CYIL vol. 8 (2017)

TOMÁŠ FECÁK CYIL 8 ȍ2017Ȏ on the ISDS under new EU investment agreements requires their express consent also as a matter of EU law. Conclusion In an attempt to tackle difficult questions related to responsibility for breaches of EU IIAs, the regulation in conjunction with the provisions of the new EU IIAs on dispute settlement marks the emergence of the new and very specific regime of international responsibility for violations of third-country investor’s treaty rights under these agreements. The complexity of the issues addressed by this regime stems from the fact that the scope of the external competence of the Union and of the rules it intends to include in its IIAs reaches beyond the extent to which the Union has exercised its internal investment-related competences. While at the external level the Union will be negotiating broad standards of post-establishment protection of investment, the violations of these standards will in most cases probably result from the conduct of Member States exercising their own internal competence, which would be often neutral when measured by the internal market standards. The Commission wanted the Union to bear international responsibility for such conduct and at the same time to soldify its own position as the sole external representative of the Union, but it does not want the Union to bear financial consequences of lost arbitrations. The tensions arising out of these specific features of the new Union competence and of competing interest on the part of the Commission and Member States could be realistically solved only by the introduction of a pragmatic regime which allows the Member States to defend their own conduct where their financial interests are at stake. 42 The idea of exclusive international responsibility of the Union for any breaches of EU IIAs which underpins the system of the regulation is based on fallacious theoretical foundations. This concept does not fit with the general international law rules on responsibility of international organizations, and it does correspond to a special rule of international law, whose existence prior to the entry of the regulation into force would be confirmed by the codification work of the ILC or by the practice of international courts and tribunals. This is the result of the purpose-built approach of the Commission to drafting of the regulation proposal. The characteristic feature of the solutions adopted in the regulation is separation of the question of international responsibility as such from its partial components, which concerns not only allocation of financial responsibility, but also the respondent status in investment arbitrations. Such separation is unusual, and in cases when a Member State will act as a respondent, even assuming that the international responsibility would rest with the Union as alleged by the Commission, such responsibility would be stripped of most of its real content and can be at most considered ‘declaratory’ than real. On the other hand, such separation should be possible in principle, provided that some other conditions are met. Claims of investors under EU IIAs will always be treaty-based. Parties to an international agreement may in their mutual relations stipulate special rules on determination of the respondent in cases of breaches of the agreement which depart from general rules on international responsibility. The new IIAs signed or negotiated by the EU 42 BAETENS, Freya, KREIJEN, Gerard, VARGA, Andrea, Determining International Responsibility Under the New Extra-EU Investment Agreements: What Foreign Investors in the EU Should Know, 12 Vanderbilt Journal of Transnational Law 1254-1255, 1259 (2014). 4.

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