CYIL vol. 8 (2017)

TOMÁŠ FECÁK CYIL 8 ȍ2017Ȏ Of course, there might be disagreement about the apportionment of financial responsibility in specific cases, in particular those involving complex investment disputes. The application of the rules on apportionment of financial responsibility may lead to both the Union and the Member State concerned being partially responsible for the treatment afforded to a third- country investor, whereas the exact proportion of the responsibility may be subject to disagreement between the Commission and the Member State. However, it is important that the question of apportionment of the financial responsibility should be resolved internally within the Union and outside the framework of the arbitration proceedings. If the Commission and the Member State do not reach an agreement, the question will be decided by the Commission, while the Member State may ultimately request such decision to be reviewed by the CJEU (see below). In sum, while the international responsibility should (at least in the Commission’s view) follow the allocation of external competences, the financial responsibility should follow the origin of the treatment of which the investor complained, which should, in principle, correspond to the allocation or exercise of the internal competence. As the Commission explained, it was immaterial from the perspective of external responsibility that a Member State had the competence under the internal market rules allowing it to legislate in its domestic sphere, as the allocation of international responsibility was to be decided with reference to external competence. Such a construction in the Commission’s view corresponded to special rules (lex specialis) on international responsibility of the Union within the meaning of Article 64 DARIO. The Commission however saw it necessary to separate the question of international responsibility from the issue of the allocation of financial responsibility in order to ensure the fair allocation of costs, so that the EU budget – and consequently the budgets of Member States not concerned with the claim in question – were not burdened with costs relating to treatment afforded by one Member State. 29 As regards the procedural issues, the regulation at the first place addresses the question which entity (the Union or the Member State concerned) shall act as the respondent in investment treaty arbitrations having regard to different scenarios under which the rights of an investor under an EU IIA might be breached. In the explanatory memorandum to the regulation proposal, the Commission linked the question of which entity shall act as the respondent in investment treaty arbitration with allocation of international responsibility. 30 The Commission however acknowledged that due to proposed rules on allocation of financial responsibility, which would in many cases cause the financial burden of investment arbitrations to be borne by Member States, it would be neither realistic nor appropriate to require that the Union should act as the respondent in each and every investment dispute. The regulation thus anticipates that in investment disputes concerning treatment afforded by a Member State entailing its potential financial responsibility, that Member State should be allowed to defend its actions in the investment arbitration itself. Thus, the regulation in fact detaches from the ‘general’ international responsibility, which shall be allegedly always borne by the Union, not only the question of financial consequences of investment disputes, but also determination of the respondent in arbitration proceedings, which should in principle (subject to exceptions) follow the allocation of financial responsibility.

29 Ibid., at 4-6. 30 Ibid., at 5.

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