CYIL vol. 8 (2017)

CYIL 8 ȍ2017Ȏ RESPONSIBILITY FOR VIOLATIONS OF INVESTORS’ RIGHTS … Even more importantly, while the regulation assumes that the international responsibility for breaches of Union investment agreements should be always borne by the Union, at the same time it determines, using different criteria, which entity (the Union or the Member State concerned) shall act as the respondent in a particular investment dispute, while in certain situations it still enables the Commission to assume the conduct of the dispute against the will of the Member State which has afforded the treatment in dispute. These rules, laid down in the internal legislation of the Union, will not be binding on arbitral tribunals. If the Union is to decide unilaterally which entity shall act as the respondent in arbitration proceedings, such possibility needs to be expressly recognized in the investment agreement concluded between the Union and the third country concerned. Otherwise, the tribunal will be under no duty to accept such a unilateral determination. 37 In terms of establishment or acknowledgement of the claimed special rule of the international responsibility of the Union and practical enforceability of the rules concerning determination of the respondent and other procedural arrangements introduced by the regulation, it is crucial how these rules are actually reflected in the text of the new EU IIAs. The EU and its Member States have already signed the CETA with Canada and the Commision has also disclosed the negotiated texts of the free trade agreements to be concluded with Singapore and Vietnam. The provisions of the CETA, EUSFTA and VIEUFTA on investor-to-state dispute settlement indeed contain rules which govern determination of the respondent on the part of the EU and its Member States, i.e. whether the respondent in an investment dispute concerning the treatment of non-EU investor should be the Union or a Member State of the EU. According to all three agreements, the identification of the proper respondent in the dispute initiated by a third-country investor rests primarily with the Union. The investor shall first deliver to the EU a notice requesting a determination of the respondent, in which it shall also identify the measures in respect of which the investor intends to submit a claim. The EU shall, after having made a determination, inform the investor within a relatively short time (fifty days under CETA, two months under EUSFTA, sixty days under VIEUFTA) as to whether the EU or a Member State shall be the respondent. Such determination shall be binding on the tribunal (and also on the EU and the Member State concerned). If the investor is not informed by the Union about the determination within the prescribed deadline, the following rules shall apply: – where the measures identified in the investor’s notice are exclusively measures of a Member State, the Member State shall be respondent; and – where the measures identified in the investor’s notice include measures of the EU, the Union shall be respondent. Having regard to the final wording of the regulation, this solution does the necessary job by making the unilateral determination of the respondent made by the Union binding on the tribunal. However, it does not clearly specify which entity bears international responsibility for the breach of investors’ rights, as it only provides for the procedure of determination of the respondent. Thus, the CETA, EUSFTA and VIEUFTA do not bring more light into the concept of international responsibility of the EU and its Member States in relations with between the Union and the Member States. As a consequence, the Union will in principle be responsible for defending any claims alleging a violation of rules included in an agreement which fall within the Union’s exclusive competence, irrespective of whether the treatment at issue is afforded by the Union itself or by a Member State. 37 See also TIETJE, SIPIORSKI, TÖPFER, supra n. 5, at 22-23.

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