CYIL vol. 8 (2017)

CYIL 8 ȍ2017Ȏ RESPONSIBILITY FOR VIOLATIONS OF INVESTORS’ RIGHTS … so far (CETA, EUSFTA and VIEUFTA) do not directly address the substantive aspects of allocation of international responsibility as such, but rather approach the matter from the procedural perspective. The provisions on dispute settlement neither explicitly fix which entity shall be internationally responsible for violations of third-country investors‘ rights, nor lay down criteria for allocation of international responsibility as such. What they do provide for is the procedural mechanism for determination of the respondent in the investment dispute at hand. This determination shall be internalized by the Union, while the choice, once duly made, shall be binding on the tribunal deciding the dispute, but also on the EU and the Member State concerned themselves. Only when such determination is not properly made by the Union (what is arguably not very likely to happen), the respondent shall be determined by the tribunal itself applying the residual attribution-based criteria. From the practical perspective, it does not seem too important anymore which entity would have borne international responsibility as such, as there are specific and detailed arrangements governing conduct of disputes and allocation of consequences of violations of investors‘ rights in individual cases. The workability of this concept, which involves quite unconventional elements, is yet to be fully tested in the practice of investment disputes. One of the weakest points in this regard seems to be that the solution of basic procedural questions, in particular the determination of the entity which shall act as the respondent, or the possibility to settle, largely depends on the same criteria which govern the allocation of financial responsibility. The question of apportionment will therefore need to be preliminarily assessed and decided internally at the EU level already in the initial stages of an investment dispute and only on the basis of the submissions made by the investor in its claim, when the answers may be far from clear, as they might ultimately depend on the result of the dispute. A disagreement between the Commission and the Member State concerned may arise especially in cases of complex disputes involving conduct of the Member State and at the same time EU law aspects, where it will be difficult to estimate beforehand the potential financial impact of the dispute on the Union and the Member State concerned and where their interests might be contradictory. Nevertheless, given the complexity of the issues it had to cope with, it is submitted that the concept introduced by the Union is generally viable and can be qualified as lex specialis of international responsibility created by the respective international agreement and applicable between its parties. However, as submitted in this article, the possibility of direct participation of the Member States on the investor-state dispute settlement will, as a matter of international law, require that the new EU IIAs are concluded as mixed, with Member Sates being the contracting parties alongside the EU. This is arguably necessary for creation of the special regime of international responsibility applicable inter partes in the relationship with the third country concerned, and also in order to establish valid agreement to arbitrate, with each potential disputing party giving its own consent with this method of dispute settlement. At the same time, the joint participation of the EU and its Member States on the dispute settlement provisions is necessary also from the EU law perspective as a matter of allocation of external competences between EU and Member States, as recently ruled by the CJEU in Opinion 2/15.

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