CYIL vol. 12 (2021)

CYIL 12 (2021) THE KOMSTROY JUDGMENT AND ITS POSSIBLE IMPLICATIONS based on GATS Article 14, the right to regulate, annex on indirect expropriation, limited definition of fair and equitable treatment, as safeguards against interference with operation of the EU institutions in accordance with the EU constitutional framework. 39 Based on the above stated the Court “ concluded that Section F of Chapter Eight of the CETA does not adversely affect the autonomy of the EU legal order. 40 ” It is worth noting that while the ECT does define applicable law as the ECT and principles of international law 41 , this definition did not satisfy the Court as to exclude the interpretation and application of the EU law. Here, the careful drafting of the Article 8.31 CETA (applicable law and interpretation) has shown to be prudent for the sake of CJ EU scrutiny 42 . Further, considering the fulfilment of the requirement for (i) general principle of equal treatment and the requirement of effectiveness 43 and (ii) right of access to an independent tribunal 44 the Court has concluded that chapter 8 of CETA is compliant with the EU law. CETA is currently in the process of ratification by the MS. In the meantime, on 29 January 2021 four decisions on the functioning of the CETA Investment Court system were adopted: (i) the rules setting out the functioning of the Appellate Tribunal; (ii) the code of conduct for Members of the Tribunal, Members of the Appellate Tribunal and mediators; (iii) the rules for mediation; and (iv) the procedure for issuing binding interpretations to be adopted by the CETA Joint Committee. 39 Opinion 1/17, para 146, 152, 154, 156, 157. 40 Opinion 1/17, para 161. 41 Article 26 (6) ECT: “ A tribunal established under paragraph (4) shall decide the issues in dispute in accordance with this Treaty and applicable rules and principles of international law. ” 42 Article 8.31. CETA Applicable law and interpretation 1. When rendering its decision, the Tribunal established under this Section shall apply this Agreement as interpreted in accordance with the Vienna Convention on the Law of Treaties, and other rules and principles of international law applicable between the Parties. 2. The Tribunal shall not have jurisdiction to determine the legality of a measure, alleged to constitute a breach of this Agreement, under the domestic law of a Party. For greater certainty, in determining the consistency of a measure with this Agreement, the Tribunal may consider, as appropriate, the domestic law of a Party as a matter of fact. In doing so, the Tribunal shall follow the prevailing interpretation given to the domestic law by the courts or authorities of that Party and any meaning given to domestic law by the Tribunal shall not be binding upon the courts or the authorities of that Party. 3. Where serious concerns arise as regards matters of interpretation that may affect investment, the Committee on Services and Investment may, pursuant to Article 8.44.3(a), recommend to the CETA Joint Committee the adoption of interpretations of this Agreement. An interpretation adopted by the CETA Joint Committee shall be binding on the Tribunal established under this Section. The CETA Joint Committee may decide that an interpretation shall have a binding effect from a specific date. 43 Canadian investors in the EU, being foreign investors, are not in comparable situations as the EU investors in the EU, hence no discrimination takes place, Opinion 1/17, para 180. 44 Regarding the accessibility of ICS to small and medium enterprises (SMEs) and independence of tribunal members, the Court referred to innovative features of ISDS in CETA: permanent tribunals (both first instance and appeal) and random allocation of cases and concluded that notwithstanding the designation, the tribunals will obviously perform judicial functions. Opinion 1/17, para 202-204.

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