CYIL vol. 9 (2018)

ONDŘEJ SVOBODA – JAN KUNSTÝŘ CYIL 9 ȍ2018Ȏ The latest UK Government’s document on future EU-UK economic framework from May 2018 assumes that investment will be a part of “a comprehensive economic partnership that covers more sectors than any free trade agreement anywhere in the world today.” 49 Nevertheless, the UK Parliament already expressed its doubts over the future investment dispute settlement mechanism in the EU-UK agreement: “Notably, it remains unclear whether any possible dispute-resolution mechanism could involve provision for foreign investment protection, such that companies could sue states in an international tribunal for alleged discriminatory practices. As we heard in evidence, the inclusion of such investment protection arrangements (in the form of the Investor- State Dispute Settlement system and the Investment Court System) in FTAs has proved highly controversial.” 50 There are also other reasons to cover investment provisions under DSFTA: “It would definitely be useful to consider including an investment protection chapter in such an agreement, particularly as the right of establishment and the freedom to provide services can be assumed to be lost in an agreement which comes within the trade liberalization paradigm.” 51 The UK Government can thus consider adopting the NAFTA model with regard to liberalisation (pre-establishment) phase. Unlike the existing UK BITs, North American treaties usually include legally binding liberalisation provisions which enable market access to foreign investors. This could open up new market opportunities for British investors, not limited only to the EU Single market. Assumingly, investment policies focusing on a high level of investment protection will face significant domestic opposition. Growing numbers of investment disputes have demonstrated that BITs can also be a vehicle to initiate investment disputes against developed states as host countries. Regarding the dispute settlement mechanism, the UK will have to decide whether to adopt the new investment court system or to stick with the ‘old’ ISDS. If it decides to keep international arbitration in its concluded and future treaties, it “could put the UK in a strategic position in the eyes of investors looking to structure their investments in a European jurisdiction.” 52 Again, such decision will probably face a backlash from the civil society. Conclusion After Brexit the UK will regain full competence in a number of fields, including investment policy. It has a tradition of outward-oriented trade and investment policy. Since 1975 the UK has signed over 100 bilateral investment treaties, the majority of which include ISDS provisions. It will not be possible to avoid controversy in formulating new investment policy. Given the lack of discussion between the Government and stakeholders to date, a substantive debate on this issue is to be anticipated. For any new policy of the UK, there is a substantial uncertainty which is typical for the whole withdrawal process. As in many other policies, the UK still has to establish its investment priorities and positions as it will no 49 HM Government, Framework for the UK-EU partnership: Economic partnership (2018) 11. 50 House of Commons, International Trade Committee, UK trade options beyond 2019 (First Report of Session 2016–17, HC 817, 2017) para 101. 51 EECKHOUT, Piet. ‘Future trade relations between the EU and the UK: options after Brexit, Study for European Parliament’ (Directorate General for External Policies of the Union 2018) 24. 52 Sherman & Sterling, ‘Brexit: Potential Implications for International Arbitration in London’ [2016] 3.

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