CYIL vol. 8 (2017)

CYIL 8 ȍ2017Ȏ RESPONSIBILITY FOR VIOLATIONS OF INVESTORS’ RIGHTS … be first recalled that the rules of general international law on responsibility of international organizations operate with the criterion of attribution. As has been explained above, the ILC rejected the suggestions of the EU representatives to articulate in DARIO another self-standing criterion of attribution, whereby the actions of EU Member States would be attributable to the Union if the Union exercised normative control over their conduct. The actions of Member States’ authorities (whether acting within the limits of their own competence or implementing binding acts of the Union) will be − insofar as assessed under rules of general international law − attributable to the Member States and in principle not to the Union. In some cases, the Union may be responsible jointly with the Member States, in particular where the normative control of the Union exercised over the conduct of a Member State reaches the intensity of direction and control within the meaning of Article 15 DARIO. Most importantly, were the rules of general international law to apply, the Union would not bear international responsibility for breaches of EU IIAs in situations where the violation of treaty standards was the result of treatment afforded by a Member State acting in exercise of its own competence. On the other hand, were the investment agreements concluded by the Union alone without parallel participation of Member States, the general international rules as codified in the DARIO do not provide a clear answer to the question which entity should be internationally responsible for breaches of such agreements attributable to Member States. In the explanatory memorandum to the regulation proposal, the Commission, relying on little legal argument, suggested that alleged exclusive international responsibility of the Union for any breaches of EU investment agreements was based on a special rule of international law ( lex specialis) , noting that such a possibility was explicitly recognized by Article 64 DARIO. The submission about the existing special rule on international responsibility in the form presented by the Commission is however convincing neither from the EU law perspective, nor from the international law perspective. As regards the EU law perspective, such a submission is not convincing mainly for the reason that it is based on a flawed assumption that the Union has an exclusive external competence for all aspects of foreign investment, including portfolio investment. While foreign direct investments are now part of the common commercial policy and therefore fall within the exclusive external competence of the EU, the alleged existence of the exclusive competence of the Union for other than direct investment does not have basis in the CJEU’s case law, it has found no support in the literature, and has been recently rebutted by the CJEU itself in its Opinion 2/15 on the competence of the EU to conclude EUSFTA. 34 The explanation of the Commission why the Union should be solely internationally responsible for any breaches of EU IIAs is therefore very unpersuasive. Assertions of the widest conceivable scope of the Union external competence in the Commission’s legislative proposals may be well understandable as an attempt for a strategic manoeuvre in the competence struggle with the Council, but they can hardly serve as solid foundations of a theoretically coherent solution for allocation international responsibility under EU IIAs. The Commission’s construction is even less persuasive from the international law perspective. Let us assume for a while that the Union indeed had a broad exclusive external competence extending to all matters related to foreign investment, including portfolio investment and ISDS. Would that mean that there exists a special rule within the meaning

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34 Opinion 2/15, supra n. 4, at paras 226-244.