to the [EU]’. 74  With regards to GATS claims, see Belgium—Measures Affecting Commercial Telephone Directory Services, Request for Consultations by the United States, WT/DS80/1, dated 13 May 1997. As to the TRIPS, see Denmark—Measures Affecting the Enforcement of Intellectual Property Rights, Request for Consultations by the United States, WT/DS83/1, 21 May 1997; Portugal—Patent Protection under the Industrial Property, Request for Consultations by the United States, WT/DS37/1, dated 6 May 1996; Sweden—Measures Affecting the Enforcement of Intellectual Property Rights, Request for Consultations by the United States, WT/DS86/1, dated 2 June 1997. 75 With respect to the GATT, see Belgium—Administration of Measures Establishing Customs Duties for Rice, Request for Consultations by the United States, WT/DS210/1, dated 19 October 2000; With respect to the SCM Agreement, see Belgium—Certain Income Tax Measures Constituting Subsidies, Request for Consultations by the United States, WT/DS127/1, dated 11 May 1998; France— Certain Income Tax Measures Constituting Subsidies, Request for Consultations by the United States, WT/DS131/1, dated 11 May 1998; Greece—Certain Income Tax Measures Constituting Subsidies, Request for Consultations by the United States, WT/DS129/1, dated 11 May 1998; Ireland—Certain Income Tax Measures Constituting Subsidies, Request for Consultations by the United States, WT/DS130/1, dated 11 May 1998; Netherlands—Certain Income Tax Measures Constituting Subsidies, Request for Consultations, WT/DS128/1, dated 11 May 1998.

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and leadership in the WTO.76 In any event, no WTO Panel has pronounced itself on the responsibility of EU Member States in these disputes, as six of them have been formally pending for years at consultations stage,77 while in the other four a ‘mutually agreed solution’ was reached. Nevertheless, it is significant that in all but one78 of the cases resulting in a ‘mutually agreed solution’ this was achieved with the EU intervening as a negotiating/responding party, not only for matters falling under its exclusive external competence,79 but also for issues revolving around the application of the TRIPS Agreement where the extent of its competence was not entirely clear in this pre-Lisbon setting.80 Most significant for our purposes, only in a few cases (five) have third parties formally invoked the joint responsibility of the EU and its Member States for alleged breaches of WTO law, by targeting them together (one) or by directing parallel claims on the same subject matter to each of them separately (four).81 EC—Computer Equipment (1998) was the first case in which the joint EU/MS membership of the WTO caused controversy as to who was responsible in Panel proceedings.82 The case concerned the tariff treatment of certain computer equipment, which the US claimed was in breach of the tariff concessions contained in the EU Schedule under 76  On this point, see S Billiet, ‘The EC and WTO Dispute Settlement: Initiation of Trade Disputes by the EC’ (2005) 10 European Foreign Affairs Review 197, 199. 77  This is the case of the five WTO disputes (at n 75) concerning claims under the SCM Agreement, as well as that involving GATS claims (at n 74). 78  The exception being: Portugal—Patent Protection under the Industrial Property Act, Notification of a Mutually-Agreed Solution from the United States and Portugal, WT/DS37/2, dated 8 October 1996, following a Portuguese Decree Law to conform with the term of patent protection required by the TRIPS Agreement. 79 Notably, Belgium—Administration of Measures Establishing Customs Duties for Rice, Request for Consultations by the United States, WT/DS210/6, Notification of a Mutually Agreed Solution from the United States and the European Union, dated 2 January 2002. 80  Denmark—Measures Affecting the Enforcement of Intellectual Property Rights, Notification of a Mutually Agreed Solution from the United States, the European Union and Denmark, WT/DS83/2, dated 13 June 2001; and Sweden—Measures Affecting the Enforcement of Intellectual Property Rights, Notification of a Mutually Agreed Solution from the United States, the European Union and Sweden, WT/DS86/2, dated 11 December 1998, both following amendments in the respective national laws to provide for provisional measures inaudita altera parte in civil proceedings involving intellectual property rights. 81  In addition to the EC—Computer Equipment (1998) (see n 82 below) dispute discussed here, the other three cases in which parallel claims were directed against the EU and its Member States separately have resulted in a ‘mutually agreed solution’ or been formally pending at consultations stage for years: (i) France—Measures Relating to the Development of a Flight Management System, Request for Consultations by the United States, WT/DS173/1, dated 31 May 1999; and European Communities—Measures Relating to the Development of a Flight Management System, Request for Consultations by the United States, WT/DS172/1, dated 31 May 1999, concerning GATT and SCM claims; (ii) Ireland—Measures Affecting the Grant of Copyright and Neighbouring Rights and European Communities—Measures Affecting the Grant of Copyright and Neighbouring Rights, Notification of Mutually Agreed Solution from United States, the European Union and Ireland, WT/DS82/3, WT/DS115/3, dated 13 September 2002; (iii) Greece—Enforcement of Intellectual Property Rights for Motion Pictures and Television Programs and European Communities—Enforcement of Intellectual Property Rights for Motion Pictures and Television Programs, Notification of Mutually Agreed Solution from the United States, the European Union and Greece, WT/DS124/2, WT/DS125/2, dated 26 March 2001. 82  European Communities—Customs Classification of Certain Computer Equipment (hereinafter, ‘EC—Computer Equipment (1998)’), Report of the Panel, WT/DS62/R, WT/DS67/R, WT/DS68/R, adopted (as modified) 22 June 1998.

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Article II:1 GATT. Thus, it typically illustrates the kind of responsibility q ­ uestion that may arise in the context of ‘classical’ EU executive federalism—ie who is responsible for acts of the custom authorities of Member States in situations where they functionally act as organs of the EU? Unsurprisingly, the EU sought to assert its exclusive responsibility for any GATT infringement, based on its understanding that apportionment of obligations and attribution of conduct in the context of international responsibility should follow the delimitation of external competences under EU law.83 In particular, the EU stressed that it was an ‘original member of the WTO in its own right’ and that the tariff concessions ‘were bound in the GATT 1994 … exclusively at the level of the [EU] and not at the level of individual member States’.84 Positioning itself as the only bearer of the GATT obligations in question, the EU declared its readiness to assume the entire responsibility for all measures in the area of tariff concessions, whether the measure complained about had been taken at EU level or at the level of the Member States.85 Significantly, the EU went further to support its claim of full responsibility by linking it to the question of who can remedy the alleged wrongs: ‘it was exclusively competent for the subject matter concerned and thus the only entity in a position to repair the possible breach’86—ie the only entity capable of ensuring the necessary restitution under WTO dispute settlement rules.87 The US, on the other hand, submitted that both the EU and two of its Member States were responsible for the allegedly wrongful tariff treatment, arguing that Ireland and the UK were ‘independent members’ of the WTO and equally bound by the EU Schedule under the GATT.88 For the US, the internal transfer of powers for tariff matters from the Member States to the EU was irrelevant externally, and did not result in ‘fewer rights and obligations being allotted to the Member States’ under WTO law.89 Furthermore, the US took the view that the conduct of the Irish and UK customs administrations was attributable to those two states, emphasising that they were told during consultations with the EU that it ‘could not control the classification practices of member State customs authorities’.90 The Panel, however, avoided explicitly addressing the US request to clarify the responsibility of the respective defendants and instead put forward compromise language that could satisfy both parties: [S]ince the [European Union], Ireland and the United Kingdom are all bound by their tariff commitments under Schedule LXXX, our examination will focus, in the first instance, on whether customs authorities in the [European Union], including those located 83 

See s II. Panel Report in EC—Computer Equipment (1998) (n 82), para 4.10. ibid paras 4.11 and 4.15. 86  ILC, ‘Responsibility of International Organizations: Comments and Observations Received from International Organizations’, 63rd Session, Doc A/CN.4/637, dated 14 February 2011, at 24 (emphasis added), where the EU clarified that it was not simply adopting Member States’ conduct as its own (as per Art 9 ARIO). 87  On this point, see further s IV.A. 88  Panel Report in EC—Computer Equipment (1998) (n 82), para 4.13. 89  ibid para 4.14. 90  ibid para 4.12. Originally, the US tried to establish separate parallel WTO Panels against the EU and the two Member States, but an agreement was reached between the parties to have one panel considering all claims (paras 1.1–1.11). 84  85 

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in Ireland and the United Kingdom, have or have not deviated from the obligations assumed under that Schedule.91

On the one hand, the formula ‘customs authorities in the European Union’ could be read as endorsing the EU’s proposition that Member States’ customs authorities act functionally as EU organs when implementing EU law,92 and thus responsibility for their conduct should be solely attributed to the EU.93 On the other hand, the Panel sided with the US in that the relevant EU Schedule was equally binding on both the EU and its Member States,94 presumably implying they would all bear international responsibility for any breaches thereof, even if this was an area of EU exclusive external competence. Nevertheless, the Panel ultimately found the Union alone to have ‘acted inconsistently with its obligations under Article II GATT’ and addressed recommendations to the EU only.95 The other borderline case of this pre-Lisbon96 period in which the joint responsibility of the EU/MS was invoked and addressed by a WTO Panel is the famous EC and Certain Member States—Large Civil Aircraft (2011) dispute,97 which was initiated by the US back in 2004 but this time directing claims against the EU and four of its Member States together (Germany, France, Spain and the UK). The US claimed they had all provided subsidies separately and in parallel to Airbus large civil aircraft98 in contravention of ‘their obligations’ under the GATT and 91 

ibid para 8.16. federal-type agency argument was further advanced by the EU and accepted by the WTO panel in European Communities—Selected Customs Matters (hereinafter ‘EC—Selected Customs Matters (2006)’), Report of the Panel, WT/DS315/R, adopted (as modified) 11 December 2006, paras 7547–53. However, this case touched only indirectly upon the issue of EU/MS international responsibility, given that the US violation claims under Art X:3 GATT were only addressed against the EU, and not against the EU Member States themselves. This can be easily explained by the fact that the US was directly challenging the decentralised nature of the EU’s system of customs administration as being contrary to the uniformity and prompt dispute resolution requirements of Art X:3 GATT. Thus, the preliminary issue that was raised was whether the EU was able to discharge its obligations under Art X:3 GATT through the Member States, which the Panel found to be the case. 93  For a similar view, see Hoffmeister (n 17) 732. 94  This was also the position of the Panel in EC—Selected Customs Matters (2006) (n 92), para 7.548: ‘[I]t would appear that the [EU] as well as its constituent member States concurrently bear the obligations contained in the WTO Agreements, including those contained in Article X:3(b) of the GATT 1994.’ (Emphasis added.) 95  ibid paras 9.1–9.2 (emphasis added). The issue of who was the proper respondent on the EU/MS side was not raised again on appeal: see EC—Computer Equipment (1998), Report of the Appellate Body, WT/DS62/AB/R, WT/DS67/AB/R, WT/DS68/AB/R, adopted 22 June 1998, para 57. 96  This case was initiated on 6 October 2004, even though compliance proceedings are still on-going at appellate level. 97  European Communities and Certain Member States—Measures Affecting Trade in Large Civil Aircraft (hereinafter, ‘EC and Certain Member States—Large Civil Aircraft (2011)’), Report of the Panel, WT/DS316/R, adopted (as modified) 1 June 2011. 98  The principal measures at issue were the so-called ‘Launch Aid’ or ‘Member State Financing’ (LA/MFS) arrangements, provided by France, Germany, Spain and the United Kingdom to Airbus for the development of large civil aircraft (LCA). Other measures challenged were: (i) Loans provided through the European Investment Bank to Airbus for LCA design, development, and other purposes; (iii) infrastructure and infrastructure-related grants to Airbus provided by Member State authorities; (iv) the provision to Airbus of equity infusions, debt forgiveness, and grants through governmentowned and government-controlled banks; (v) research and technological research funding to Airbus provided by the EU and the Member States. 92  This

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SCM Agreement.99 Again not surprisingly from an EU law standpoint, the Union requested that the Panel determine, as a preliminary matter, that the EU was the ‘only proper respondent’ in the dispute, stressing that it was not simply ‘representing’ the Member States in the proceedings, but took ‘full responsibility’ for their actions.100 However, the EU’s argumentation was essentially limited to restating that the alleged GATT/SCM violations related to matters within its exclusive competence and for which it bears sole responsibility in the WTO,101 with no indication as to how it would ensure compliance with any potentially adverse Panel’s recommendations also by its Member States in this specific case. The Panel rejected the EU’s request, endorsing instead the formal argument advanced by the US that consultations and Panel requests had been made with respect to the four Member States ‘in addition’ to the EU: ‘Each of these five is, in its own right, a member of the WTO, with all the rights and obligations pertaining to such membership, including the obligation to respond to claims made against it by another WTO member.’102 For the Panel, the ‘rules of the organisation’—ie the internal division of powers—were of no relevance for the purpose of apportioning WTO obligations and allocating responsibility for any possible breach thereof between the EU and its Member States. Notably, it reasoned that the fact that the four Member States had chosen not to directly defend their interests in the dispute by making oral and written submissions separate from those of the EU was ‘a matter entirely within their discretion’ and subject to their obligations under EU law, but it did ‘not affect their rights or status as respondent parties’ under WTO law.103 Taking this position a step forward, it held that ‘whatever responsibility the [EU] bears for the actions of its member States does not diminish their rights and obligations as WTO Members, but is rather an internal matter concerning the relations between the [EU] and its member States’.104 Following this line of reasoning, the Panel determined that both the EU and the four Member States had acted inconsistently with their WTO obligations and addressed recommendations accordingly—ie significantly, the first and only WTO ruling to date establishing such a joint responsibility.105 99  EC and Certain Member States—Large Civil Aircraft (2011), Request for Consultations by the United States, WT/DS316/1, dated 12 October 2004. 100  Panel Report in EC—Large Civil Aircraft (2011) (n 97), para 7.171, requesting that the term ‘certain Member States’ be dropped from the name of the case. 101  ibid paras 7.169 and 7.172. See also, EC and Certain Member States—Large Civil Aircraft (2011), First Written Submission by the European Communities, WT/DS316, dated 5 April 2007, 4 and 44, available at: http://trade.ec.europa.eu/wtodispute/show.cfm?id=268&code=2#_eu-submissions. 102  ibid para 7.174. 103  ibid para 7.176. 104  ibid para 7.175 (emphasis added). 105  ibid para 8.5. Note, however, that the EU did not appeal the specific issue of the proper respondent, and thus the Appellate Body did not have a chance to rule on it in an authoritative manner: see EC and Certain Member States—Large Civil Aircraft (2011), Notification of Appeal by the European Union, WT/DS316/12, dated 23 July 2010. Ultimately, the Appellate Body addressed its recommendations to the EU only: ‘request the European Union to bring its measures, found in this Report, and in the Panel Report as modified by this Report, to be inconsistent with the SCM Agreement, into conformity with its

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C. Post-Lisbon Practice—Challenging EU ‘Exclusive’ Responsibility? Against the backdrop of the pre-Lisbon practice just examined, it is readily apparent from Table 2 that joint EU/MS membership of the WTO is becoming much more visible in dispute settlement practice post-Lisbon—even if this may be somehow counterintuitive from an EU law perspective with the Union having been granted exclusive external competence for all CCP matters. At the outset, two main observations can be made: first, complaints addressed jointly to the EU and one or more of its Member States (nine) are no longer the exception but almost as common as complaints directed against the EU alone (14); and second, it is no longer just the US bringing such joint complaints, but also other active players in the WTO dispute settlement system (ie Argentina, Brazil, China, India, Japan and Russia). Out of the nine cases in which the joint responsibility of the EU and its Member States has been formally invoked, only one106 has led to the adoption of a WTO Panel report, while the others appear still at consultations/Panel request stage.107 Therefore, it is too early to appraise the significance of this trend in WTO dispute settlement practice. Nonetheless, it is interesting to note that these cases concern claims under WTO covered agreements falling within the ‘old’ (eg, GATT, Technical Barriers to Trade (TBT) and SCM Agreements) and ‘new’ EU exclusive external competence (ie GATS and TRIPS) alike, and increasingly involve Member

obligations under that Agreement.’ (Emphasis added.) However, it also upheld the Panel’s recommendations to ‘the Member granting each subsidy’ for those findings that were not appealed. See EC and Certain Member States—Large Civil Aircraft (2011), Report of the Appellate Body, WT/DS/316/AB/R, adopted 1 June 2011 paras 1416 and 1418. 106 European Communities and its Member States—Tariff Treatment of Certain Information Technology Products (hereinafter, ‘EC—IT Products (2010)’), Report of the Panel, WT/DS375/R, WT/DS376/R, WT/DS377/R, adopted on 21 September 2010. 107  European Union and a Member State—Seizure of Generic Drugs in Transit, Requests for Consultations by India, WT/DS408/1, dated 19 May 2010; and European Union and a Member State— Seizure of Generic Drugs in Transit, Request for Consultations by Brazil, WT/DS409/1, dated 19 May 2010, both concerning GATT and TRIPS claims against several EU regulations and Dutch measures; European Union and a Member State—Certain Measures Concerning the Importation of Biodiesels, Request for the Establishment of a Panel by Argentina, WT/DS443/5, dated 7 December 2012, involving GATT and TRIMS claims against a Spanish Ministerial Order supposedly adopted pursuant to Dir (EC) No 2009/28; European Union and Certain Member States—Certain Measures Affecting the Renewable Energy Generation Sector, Request for Consultations by China, WT/DS452/1, dated 7 November 2012, regarding claims under GATT, SCM and TRIMS against Italian and Greek measures supposedly taken pursuant to Dir (EC) No 2009/28; European Union and Certain Member States— Certain Measures on the Importation and Marketing of Biodiesel and Measures Supporting the Biodiesel Industry, Request for Consultations by Argentina, WT/DS459/1, dated 23 May 2013, concerning claims under GATT, TBT, SCM and TRIMs against Dir (EC) No 2009/28 and Dir (EC) No 2009/30 and related measures taken by several Member States; European Union and its Member States— Certain Measures Relating to the Energy Sector, Request for the Establishment of a Panel by Russia, WT/DS476/2, dated 28 May 2015, involving claims under the GATT and GATS against the so-called ‘Third Energy Package’, and in particular Dir (EC) No 2009/73, as well as related EU legal instruments and implementing measures by the Member States.

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States’ measures taken in the framework of EU legislation in the field of energy and climate change policies.108 At the time of writing, the issue of EU/MS joint responsibility has only been addressed by the WTO Panel in the EC—IT Products (2010) dispute concerning the tariff treatment of certain information technology products, which the US, Japan and Chinese Taipei claimed was in breach of the EU’s and its Member States’ obligations under (inter alia) Articles II:1(a) and II:1(b) GATT as it did not respect their commitments to provide duty-free treatment for these products under the Information Technology Agreement (ITA).109 The complainants addressed the consultations and Panel requests jointly to the EU and its Member States, on grounds that both played a role in the application of the duties concerned. The complainants submitted that, while the EU had promulgated the challenged measures, customs authorities of the Member States, in implementing these EU regulations, issued ‘Binding Tariff Information’ decisions specifying the customs classification code and applied customs duties to the products at issue. They further argued that the ‘internal legal relationship’ between the EU and its Member States ‘cannot diminish the rights of other WTO members’, including under the DSU to bring claims against the EU Member States as WTO members in their own right.110 However, the EU notified the Panel that it would participate as sole respondent in the proceedings and bear sole responsibility for any GATT breach. As in the EC—Computer Equipment (1998) dispute discussed above, the EU’s assertion of exclusive responsibility was here supported by a combination of internal and WTO-based legal arguments. As could be expected, the Union reiterated its exclusive competence under EU law for all tariff matters, arguing that the role of national customs authorities was limited to applying measures previously enacted at EU level. But critically, it also stressed that this meant, from a WTO law perspective, that only the EU could take ‘remedial action’ to implement the Panel’s recommendations to the extent a GATT violation were determined, and thus ‘addressing any recommendations to each [EU] Member State would serve no useful purpose’.111 In addition, the Union sought to assure the Panel that the EU Member States would be required, as a matter of EU law, to apply any such implementing measures taken at EU level.112 The Panel made its recommendations to the EU only, hiding behind a rather formalistic argument (ie an ‘as such’ challenge), but,

108  For an overview, see T Perišin, ‘Pending EU Disputes in the WTO: Challenges to EU Energy Law and Policy’ (2014) 10 Croatian Yearbook of International Law 371. 109  EC—IT Products (2010), Request for the Establishment of a Panel by the United States, Japan and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, WT/DS375/8, WT/DS376/8, WT/DS377/6, dated 19 August 2008, which also includes claims under Article X GATT (publication and administration of trade regulations) by the United States and Chinese Taipei with regards to one of the products at issue (set-top boxes which have a communication function). 110  Panel Report in EC—IT Products (2010) (n 106), para 7.81. 111  ibid para 7.80. 112  ibid para 7.80.

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ultimately, persuaded that EU sole responsibility would bring a satisfactory settlement of this specific dispute: [W]e note that the complainants have framed their claims as challenging the [EU] measures ‘as such’ and have confirmed to the Panel that they are not making claims with respect to specific applications of those measures by national customs authorities of any member States. Under the circumstances, the Panel considers that it is not required to make, and does not make, findings with respect to member States’ application of the [EU] measures that were challenged ‘as such’ in this dispute. Moreover, we are of the view that findings with respect to the measures adopted by the [EU] will provide a positive solution to the dispute.113

D.  A Nuanced Picture on EU (Exclusive) Responsibility Two general conclusions can be drawn from the preceding analysis of EU/MS participation in the WTO dispute settlement system. First, theoretical questions such as ‘who is responsible for what’ arising from the joint EU/MS membership of the WTO have seldom been a controversial issue in dispute settlement practice. In fact, the question of EU/MS responsibility has thus far been litigated and directly addressed only on three occasions in WTO Panel proceedings (ie EC—Computer Equipment (1998), EC—IT Products (2010) and EC and Certain Member States— Large Civil Aircraft (2011)). Second, in these few instances where EU/MS responsibility was contentious, what caused contention was the EU’s eagerness to be held responsible in lieu of its Member States, and not them seeking to hide behind each other so as to evade international responsibility altogether.114 Put differently, concerns over ‘accountability gaps’ have not really materialised in EU/MS practice within the WTO dispute settlement system. That being so, in what ways does this contribution seek to offer a more nuanced assessment of the EU’s leading role in WTO dispute settlement vis-à-vis that found in the literature? The first qualification made here concerns the degree to which the EU’s assertion of exclusive participation and responsibility has been accepted by other WTO members and scrutinised by WTO dispute settlement organs. In this regard, it has been argued that WTO dispute settlement practice ‘has gone a long way in the direction of attributing the acts of the Member States to EU, in particular when the Member States implement EU law or when their acts fall within the scope of EU legislation’.115 Such a conclusion would seem premature for a number of reasons. First, as we have seen, out of the total 68 WTO disputes in which the EU was targeted as sole respondent, only a few actually raised this sensitive question of attribution of conduct of the EU Member States to the Union. Since the vast 113 

ibid para 8.2 (emphasis added). For a similar view, see Delgado Casteleiro and Larik (n 5) 255; Eeckhout (n 5) 7. 115  Kuijper and Paasivirta (n 6) 63; for a similar view, see Hoffmeister (n 17) 734 and 743; and Delgado Casteleiro (n 68) 202. 114 

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majority of these cases involved complaints against EU measures only—rather than specific applications thereof by the Member States—there was no ambiguity that the Union bore sole responsibility for the alleged WTO-inconsistency of such acts.116 Second, there were certainly some instances, particularly in the pre-Lisbon period, in which WTO members could have challenged but instead tacitly accepted EU exclusive responsibility for actions of the Member States taken under its (limited) normative authority, notably, EC—Asbestos (2001), EC—Commercial Vessels (2005) and EC—Biotech (2006). And it is also true that WTO panels have refrained from interfering with this course of action insofar as it was acquiesced to by WTO members. In this sense, the approach to EU/MS international responsibility in the WTO has been rightly described as being marked by both assertiveness of the Union and pragmatism of all parties involved.117 However, this does not necessarily set a precedent for future disputes.118 Indeed, the examination of post-Lisbon practice reveals that WTO members have increasingly brought joint complaints when challenging measures adopted by the Member States within the normative sphere of EU law,119 and it remains to be seen how these claims of joint EU/MS responsibility are dealt with if actually contested in WTO Panel proceedings.120 The second refinement made here pertains to the degree to which EU competence rules have been considered a relevant criterion for the purpose of allocating EU/MS international responsibility, in the three cases in which this proved a controversial issue before WTO panels. In this regard, it has been rightly noted that the approach of WTO panels has not been entirely consistent.121 Understandingly from an international law perspective, WTO panels have consistently taken the position that internal transfers of powers do not affect the validity of WTO obligations for EU Member States: as full WTO members in their own right, they are bound by the entire WTO Agreement (and its covered agreements), in spite of whatever competence the Union may have for parts thereof as a matter 116 

See nn 65 and 66. Delgado Casteleiro and Larik (n 5) 254; Eeckhout (n 5) 7. This point is further corroborated by the fact that there is no strict rule of stare decisis in WTO dispute settlement according to which previous rulings bind panels in subsequent cases, nor an Appellate Body decision on the matter that could be relied upon by future panels; see P van den Bossche, The Law and Policy of the World Trade Organization 3rd edn (Cambridge, Cambridge University Press, 2013) 51–53. 119  On this point, see further s IV.A below with specific reference to: European Union and Certain Member States—Certain Measures on the Importation and Marketing of Biodiesel and Measures Supporting the Biodiesel Industry, Request for Consultations by Argentina, WT/DS459/1, dated 23 May 2013. 120  In this context, note that the Panel in EC—IT Products (2010) (n 106), para 8.2, sounded a warning that, if necessary, it would have been prepared to address specific recommendations to the Member States, even if they are merely implementing EU legislation found WTO-inconsistent: ‘[EU] member states are WTO Members in their own right and … like all WTO Members, they are bound to act consistently with their WTO obligations. Thus, if one or more [EU] member States were found to have applied WTO inconsistent measures, be they enacted by the States themselves or by the [EU], it could be appropriate to find that the member States have acted inconsistently with their WTO obligations.’ For a similar reading, see L Bartels, ‘Procedural Aspects of Shared Responsibility in the WTO Dispute Settlement System’ (2013) 4(2) Journal of International Dispute Settlement 343, 352. 121  Kuijper and Paasivirta (n 6) 60. 117 

118 

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of EU law.122 In other words, the ‘rules of the organisation’ are largely irrelevant for the question of apportioning WTO obligations. Conversely, the available WTO jurisprudence is less clear on the extent to which the ‘rules of the organisation’ may be relevant to the question of attributing acts of the Member States to the Union. Whereas in cases of classical EU executive federalism (ie EC—Computer Equipment (1998) and EC—IT Products (2010)) WTO panels have ultimately accepted the Union’s sole responsibility for acts of its Member States when implementing EU (customs) legislation found in violation of the GATT, the Panel in EC and Certain Member States—Large Civil Aircraft (2011)) drew a line in this regard and held both the EU and its Member States responsible for breaches of the SCM Agreement. These different findings cannot be easily explained in light of the internal allocation of competences, since both the GATT and the SCM Agreement have long been within the exclusive external competence of the Union. Yet, as will be argued next, this case law may appear less inconsistent if viewed from the perspective of a WTO Panel and its very purpose in assigning responsibility for an internationally wrongful act in the specific treaty context of the WTO.

IV.  EU/MS International Responsibility in the WTO—A Model or a Case Apart? A.  A ‘Competence Model’ or a ‘Competence/Remedy Model’? In comparing the different approaches to EU/MS international responsibility in the WTO and under the European Convention on Human Rights, Kuijper aptly qualifies the relative impact of the EU’s internal rules on determinations of international responsibility. He argues that it is not just internal factors, such as the scope of EU powers and whether the Member States may be seen as de facto Union organs in certain instances, which determine the degree to which the EU will bear sole or joint responsibility.123 Rather, these internal elements will ‘strongly vary in impact on the final questions of attribution and responsibility’ depending on the specific treaty regime in which the responsibility of the EU and/or its Member States is invoked, and in particular the prevailing remedy for an internationally wrongful act preferred by the regime in question.124 In the context of the WTO, both the legal texts and the practice of the dispute settlement organs clearly attach

122  Panel Report in EC—Computer Equipment (1998) (n 82), para 8.16; Panel Report in EC—IT Products (2010) (n 106), para 8.2; Panel Report in EC and Certain Member States—Large Civil Aircraft (2011) (n 97), para 7.174. 123  PJ Kuijper, ‘Attribution—Responsibility—Remedy: Some Comments on the EU in Different International Regimes’ (2014) SHARES Research Paper 30, 20. 124  ibid at 2.

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a strong preference for juridical restitution—ie the ‘prompt’ withdrawal (or modification) of the WTO-inconsistent measure and continued performance of WTO obligations.125 In such a system, where the primary consequence of international responsibility is the return to legality, the key question becomes who (ie the EU or the Member States, or both) has the actual power to undo the wrongful act and ensure conformity to existing WTO obligations. In this sense, as rightly pointed out by Nollkaemper, the role of power in determining international responsibility (whether joint or not) is a fundamental one.126 Put simply, why would WTO dispute settlement organs bother to assign responsibility to a WTO member that does not hold the power to remove (or modify) the measure found WTO-inconsistent? That being said, does it necessarily follow that the EU is the one and only able to provide for restitution and ensure performance of WTO obligations in all instances? This would seem to be the view taken by Kuijper and Paasivirta in suggesting the so-called ‘competence model’ for managing EU/MS international responsibility in the WTO. In their opinion, the relevant WTO member is always the EU, and not the Member States, because the near-exclusive EU external competence for WTO matters post-Lisbon implicates that only its institutions can provide for the necessary restitution. Following this line of reasoning, the EU should be solely responsible for the WTO-inconsistency of all acts taken in the sphere of EU law, including by its Member States.127 But if this proposition is accepted, what would be the legal justification for the Member States to remain independent members of the WTO, given they are claimed entirely incompetent to fulfil one of the core obligations of that membership—ie to ensure the conformity of their laws, regulations and administrative procedures with WTO obligations?128 In reality, the proposed ‘competence model’ may need some refinement, as evidenced by the EU’s own argumentation in the three WTO cases previously discussed, in which EU/MS responsibility proved contentious in Panel proceedings. On the one hand, the two premises underlying the ‘competence model’ appear perfectly sensible when applied to situations of classical EU executive federalism such as those posed by the EC—Computer Equipment (1998) and EC—IT Products (2010) disputes involving EU customs legislation. In both cases, it was plainly clear that: first, the EU had required the Member States to act inconsistently with WTO

125  Art 3.7 DSU reads: ‘In the absence of a mutually agreed solution, the first objective of the dispute settlement mechanism is usually to secure the withdrawal of the measures concerned if these are found to be inconsistent with the provisions of any of the covered agreements…’ (emphasis added); see also Arts 19.1 and 21.1 DSU; and van den Bossche (n 118) 194–95 for an overview. 126  Nollkaemper (n 32) 307–08 and 346. 127  This ‘competence model’ was first introduced in Kuijper and Paasivirta (n 6) 54–55, and further elaborated in Kuijper (n 123) 8–9 and 18. A similar view is taken by Hoffmeister (n 17) 743: ‘Article 2(1) TEU expresses the rule that Member States can no longer act in such exclusive Union policies unless if so empowered by the Union. Accordingly, Union law contains a strong indication that in areas of exclusive external Union competence action of either the Union institutions or the Member States should be attributed to the Union, as only the Union has the legal power to act in this field and to remedy the potential breach of international law.’ (Emphasis added.) 128  See Art XVI:4 WTO Agreement.

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law—ie by adopting the challenged (directly applicable) regulations that Member States had no choice but to apply and which left no room for discretion in terms of implementation; and, second, the EU was the only entity with the actual power to provide restitution—ie to modify/withdraw the regulations found WTOinconsistent. Under these circumstances where the Union has full ex ante and ex post normative control over Member State action, it would not be very efficient nor provide much legal certainty from a third party perspective, to hold EU Member States responsible as they do not have any individual power to undo the wrongful situation and ensure performance of WTO obligations. On the other hand, it is less straightforward whether these two assumptions underpinning the ‘competence model’ can be upheld as we move away from tariffs and customs matters into other areas of WTO law, which are not so extensively regulated at EU level and where the role of the EU Member States is not strictly confined to executing EU law. This point is well illustrated by the EC and Certain Member States—Large Civil Aircraft (2011) dispute. First, it is generally the case that, in the field of state aid, the EU does not require but at most authorises Member States to provide aid under certain conditions,129 and therefore Member States do enjoy some level of discretion in whether or not they act in contravention of the SCM Agreement. Moreover, in this particular dispute, the EU did not point to any Commission state aid decision actually authorising the separate subsidies granted by the Member States,130 and it has indeed been reported that such subsidies were not subject to a specific EU authorisation.131 This being so, it would be hard to see how the EU could claim to exercise normative control over subsidising action taken by the Member States where there appears to be no basis in EU law for assessing the substantive legality of such action.132 Indeed, even in an area where the EU has exclusive competence both externally and internally,133 it may be possible for Member States to act outside the scope of EU normative authority in a manner that violates the SCM Agreement. A key reason for this is that the Commission’s powers of control are limited to government support that constitutes ‘state aid’, which is a narrower concept than the WTO’s notion of ‘subsidy’.134 129 

See n 50. See eg EC and Certain Member States—Large Civil Aircraft (2011), First Written Submission by the European Communities, WT/DS316, dated 9 February 2007, 89–95 providing the factual background to MSF/LA arrangements. 131  See eg Kuijper and Paasivirta (n 6) 63; and Delgado (n 68) 206. In this sense, EC and Certain Member States—Large Civil Aircraft (2011) significantly differs from the EC—Commercial Vessels (2005), where EU law was clearly at the origin of the national aid schemes found WTO-inconsistent and EU sole responsibility was accepted (see s III.B). 132  Hoffmeister (n 17) 742, stating that it is necessary to establish that EU law governs the substantive legality of Member State action as one of the conditions for determining ‘normative control’ of the Union for the purpose of international responsibility. 133  See Art 3(1)(b) TFEU. 134  An obvious reason for this is that Art 107(1) TFEU confines ‘State aid’ to government support measures that distort competition and trade within the EU, whereas WTO disciplines apply more broadly apply to subsidies that affect international trade (eg, export and import substitution subsidies prohibited under Art 3 SCM Agreement) and cause ‘adverse effects’ to other WTO members 130 

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Second, in terms of remedial action, the EU did not attempt to argue that it was best placed to implement the Panel’s recommendations. In fact, it is far from evident that the Union alone could have remedied the wrongful situation, particularly for those ‘Member State Financing’ (or ‘Launch Aid’) measures that the Panel found to constitute a prohibited (export) subsidy under Article 3.1(a) SCM Agreement and had to be withdrawn within 90 days.135 Under these circumstances, it appears perfectly sensible for the Panel to address individual recommendations to each subsidising EU Member State, as they had actual power and full discretion to withdraw their WTO-inconsistent subsidies with no need for any prior EU legislative action. Therefore, the EC and Certain Member States—Large Civil Aircraft (2011) dispute highlights that a perfect match between EU exclusive external competence for WTO matters and exclusive remedial capacity for any breach of WTO law, which underlies the ‘competence model’, cannot simply be taken for granted. The question remains, however, whether this may be considered a marginal case due to the peculiarities of EU state aid rules, or conversely whether similar doubts as to the EU’s exclusive ability to provide restitution could arise in other fields of WTO law. Arguably, this could also become an issue in WTO disputes involving acts of the Member States apparently aimed at implementing EU Directives, where it can be highly complex, particularly for a third party, to identify whether the alleged WTO-inconsistent measure is required by EU law, or instead results from an autonomous decision of the Member State, or indeed implicates both.136 A case in point is the recent complaint brought by Argentina against the EU and some of its Member States regarding certain measures affecting the marketing of biodiesel products and supporting the biodiesel industry.137 On the one hand, the EU seems clearly responsible for GATT/TBT claims against the ‘sustainability criteria’ for biofuels and bioliquids:138 these are established as mandatory common

(ie, so-called ‘actionable subsidies’ under Art 5 SCM Agreement). For further discussion, in the specific context of the EC and Certain Member States—Large Civil Aircraft (2011) dispute, see M Wu, ‘Why not Brussels? European Community State Aid Rules and the Boeing-Airbus Dispute: Comment on Piet Jan Slot’ in KW Bagwell, GA Bermann and PC Mavroidis, Law and Economics of Contingent Protection in International Trade (Cambridge, Cambridge University Press, 2010). 135  Panel Report in EC and Certain Member States—Large Civil Aircraft (2011) (n 97), paras 8.1 and 8.6, pursuant to Art 4.7 SCM Agreement. Note, however, that this finding was reversed by the Appellate Body: see Appellate Body Report in EC and Certain Member States—Large Civil Aircraft (2011) (n 105), paras 1415–16. 136  See eg European Union and Certain Member States—Certain Measures Affecting the Renewable Energy Generation Sector, Request for Consultations by China, WT/DS452/1, dated 7 November 2012, at 1, whereby China challenges the domestic content restrictions in the feed-tariff programmes of Greece and Italy stating that ‘these measures appear to have been promulgated under the powers delegated to EU Member States by, inter alia, Directive 2009/28/EC …’. 137  European Union and Certain Member States—Certain Measures on the Importation and Marketing of Biodiesel and Measures Supporting the Biodiesel Industry, Request for Consultations by Argentina, WT/DS459/1, dated 23 May 2013. 138  ibid at 1–4. In particular, Argentina objects to the requirement that, in order to be considered ‘sustainable’, biofuels and bioliquids must save at least 35% of green house emissions relative to fossil

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standards in the EU Renewable Energy and Fuel Quality Directives139—ie only conforming biofuels and bioliquids may count towards meeting the obligatory national renewable energy targets set out for each Member State140 and/or be eligible for financial support—and, therefore, only the EU is in a position to modify (or withdraw) these criteria if found WTO-inconsistent. On the other hand, it is less obvious whether the Union is equally responsible for GATT/SCM claims against tax exemptions/reductions on such ‘sustainable’ biofuels allegedly applied by some EU Member States:141 these tax incentives are not, strictly speaking, required by EU law142 and therefore Member States retain the power to withdraw them if found WTO-inconsistent. In fact, this case raises the type of responsibility question that was pragmatically avoided in the EC—Biotech (2006) dispute discussed above and, should it reach Panel proceedings, may provide a first opportunity for WTO dispute settlement organs to actually rule on the question of who is responsible for conduct of the member states that is authorised in EU Directives.143 fuels, arguing that this threshold is arbitrary and appears neither to be scientifically proven nor based on any international standard. With regards to these GATT/TBT claims (PART A), Argentina appears indeed to invoke solely EU responsibility, in referring to Art XVI:4 WTO Agreement: ‘the measures do not appear to conform to the obligation of the European Union to ensure the conformity of its laws, regulations and administrative procedures with the obligations incumbent upon it under the annexed Agreements.’ (Emphasis added.) This reference is not made with respect to GATT/SCM claims in Part B of the consultations request (see n 141). 139  See Dir No 2009/28/EC [2009] OJ L140/16, Art 17; Dir No 2009/30/EC [2009] OJ L140/88, Art 7(b). 140  Dir 2009/28/EC, Art 3 and Annex I, sets out legally binding and differentiated targets for each Member State, in order to: (i) increase the share of renewable energy to at least 20% in EU gross final consumption of energy by 2020; (ii) increase the share of renewable energy to 10% of energy used in the transport sector in each Member State by 2020. For a discussion, see A Swinbank and G Daugbjerg, ‘Improving EU Biofuels Policy?’ Greenhouse Gas Emission, Policy Efficiency and WTO Compatibility’ (2013) 47 Journal of World Trade 813. 141  European Union and Certain Member States—Certain Measures on the Importation and Marketing of Biodiesel and Measures Supporting the Biodiesel Industry, Request for Consultations by Argentina, WT/DS459/1, dated 23 May 2013, at 4–7. The EU Member States concerned are Belgium and France. 142  Dir 2003/96/EC, para 26 of the Preamble and Art 15 allow Member States to exempt or reduce excise duties so as to promote the use of biofuels. As such tax exemption/reduction may constitute ‘state aid’, Member States are required (Art 26) to notify such measures to, and obtain approval from, the Commission pursuant to Art 108 TFEU (see n 50). Implementation of such tax incentive schemes varies significantly across EU Member States: for an overview, see A Jung et al, Biofuels—At What Cost? Government Support for Ethanol and Biodiesel in the European Union: 2010 Update (International Institute for Sustainable Development, July 2010) 42–47, available at: www.iisd.org/gsi/sites/default/files/ bf_eunion_2010update.pdf. 143  See also, European Union and its Member States—Certain Measures Relating to the Energy Sector, Request for the Establishment of a Panel by Russia, WT/DS476/2, dated 28 May 2015, concerning inter alia GATS claims against Dir (EC) No 2009/73 and Member State implementing measures, particularly by Croatia, Hungary and Lithuania. Here, however, the degree of discretion left to the Member States in implementing the EU Dir (ie, they may select among three alternative ‘unbundling’ models provided for in Art 9 in ensuring the separation of natural gas production/supply from transmission networks) does not appear to be the only rationale for invoking their responsibility. Rather, the alleged claims of violation of Arts XVI and XVII GATS are based on the specific commitments that the three EU Member States concerned (presumably) undertook in their individual Services Schedules (see n 28) with respect to pipeline transport services.

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In addition, one should bear in mind that there is no strict parallelism between EU exclusive external competence in the field of the CCP and the distribution of internal regulatory competences between the EU and its Member States.144 To put it differently, even if it is accepted that the Union has exclusive treaty-making powers for (nearly) all WTO matters, it does not have exclusive treaty-infringing powers. There are some important policy fields covered by WTO law that have been only partially regulated at EU level and where Member States retain considerable regulatory autonomy internally. One example seen earlier is internal taxation (covered by GATT)145 and another is patent law (covered by TRIPS).146 In these areas, it could well be that an act of a Member State outside the scope of EU legislation infringes WTO law. If presented with such a scenario, proponents of EU exclusive responsibility may still argue that the Union has internal control mechanisms to effectively ensure compliance with an adverse WTO ruling,147 notably by initiating infringement proceedings against the Member State(s) concerned.148 However, from the perspective of the WTO dispute settlement organs, why would this be any more effective than holding the infringing EU Member State directly responsible? To sum up, when approaching EU/MS responsibility for breaches of WTO law, the key practical question is who has the actual power to provide juridical restitution and secure performance of WTO obligations, as underscored by the ‘competence/remedy’ model suggested here. From this angle, EU competence rules become a relevant criterion for the purposes of attributing EU/MS international responsibility: complaining parties would generally address their claims,149

144  This is reflected in Art 207(6) TFEU, providing that the exercise of EU exclusive competence in the field of common commercial policy ‘shall not affect the delimitation of competences between the Union and the Member States, and shall not lead to harmonisation of legislative or regulatory provisions of the Member States in so far as the Treaties exclude such harmonisation’. 145  Art 113 TFEU provides the legal basis for the harmonisation of national legislations for certain forms of taxation (eg turnover taxes, excise duties and other forms of indirect taxation), but only ‘to the extent that such harmonisation is necessary to ensure the establishment and the functioning of the internal market and to avoid distortion of competition’. On this point, see Eeckhout (n 5) 10. 146  Art 118 TFEU provides the legal basis for the creation of European intellectual property rights and for the setting up of centralised Union-wide authorisation, coordination and supervision arrangements. One of the few pieces of EU legislation in the field of patent law: Dir 98/44/EC of the European Parliament and of the Council of 6 July 1998 on the legal protection of biotechnological inventions [1998] OJ L213/13. For an account of the difficulties in harmonising patent law at EU level, see Aurora Plomer, ch 13 in this volume. 147  See Kuijper and Paasivirta (n 6) 39 and 59. 148  Arts 258 and 260 TFEU; and C-239/03 Commission v France (Étang de Berre) [2004] ECR I-9325, para 29 (concerning also a ‘mixed’ agreement). Pursuant to Art 216(2) TFEU, the WTO covered agreements are also binding upon the EU Member States as a matter of EU law, and thus they are under an obligation in EU law to adopt the necessary measures to implement WTO obligations, and refrain from taking any measure that would undermine due performance of such obligations. See generally, M Mendez, ‘The Enforcement of EU Agreements: Bolstering the Effectiveness of Treaty Law?’ (2010) 47(6) Common Market Law Review 1719. 149  However, see Delgado Casteleiro and Larik (n 5) 253 rightly noting that complaining parties in the WTO may strategically target the EU as a respondent, rather than individual Member States, fostered by the prospects of being capable to retaliate (ie ‘suspension of concessions or other obligations’ as one of the temporary remedies provided for in Arts 3.7 and 22.2 DSU) against the EU as a whole in

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and WTO dispute settlement organs would address their findings, based on their assessment of who is in the best position to withdraw or amend the WTOinconsistent measure.150 However, and contrary to what Kuipjer and Paasivirta’s competence model suggests, it does not follow that the EU—and not its Member States—is the relevant WTO member in each and every case just because it has exclusive external competence for WTO matters. This is because the division of external competences under EU law says nothing about who has the power to act internally to undo an internationally wrongful situation but merely indicates who has the power to conclude a given international treaty. From the perspective of providing juridical restitution, what matters is the division of internal (and not external) regulatory competences under EU law, as well as the manner in which these are exercised by the Union and/or its Member States. As discussed earlier, and particularly when moving away from highly integrated areas of the CCP, there may be instances in which Member States are the relevant WTO member with the power to take remedial action because EU normative control over their WTOinfringing conduct is either limited or absent altogether. In this case, and so as long as the EU Member States are targeted as respondents, there appear to be no compelling grounds why WTO dispute settlement organs should instead rely on the Commission’s infringement action or other internal enforcement mechanisms so as to ensure due performance by the Member States of their WTO obligations.

B.  A Case Apart? The aforementioned ‘competence/remedy’ model for EU/MS international responsibility in the WTO inevitably raises the question as to whether the internal division of powers between the EU and its Member States may matter less for determinations of international responsibility in other treaty regimes which, unlike the WTO dispute settlement system, do not favour juridical restitution as the primary remedy for breaches. This proposition is, indeed, supported by the approach taken to the apportionment of responsibility between the EU and its Member States in the context of investor–state dispute settlement (ISDS) proceedings, where the most common remedy is monetary compensation.151 Thus, in this treaty context, the key question is most often who should pay any monetary damages awarded by arbitral tribunals, and not so much who holds the power to undo a wrongful act.152 As will be examined below, even though foreign direct their quest to induce compliance. Yet arguably, this possibility of retaliating against the EU as a whole is not impaired by bringing joint complaints against the EU and (some of) its Member States. 150  For a similar view, in the context of non-compliance proceedings under multilateral environmental agreements, see Nollkaemper (n 32) 343 and 346. 151  See eg R Dolzer and C Shreuer, Principles of International Investment Law 2nd edn (Oxford, Oxford University Press, 2012) 296–97. 152  While arbitral tribunals do in principle have the power to award restitution (unless excluded in a given investment treaty), it has seldom been requested and awarded in practice. On the reasons for this, see S Ripinsky and K Williams, Damages in International Investment Law (British Institute of International and Comparative Law, 2008) 57–59.

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investment (FDI) is also in an area of exclusive EU external competence,153 here the EU seems less eager to assume exclusive responsibility at all costs. The reasons for this are spelled out in the recently adopted EU Regulation establishing a framework for managing financial responsibility linked to ISDS,154 but are somehow contradictory. On the one hand, the Regulation reaffirms the view that international responsibility should follow the internal division of powers: given that the EU is exclusively competent to assume international obligations in the field of FDI, in principle only the EU can act as a respondent and be held internationally responsible for violations of FDI provisions, ‘irrespective of whether the treatment at issue is afforded by the Union itself or by a Member State’.155 On the other hand, the Regulation seeks to distinguish between this external responsibility under public international law and the allocation of financial responsibility as an internal EU law matter, decided irrespective of international responsibility: Where the Union … has international responsibility for the treatment afforded, it will be expected, as a matter of international law, to pay any adverse award and bear the costs of any dispute. However, an adverse award may potentially flow either from treatment afforded by the Union itself or from treatment afforded by a Member State. It would as a consequence be inequitable if awards and the costs of arbitration were to be paid from the budget of the Union where the treatment was afforded by a Member State, unless the treatment in question is required by Union law. It is therefore necessary that financial responsibility be allocated, as a matter of Union law, between the Union itself and the Member State responsible for the treatment afforded on the basis of criteria established by this Regulation.156

It is questionable whether such a distinction is convincing, partly because the EU Regulation directly links the internal allocation of financial responsibility with 153  Following the entry into force of the Lisbon Treaty, foreign direct investment is now included within the CCP under Art 207(1) TFEU. On this new competence, see inter alia JA Bischoff, ‘Just a Little BIT of “Mixity”? The EU’s Role in the Field of International Investment Protection Law’ (2011) 48(5) Common Market Law Review 1527; J Chaisse, ‘Promises and Pitfalls of the European Union Policy on Foreign Investment—How Will the New EU Competence on FDI Affect the Emerging Global Regime’ (2012) 15(1) Journal of International Economic Law 51; RV Puig, ‘The Scope of the New Exclusive Competence of the European Union with regard to Foreign Direct Investment’ (2013) 40(2) Legal Issues of Economic Integration 133. 154  Reg (EU) No 912/2014 of the European Parliament and of the Council of 23 July 2014 establishing a framework for managing financial responsibility linked to investor-to-state dispute settlement tribunals established by international agreements to which the European Union is party [2014] OJ L257/121 (hereinafter, ‘EU Reg No 912/2014’). For a more detailed account, see Catharine Titi, ch 5 in this volume. 155  Reg (EU) No 912/2014, para 3 of the Preamble. See also, European Commission, ‘Proposal for a Regulation of the European Parliament and of the Council establishing a framework for managing financial responsibility linked to investor-state dispute settlement tribunals established by international agreements to which the European Union is party’ (COM (2012) 335 final), dated 21 June 2012, at 4 stating that: ‘Should it be the case that both the European Union and the Member States are parties to an agreement and it needs to be decided who is responsible as a matter of international law for any particular action, the Commission takes the view that this has to be decided not by the author of the act, but on the basis of the competence for the subject matter of the international rules in question, as set down in the Treaty. In this perspective, it is immaterial that a Member State has competence under the rules on the internal market allowing it to legislate in its domestic sphere.’ (Emphasis added.) 156  Reg (EU) No 912/2014, para 5 of the Preamble. (Emphasis added.)

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respondent status in ISDS proceedings. As a general rule,157 participation in arbitral proceedings follows the division of financial responsibility, whereby the EU should act as sole respondent where the dispute: (i) involves (exclusively or also) treatment afforded by its institutions; or (ii) involves treatment afforded by the EU Member States insofar as the treatment concerned ‘is required by Union law’.158 Unless this is so, EU Member States should act as the respondent in investment disputes concerning treatment afforded by their own organs.159 In case of an adverse ruling, EU Member States would not only bear financial responsibility under EU law, but also, and importantly, under international law—ie an international law obligation to pay damages awarded by the arbitral tribunal in question.160 It follows therefore that, in the context of ISDS, the EU is only ready to take up international responsibility for acts of its Member States to the extent that such conduct is required by EU law. While this criterion is not crystal-clear and may not always be easy to apply in practice,161 ‘required by Union law’ does narrow the scope of EU sole responsibility for the acts of its Member States in the investment context. Arguably, it does not encompass all instances in which EU Member States act in the execution of EU legislation, but this will depend on the level of discretion left to them in terms of implementation.162 In other words, emphasis 157  ibid, Art 9 provides exceptions to this general rule, whereby the EU will act as the respondent independently of where financial responsibility lies, notably: (i) where similar treatment is being challenged in a related claim against the EU in the WTO, provided that a WTO panel has been established and the claim concerns the same specific legal issue and it is necessary to ensure consistent argumentation in the WTO (Art 9(3)); and (ii) where EU Member States decline to act as respondents, even though financial responsibility lies with them (Art 9(1)(b)). 158  Reg (EU) No 912/2014, paras 7–9 of the Preamble; Art 3(1)(a) and (c); Art 4(1); Art 9(2). 159  ibid, Art 9(1). Therefore, the Reg seeks to eliminate the possibility of bringing a claim simultaneously against both the EU and the Member States: see further, F Baetens, G Kreijen and A Varga, ‘Determining International Responsibility under the New Extra-EU Investment Agreements: What Foreign Investors in the EU Should Know’ (2014) 47(5) Vanderbilt Journal of Transnational Law 1203, 1225–27. This ‘either/or’ approach has also been incorporated in the EU–Canada Comprehensive Economic and Trade Agreement (CETA), Art X.20, which provides a procedural mechanism for the determination of respondent status in disputes with the EU or its Member States. In essence, the EU is under an obligation to inform the investor concerned as to whether the Union or a Member State shall be the respondent and thus discharge international responsibility. If it fails to do so within 50 days, responsibility will be divided as follows: (i) where the measures identified by the investor are exclusively measures of a Member State, that Member State shall be the respondent; (ii) where the measures identified by the investor include measures of the EU, the Union shall be respondent. 160  A Dimopoulos, ‘The Involvement of the EU in Investor-State Dispute Settlement: A Question of Responsibilities’ (2014) 51 Common Market Law Review 1671, 1677–78. 161  See on this point, C Tiejte, E Sipiorsk and G Topfër, Responsibility in Investor–State Arbitration in the EU (European Parliament, 2012) 18–19, available at: www.europarl.europa.eu/RegData/etudes/ etudes/join/2012/457126/EXPO-INTA_ET%282012%29457126_EN.pdf. 162  See notably, Reg (EU) No 912/2014, para 7 of the Preamble, qualifying this criterion in the context of EU Directives: ‘where the Member State acts in a manner required by Union law, for example in transposing a directive adopted by the Union, the Union itself should bear financial responsibility in so far as the treatment concerned is required by Union law.’ (Emphasis added.) For a seemingly more flexible reading as incorporating all instances in which member states act to implement EU law, see A Delgado Casteleiro, ‘The International Responsibility of the European Union—The EU Perspective: Between Pragmatism and Proceduralisation’ (2012–13) 15 Cambridge Journal of European Legal Studies 563, 580–81 (referring to the ‘EU’s normative control’) and 586 (referring to ‘implementing EU law’).

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here is not so much on who is competent for contracting the international investment obligation in question, but rather on whether a provision in EU law is actually at the origin of the breach. Whereas this more cautious approach in asserting EU exclusive responsibility vis-à-vis that taken in the WTO may be explained by moral hazard concerns,163 it is nonetheless at odds with the EU’s own argument that the scope of EU exclusive external powers should be the decisive factor for assigning EU/MS responsibility under mixed agreements.164

V. Conclusions It is largely undisputed that the EU has played a prominent role in the WTO dispute settlement system over the past two decades. As one of the rare international fora where the EU is actually allowed to fully participate in dispute settlement proceedings, it is not surprising that the Union has been eager to stand as a ‘responsible’—if not ‘over-responsible’—actor in the multilateral trading system, even if not always compliant with WTO law. And yet, this ‘success story’ should not lead us to overstate the degree to which third parties have accepted the EU’s eagerness to assume exclusive responsibility for breaches of WTO law by its Member States, nor to misrepresent the relative impact of its own competence rules on determinations of EU/MS international responsibility in the WTO. The main reason calling for a more qualified assessment is that there is (currently) simply no well-established authoritative WTO jurisprudence on the sensitive question of when can Member State conduct be attributed to the Union.165 As seen earlier, it has been raised and adjudicated only on three occasions in WTO Panel proceedings and never, thus far, in Appellate Body proceedings. In addition, WTO dispute settlement practice reveals that joint complaints against the EU and its Member States have not ceased, even if the Union has been granted exclusive external powers for almost all WTO matters under the Lisbon Treaty. Nonetheless, in the three cases where EU/MS responsibility was contentious, WTO panels have unambiguously held that EU Member States are bound to perform all obligations incumbent upon them under the WTO Agreement (and its annexed agreements), so as long as they remain full and independent members of the WTO and irrespective of the exclusive external powers they may have 163  See Dimopoulos (n 160) 1676, noting that, unlike in the WTO dispute settlement system (where the primary remedy is not compensation), the assumption by the EU of international responsibility for all Member State acts violating investment obligations raises very significant moral hazard concerns: ‘Member States may act in violation of their obligations under EU [international investment agreements], knowing that compensation will be paid by the EU and (indirectly) shared by all Member States.’ Arguably, similar moral hazard concerns could arise with regards to retaliation in the WTO dispute settlement system, albeit this is only a secondary remedy therein (see n 159). 164  See s II.B. 165  See s III.D, indicating that the vast majority of the total 68 WTO disputes in which the EU was targeted as sole respondent concerned EU measures only—and not Member States’ measures as such— and therefore there was no ambiguity that such EU acts were attributable to the Union.

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transferred to the Union in the CCP field under EU law. While this stance may grate on the ears of most EU lawyers, it is legally sound from an international law standpoint. Moreover, it is also wise from a broader governance perspective: to put it bluntly, it is not for WTO dispute settlement organs to turn the WTO Agreement de facto into a ‘pure’ EU agreement for the purpose of international responsibility.166 That being so, in assigning international responsibility—ie whether solely to the EU (EC—Computer Equipment (1998) and EC—IT Products (2010)) or jointly with (some of) its Member States (EC and Certain Member States—Large Civil Aircraft (2011)), these WTO panels were seemingly guided by one pragmatic consideration: who has the actual power to remove (or modify) the measure found to be WTO-inconsistent? Therefore, it is this special feature of the WTO dispute settlement system—ie a clear preference for juridical restitution as a primary remedy for breaches of WTO law—that ultimately renders the division of competences between the EU and the Member States under EU law a relevant criterion in deciding who should be held responsible in the WTO. This ‘competence/remedy’ model for managing EU/MS international responsibility in the WTO may thus remain a case apart, unique to that dispute settlement regime, as notably demonstrated by the more cautious EU approach emerging in the investment field. However, and contrary to what other scholars appear to suggest,167 it is not a foregone conclusion that the EU is always the one and only entity with the actual power to provide juridical restitution in the WTO dispute settlement system, just because it has exclusive external competence for nearly all WTO matters. This is undoubtedly the case when it comes to highly harmonised segments of the CCP (eg tariffs and customs matters), where the conduct of Member States is strictly confined to implementing directly applicable EU legislation: evidently, the EU only can amend/withdraw such legislation if it is found to be WTO-inconsistent. And yet, as discussed earlier, it is less straightforward why the EU would also have an exclusive remedial capacity for breaches of WTO law in cases where its normative control over Member State action is more limited, or indeed entirely absent. For instance, why couldn’t the EU Member States themselves withdraw their own subsidies, or regulatory measures permitted but not required by EU law, if found to be WTO-inconsistent? In fact, from the perspective of providing juridical restitution, it is not the division of external (ie treaty-making) competences between the EU and Member States that is of primordial importance but, rather, the delimitation and exercise of internal (treaty-infringing/treaty-performing) competences—and, importantly, the latter are not within the exclusive regulatory domain of the Union for all subject matters covered by WTO law.168 166  In a post-Lisbon setting, this would have likely been the practical consequence had WTO dispute settlement organs accepted the Commission’s proposition (supported by some EU law scholars) that the apportionment of obligations should strictly follow the distribution of external competences under EU law and be the decisive factor in assigning international responsibility (see s II.B). 167  See n 127. 168  See ss II.C and IV.A, pointing to several policy areas covered by WTO law where there has been (as of yet) no full harmonisation of national laws, because they have been only partially regulated at EU level (eg minimum standard Dirs in the areas of consumer and environmental protection), or even not at all (eg certain forms of internal taxation).

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This being so, insofar as an EU Member State is targeted as a respondent in a WTO dispute and holds the power to end an eventual breach of its WTO obligations, there are no cogent reasons why WTO dispute settlement organs should rely on EU control mechanisms169 instead of making the Member State directly responsible and accountable under WTO law. Indeed, it could be argued that this would not only make little sense from an international law perspective, but also be undesirable for intra-EU ‘fairness’ considerations. To retake the logic underpinning the EU Regulation on financial responsibility in the ISDS context,170 why would it be any more ‘fair’ in the WTO for the EU to face the consequences of international responsibility (including possible retaliation) en bloc, when a breach of WTO law is caused by a discretionary (ie where EU law merely authorises) or fully autonomous (ie where there is no EU legislation) decision of one (or some) of its Member States? In closing, it is important to underline that the issue of EU/MS international responsibility in the WTO is not, of course, a purely legal question but one that is highly political for all players involved. For the EU, the capacity to speak with one voice and assert its exclusive responsibility in the WTO dispute settlement system is certainly instrumental in forging its own identity as a leading trade actor on the global stage,171 but also important at a more practical level.172 At the same time, it appears politically unviable for (some) EU Member States to even consider relinquishing their independent membership of the WTO.173 For their part, other WTO members may target the EU and its Member States jointly as respondents not solely out of genuine legal concerns,174 but strategically as a means to challenge the Union’s unity and leadership in the WTO.175 In these circumstances, the EU and its Member States may increasingly find themselves at a crossroad between maintaining their ‘joint’ membership of the WTO while claiming the EU’s ‘exclusive’ responsibility in its dispute settlement system. Indeed, aside from voting and other political considerations,176 one may well question whether there 169  Again, doing so would de facto turn the WTO Agreement into a ‘pure’ EU agreement, whereby EU Member States are not seen as WTO members in their own right and bearers of the contractual obligations, but mere vehicles for carrying out the EU’s obligations under WTO law. 170  Reg (EU) No 912/2014, para 5 of the Preamble, discussed in s IV.B. 171  See inter alia, Baetens, Kreijen and Varga (n 159) 1244; Delgado Casteleiro and Larik (n 5) 255. 172  See Kuijper (n 5) 224, arguing that ‘[f]or practical reasons, there can be no question of drafting submissions to WTO Panels and Appellate Body in a commission consisting of the Commission and all the Member States: it would be the death of any coherent application or defence before these jurisdictional organs’. 173  See eg M Hanh and L Danieli, ‘You’ll Never Walk Alone: The European Union and its Member States in the WTO’ in M Bungenberg and C Herrmann (eds), European Yearbook of International Economic Law—Common Commercial Policy After Lisbon (New York, Springer, special issue, 2013) 63 arguing that it could even cause ‘a constitutional crisis’ in some EU Member States (eg Germany) if the Lisbon Treaty was interpreted as requiring their withdrawal from the WTO. 174 Arguably, EC and Certain Member States—Large Civil Aircraft (2011) could be cited as an example here. 175 Arguably, EC—Computer Equipment (1998) and EC—IT Products (2010) could be seen as an example of the US ‘divide and rule’ strategy: see Billiet (n 76) 199. 176  Pursuant to Art IX(1) WTO Agreement, the EU does not just have one vote in WTO decisionmaking but a number of votes equal to the number of its Member States (ie 28 at present). From this

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is still a legal need, as a matter of EU law,177 for the parallel EU/MS membership of the WTO. In other words, have EU exclusive powers under the CCP now become sufficiently broad for the Union to assume alone the obligations of WTO membership?178 And if so, does it have effective internal mechanisms at its disposal to ensure implementation of those obligations by its Member States?179 It is not the purpose of the present chapter to engage with these convoluted questions of EU law, nor to take a position on the highly controversial and politically sensitive issue of whether the Member States should remain WTO members in their own right.180 What is here submitted is that it is for the EU and its Member States to address these matters in-house, and meanwhile the WTO dispute settlement organs have made a judicious choice not to interfere.

perspective, the EU may not want to give up its current advantage should WTO decision-making practice move away from consensus in the future. On this point, see M Bungenberg, ‘Going Global? The EU Common Commercial Policy after Lisbon’ in C Herrmann and JP Terhechte (eds), European Yearbook of International Economic Law (New York, Springer, 2010) 134–35; Hanh and Danieli (n 173) 53–54. 177 From a WTO law perspective, any member may unilaterally withdraw from the WTO, six months after the written notice of withdrawal is received by the Director-General (Art XV(1) WTO Agreement). 178  From an EU law perspective, besides the exclusion of transport services from the scope of the CCP (see n 23), EU Member States seem to attach particular significance to the fact that they (not the EU) contribute to the WTO budget to justify their continued participation in the organisation: see eg WTO Trade Policy Review Body, ‘Trade Policy Review—Report by the European Union’ (WT/ TPR/G/248), dated 1 June 2011, at 6 (fn 2) noting that ‘Member States maintain an active role in the Committee on Budget, Finance and Administration’ after the entry into force of the Lisbon Treaty. However, see Opinion 1/94 (n 8), para 21, where the Court already opined: ‘Given that the WTO is an international organization which will have only an operating budget and not a financial policy instrument, the fact that the Member States will bear some of its expenses cannot, on any view, of itself justify participation of the Member States in the conclusion of the WTO Agreement.’ 179  On this point, see n 148. 180  In favour of preserving the status quo, see eg Hanh and Danieli (n 173) 61–63. For a seemingly different view, see among others, Bungenberg (n 176) 134.

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13 The Unitary Patent and Unified Patent Court: Past, Present and Future AURORA PLOMER

I. Introduction The existential crisis which is being experienced by the European Union (EU) has taken a turn for the worse.1 The Union’s identity, its ‘raison d’etre’ and the ­legitimacy of its institutions are under unprecedented scrutiny after the Union’s punishing handling of the Greek debt,2 its paralysis in the face of the ­humanitarian plight of migrants on its borders3 and the UK’s anticipated withdrawal from the EU. In addition to the longstanding scholarly critique of the democratic deficit in the EU,4 there is now disquiet amongst EU scholars about what is perceived as a growing ‘justice deficit’ in the Union.5 Ironically, the justice deficit is surfacing at a time when the EU’s treaties offer a more robust legal basis than ever for securing protection of human rights, albeit subject to the interpretation of a powerful court anxious to protect its own hegemony and the ‘autonomy’ of EU law in the international legal order.6 The EU’s adoption of a new pan-European ‘unitary’ patent and 1  See Grainne De Búrca calling for a renewal of the EU’s raison d’etre in the wake of the Eurozone crisis in 2010: ‘Europe’s Raison d’Être’ in D Kochenov and F Amtenbrink (eds), The European Union’s ­Shaping of the International Legal Order (Cambridge, Cambridge University Press, 2014) 21. 2  For instance, Habermas’s critique of the Greek debt agreement as ‘toxic’ and contrary to the democratic foundations of the EU: P Oltermann, ‘Jurgen Habermas’s verdict on the EU/Greece debt deal— full transcript’ The Guardian (London, 16 July 2015) www.theguardian.com/commentisfree/2015/ jul/16/jurgen-habermas-eu-greece-debt-deal. For a discussion of the fundamental issues of principle regarding the legitimacy of states and EU institutions raised by the TSCG see P Craig, ‘The Stability, Coordination and Governance Treaty: Principle, Politics & Pragmatism’ (2012) 37 European Law Review 231. 3  Described as ‘shameful’ by critics across the political and religious spectrum, eg J Daley, ‘What is the EU for, if not solving the migration crisis?’ The Telegraph (London, 9 August 2015) www.telegraph. co.uk/news/uknews/immigration/11792039/What-is-the-EU-for-if-not-the-migration-crisis.html. 4  Originally voiced by J Weiler, ‘The Transformation of Europe’ (1991) Yale Law Journal 2403. 5  D Kochenov et al, Europe’s Justice Deficit? (Oxford, Hart Publishing, 2015). 6  As reinforced by the Court’s Opinion of 18 December 2014 on the EU’s Accession to the ECHR. See generally P Eeckout, EU External Relations Law (Oxford, Oxford University Press, 2011) and R Wessel and S Blockmans (eds), Between Autonomy and Dependence: The EU Legal Order Under the Influence of International Organisations (Berlin, Springer Science & Business Media, 2012).

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the collateral creation of a novel international court with exclusive competence to enforce the unitary patent, raises many questions which echo concerns about the ability of the Union to combine the pursuit of market values with social justice and the protection of human rights.7 This chapter analyses the alignment of these objectives in the EU’s unitary patent (EPUE) and the unified patent court (UPC), a novel dispute settlement mechanism on European patents,8 lying at the juncture of three autonomous but interlinked legal systems: the EU, the European Patent Convention (EPC) and the European Convention on Human Rights (ECHR). The chapter starts by setting out in section I the origins and rationale of the EU’s patent unification project and its dependency on the international project which resulted in the adoption of the EPC9 and the creation of the European Patent Organisation (EPO) in 1973. Section II analyses how this dependency is manifest today in the jurisdictional fragmentation and legal uncertainty caused by the ‘patent package’, comprised of the unitary patent and the UPC, notwithstanding the CJEU’s dismissal of its critics on 5 May 2015.10 It highlights the hybrid nature of the unitary patent as a partial legal object of EU rights and the UPC as an international court mandated to apply EU law yet out with the EU jurisdictional order. Section III identifies four areas of tensions and gaps in the applicable laws which are indicative of the structural disconnect between the EU, EPC and ECHR legal orders. The chapter concludes in section IV that the EU ‘patent package’ does not live up to the EU’s unifying ambition but has resulted instead in an increasingly complex juridical order on European patents which will likely further intensify with the UK’s withdrawal from the EU. The overriding concerns are that the EU’s new addition, far from unifying the European patent system, will facilitate forum shopping by large private corporations at the detriment of small and mediumsized enterprises (SMEs) without a clear legal path to adequately safeguard the public interest.

7  See for instance Andrew Williams’ critique of what he describes as the EU’s thin ethos of human rights: A Williams, The Ethos of Europe: Values, Law and Justice in the EU (Cambridge, Cambridge University Press, 2010). 8 There is a lively debate amongst international lawyers on the definition and boundaries of courts and formal and informal dispute settlement mechanisms such as tribunals. For an overview see R Mackenzie, CPR Romano, Y Shany and P Sands, Manual on International Courts and Tribunals (Oxford, Oxford University Press, 2010). The UPC has been configured as a court, albeit a court which transcends the traditional boundaries between national and international courts. See discussion below of the ‘hybrid’ character of the court. 9 Convention on the Grant of European Patents (European Patent Convention), Munich, 5 October 1973, 1065 UNYS 199, as revised on 17 December 1991 and on 29 November 2000. 10  Case C-146/13 concerning Reg (EU) No 1257/2012 of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection, ECLI:EU:C:2015:298 and Case C-147/13 concerning Reg (EU) No 1260/2012 of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection with regard to the applicable translation arrangements, ECLI:EU:C:2015:299.

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II.  The Origins of Patent Harmonisation in the European Union The unitary patent is the outcome of a long drawn out project to harmonise ­patent laws in Europe.11 The project was originally led by the Council of Europe, well before the creation of the European Economic Community (EEC). Barely three months after its creation, in September 1949, the Council of Europe adopted the patent unification project as one of its three flagship programmes. The rationale was founded in the abstract ideal of Article 1(a) of the Statute of the ­Council of Europe which proclaims the economic and social benefits of greater unity whilst Article 1(b) expressly mandates the Council and its members to pursue this aim ‘by agreements and common action in economic, social, cultural, scientific, legal and administrative matters and in the maintenance and further realisation of human rights and fundamental freedoms’. The preparatory work of mapping national patent laws and the groundwork for developing an effective common patent system in Europe was well underway by the time the EEC came into being in 1956. It was carried out largely in secrecy by a committee made up of heads of national patent offices and government representatives.12 The diversity of national patent laws reflecting the variety of economic and social priorities which determined patent eligibility and exceptions to patentability in national laws proved the greatest stumbling block to unification. Progress was very slow, but the work carried by the Council of Europe committee led to the adoption of the Council of Europe’s Convention on the Unification of Certain Points of Substantive Law on Patents for Invention in 1963 (known as ‘the Strasbourg Convention’).13 Article 1 of the Strasbourg Convention laid down the elements of a common, substantive, ­European patent law—ie novelty, inventive step and industrial application— without which centralisation of the administrative procedure for the grant of European patents could not have taken place a decade later with the creation of the EPO as the administrative organ of the EPC in 1973.14 The EU (EEC at that time) begun to manifest a tentative interest in the ­patent unification project in the late 1950s, originally in response to EURATOM (‘the European Atomic Energy Community’).15 Confidential notes of 1959 show 11  See A Plomer, ‘A Unitary Patent for a (Dis) United Europe: The Long Shadow of History’ (2015) 46(5) IIC-International Review of Intellectual Property and Competition Law 508; J Pila, ‘The European Patent: An Old and Vexing Problem’ (2013) 62(4) International and Comparative Law Quarterly 917. 12  See Plomer, ibid. For a critique of the EU’s secrecy in other contexts see D Curtin, ‘Top Secret Europe’ (Inaugural lecture, University of Amsterdam, October 2011). 13  On the history of the making of the Strasbourg Convention, see C Wadlow, ‘Strasbourg, the Forgotten Patent Convention, and the Origins of the European Patents Jurisdiction’ (2010) 41(2) International Review of Intellectual Property and Competition Law 123; C Wadlow, ‘“Hamlet Without the Prince”: Can the Unitary Patent Regulation strut its stuff without Articles 6–8?’ (2013) 8(3) Journal of Intellectual Property Law and Practice 207. 14  Art 4 EPC. 15  Plomer (n 11).

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that the Commission was reluctant to initiate action in this field, prompted by doubts about the EEC’s competence.16 Article 100 of the Treaty of Rome (‘the EEC Treaty’) limited the competence of the EEC to acts which directly affected the establishment or functioning of the common market.17 The Commission was unsure whether the diversity of national patent laws had a direct effect on the functioning of the common market or whether the effect was indirect and if so, outwith the scope of Article 100. Neither was the Commission certain whether the differences in national laws, by themselves, caused harmful distortions to competition, contrary to Article 101.18 Another stumbling block was Article 36 of the EEC Treaty which permitted States to introduce prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property.

Notwithstanding these doubts, under pressure from the President of EURATOM, the Commission agreed to set up a coordination meeting with representatives from Member States in the autumn of 1959 to consider the problems raised by the lack of a uniform patent system. Recourse to a separate international agreement was contemplated as a means of circumventing Article 36. Thus, from the beginning, the Community project ran in parallel to the international project, with overlapping membership and economic goals19 but in search of a Community legal rationale to justify patent harmonisation as a tool for realisation of the common market. The international project of patent harmonisation initiated by the Council of Europe in 1948 proved stubbornly resistant to absorption by the EEC. The wider membership of the Council of Europe was one of the factors behind the adoption of the EPC in 1973.20 The EPC enabled progression of patent harmonisation in Europe through the creation of a procedure for the centralised grant of European patents by the EPO. The EEC’s project was eclipsed by the Council of Europe in 16 ibid.

17  Consolidated Version of the Treaty Establishing the European Community [1957] OJ C340. Art 100 provided that: ‘The Council shall, acting unanimously on a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, issue directives for the approximation of such laws, regulations or administrative provisions of the Member States as directly affect the establishment or functioning of the common market.’ 18  ibid. Art 101 provided that: ‘Where the Commission finds that a difference between the provisions laid down by law, regulation or administrative action in Member States is distorting the conditions of competition in the common market and that the resultant distortion needs to be eliminated, it shall consult the Member States concerned.’ 19 The six founding members of the EEC were France, West Germany, Italy, the Netherlands, ­Belgium and Luxembourg and the 10 founding members of the Council of Europe were Belgium, ­Denmark, France, Ireland, Italy, Luxembourg, the Netherlands, Norway, Sweden and the UK. The UK had one of the leading patent offices in Europe but did not join the EEC until 1973. One of the ­challenges for the EEC drafting committee on patents was to develop a legal framework which would accommodate non EEC members. See Plomer (n 11). 20  The UK, one of the leading patent offices in Europe, was not yet a member of the EEC.

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the 1960s partly because the latter was able to facilitate adoption of a dedicated international agreement with a single purpose which did not have to be integrated into the complex legal structure and goals of the EEC. On the other hand, the EPC does not as yet ensure full harmonisation of the European patent system because the validity and enforcement of a European patent granted by the EPO ultimately stand to be determined by the domestic courts of the designated Member States in accordance with national laws.21 The European patent famously translates into a ‘bundle’ of national patents upon grant which may be litigated in multiple courts in Europe with potentially different outcomes.22 So, back in the 1970s, the EEC resigned itself to the adoption of the EPC as a temporary building block towards a fully harmonised system which, it envisaged, would morph into an integrated Community system which would include a centralised Community court to enforce the European patent. The economic assumption was that uniform patent protection in the EEC, untrammelled by national variations, would attract innovators spurned by a cheaper and more secure legal environment to protect their products and inventions.23 In furtherance of this goal, unification required Member States to renounce the flexibility of national patent laws which had historically developed to reflect national interests, and to surrender the role of national courts in patent litigation.24 Unsurprisingly, the Commission’s attempts to overcome the challenges met with persistent political and legal difficulties. A Community Patent Convention of 1975 and an Agreement relating to Community Patents (1989) never secured the minimum number of ratifications required to enter into force. Initial doubts about the legal basis of the Community’s rationale for the project in the treaties had given way to firm statements in policy documents and (unsuccessful) proposals for a Community patent.25 The adoption of the ­Lisbon Treaty marked a critical turning point for the unification project, with the extension of the Union’s competence to intellectual property rights in Article 118 Treaty on the Functioning of the European Union (TFEU). For the first time, the treaties expressly mandated the Council and Parliament to ‘establish measures for the creation of European intellectual property rights to provide uniform protection of intellectual property rights throughout the Union and for the setting up of centralised Union-wide authorisation, coordination and supervision

21 

Art 74 EPC. Art 2 EPC. These assumptions are shared by scholars such as Dominic Guellec and Bruno Van ­Pottelsberghe de La Potterie, in The Economics of the European Patent System: IP Policy for Innovation and Competition(Oxford, Oxford University Press, 2007) but questioned by other economists, for instance Keith E Maskus, ‘Intellectual Property Rights and Economic Development’ (2000) 32 Case Western Reserve Journal of International Law 471 and Joseph E Stiglitz, ‘Economic Foundations of Intellectual Property Rights’ (2008) 57 (6) Duke Law Journal 1693–724. 24  The flexibility granted to national laws is expressly recognised in the trilateral WTO, WIPO, WHO report on access to medicines as a mechanism which could be more fully exploited by members in the implementation of TRIPS. 25 H Ullrich, ‘Patent Protection in Europe: Integrating Europe into the Community or the ­Community into Europe?’ (2002) 8(4) European Law Journal 433. 22  23 

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arrangements’. In addition, Article 262 authorised the Council to adopt provisions to confer jurisdiction ‘on the Court of Justice of the European Union in disputes relating to the application of acts adopted on the basis of the Treaties which create European intellectual property rights’. The main legal obstacles standing in the way of patent unification in the treaties had thus been removed.26 Still, a new proposal for a Community Patent and Community Patents Court27 was rejected by the European Court of Justice (CJEU) as incompatible with the treaties.28 The draft agreements of 2009 were the culmination of discussions initiated by the Commission in a proposal dating back to 2000 which resulted in the Council Regulation on the Community patent (COM (2000) 412 final), providing for the accession of the Community to the EPC, the creation of a unitary industrial property right valid throughout the Community and the granting of that right by the EPO. This was followed on 3 April 2007 by a communication entitled ‘Enhancing the patent system in Europe’ (COM (2007) 165 final), on which the text of the 2009 draft proposal was based. Whilst conceding that the creation of an international patents court was not necessarily incompatible with the treaties,29 the CJEU was not satisfied that the proposed court could guarantee the uniform application of EU law under Article 267 TFEU because Member States had conferred exclusive jurisdiction on the patent court and, in so doing, divested themselves of their power and obligation to request preliminary rulings to the Court.30 The revised proposals of 2012 for a unitary patent with collateral enforcement by a new international ‘Unified Patent Court’ were devised to overcome the CJEU’s objections. On 5 May 2015, the CJEU dismissed the final set of legal challenges to the latest version of the EU patent unification project. The remainder of this chapter argues that, notwithstanding the CJEU ruling, the ‘patent package’ is poorly integrated within the legal order of the Union and fails to adequately reflect the human rights mission of the EU.

III.  From Harmonisation to Unification: The New Hybrids in the EU Legal Order A.  The ‘European Union’ Unitary Patent The European Union patent with unitary effect (EPUE) was finally established in Regulation 1257/2012 (‘the Regulation’) and has since survived several challenges 26  Notably through the introduction of the mechanism of ‘enhanced cooperation’ in the Lisbon Treaty and the addition of Art 118 TFEU. 27  Council Document 7928/09 of 23 March 2009 on a revised Presidency text of the draft agreement on the European and Community Patents Court and the draft Statute of that court. 28  Opinion 1/09, ECLI:EU:C:2011:123, [2011] ECR I-1137. 29  At paras 74, 75 and 76 of Opinion 1/09 (n 28). 30  At paras 79 and 80.

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to its legality at the CJEU. The Regulation is an EU instrument whose adoption was made possible by the new mechanism of enhanced cooperation incorporated in the Treaty of Lisbon in Article 20 of the Treaty on European Union (TEU) and Articles 326–334 of the TFEU.31 On 10 March 2011, in the absence of unanimity, the Council agreed to the request of 25 out of the 28 EU Member States to establish enhanced cooperation to create the unitary patent.32 Italy,33 Spain and Croatia did not participate in enhanced cooperation. Subsequently, an action by Italy and Spain to nullify resort to enhanced cooperation was dismissed by the Grand Chamber of the CJEU in April 2013.34 According to the Grand Chamber’s perplexing reading of Article 118 TFEU, the requirement that the Union should ‘provide uniform protection of intellectual property rights throughout the Union and for the setting up of centralised Union-wide authorisation, coordination and supervision arrangements’ is to be understood as applying only to all the Member States participating in enhanced cooperation and not all the Member States of the EU.35 The Grand Chamber reiterated the same point in its Judgment of 5 May 2015, noting that since the power conferred by that article [Article 118 TFEU] is exercised within the ambit of enhanced cooperation, the European intellectual property right so created and the 31  Council Decision of 10 March 2011 authorising enhanced cooperation in the area of the creation of unitary patent protection, OJ L7/53 (22 March 2011). Reg (EU) No 1257/2012 of the European Parliament and of the Council of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection, OJ L361/1 (31 December 2012) (‘Reg 1257/2012’); and Reg (EU) No 1260/212 of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection with regard to the applicable translation arrangements, OJ L361/89 (31 December 2012). See W Tilmann, ‘Spain’s Action against the EU Patent Package: Arguments and Counter-Arguments in Case C-146/1’ (2014) 36 European Intellectual Property Review 4. 32  12 Member States, namely Denmark, Germany, Estonia, France, Lithuania, Luxembourg, the Netherlands, Poland, Slovenia, Finland, Sweden and the United Kingdom, addressed requests to the Commission by letters dated 7, 8 and 13 December 2010 indicating that they wished to establish enhanced cooperation between themselves in the area of the creation of unitary patent protection on the basis of the existing proposals supported by these Member States during the negotiations and that the Commission should submit a proposal to the Council to that end. The requests were confirmed at the meeting of the Council on 10 December 2010. In the meantime, 13 more Member States, namely Belgium, Bulgaria, the Czech Republic, Ireland, Greece, Cyprus, Latvia, Hungary, Malta, Austria, Portugal, Romania and Slovakia have written to the Commission indicating that they also wish to participate in the envisaged enhanced cooperation: Council Decision of 10 March 2011. 33  Following the dismissal of Spain’s legal challenge by the CJEU on 5 May 2015 in Case C­-146/13 and Case C-­147/13 (n 10), Italy has indicated to the Council that it wishes to participate in the enhanced cooperation for the creation of the unitary patent in accordance with Art 331 TFEU: Notification from the General Secretariat of the Council to Delegations, dated 7 July 2015, accessible: www.deltapatents. com/uploads/1/7/0/3/17035020/unitary-patent-blog-14-july-2015.pdf. A puzzling aspect of the note is the statement that ‘the accession to enhanced cooperation on the European Patent does not prejudge Italy’s well established position on the EU language regime and does not constitute a precedent’ given that Italy did not join Spain in Case 1260/2012 concerning translation arrangements. 34  Cases C-274/11 and C-295/11 Spain and Italy v Council, ECLI:EU:C:2013:240. 35  ibid paras 67 and 68, emphasis added. For a blistering critique of the CJEU’s ruling on enhanced cooperation in C-247/11 and C-295/11, see Lamping describing the Court’s acquiescence of the use of enhanced cooperation as an instrument of ‘repressive dominance’ rather than integration. M Lamping, ‘Enhanced Cooperation in the Area of Unitary Patent Protection: Testing the Boundaries of the Rule of Law’ (2013) 20 Maastricht Journal of European and Comparative Law 589.

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uniform protection given by it must be in force, not in the Union in its entirety, but only in the territory of the participating Member States.36

Thus, contrary to the natural reading of the language of the texts, the Regulation, which is a legal instrument of the EU, creating a new system of patent rights in the EU, will not provide uniform protection of intellectual property rights throughout the Union. Instead, patent protection will be limited to the territories of the participating Member States, a subset which could involve less than half the 28 members since only 13 states are required to ratify the collateral international agreement creating the UPC, upon which enforcement of the unitary patent is dependent.37 Moreover, as made clear by the CJEU in its judgment of 5 May 2015, the entry into force of the Regulation is not dependent upon completion of the process or measures required under national laws to enforce the Regulation in these 13 states.38 The Court reached this conclusion in reply to Spain’s plea that the Regulation infringes the principle of autonomy and uniform application of EU law. Spain’s claim was that Article 18(2) of the Regulation gives Member States the capacity to decide unilaterally whether that regulation is to apply to them.39 Spain noted that if a Member State were to decide not to ratify the UPC Agreement, the Regulation would not be applicable to that Member State and the UPC would not acquire exclusive jurisdiction over its territory to decide on EPUE cases, with the result that EPUEs would not have unitary effect as regards that Member State. The CJEU dismissed the claim, relying on its own case law and Article 288 TFEU in respect of the direct application of a regulation, on the grounds that the entry into force and application of the Regulation in favour of or against those subject to it ‘are independent of any measure of reception into national law’.40 Whilst this is strictly true, the Court’s reply arguably avoids the potential legal and constitutional difficulties arising from the scenario where the legal effect of an EU Regulation is to erode the national sovereignty of Member States in the signing and ratification of international treaties, since the effect of the Regulation is to impose obligations for Member States under EU law in respect of an international treaty to which the Member State in question may not have acceded as a matter of domestic and international law. Perhaps aware of political sensitivities, the Court, unlike AG Bot, stopped short of stating that Member States were under an obligation to 36 

Case C-146/13 (n 10), para 41. Art 89 UPC. The 13 states must include the UK, France and Germany, the three Member States with the highest number of European patents. 38  At para 105, which states that ‘according to the Court’s case-law, the direct application of a regulation, provided for in the second paragraph of Article 288 TFEU, means that its entry into force and its application in favour of or against those subject to it are independent of any measure of reception into national law, unless the regulation in question leaves it to the Member States themselves to adopt the necessary legislative, regulatory, administrative and financial measures to ensure the application of the provisions of that regulation (see judgments in Bussone, 31/78, EU:C:1978:217, paragraph 32, and ANAFE, C–606/10, EU:C:2012:348, paragraph 72 and the case-law cited)’. 39  Art 18(2) provides that the Reg ‘shall apply from 1 January 2014 or the date of entry into force of [the UPC Agreement], whichever is the later’. 40  Case C-146/13 (n 10), para 105. 37  See

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ratify the UPC.41 According to AG Bot, the obligation would arise from a state’s duty of sincere cooperation under the treaties. Member States who failed to ratify would find themselves in breach of this duty, as failure to ratify would jeopardise the attainment of the Union’s harmonisation objectives. The UPC Agreement may only come into force after ratification by 13 states, including the three states with the highest number of European patents.42 The States in question are the UK, France and Germany. To date, only France has ratified the Agreement. Germany and the UK have yet to ratify the Agreement. Whether or not the duty of sincere cooperation would be enforced in the current political climate raises complex legal and political questions.43 The UK government indicated in November 2016 that the UK will ratify the Agreement notwithstanding initial doubts following the UK referendum as to whether the UK would complete ratification.44 Had it not ratified the UPC, the UK would have had to relinquish the seat of the Chemistry Division of the UPC which was planned to be in London. Once the UPC Agreement enters into force, the UK’s participation in the UPC will no longer be required for the UPC to start operating. On the other hand, if the UK withdraws from the EU, the question will arise whether the UK can remain a member of the UPC. Opinion 1/09 had been hitherto interpreted as excluding non EU Member States from membership of the UPC. On the other hand, the fragmentation of the EU enabled by the mechanism of enhanced cooperation which enables a subsection of its territories to establish its own sui generis legal regime, is arguably reflected in the language of the Regulation which expressly states that the rights thereby created shall be uniform across all the participating states.45 In the same vein, the rights conferred to proprietors under Article 5(1) of the Regulation do not extend to all the territory of the EU but only to ‘the territories of the participating Member States in which it has unitary effect’. The language of the text thus suggests that the drafters deliberately opted for these formulations to cover the precise eventuality of lack of unanimity which arose. In this way, the unitary patent is a sui generis paradoxical legal object. It has its origins in the legal order of the EU, its express purpose is to contribute to the Union’s objectives under Article 3(3) TFEU, notably the establishment of an internal market.46 But its provisions do not extend to all members of the EU in the 41  The UPC Agreement may only come into force after ratification by 13 states, including the three states in which the highest number of European patents had effect in the year preceding signature of the Agreement (Art 89). The three states in question are the UK, France and Germany. To date, only France has ratified the Agreement. 42  Art 89 UPC. 43  On the increasing overlap of EU and Member States’ competences in external relations and the duty of sincere cooperation see M Cremona, ‘External Relations and External Competence of the European Union: The Emergence of an Integrated Policy’ in G de Búrca and P Craig, The Evolution of EU Law (Oxford, Oxford University Press, 2001). See also C Hillion, Mixity and Coherence in EU External Relations: The Significance of the Duty of Cooperation (Centre for the Law of EU External Relations (CLEER), 2009). 44 www.gov.uk/government/news/uk-signals-green-light-to-unified-patent-court-agreement. 45  Art 5(2). 46  Reg 2012, Preamble para 1.

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new flexible sub-legal order of inter se agreements facilitated by the mechanism of enhanced cooperation taking the Union and its members into unchartered legal territory and further challenging traditional constitutional boundaries.

B.  The (International) Unified Patent Court The EU’s main efforts at securing unification of the European patent system were always directed at the creation of a uniform enforcement system which would eradicate the disparities and distortions created by the role of national courts which retained concurrent jurisdiction with the EPO boards in validity proceedings and exclusive jurisdiction in infringement proceedings, upon grant of a European patent by the EPO. The creation of a ‘European Union’ unitary patent needed to be accompanied by the creation of a central Union court with exclusive jurisdiction over the unitary patent. The unitary patent is thus legally intertwined with and dependent for its enforcement on the existence of the UPC, a novel court with exclusive jurisdiction over the enforcement of the patent. In the absence of unanimity amongst the 28 Member States on the creation of the unitary patent, the creation of what was originally intended to be an EU court fully integrated in the EU, was instead created as a separate international court.47 An interesting question is why enhanced cooperation, which had been relied upon to create the unitary patent, was not relied upon to create the patents court. The likely answer lies in a mix of political and legal considerations. Had enhanced cooperation been used, the unified patent court would have been formally created by means of an EU legal instrument and presumably fully integrated as a court within the EU system, under the direct purview of the CJEU. As is well known, such a prospect was anathema to industry and some Member States. In addition, full integration of the court within the EU system posed the thorny question of the relationship of EU law with EPC law, since the patent court is vested with the power to adjudicate on patents granted under the separate, autonomous legal system of the EPC which does not recognise the primacy of EU law. The creation of the patent court through an international agreement instead thus arguably resolved the legal ­challenge which the EU had wrestled with in order to achieve unification of the European patent system after the adoption of the EPC short of full integration. The UPC is formally constituted as an international court48 but it is under an obligation to apply EU law and mandated to cooperate with the CJEU to ensure the correct application of EU law.49 By contrast to the Community Patents Court, its unsuccessful predecessor whose constitution and powers were judged to be

47 

Agreement on a Unified Patent Court, OJ C175/1 (20 June 013) (UPC Agreement), Art 32. Art 31. 49  Art 21. 48 

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incompatible with the treaties by the CJEU in Opinion 1/09,50 the new chameleon court is to have legal personality in each contracting Member State and is to enjoy the most extensive legal capacity accorded to legal persons under the national law of that state.51 The UPC, unlike its predecessor, remains formally subject to legal control by the contracting Member States and is formally subject to the same obligations as any national court of the Member States.52 Furthermore, contracting Member States are liable for the court’s actions under Article 21. In this way, whilst formally outwith the EU system, the UPC is nevertheless configured to be ultimately answerable to the CJEU as final arbiter and guarantor of the autonomy and uniformity of EU law. Whether this elaborate legal contrivance will achieve this goal is a moot point. Spain was not convinced and submitted in Case C-146/13 that the jurisdiction vested in the UPC over the unitary patent is an infringement to the principles of autonomy and uniformity of EU law.53 Spain submitted, inter alia, that the UPC does not form part of the institutional and judicial system of the EU and that the UPC Agreement does not lay down any guarantees for the preservation of EU law.54 Neither, Spain claimed, does the direct attribution of actions of the UPC to the contracting Member States circumvent the CJEU’s finding in Opinion 1/09 that the previous proposal for a Community Patent Court was incompatible with the treaties.55 The Grand Chamber of the CJEU dismissed both claims by simply stating that it did not have jurisdiction under Article 263 TFEU to rule on the lawfulness of an international agreement concluded by Member States.56 Citing its own case law, the CJEU further added that neither do ‘the Courts of the European Union have jurisdiction in such an action to rule on the lawfulness of a measure adopted by a national authority (see, to that effect, judgment in Liivimaa Lihaveis, C‑562/12, EU:C:2014:2229, paragraph 48 and the case-law cited)’.57 Certainly, the Court’s self-limiting approach to judicial review of the UPC Agreement is in line with a similar ‘hands-off ’ approach to other EU ‘external’ agreements58 but it also stands in stark contrast with the Court’s heavy interventionist (and obstructive) approach to the agreement on the EU’s accession to the ECHR.59 On the other hand, unlike other i­nternational agreements

50  The CJEU held, inter alia, that the European and Community Patents Court was incompatible with the treaties because it restricted the ability of Member States to seek preliminary rulings and as such, threatened the autonomy of the EU legal order: Opinion 1/09 (n 28) paras 73 to 87. 51  Art 4(1). 52  Art 1. 53  Case C‑146/13 (n 10) Six and Seventh Pleas. 54  ibid paras 89–91. 55  ibid para 90. In particular, Spain claimed that the direct attribution of actions of the Unified ­Patent Court to the Contracting Member States individually and collectively was not sufficient to ­guarantee the protection of EU law in accordance with Arts 258, 259 and 260 TFEU. 56  In an action brought under Art 263. Case C-146/13 (n 10) para 101. 57  ibid para 102. 58  That is, the Eurozone fiscal agreements. 59  See Christophe Hillion and Ramses A Wessel, ch 2 in this volume.

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such as the ECHR under the jurisdiction of the European Court of Human Rights (ECtHR), the UPC Agreement specifically mandates the unified patent court to respect the primacy of EU law and to seek preliminary rulings from the CJEU. The substantive content of the UPC Agreement—unlike the ECHR—requires the UPC to defer to the CJEU, a court without formal supervisory powers over the UPC Agreement. Moreover, the obligation has ‘teeth’ in that liability is imposed on contracting states for the UPC’s failure to comply with this obligation.60 ­Needless to say, it is a moot question how the CJEU would decide whether the UPC (or Member States) have failed in their obligation to either refer a preliminary ruling to the CJEU or to adequately implement EU law or a CJEU ruling. Neither is it known what the sanctions would be for putative breaches by the UPC or Member States should they be found in breach of their obligations. Many questions thus still remain unanswered regarding both the process and substantive grounds on the circumstances under which the UPC should seek a preliminary ruling from the EU Court and how the CJEU will exercise its jurisdiction over the liability of Member States for breaches of the UPC’s obligations. Whilst the CJEU may be satisfied that the jurisdiction vested in the UPC does not threaten the integrity of EU law, the UPC nevertheless remains a paradoxical legal institution from the perspective of international law. Unlike other dispute settlement mechanisms with jurisdiction over patent disputes (eg World Trade Organization (WTO) tribunals), the UPC is directly linked to the EU system, most significantly through the obligation imposed on the UPC to apply EU law and through the oversight role of the CJEU. Moreover, the UPC’s express object is to contribute to the establishment of the internal market in the EU.61 Membership of the court is limited to the contracting Member States of the EU.62 Altogether, these ‘EU’ dimensions point to the UPC having its natural ‘home’ in the legal order of the EU. But the UPC is not a court of the EU. Instead, it is an international court which is also claimed ‘to be part of ’ the contracting members’ judicial systems, even though the UPC is differently constituted from national courts and is not integrated into national courts’ hierarchies. In this way, the UPC is a feature of the legal imagination of its drafters. Quite how it was envisaged that EU, international and national laws would be deployed and applied to determine the functioning of this new hybrid is a moot point, raising many intriguing and complex questions regarding, inter alia, the immunity of the UPC in international law in the light of its obligations vis-à-vis the EU and Member States which the UPC Agreement expressly renders individually and collectively liable for the actions of the UPC.63

60 

Art 21 UPC. Preamble and Art 1 UPC Agreement. Although the object also includes the settlement of disputes relating to the European Patent. 62  UPC Agreement, Preamble. 63  Art 23 UPC Agreement. By contrast to traditional, fully fledged, international courts which enjoy considerable immunity. See JE Alvarez, International Organizations as Law-makers (Oxford, Oxford University Press, 2005). 61 

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From a practical perspective, the legal complexity of the structure of the UPC and jurisdiction of its divisional courts could arguably defeat the purpose for which it was created, namely to set up a simpler (and cheaper) patent system to attract innovators to the EU. Instead, critics have voiced concerns that the structure of the UPC will encourage forum shopping by powerful competitors and threaten SMEs.64 Under Article 15 UPC, an applicant may be able secure an injunction in one of the divisional courts before the patent’s validity has been tested, under what is known as ‘German style bifurcation’.65 It is well known amongst practitioners that legal challenges to the validity of a patent are much more difficult and costly than infringement proceedings.66 Moreover, fears that the type of forum shopping facilitated by the court structure could be dangerous for business have been voiced not only by SMEs but by world-leading IT companies as well as respected national judges.67 To complicate matters further, the risks to businesses created by the patent package arise not only in respect of the unitary patent but also in respect of the existing and future traditional European national ‘bundle’ patents too, over which the UPC has also been vested with exclusive jurisdiction after a transitional period.68 Thus, the legal complexities of the UPC could create perverse incentives and foster legal insecurity, leading applicants to stay clear of the unitary patent and European patent altogether and revert back to national patent protection in those selected territories in Europe where it makes best commercial sense for the company.69

IV.  The Fragmented and Uncertain Field of Applicable Laws The legal complexity and uncertainty of the package is arguably amplified by the legal mix of substantive laws defining the nature of the rights conferred by the unitary patent. The material, applicable laws were originally contained in Articles 6–8 of the EU Regulation. But these sections were lifted out of the EU Regulation and moved to Article 24 of the international UPC Agreement70 in an attempt to

64 For instance, Sir David Kitchin, ‘Introductory Remarks: A Judicial Perspective’ in J Pila and C Wadlow, The Unitary EU Patent System (Oxford, Hart Publishing, 2014). 65  The point relates to the ‘bifurcation’ procedure in Art 15. 66  See for instance, Sofia Larence’s blog at Bristows: www.bristowsupc.com/latest-news/?story=107. 67  Open letter of 26 September 2013 by Google, Yahoo, Microsoft, Apple, Samsung and Blackberry cited by Sir David Kitchin (n 64). 68  Art 1 UPC. Applicants may opt out for a transitional period of seven years in accordance with Art 83 and Rule 5 of the Rules of Procedure. 69  Microsoft presentation at international conference in Brussels, September 2014 ref. See R Hilty et al, ‘The Unitary Patent Package: Twelve Reasons for Concern’ Max Planck Institute for Intellectual Property & Competition Law Research Paper 12-12 (2012). 70  For a critique of the move see Wadlow (n 13).

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limit the role of the CJEU in response to the industry’s distrust of the CJEU’s role in patent cases.71 Devoid of substantive content on the material, applicable laws, the Regulation was described by Spain as an ‘empty shell’.72 Spain submitted that this empty shell ‘does not establish any judicial system capable of ensuring uniform protection of intellectual property rights throughout the European Union’73 and therefore constitutes an abuse of power by the Parliament and Council. The Grand Chamber dismissed the claim, applying its own definition of ‘abuse of power’ in Fedesa and Others74 and Spain and Italy v Council.75 The Court simply stated that the Regulation did not seek to secure ends in Article 1(1) other than those for which the power in question was conferred, nor was the aim to avoid a procedure specifically prescribed by the TFEU for dealing with the circumstances of the case. Thus, the CJEU’s reply addresses only the ‘misuse of power’ claim, under which the ‘empty shell’ allegation had been made, most probably because the framing of Spain’s claim seemed to be that EU law has been used as a prop to set up a separate legal framework for patents over which EU law and EU institutions had no direct oversight. On the other hand, whilst the Regulation may be an ‘empty shell’, in the sense that the applicable laws relating to enforcement of the unitary patent are not to be found in the Regulation but in the UPC, the UPC itself is not an ‘empty shell’. It contains a list of sources of law which the UPC is mandated to apply with EU law ranked first: (a) Union law, including Regulation (EU) No 1257/2012 and Regulation (EU) No 1260/20121; (b) this Agreement; (c) the EPC; (d) other international agreements applicable to patents and binding on all the ­Contracting Member States; and (e) national law.76

The legal spectrum of applicable laws is manifestly vast and indeterminate, extending to the whole of EU law, international law and national law. As regards 71 Notably in the much critiqued Brüstle ruling and the CJEU’s interpretation of the Reg on S­ upplementary Protection Certificates (EC) No 469/2009 of the European Parliament and of the Council of 6 May 2009 concerning the supplementary protection certificate for medicinal products ([2009] OJ L152/1), described as ‘unfortunate’ and controversial by Lord Neuberger in the Burrell Lecture for the Competition Law Association Intellectual Property in the UK and Europe, 1 April 2014. The CJEU’s interpretation of the Reg has also been critiqued by pharmaceutical companies as running counter to the purpose of the Reg. See Case C-577/13 Actavis Group PTC EHF and another v Boehringer Ingelheim Pharma GmbH & Co KG, ECLI:EU:C:2015:165. AR Omkar Joshi and J Manthan, ‘Supplementary Protection Certificate Provisions for Pharmaceutical and Biotechnological Products in Europe: An Era After Medeva and Georgetown Decisions’ (2014) 19 Journal of Intellectual Property Rights 378 and C Hayes, ‘An Innovative Decision on Supplementary Protection Certificates for Combination Products?’ (2015) Journal of Intellectual Property Law & Practice 75. 72  Case C-146/13 (n 10) para 54. 73 ibid. 74  Case C-331/88 Fedesa and Others, ECLI:EU:C:1990:391, [1990] ECR I-4023, para 24. 75  Cases C-274/11 and C-295/11 Spain and Italy v Council, ECLI:EU:C:2013:240, para 33. 76  Art 24.

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the Court’s jurisdiction over EU law, it is worth noting that the extension of such jurisdiction to an international court may appear prima facie at odds with Article 344 TFEU which prohibits Member States from submitting a dispute concerning the interpretation or application of the Treaties to any method of settlement other than those provided therein. It is also at odds with the longstanding jurisprudence of the CJEU that arbitral tribunals and international courts have no right to make a preliminary reference.77 On the other hand, the CJEU ruled in Opinion 1/09 that Article 344 is addressed to Member States and not to the private individuals who are the anticipated litigants at the UPC whilst the UPC Agreement has been declared by the CJEU to be compatible with the treaties. ­Furthermore, the referral mechanism built into Article 21 of the UPC Agreement, together with the primacy accorded to EU law in Article 20 indicate that the UPC’s interpretation of EU law, including decisions by the UPC to ignore or exclude the application of EU law, would formally be subject to review by the CJEU. Thus, formally, the structure of the UPC arguably does not limit or exclude the jurisdiction of the CJEU nor threaten the autonomy of EU law which Article 344 TFEU seeks to protect. Equally, a preliminary review of the listed sources of law suggests four critical areas of uncertainty and potential tensions which leave plenty of scope for the UPC to develop patent law within or alongside EU law, if not directly in conflict with EU law. First, the ordering of the sources is intended to underscore the primacy of EU law. EU law was deliberately moved to the head of the list and, in addition, Article 20 of the UPC Agreement mandates the unified patent court to apply and respect the primacy of EU law. Yet, unlike other fields of intellectual property law such as copyright and trademarks,78 there is no dedicated EU legislation in the form of directives or regulations specifically directed at patents outside the EU

77  For a detailed discussion see T Lock, The European Court of Justice and International Courts (Oxford, Oxford University Press, 2015) 142 ff. 78  For instance EC Council Dir 93/98 harmonising the terms of protection of copyright and certain related rights [1993] OJ L290/09. Dir 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society [2001] OJ L167/10. Dir 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases [1996] OJ L77/20. Dir 2014/26/EU of the European Parliament and of the Council of 26 February 2014 on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use in the internal market [2014] OJ L84/72. Dir 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property [2006] OJ L376/28. Dir 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs [2009] OJ L111/16. Dir 2011/77/EU of the European Parliament and of the Council of 27 September 2011 amending Dir 2006/116/EC on the term of protection of copyright and certain related rights [2011] OJ L265/1. Dir 98/71/EC of the European Parliament and of the Council of 13 October 1998 on the legal protection of designs. Dir 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the Enforcement of Intellectual Property Rights [1998] OJ L289/28.

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­ irective on Biotechnological Inventions of 1998 and the Regulation on SuppleD mentary Protection Certificates of 2009.79 The basket of EU law on patents may not be empty but it is distinctly sparse, leaving considerable scope for the UPC to develop its own case law on the scope and limits of patentees’ rights over unitary and European patents in multiple fields of patent law, including but not limited to biotechnology. The spectrum of the fields which may give rise to intellectual property rights is reflected in the division of subject matter between the three ­sections of the UPC which will be located in Paris, London and Munich respectively. The London court will have jurisdiction over patents in the fields of chemistry, metallurgy and human necessities. The Munich court will have jurisdiction over mechanical engineering, lighting, heating, blasting and weapons. The Paris court will have jurisdiction over performing operations, textiles, fixed constructions, physics and electricity. Arguably, in the absence of a comprehensive dedicated body of EU law on patents, the UPC, as a designated specialist court with exclusive jurisdiction on the unitary and European patents, is poised to develop EU and European patent law at considerable arm’s length from the CJEU. Second, the listed sources which are ‘external’ to EU law include the EPC of 1973, an international agreement to which the EU is not a party, administered by the EPO which is also not a party to the UPC, although the EPO is charged under the EU Regulation on the unitary patent to administer the grant of the unitary patent.80 The EPC establishes a system of law, which is common to contracting states, for the grant of patents.81 The requirements for the grant of patents in the EPC system are applied and interpreted by EPO boards—proante—at the grant stage. The EPC has been amended to recognise the unitary patent which will legally emerge upon registration of the unitary effect of the patent upon completion of the examination by the EPO.82 Yet there is no formal mechanism to integrate the UPC (and CJEU)’s application and interpretation of EU law, the EPC and other sources of law post grant into the EPC system. The EPO examining and opposition boards will not be bound to apply UPC case law. For sure, the EPO is likely to extend its sponsorship of informal meetings between national judges and EPC board members to the UPC judges. But without underestimating the value of such informal dialogue in fostering harmonisation, it remains clear that whatever uniformity is achieved at the post grant stage cannot without amendment of 79  Dir 98/44/EC of the European Parliament and of the Council of 6 July 1998 on the legal protection of biotechnological inventions. 80  Under previous versions of the community/unitary patent, the EU was to accede to the EPC. This avenue was finally dropped in the latest package partly because of the difficulties this posed to the autonomy and supremacy of EU law. 81  Art 1: A system of law, common to the Contracting States, for the grant of patents for invention is established by this Convention. 82  Art 142 EPC provides: ‘(1) Any group of Contracting States, which has provided by a special agreement that a European patent granted for those States has a unitary character throughout their territories, may provide that a European patent may only be granted jointly in respect of all those States. (2) Where any group of Contracting States has availed itself of the authorisation given in paragraph 1, the provisions of this Part shall apply.’

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the EPC formally impact on the EPO boards’ application and interpretation of the EPC. So, the degree of uniformity achieved through the UPC judgments will remain at arm’s length from the EPC system too. Third, the other ‘external’ sources listed in Article 24 are confined to specialised international agreements relating to patents. Although not specifically mentioned, the ‘elephant in the room’ here is the Trade Related Aspects of Intellectual Property Rights agreement of 1994 (TRIPS), an agreement to which both the EU and Member States are separate parties and whose interpretation and application could give rise to conflicting EU/national/UPC interpretations, as underscored by Gracia Marin-Duran in chapter 12 of this volume.83 Fourth, the two instruments—the EU Regulation and UPC agreement— contain scant references to the protection of human rights. The Preamble of the UPC Agreement only refers to the Charter recalling the primacy of Union law, which includes the TEU, the TFEU, the Charter of Fundamental Rights of the European Union, the general principles of Union law as developed by the Court of Justice of the European Union, and in particular the right to an effective remedy before a tribunal and a fair and public hearing within a reasonable time by an independent and impartial tribunal, the case law of the Court of Justice of the European Union and secondary Union law.

There are no references to the ECHR or ECtHR. Yet Member States are parties to both the ECHR and the Charter—raising the prospect of potential conflicts in the event that the ‘autonomous’ EU law on patents imposes obligations on Member States which are inconsistent with the ECHR, the very concern behind the case for accession of the EU to the ECHR which was set back, again, by the momentous judgment of the CJEU in Opinion 2/13.84 Examples of potential breaches of human rights implicated in patent litigation include current concerns about the judicial independence of the members of the EPO boards, expressed by a former UK senior judge following the termination of the contract of one of the board members.85 Another example is the CJEU’s flagrant disregard of the ECtHR’s jurisprudence on Article 2 ECHR in the Brüstle case.86 More generally, the grant of rights of exclusivity over an invention is considered today as a ‘social contract’ or quid pro quo for disclosure of the invention to incentivise innovation and enable society to ‘build on the shoulders of giants’. The delineation of patent rights may therefore require courts to set the legal parameters of patent policy and strike a fine balance between the private rights of inventors and the public interest in

83  For a detailed discussion of the potential constitutional difficulties in CJEU’s approach to TRIPS see T Mylly ‘A Constitutional Perspective’ in Pila and Wadlow (n 64). 84  For an analysis and discussion of the implications of the decision see Christophe Hillion and Ramses A Wessel, ch 2 in this volume. 85  Letter by Sir Robin Jacob addressed to President of the EPO of 7 January 2015 and the sharp dismissal of the EPO on 21 January 2015. 86  A Plomer, ‘After Brüstle: EU Accession to the ECHR and the Future of European Patent Law’ (2012) 2 Queen Mary Journal of Intellectual Property 110.

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access to science, medicines and health innovations, as illustrated by the Myriad litigation in the highest courts of Australia and the US.87 Without a clear legal chart by which to steer the UPC, it remains an open question whether the new system will strike a fair balance amongst patentees themselves, and between patentees and the public.

V. Conclusion The questions raised in these four areas share an interconnecting thread which, broadly, relates to the framework’s compliance with the EU’s commitment to the rule of law and the protection of fundamental rights, all of which raise difficult questions in the light of the CJEU’s rejection of the ECHR accession agreement. Certainly, the Court’s self-limiting approach to judicial review of the UPC Agreement is in line with a similar ‘hands-off ’ approach to other EU ‘external’ agreements but it is also stands in stark contrast with the Court’s heavy interventionist (and obstructive) approach to the agreement on the EU’s accession to the ECHR. Whilst the CJEU may be satisfied that the jurisdiction vested in the UPC does not threaten the integrity of EU law, many questions remain open about the future of the UPC system and its ability to achieve the EU’s ambition to foster economic investment in Europe in tandem with the protection of fundamental rights. An overriding concern is that the EU’s new addition to the European patent system, famously described as a 12-headed monster,88 has added to the complexity of the existing system, creating additional constitutional strains and legal uncertainty. This is a far cry from the original objective of creating a simpler and cheaper system to incentivise innovation by European SMEs. Instead, many fear that the new ‘unified’ EU system will facilitate forum shopping by large private corporations at the detriment of SMEs, without a clear legal path to adequately safeguard the public interest. These questions are quite separate from the UK’s participation in the UPC Agreement and will therefore remain in the event of the UK’s planned exit from the EU. Whether the UK will be able to continue participating in the UPC as a non-EU Member is far from clear in the light of the CJEU’s Opinion in Case 1/09. Once the UPC enters into force, it is possible that the UPC will no longer require the UK in order to function. The ratification process has taken considerably longer than originally anticipated. Still, at the time of writing twelve countries have now completed the ratification process, so the target date of December 2017  is within reach once the UK and Germany have completed ratification.89   Thereafter, the UPC will take a leap into a legally unchartered and  uncertain future. 87  Association for Molecular Pathology v Myriad Genetics, No 12-398 (569 US) and D’Arcy v Myriad Genetics Inc & Anor (Case No S28/2015). 88  Hilty et al (n 69). 89  The last country to complete the process of ratification was Italy (10/02/17): www.consilium. europa.eu/en/documents-publications/agreements-conventions/agreement/?aid=2013001.

INDEX

Aarhus Convention, 109–10, 197, 210 Aarhus Convention Compliance Committee, 80, 210 abuse of power, 179, 288 amicus briefs, 35, 41–2, 156, 180 Anti-Dumping Agreement, 204, 213–14 arbitration: interpretation of necessity, 229 ISDS see investor-state dispute settlement state-state arbitration see state-state arbitration Area of Freedom, Security and Justice (AFSJ), 172 Argentina: WTO complaints, 257, 264 ARIO: aid and assistance to wrongful acts, 94–5 Article 6, 244 Article 7, 244, 245 Article 9, 94, 245 Article 14, 94–5 Article 15, 95–6 Article 16, 96 Article 58, 97–8 Article 64, 245–6 attribution of conduct, 97–8, 244–6 coercion of states, 96 countermeasures, 61 definition of international organisation, 89 direction and control of wrongful acts, 95–6 EU debate, 241, 244 international investment responsibility, 87–94 lex specialis and, 83, 84–5, 245 origins, 84 responsibility conditions, 240 standing, 57–8 status, 84–5 ultra vires conduct, 89–90 WTO and, 237 Articles on the Responsibility of International Organizations for Internationally Wrongful Acts see ARIO Articles on the Responsibility of States for Internationally Wrongful Acts see ASR ASR: countermeasures dispute settlement and, 60 erga omnes obligations, 61

human rights obligations, 71 targeted states, 71 international organisations and, 84 responsibility conditions, 240 standing, 57–8 WTO and, 76 association agreements, 51–2, 155, 196–7 Australia: Australia—Tobacco Plain Packaging, 247 Nuclear Tests cases, 130 Russian countermeasures against, 72 Austria: BITs: compatibility with EU law, 148 intra-EU arbitrations, 43 autonomy: EU law see autonomy of EU legal order human rights and, 170–1 legitimacy and, 164–6, 186–7 autonomy of EU legal order: categories of IDS and, 169–72 central constitutional principle, 32 CJEU guarantor, 106–7, 161, 166–8, 285 CJEU self-conception as domestic court, 183–6 conditions, 166–8 conflict of principles, 3 ECHR accession and, 46, 161, 172–7, 173, 231 ECtHR and, 172–7 IDS and, 30, 161–89 interpretation of EU law, 27–8 international law and, 104–7, 167 ISDS and, 178–83 Kadi, 104, 185 legitimacy, 162, 186–7 monism and, 107–10 state-state arbitration and, 142 unitary patents and, 282 aviation, 70, 107, 119, 217–18, 225 Belgium: Iron Rhine case, 117, 142, 143, 152–3 Lugano Convention and, 14 Berne Convention, 206–7 bilateral investment treaties (BITs) see free trade agreements Brazil: WTO complaints, 257 BREXIT, 275, 283

294 

Index

Brussels Convention (1968), 122 Bulgaria, 225 Cameroon: UK Trusteeship Agreement, 129–31 Canada: CETA see CETA ICJ disputes, 34 Russian countermeasures against, 72 Cerberus, 101, 110 CETA: citizens’ rights and, 225–6 effect of ISDS decisions, 202 individual rights, 223 ISDS, 15–16, 162, 178 Chicago Convention on International Civil Aviation, 119 Chile: ITLOS and, 170 Swordfish Case, 10–11, 36 WTO cases, 36 China: Philippines v China, 49 WTO complaints, 257 WTO disputes, 22 Chinese Taipei, 258 citizenship, 214–15, 220–34 CJEU see also specific subjects on abuse of power, 288 CFSP and, 107, 122–7 constitutional mandate, 218–19 cooperation principle, 104 direct effect of IDS decisions and, 198–205 domestic or international court, 183–6 ECtHR jurisprudence and, 291 Energy Charter Treaty and, 14 ERTA principle, 103, 104–5 exclusive jurisdiction, 138 agreements concluded for EU by member states, 120–2 autonomy of EU legal order, 106–7, 161, 166–8, 173, 285 BITs and, 155 competence, 118–22, 140–3, 156 direct effect, 107–10 free choice of means and, 3, 113–32 IDS decisions and, 196–8 international law and, 103–7, 167 mixed agreements, 115–17, 126, 127, 128, 145, 150, 197–8, 206–7 Opinion 1/94, 9, 29, 239–40, 252 relevance, 129–31 state-state arbitration and, 139–49 substitution of EU for member states, 118–20 third country parties, 127–9 union agreements, 115–122 unity of EU legal order and, 102–3, 109, 114

fragmentation of international law and, 37–9 gatekeeper role, 2, 101, 111 German Constitutional Court and, 171 guardian of autonomous legal order, 106–7, 161, 166–8, 285 intellectual property rights and, 281–2 international influence, 21–3 judicial appointment procedures, 168 legal status, 1 legitimacy, 162 monism, 107–10, 193–4 Patent Court and, 280, 282–3, 284–6 WTO obligations and, 217–19 Colombia: EU-Colombia FTA, 200 comity, 48, 132, 151, 156, 222, 229 Common Commercial Policy (CCP), 26, 244, 245–6, 257, 266, 271, 273 Common Foreign and Security Policy (CFSP), 107, 122–7, 131–2, 172 conflict of forum clauses, 45–50 constitutionalism, 165, 166, 172, 228 cosmopolitan constitutionalism, 221, 226, 227, 230–1, 232 republican constitutionalism, 221, 224, 227, 230, 232 consular assistance, 229 Convention on the Protection of the Rhine against Pollution by Chlorides (1976), 151–2 cooperation principle, 104, 125–6, 128, 129, 143–7, 283 cosmopolitan constitutionalism, 221, 226, 227, 230–1, 232 Costa Rica: ICJ case, 22 Council of Europe: ECHR see European Convention on Human Rights European Patent Convention (1973), 273, 278–9, 290 Strasbourg Convention (1963), 277 countermeasures: EU as subject of, 72–3 EU practice, 61–72 EU/Faroe Islands dispute, 62–8 Russia and Crimea, 68–70, 71 Yugoslavia, 70 Zimbabwe, 71 function, 59 human rights and, 71 IDS function, 58–60 retorsion and, 59 sanctions and, 59 third party countermeasures, 61 Court of Justice of the European Union see CJEU Croatia: Croatia-Slovenia arbitration, 142–3, 153–4 unitary patents and, 281

Index customary international law: EU responsibility in international investment, 83–98 interpretation of treaties, 227–8 peaceful settlement of disputes, 135–6 standing see standing Cyprus: Marfin claim, 87, 88–9 democracy: constitutionalism, 172, 228 deliberative democracy, 164, 166, 214 EU deficit, 186, 188, 225, 275 EU value, 215, 223 ISDS and, 182 legitimacy and, 163, 164, 165–6, 225 Denmark: Atlanto-Scandian Herring case, 11, 36–7, 53, 62–8 Dworkin, Ronald, 103 EEA Agreement, 105, 106, 114, 196, 207, 214 EEA Court, 19–20, 46, 105 effective judicial remedies, 223–4 effectiveness principle, 140, 147–9, 150 EFTA Court, 13–14, 214 Egypt: WHO Agreement (1951), 93 Energy Charter Treaty: CJEU and, 14–15 conflict of forum clauses, 50 dispute settlement mechanism, 14 EU standing, 56, 77–8 fragmentation of international law, 31 individuals’ standing, 78–80 investor-EU arbitration, 79–80 intra-EU arbitrations, 41, 42 mixed agreement, 41 equality: EU value, 223–4, 225 erga omnes obligations, 57–8, 61, 67, 70–2, 76 EU: Area of Freedom, Security and Justice (AFSJ), 172 association agreements, 51–2, 155, 196–7 budget violations, 225 CCP, 26, 244, 245–6, 257, 266, 271, 273 CFSP, 107, 122–7, 131–2, 172 countermeasures, 61–72 democratic deficit, 186, 188, 275 EMU, 220 existential crisis, 275 external relations see external action FDI, 26 financial assistance to Greece, 89–91 FTAs, 169 CETA, 15–16, 162, 178, 202, 223, 225–6 dispute settlement, 181 secretive negotiations, 225, 233 TTIP, 16, 162, 180, 202, 223 justice deficit, 275 legitimacy, 186

 295

member states see member states mixed agreements see mixed agreements objectives, 215 Parliament see EU Parliament participation in IDS see EU participation in IDS social justice, 276 state-state arbitration and, 149–55 trade and investment strategy, 168–9 values, 223 WTO and see WTO EU Charter of Fundamental Rights, 214, 215, 216, 223, 226, 291 EU law: autonomy see autonomy of EU legal order citizenship, 214–15 constitutional requirement to protect in IDS, 220–7 competences, 30 IDS participation, 24–6, 140–3, 156 ITLOS and see UNCLOS/ITLOS direct effect of IDS decisions, 198–205 CJEU approach, 198–200 ISDS, 201–3, 204 new FTAs, 200–1, 205 political process, 203–5 ECHR and, 174–5 effectiveness, 140, 147–9, 150 effects of IDS decisions on, 191–211 direct effect, 198–205 incorporation, 193–8 ISDS, 201–3 new FTAs, 200–1 political process, 203–5 primacy of IDS, 207–11 EU international agreements as part of, 115–17 Financial Responsibility Regulation, 15, 83, 85–6, 94, 96, 268, 272 hierarchy of sources, 194–6 incorporation of IDS decisions into, 193–8 automatic incorporation, 193–4 CJEU jurisdiction and, 196–8 hierarchy of EU sources, 194–6 international law fragmentation and, 32–54 international law primacy, 207–11, 218 legal order, 1, 55 sui generis, 104, 175 legitimacy, 162 primacy, 135, 140, 147–9 UPC and, 289–90 principles, 174, 221 property rights, 180 Trade Barriers Regulation, 213 unity, 102–3, 109, 114, 197 unitary patents and, 282, 286, 291

296 

Index

EU Parliament: ISDS and, 181 powers, 223 Troika responsibilty and, 90–3 EU participation in IDS: autonomy of legal order, 161–89 bilateral v multilateral frameworks, 50–5 categories of IDS mechanisms, 169–72 CJEU exclusivity see CJEU conflict of forum clauses, 45–50 consequences, 183–7 EU contribution to IDS development, 21–3 free choice of means and CJEU exclusive jurisdiction, 3, 113, 131–2 international law fragmentation, 31–54 EU experiences, 33–43 jurisdiction see jurisdiction new association agreements, 51–2 principles, 23–9, 30 competences, 24–6, 140–3, 156 external action objectives, 24 general conditions, 26–9 REIO clauses, 44–5 special treaty clauses, 43–50 standing see standing successful participation, 8–16 unsuccessful attempts at participation, 16–20 EURATOM, 47, 277, 278 Eurogroup, 90–1 European Central Bank, 88–93 European Convention on Human Rights (ECHR): achievements, 187 direct effect, 177 EU accession autonomy of EU legal order, 46, 161, 172–7, 173, 231 CFSP and, 126 CJEU exclusive jurisdiction and, 105, 106–7, 111, 114 controversy, 162, 292 draft agreement, 162, 185 hierarchy of EU sources, 195 legitimacy, 187 potential ECtHR conflicts, 172–7 principles and conditions, 7, 16–19, 32, 35, 188 standing of individuals and, 78 EU law status, 174–5 international influence, 22 patents and, 276, 291 European Court of Human Rights: AFSJ and, 172 binding judgments, 9 Bosphorus principle, 176 CFSP and, 126, 172 CJEU jurisprudence and, 23, 291

CJEU potential conflicts, 106–7, 170 post-ECHR accession, 172–7 EU participation, 32, 33, 161 hierarchy of EU sources, 195 margins of appreciation, 172–3 non-binding judgments, 17 standing: individuals, 78 European Financial Stability Facility (EFSF), 90 European Laying-up Fund for Inland Waterway Vessels, 20, 25, 105 European Patent Convention (1973), 276, 278–9, 290 European Patent Organisation (EPO), 276, 278–80, 290–1 European Road Transport Agreement (ERTA), 103, 104, 120–1 European Stability Mechanism (ESM), 90, 91–2, 93 external action (EU): CFSP, 107, 122–7, 131–2, 172 competence, 245–6 competence creep, 102 disempowerment of EU citizens, 225–7 EU principles, 224 foreign policy mandate, 224 international to multilevel dispute settlement, 227–31 Lisbon Treaty competence, 241–2, 257–8 objectives, 24 principles, 26–9 protection of citizens in IDS, 231–4 special treaty clauses, 43–50 Faroe Islands: EU/Faroe Islands dispute, 11, 36–7, 53, 62–8 Financial Responsibility Regulation, 15, 83, 85–6, 94, 96, 268, 272 Finland: BITs: compatibility with EU law, 148 foreign direct investment (FDI), 15, 26, 76, 83, 93, 161, 267–8 forum shopping, 276, 287, 292 France: countermeasures against Yugoslavia, 70 Declaration of the Rights of Man, 233 EC—Asbestos, 251 ITLOS, EU and, 38 Nuclear Tests cases, 130 Rhine Chlorides, 142, 143, 151–2 Rhine Convention (1976), 151–2 Unified Patent Court and, 283, 290 WTO disputes, 255–6 free trade agreements/BITs: bilateral v multilateral frameworks, 50–5 CETA, 15–16, 162, 178, 202, 223, 225–6 citizens’ rights and, 223, 225–6 compatibility with EU law, 148–9 effects of decisions on EU law, 200–1, 205 EU participation in disputes, 15–16 intra-EU arbitrations, 40–3

Index ISDS see investor-state dispute settlement secretive negotiations, 225, 233 standing: individuals, 214, 219 state-state arbitration, 155 TTIP, 16, 162, 180, 202, 223 freedom, 223–4 gatekeepers, 2, 101, 111 GATS: CJEU jurisdiction and, 240 EU countermeasures against Russia and, 69–70 EU v member state responsibility, 252, 257 Russian countermeasure and, 73 standing: individuals, 214 GATT (1947), 74, 75, 118–19 GATT (1994): CJEU and, 218 EU compatibility, 169 EU countermeasures against Russia and, 69–70 EU v member state responsibility, 252, 253–6 exceptions, 36, 63, 64–5, 69–70 panel procedures, 220 Russian countermeasures and, 73 standing: individuals, 213–14 taxation of products, 246, 266 Georgia: EU association agreement, 51 Germany: bifurcation procedure, 287 BIT intra-EU arbitrations and, 43 Constitutional Court v CJEU, 171, 177 Inland Waterways, 128 Iron Rhine case, 117 ITLOS, EU and, 38 nuclear power plant shutdown, 180 Rhine Convention (1976), 151–2 Unified Patent Court and, 283, 290 WTO disputes, 255–6 globalisation, 101, 162, 187, 219 GMOs, 217 Greece: Bondholder Act (2012), 88 Cyprus Popular Bank claim, 87–8 Economic Adjustment Programmes, 88 EU financial policies, 89–91, 275 IMO and, 121, 127, 128 Poštová banka claim, 87–8 rule of law and, 225 Greenpeace, 146 Habermas, Jürgen, 165, 172 Hague Convention on Child Abduction (1980), 119–20 Hobbes, Thomas, 224, 233 human dignity, 214, 215, 223 human rights: autonomy and, 170–1

 297

countermeasures and, 71 cultural dimensions, 170–1 EU constitutional requirement to protect in IDS, 223–4 EU constitutional safeguards, 222–3, 275–6 EU external relations and, 225–7 protection on IDS, 231–4 EU principle, 216, 221 Kadi, 32, 104, 111, 185, 221, 228 minimum standards, 171 person v state-centred proportionality, 228–30 rule of law and, 233 Unified Patent Court and, 291 Hungary: AES arbitration, 183 Iceland: Atlanto-Scandian herring fishing, 62 EFTA Court jurisdiction, 13–14 ICSID arbitrations, 229 ICSID Convention, 15, 55, 79, 87, 138, 202 IDS: decisions see IDS decisions EU citizens and, 213–34 EU parties see EU participation in IDS fragmentation and proliferation, 31–43, 101, 191 free choice of method, 3, 113, 131–2, 136, 138, 140 individuals and, 213–16 international to multilevel dispute settlement, 227–31 legitimacy, 191 IDS decisions: direct effect, 192, 198–205 CJEU approach, 198–200 ISDS, 201–3 new FTAs, 200–1, 205 political process, 203–5 double primacy, 205–11 domestic law, 206–7 EU law, 207–11 effects on EU law, 191–211 direct effect, 198–205 incorporation into EU law, 193–8 incorporation into EU law, 193–8 automatic incorporation, 193–4 CJEU jurisdiction and, 196–8 hierarchy of EU sources, 194–6 ILO Conventions, 120 IMF, 87–93 India: WTO complaints, 257 individuals: disempowerment of citizens in EU external relations, 225–7 EU constitutional freedoms, 222–3 EU constitutional requirement to protect in IDS, 223–4, 231–4

298 

Index

IDS and, 213–16 person v state-centred proportionality, 228–30 responsibility for IOs, 97 standing against EU, 78–80, 184 against IOs, 74, 78–80 ECT investors, 78–80 WTO, 213–14 WTO protection of individual rights, 217–20 inland waterways, 20, 105, 128 intellectual property rights see also TRIPS Lisbon Treaty, 279–80 patents see patents uniform protection, 281 Inter-American Court of Human Rights, 22 interdependent obligations, 58, 76 International Air Transport Agreement, 225 International Civil Aviation Organization, 217–18 International Convention on Civil Liability for Oil Pollution Damage, 119 International Convention on the Contract for the International Carriage of Goods by Road, 119 International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 119 International Court of Justice: consular assistance, 229 EU courts and, 21, 22 EU participation and, 33–5 Fisheries Jurisdiction, 34 fragmentation of international law and, 102 jurisdiction, 10, 14, 55, 115 CFSP and, 123 Northern Cameroon case, 129–31 Nuclear Tests cases, 130 primacy, 31 international dispute settlement see IDS international investment see investment international law: CJEU and see CJEU direct effect, 107–10 fragmentation see international law fragmentation monism, 107–10, 193–4 part of EU law, 115–17 primacy, 109 International Law Commission: ARIO see ARIO ASR see ASR EU debate, 241, 244 international law fragmentation: bilateral v multilateral frameworks, 50–5 CJEU and, 37–9, 101–2 conflict of forum clauses, 45–50 EU and ECHR, 35

EU and ICJ, 33–5 EU members’ treaty-making powers, 40–3 overview, 31–54 International Maritime Organization (IMO), 121, 128 international organisations see also specific organisations aid and assistance to wrongful acts, 94–5 ARIO see ARIO coercion of states, 96 definition, 89 direction and control of wrongful acts, 95–6 individual responsibility and, 97 member state responsibility, 97–8 standing, 55–6 individuals, 74, 78–80 investment: attribution of responsibility ARIO and, 87–98 Cyprus Popular Bank, 87–8 international organisations, 83–98 Marfin, 87, 88–9 Poštová banka, 87–8 Pringle v Ireland, 91–2 BITs see free trade agreements Financial Responsibility Regulation, 15, 83, 85–6, 94, 96, 268, 272 indirect expropriation, 179–80 ISDS see investor-state dispute settlement investment court system, 16, 162, 163, 180–1, 202, 211 investor-state dispute settlement (ISDS): apportionment of responsibility, 267–70, 272 autonomy of EU legal order and, 178–83 CETA, 162 costs, 187 effects of decisions on EU law, 201–3, 204 EU influence, 23 EU participation, 15–16, 161–2 fears, 162 Financial Responsibility Regulation and, 85 indirect expropriation, 179–80 interpretation of necessity, 229 lack of trust in, 181–2 legitimacy and, 178–9, 182, 188 Lisbon Treaty and, 161 party-owned process, 179 Singapore FTA, 162 standing, 55 wide interpretations, 179–80 Iran-US Claims Tribunal, 22 Ireland: Berne Convention and, 206–7 Mox dispute see Mox dispute Pringle v Ireland, 91–2 ISDS see investor-state dispute settlement Italy: unitary patents and, 281 ITLOS see UNCLOS/ITLOS

Index Japan: WTO complaints, 257, 258 John Chrysostom, Saint, 111 judicial dialogue, 32, 133, 229, 230, 231 jurisdiction: agreements between member states conferring jurisdiction, 122 CJEU see CJEU EU clauses, 74 EU in WTO, 74–5 international law, 56 meaning, 74 Kant, Immanuel, 164–5, 215, 223 legitimacy: autonomy and, 164–6, 186–7 concepts, 163–8 democracy and, 163, 164, 165–6, 225 EU law and, 162, 186–7 IDS mechanisms, 191 Investment Court System, 181 ISDS and, 178–9, 182, 188 legal legitimacy, 163 procedural legitimacy, 164 reason-based, 164, 168, 178, 188 republican constitutionalism, 230 sociological legitimacy, 186 Liechtenstein, 13–14 Lisbon Treaty: CJEU and, 2 external competences, 241–2, 257–8 intellectual property rights, 279–80 international agreements and, 161 judicial appointment procedures, 168 Lomé Convention, 13 loyalty, 139, 143–7 Lugano Convention, 14, 104 Luxembourg: Inland Waterways, 128 Rhine Convention (1976), 151–2 Marpol Convention, 119 Mauritius: Chagos Marine Protected Area Arbitration, 154–5 member states: agreements between member states conferring jurisdiction, 122 agreements concluded for EU by, 120–2 effects of IDS decisions on, 206–7 free choice of forum, 113, 131–2 international investment responsibility, 86–7 Kupferberg, 206, 228 mixed agreements see mixed agreements responsibility for EU conduct, 97–8 state-state arbitration, 133–57 competence, 133–8, 140–3, 156 substitution of EU for, 118–20

 299

treaty making powers: internal market and, 40–3 WTO responsibility, 75, 237–73 MERCOSUR, 229 Mexico: Metalclad arbitration, 179–80 mixed agreements: CJEU jurisdiction and, 115–17, 126, 127, 128, 145, 150, 197–8, 206–7 Energy Charter Treaty, 41 UNCLOS, 150 WTO, 169, 237, 239–41 Moldova: EU association agreement, 51 monism, 107–10, 193–4 Mox dispute, 10, 11, 27–8, 46–9, 54, 106, 111, 115–16, 131, 132, 141–2, 144–5, 150–1, 156 necessity, 222, 229 Netherlands: Arctic Sunrise Arbitration, 146–7, 154 ECHR direct effect, 177 intra-EU arbitrations, 43 Iron Rhine case, 117, 142, 143, 152–3 ITLOS, EU and, 38 Netherlands-Slovakia BIT, 42, 43 Rhine Chlorides, 142, 143, 151–2 Rhine Convention (1976), 151–2 New Zealand: Nuclear Tests cases, 130 Nicaragua: ICJ case, 22 North Atlantic Fisheries Organization (NAFO), 34 Norway: Atlanto-Scandian herring stock agreement (2007), 62–3 EFTA Court jurisdiction, 13–14 Russian countermeasures against, 72 oil pollution, 119 OSPAR Convention, 10, 47, 48 patents: origins of harmonisation, 277–80 Strasbourg Convention (1963), 277 unification, 280–7 applicable laws, 287–92 Unified Patent Court see Unified Patent Court unitary patents, 280–4 Paul, Saint, 111 Permanent Court of Arbitration (PCA): Iron Rhine case, 117, 142, 143, 152–3 Optional Rules, 137 Rhine Chlorides, 142, 143, 152 services, 138 Permanent Court of International Justice: SS Wimbledon, 76 Peru: EU-Peru FTA, 200 Peter, Saint, 101 Philippines: Philippines v China, 49 Portugal: fishing rights, 34

300 

Index

poverty eradication, 224 power politics, 224, 225, 226, 233 property rights, 180 proportionality, 216, 217, 219, 221, 222, 227, 228–30 Rawls, John, 215, 223 REIO clauses, 44–5 republican constitutionalism, 221, 224, 227, 230, 232 retorsion, 59 Romania: intra-EU arbitrations, 43 Romania-Sweden BIT, 42 rule of law and, 225 Rome Convention (1980), 122 Rousseau, Jean-Jacques, 165 rule of law, 166, 215, 218, 220, 220–1, 223–4, 225, 228, 233, 292 Russia: Arctic Sunrise Arbitration, 146–7, 154 Atlanto-Scandian herring fishing, 62 countermeasures against EU, 72–3 ECHR, EU and, 35 EU countermeasures for wrongful conduct in Crimea, 68–70, 71 WTO complaints, 257 sanctions: countermeasures and, 59 Schengen Agreement, 220, 225 SCM Agreement, 76–7, 213–14, 252, 256, 257, 261, 263, 264, 265 Serbia: EU countermeasures against, 70 Singapore-EU FTA: effect of ISDS decisions, 202 individual rights, 223 ISDS, 162, 178, 179 Slovakia: intra-EU arbitrations, 43 Netherlands-Slovakia BIT, 42, 43 Slovakian Bears case, 109–10 Slovenia: Croatia-Slovenia arbitration, 142–3, 153–4 solidarity, 103, 215, 223 South Korea: EC—Commercial Vessels and, 252 EU-South Korea FTA, 201 Spain: ECT arbitration, 42 ICJ disputes, 34 ITLOS, EU and, 38 UPC and, 281, 282, 285, 288 WTO disputes, 255–6 standing: customary international law, 57–74 function of countermeasures, 58–60 EU and ECT, 77–8

EU and WTO, 8–9, 33, 35–7, 75–7 EC—Bananas, 75–6, 77 US—FSC, 76–7 individuals against EU, 78–80, 184 Aarhus Convention Compliance Committee, 80 ECT investors, 78–80 individuals against IOs, 74, 78–80 international law, 56 international organisations, 55–6 WTO: individuals, 213–14 state aids, 246, 252, 263, 264 state sovereignty, 32, 40, 113, 127, 131–2, 157, 170–1, 176, 282 state-state arbitration: CJEU exclusive jurisdiction and arguments, 139–49 competence, 140–3, 156 effectiveness, 147–9 loyalty, 143–7 supremacy of EU law, 147–9 EU-non EU state disputes, 134, 154–5 IDS method, 133–8 intra-EU disputes, 134, 150–4 overview, 133–57 procedural rules, 137–8 scope, 134 treaty clauses, 136–7 tribunals’ accommodation of EU law, 149–55 Stockholm Chamber of Commerce, 79, 80 Stockholm Convention on Persistent Organic Pollutants, 145 Strasbourg Convention (1963), 277 subsidiarity, 216, 221, 227 subsidies, 76–7, 246, 255–6, 263–4 Sweden: BITs: compatibility with EU law, 148 intra-EU arbitrations, 43 Open Skies case, 127, 128 PFOS case, 126, 128, 129, 145 Romania-Sweden BIT, 42 Switzerland: Lugano Convention and, 14 Rhine Convention (1976), 151–2 TBT Agreement, 257 tobacco products, 247 Trade Barriers Regulation, 213 Transatlantic Trade and Investment Partnership (TTIP), 16, 162, 180, 202, 223 TRIPS: CJEU jurisdiction and, 207, 240 EU v member state responsibility, 252, 253, 257 standing: individuals, 214 Unified Patent Court and, 291 Troika, 88–92 Trusteeship Agreements, 129–31

Index Turkey: association agreement, 196–7 ECHR, EU and, 35 Ukraine: EU association agreement, 51–2, 155 Russian countermeasures against EU, 72–3 Russian wrongful conduct in Crimea, 68–70, 71 UNCITRAL, 79–80, 137 UNCLOS/ITLOS: Arctic Sunrise Arbitration, 146–7, 154 Atlanto-Scandian Herring case, 11, 37, 53, 62–8 Chagos Marine Protected Area Arbitration, 154–5 CJEU jurisdiction and, 199–200, 217–18 conflict of forum clauses, 50 EU attitude to, 169–70 EU influence, 22 EU power politics, 225 EU standing, 10–13, 24, 33, 35–7, 38–9, 56 mixed agreement, 150 Mox dispute and see Mox dispute origins, 44–5 Philippines v China, 49 SRFC case, 12, 38 UNCTAD, 41 Unified Patent Court, 2, 3 Agreement, 285–6, 287, 289, 291 applicable laws, 287–92 Chemistry Division, 283, 290 CJEU exclusive jurisdiction and, 19, 20, 105, 107, 280, 282–3, 284–5 creation, 282 divisions, 290 human rights and, 291 international court, 283–4 locations, 283, 290 mandate, 276, 286 membership, 283, 286 ratification of Agreement, 283 sui generis legal order, 283 unity of EU law and, 286 unitary patents, 280–4 United Kingdom: BREXIT, 275, 283 Chagos Marine Protected Area Arbitration, 154–5 countermeasures against Yugoslavia, 70 ITLOS, EU and, 38 Mox dispute see Mox dispute Northern Cameroon case, 129–31 Unified Patent Court and, 283, 290, 292 WTO disputes, 255–6 United Nations: Charter dispute settlement, 138

 301

EU respect for, 24 peaceful settlement of disputes, 135 Friendly Relations Declaration, 113, 131 human rights and rule of law, 233 international cooperation, 216 Law of the Sea Convention see UNCLOS/ ITLOS United States: amicus briefs, 41 Metalclad arbitration, 179–80 Russian countermeasures against, 72 TTIP, 16, 162, 180, 202, 223 WTO complaints, 252, 253–5, 258 WTO disputes, 248 Universal Declaration of Human Rights (UDHR), 226 Vienna Convention on Consular Relations, 229 Vienna Convention on the Law of Treaties (VCLT), 32, 42, 44, 152, 216, 222, 228, 233 Vienna Convention on the Law of Treaties between States and International Organisations or between International Organisations (1986) (VCLTIO), 44, 242–3 Vietnam: EU-Vietnam FTA, 15–16 Warsaw Convention (1929), 119 WHO, 93 WTO: Agreement on Customs and Valuation, 213–14 Agreement on Pre-Shipment Inspection, 213–14 Anti-Dumping Agreement, 204, 213–14 disputes see WTO disputes EU-Ukraine agreement and, 52 Government Procurement Agreement, 214 individual rights, 223 influence on EU, 29 Information Technology Agreement (ITA), 258 international cooperation, 216 mixed agreement, 169, 237, 239–41 no-direct effect rule, 199, 202, 203, 204 protection of individual rights, 217–20 REIO clauses, 45 SCM Agreement see SCM Agreement TBT Agreement, 257 TRIPS see TRIPS WTO disputes: Australia—Tobacco Plain Packaging, 247 citizens rights and, 228, 229 CJEU influence, 22 CJEU jurisdiction and, 197, 198, 202, 205 countermeasures, 67 domestic law and, 49–50 DSM template, 200, 203 EC—Asbestos, 251, 260

302  EC—Bananas, 217, 225 EC—Bed Linen, 209 EC—Beef Hormones, 217 EC—Biodiesel Industry, 264–5 EC—Biotech, 251, 260, 265 EC—Commercial Vessels, 252, 260 EC—Computer Equipment, 245, 253–5, 258, 259, 261, 262–3, 271 EC—IT Products, 258–9, 261, 262–3, 271 EC—Large Civil Aircraft, 255–6, 259, 261, 263–4, 271 EC—Seals, 203, 204 EU cases, 169, 248, 250 EU standing, 8–9, 33, 35–7, 56, 75–7 EU v member state responsibility, 74–5 apportionment of obligations, 241–3 assessment, 270–3 attribution of conduct, 244–7

Index case apart, 267–70 competence model, 261–7 controversy, 247–61 mixed agreement, 169, 239–41 post-Lisbon practice, 257–61 practice, 247–61 pre-Lisbon practice, 249–56 survey, 237–73 theory, 241–7 individuals’ standing, 213–14 international law and, 108 lack of direct effect of decisions, 200, 202 primacy, 207 United States, 248 Yugoslavia: EU countermeasures against, 70 Zimbabwe: EU countermeasures against, 71