CYIL vol. 8 (2017)

CYIL 8 ȍ2017Ȏ RESPONSIBILITY FOR VIOLATIONS OF INVESTORS’ RIGHTS … The Union, represented by the Commission, shall act as the respondent where the dispute concerns treatment afforded by the institutions, bodies, offices or agencies of the Union. The Commission shall only inform the Parliament and the Council about the initiation of a dispute by a third-county investor. Much more detailed rules govern the conduct of disputes concerning, fully or partially, treatment afforded by a Member State. The basic rule is that in these cases the Member State concerned should act as the respondent. The regulation however sets out some exceptions where the Union may − subject to conditions − act as the respondent also in these cases. According to Article 9(2), the Commissionmay take over the conduct of proceedings from the Member State where (i) the Union would bear all or at least part of the potential financial responsibility arising from the dispute; or (ii) the dispute also concerns treatment afforded by the institutions, bodies, offices or agencies of the Union. The Commission should make such decision only ‘based on a full and balanced factual analysis and legal reasoning provided to the Member States’ in the framework of the comitology procedure under Regulation No. 182/2011. 31 Article 9(3) provides that the Commission may decide that the Union is to act as the respondent where similar treatment is being challenged in a related claim against the Union in the WTO, where a panel has been established and the claim concerns the same specific legal issue, and where it is necessary to ensure a consistent argumentation in the WTO case. A Member State may also let the Union act as the respondent in the proceedings voluntarily: the Union shall act as the respondent when the Member State has confirmed to the Commission that it does not intend to act as the respondent. Chapter IV of the regulation (Articles 13-16) lays down conditions under which the Union and the Member State concerned may settle with the investor in different scenarios, taking into account whose financial interests are at stake and which entity wishes to settle. It is interesting to note that it addresses only settlement in situations when the Union acts as respondent, while it remains silent on scenarios with the respondent being the Member State. It is apparently implicitly assumed that in such cases financial responsibility will be borne exclusively by the Member State and that Member State should be thus also entitled to settle the dispute as it deems appropriate. Chapter V of the regulation (Articles 17-21) lays down procedures for payments of sums awarded by arbitral tribunals or agreed in a settlement with an investor and specifies the mechanism for internal settlement between the Union and the Member State concerned in order to give practical effect to the rules on allocation of financial responsibility. Article 17 provides that this part of the regulation shall apply where the Union acts as the respondent in a dispute. The regulation is again silent on the question of payments to investors in situations where the Member State acts as the respondent. This issue is addressed only in the explanatory memorandum, which simply states that where the Member State concerned has acted as the respondent to a claim, it shall be responsible for the payment of final awards and settlements relating to that claim. 32 This principle has not been however expressly articulated in the regulation itself, and it can be only inferred by interpretation relying on the explanatory memorandum and on the definition of the term ‘financial responsibility’. 31 Regulation (EU) No. 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by Member States of the Commission’s exercise of implementing powers. 32 Regulation proposal, supra n. 27, Explanatory Memorandum, at 11-12.

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