CYIL vol. 8 (2017)

CYIL 8 ȍ2017Ȏ RESPONSIBILITY FOR VIOLATIONS OF INVESTORS’ RIGHTS … disputes concerning violation of an agreement to which such Member State is not a party would be easily acceptable for the tribunal, especially if the determination is made by the Union against the will of the Member State concerned. Furthermore, the direct participation of Member States seems also necessary for proper establishment of the jurisdiction of investment tribunals. As noted by Dimopoulos, participation of the Member State on the ISDS under ‘pure’ EU investment agreements would cast doubts on the jurisdiction of arbitral tribunals, since the Member State which has not concluded the investment agreement in question has not expressed its consent to be party to arbitration and the tribunal may therefore lack jurisdiction to hear claims brought against the Member State. 38 As he rightly argues, in such cases, the framework established under the regulation could not function properly. 39 As explicitly provided in the three analyzed EU IIAs, agreements, the respondent consents (by virtue of entering into agreement) to the settlement of the dispute by the tribunal in accordance with the procedures set out therein. It seems inevitable that if such consent is to be deemed validly given, the respondent itself must be a party to the agreement. This particular issue has been noticed also by the CJEU in its recent Opinion 2/15 on the competence of the EU to conclude the EUSFTA. According to the Court, the possibility of the investor to initiate dispute settlement against the Member State and the deemed consent of the latter with the arbitration bring about the necessity of the Member Sates‘ consent with conclusion of EUSFTA: 291. The claimant investor may indeed decide, pursuant to Article 9.16 of the envisaged agreement, to submit the dispute to arbitration, without that Member State being able to oppose this, as its consent in this regard is deemed to be obtained under Article 9.16.2 of the agreement . 292. Such a regime, which removes disputes from the jurisdiction of the courts of the Member States, cannot be of a purely ancillary nature within the meaning of the case-law recalled in paragraph 276 of this opinion and cannot, therefore, be established without the Member States’ consent . 293. It follows that approval of Section B of Chapter 9 of the envisaged agreement falls not within the exclusive competence of the European Union, but within a competence shared between the European Union and the Member States. 40 (emphasis added). While in Opinion 2/15 the Court operates with a debatable (to say the least) concept of ‘shared competence’, 41 it made it clear that the direct participation of the Member States 41 As follows from paras. 244 and 292 of Opinion 2/15, existence of shared external competence for certain parts of EUSFTA requires involvement of the Member States. The principal problem with the Court’s concept of ‘shared’ competence in the sphere of external relations is that it seems to be in direct contradiction with the definition of shared competence which is now expressly included in the text of the TFEU. According to Article 2(2) TFEU, when the Treaties confer on the Union a competence shared with the Member States in a specific area, the Union and the Member States (each of them) may legislate and adopt legally binding acts in that area. The Member States shall exercise their competence to the extent that the Union has not exercised its competence, i.e. the EU may pre-empt certain area by exercising its shared competence. At least within the sphere of internal competences, it is commonly understood that existence of shared competence enables the Union to adopt measures without the need of specific approval by individual Member States. However, in Opinion 2/15 the Court apparently suggests that shared competence means something different in the internal sphere and in the sphere of external relations, though the Court has never bothered to explain this divergence, which seems hardly justifiable. On the competence of the EU for foreign investment see the also extensive analysis (pre-dating Opinion 2/15) in: FECÁK, Tomáš, International Investment Agreements and EU Law. Alphen aan den Rijn: Kluwer Law International, 2016, 144-218. 38 DIMOPOULOS, supra n. 8, at 1686. 39 Ibid. , at 1684. 40 Opinion 2/15, supra n. 4.

57