CYIL vol. 8 (2017)

TOMÁŠ FECÁK CYIL 8 ȍ2017Ȏ The endeavour to take up international responsibility even in situations where the rules of general international law seem to point at Member States may seem paradoxical. The Union’s eagerness is probably best explained by the Commission’s quest for integration and for international confirmation and acceptance of the role of the EU. 26 By being a direct participant in international economic disputes, the Commission is provided with an opportunity to actively assert and promote the Union’s policy preferences and to indirectly contribute to the shaping of the international legal system. Nevertheless, there are substantial differences between the disputes being settled at the WTO level and investment treaty arbitrations. The responsibility for breaches of WTO rules should in the first place ensure withdrawal of the inconsistent measure and may possibly lead to the entitlement of the aggrieved third country to adopt and apply trade countermeasures. Although the economic impact of amendment of inconsistent measures or of countermeasures may be significant, they do not pose a direct burden on the Union’s budget, whereas the acceptance of their imposition instead of complying with international commitments may be a matter of political calculation. On the other hand, the negative budgetary consequences of unsuccessful investment treaty arbitrations are much more tangible, as the arbitral awards in favour of investors usually entail a duty of the losing party to pay financial compensation, often in considerable amounts. While the idea that the Union would bear international responsibility for any breaches of Union investment agreements, and that for that reason the Commission would act as the respondent in investment treaty disputes was certainly very appealing for the Commission, far less attractive was the prospect of the Union having to bear the financial consequences of lost arbitrations, especially in cases where the disputed treatment would be afforded solely by a Member State. That was the basic legal factual and legal configuration under which the Commission undertook to draft a proposal of the Regulation on financial responsibility. 3.1 Regulation No. 912/2014 and the Concept of Financial Responsibility A logical and also necessary step in the Commission’s quest to build foundations of the EU international investment policy was to introduce a set of more detailed rules which would govern the questions related to responsibility for breaches of EU IIAs. In 2012 it presented the proposal for regulation, 27 which eventually entered into force in September 2014 as Regulation No. 912/2014 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 (hereinafter referred to as the ‘regulation’). The primary aim pursued by the regulation is to establish the framework for managing consequences of investment disputes brought by foreign investors against the Union or its Member States under Union investment agreements. It furthermore addresses procedural issues related to conducting dispute settlement procedures based on such agreements. 26 EECKHOUT, supra n. 14, at 8. 27 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, 21 June 2012. 3. The Emerging Regime of Responsibility of the EU and Member States under the New EU Investment Agreements

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