The Role of the European Union in the Systemic Reform of Investor-State Dispute Settlement in International and Regional Trade Agreements
The European Union’s contribution to the rule of law in the reform of Investor-State dispute settlement: Bridging the gap between ISDS and EU Values with the Investment Court System and Multilateral Court System
We seem, these days, to be witnessing the disintegration of the international economic order. International trade in the time of Trump, the rise of China, and Brexit are mere reminders of these changing times. And, in the midst of this chaos, stands the European Union.Which, after decreeing that “ISDS is dead”, is attempting to take on, by itself, the role of leader and reformer of international trade and investment.
In 2009, the Lisbon Treaty consecrated foreign direct investment as an exclusive EU competence (art. 207(1) TFEU). To this day, the European Union continues to struggle to establish a clear, coherent and comprehensive investment policy as part of its Common commercial policy in line with EU values. Enshrined at article 2 of the TEU, the EU « is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. These values are common to the Member States in a society in which pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men prevail. ». The fundamental EU values have acted as a backdrop to all policies enacted.
Reflecting on the development of a EU investment policy in an era of change, EU values are now more than ever exploited as the background to a consistent and strong policy. The inclusion of provisions promoting the respect of human rights, sustainable development and corporate social responsibility is but one illustration of the advances of international trade agreements in line with EU values. Similarly, the progressive stance attached to the EU Common commercial policy, and defended in all foras, can be seen as a strong defense and implementation of EU values. Accordingly, this dissertation will continually explore the silver lining of EU values to the modernization of its investment policy, promoting their respect both at the supranational and international levels when negotiating new generation trade agreements.
While it is clear that foreign direct investment is attached to EU competence, recent rulings have confirmed that investor-state dispute settlement and portfolio investment are of mixed competence, and therefore stand to be ratified by Member States. This latest development emphasizes the tension between the internal challenges that the EU must face through the implementation of its investment policy and the interactions between the institutions involved, on the one hand, and the external impacts that this policy then has on the regional and multilateral investment agreement network, on the other. Complex questions of compatibility of EU law with the investor state system, and its interelations with international investment law will be examined. The proliferation of free trade agreements including investment chapters, or more simply of international investment agreements (which include all manners of treaties containing investment protections and dispute settlement provisions), causes fragmentation of this body of law.
The reform by the European Union of investor-state dispute resolution for the introduction of the Investment Court System is a clear illustration of these changing paradigms.
By introducing a permanent court with an appeal level, providing guarantees of independance and impartiality of the arbitrators, the EU has operated a fundamental modification to the existing system. In fact, “[t]o the EU, ISDS is dead”. The ongoing reflections at UNCITRAL for the establishment of a Multilateral Investment Court is another illustration, and in many ways, demonstrates the growing EU impact and influence on the content and design of international trade agreements. Reforms proposed by the European Union for the dispute settlement system could have the effect of diminishing this fragmentation and providing a uniform solution. Or, to the contrary, of creating yet one more institution and a specifically attached treaty framework. The ultimate objective of this thesis will therefore be to determine whether the EU investment policy reforms have a unifying effect at the supranational, regional and international levels.
Key words: Trade, Investment, EU Commission, EU Parliament, Court of Justice of the European Union, EU Council, Exclusive competence, Mixed competence, World Trade Organisation, Mega-regionals and regional trade agreements, Legitimacy, Multilateralism, Regionalism, Bilateralism, Investment, Dispute settlement, Arbitration, Investor-State dispute settlement, International investment agreements, Complex networks of treaties, Proliferation, Fragmentation, International economic law, International investment law, International public law
Canada-EU Comprehensive Economic and Trade Agreement (CETA)
Japan-EU Partnership Agreement (JEEPA)
EU-Vietnam Free Trade Agreement
- Possible conclusions
- the EU can export its MIC model and promote unity because it responds to concerns in this regard
- The EU has developed a model (ICS) which responds to its internal values on rule of law, but not those of the ISDS. Hence the MIC model cannot be exported
- Middle ground – some parts of the MIC may be appropriate – the opt-in Appeal mechanism
As we stand at a turning point in international trade negotiations, the legal analysis of existing EU institutions will assist in understanding the shift in power to the east, and between the regions themselves. Indeed, ongoing negotiations between major partners will redefine the existing trade relations no matter whether they are concluded. The Regional Comprehensive Economic Partnership (« RCEP »), Transatlantic Trade and Investment Partnership (« TTIP »), TPP and CETA can be considered as the outcome of the EU’s CCP, its will to negotiate regional agreements, and contribute to the redefinition of a multipolar world into a multiregional partnership. The competition to conclude trade agreements with China both through EU and US partnerships (for the EU with the negotiation of the EU-China FTA, for the US, with the negotiation of the TPP, excluding China, and competing with China’s parallel initiative in the RCEP) also highlight the shift in international trade negotiations. This will lead to a refined understanding of the creation of the « Pacific century » as economic interests converge to that region of the world. While the US has a rule making approach, contrasted to the EU’s development of a legal model, the convergence of interest could lead to the center of the nodes of international trade agreements being moved to Asia. This will allow us to answer the second research objective as to whether trade negotiations can be the same when the EU is involved. The role of the European institutions needs to be analyzed to understand the impact of the EU’s involvement in trade negotiations. More specifically, an assessment of (1) the role of the CJEU, (2) the mandate of the Commission to negotiate international trade agreements, (3) the determination of an agreement as a mixed agreement (or not), (4) the vote of Member States on the signature of mixed agreements, and the related issues to the provisional application (whether or not it may be enforced in the case of mixed agreements, and if Member States have the power to halt it altogether, as many are claiming under CETA), is required to respond to the second research objective.
Laurence Marquis is a Marie Sklodowska-Curie doctoral fellow with the LUISS University, in Rome, and the Université Laval, in Québec. Her research focuses on free trade agreements, and the impact and implementation of the EU investment policy, in the European union as well as on the complex regime of international free-trade agreements.
As a lawyer called to the Quebec and Paris Bars, she obtained her law degree from the Université de Montréal and her master’s degree in international commercial law from the Université Paris 1-Sorbonne. She practiced law with the international arbitration group at Jones Day, and acted as deputy counsel for the International Chamber of Commerce in Paris. More recently, she was counsel to the Government of Canada in investor-State arbitrations under NAFTA Chapter 11, as well as with the negotiations of treaties on the protection and promotion of investments and other free-trade agreements.
She has lectured in international arbitration with the Université de Sherbrooke, and was Editor in chief by interim for the Quebec Journal of International Law at the Université du Québec à Montréal.
Laurence Marquis, “The EU Investment Policy Since the Lisbon Treaty: A Decade’s Evolution from Conservative to Innovative?”, Routledge, in The Supranational at Stake? The EU’s External Competences caught between Complexity and Fragmentation, Eds. Pr Anne Weyembergh & Pr. Mario Telo (to be published)
Laurence Marquis, “L’Accord de partenariat stratégique Canada-Union européenne: Jumeau politique méconnu de l’Accord économique et commercial global”, RQDI Hors Série, 60 ans de l’Union européenne (to be published)
Mark Daku, Laurence Marquis, “Ethics in Research”, in Morin, Jean-Frédéric, Christian Olsson and Ece Özlem Atikcan (eds). Key Concepts in Research Methods. Oxford: Routledge (to be published).
Stéphane Paquin, Laurence Marquis, “The role of Ontario and Québec in the renegotiation of NAFTA (USMCA)”, Canadian Journal of Political Science (to be published)
Laurence Marquis, “Christian Deblock, Joël Lebullenger, Génération TAFTA. Les nouveaux partenariats de la mondialisation”, Presses universitaires de Rennes, 2018, Issue 30.2 – 2018, Quebec Journal of International Law
Laurence Marquis, “Christian Deblock, Joël Lebullenger et Stéphane Paquin, Un nouveau pont sur l’Atlantique : l’Accord économique et commercial global entre l’Union européenne et le Canada, Québec, Presses de l’Université du Québec, 2015”, Issue 28.2 - 2015, 31 Octobre 2016, Quebec Journal of International Law Revue québécoise de droit international
Laurence Marquis, “Commerce”, “Libre-échange”, “Banque Mondiale”, Valère Ndior (dir.), Dictionnaire de l'actualité internationale, Pedone, Paris, à paraître en 2020
Laurence Marquis, Emmanuel Jolivet, “Arbitration and the Environment”, Paris Journal of International Arbitration 2011
Laurence Marquis, Jan Heiner Nedden, “Use of Technology by a Major International Arbitration Organization”, International Commercial Arbitration Practice: 21st Century, 2011
Laurence Marquis, Emmanuel Jolivet, “Provisional Enforcement of Awards in France”, Paris Journal of International Arbitration 2010
Laurence Marquis, Emmanuel Jolivet, “Pathological arbitration clauses”, Paris Journal of International Arbitration 2010
Laurence Marquis, Emmanuel Jolivet, “Costs in ICC Arbitration”, Paris Journal of International Arbitration 2010
Laurence Marquis, « An update on recent ICC Court Practice », YCAP Newsletter, Lex Arbitri, 2011
Academic conferences and activities
August 2020, “Les investissements étrangers directs au Canada”, École d’été Commercer dans un monde multipolaire, prof. Stéphane Paquin, ENAP, Montreal, Canada (à venir)
March 2020, Gem-Stones AGORA, Presentation of book chapter in Emerald Volume, “The evolution of the EU investment policy since the Lisbon Treaty: From a conservative to an innovative policy?”, Brussels, Belgium
March 2020, Gem-Stones Roundtable AGORA, led by Prof. Ouellet, Presentation of executive brief: Reforming ISDS – The EU’s innovative proposal for a Multilateral Investment Court, An EU proposal to reform a global issue, Brussels, Belgium
October 2019, “Les données personnelles”, Ateliers Schuman, L’Union européenne et l’Amérique du Nord à l’heure de la nouvelle route de la soie, Université Laval, Canada
October 2019, ”L’AECG / APS”, avec Prof. Ouellet, L’Union européenne et les espaces d’intégration régionale – enjeux commerciaux et au-delà, Université Laval, Canada
October 2019, “Agenda progressiste commercial / Trade for all”, L’Union européenne et les espaces d’intégration régionale – enjeux commerciaux et au-delà, Université Laval, Canada
September 2019, “The impact of recent CJEU cases on CETA’s implementation”, CETA Implications and Implementation Conference, Dalhousie University, Canada
September 2019, “European Trade and Privacy Nexus: From Regional to Global Rule-Making”, with Guillaume Beaumier, Grant obtained from Gem-Stones, UACES, Lisbon, Portugal
August 2019, “Les investissements étrangers directs au Canada”, École d’été Commercer dans un monde multipolaire, prof. Stéphane Paquin, ENAP, Montreal, Canada
July 2019, Preparation and submission of grant request to the Quebec government (Subvention Connexion) for an international academic conference organized by Université Laval (approx. 19 000 Can$). The grant was obtained and the event conducted. As part of the academic and organizing committee, assistance to the organization of the 2 day international conference following the 5 day intensive school on EU law.
March 2019, Gem-Stones Annual Conference, “The EU Investment Policy in times of crisis – Policy Paper”, Salon 5 – Threats to the Trade System (Prof. Mario Telò), Brussels, Belgium
November 2018, De la porosité des frontières normatives en droit international: l’exemple du droit international économique, organizer of the panel for the Quebec Society of International Law, Ottawa, Canada (organizer)
November 2018, The Comprehensive and Economic and Trade Agreement: an overview, European Integration bachelor’s degree class, Université Laval, Quebec, Canada (lecture)
November 2018, CETA/NAFTA: Ouverture de nouveaux marchés!, with the Honorable Pierre-Marc Johnson and Raymond Bachand, organized by the French Chamber of Commerce, Montreal, Canada (moderator)
October 2018, The Strategic Partnership Agreement between Canada and the European Union, Double Masters Degree between Université Laval and Université de Bordeaux, Université Laval, Quebec, Canada (lecture)
May 2018, The (r)evolution of the EU investment policy – Lessons from the ICS in CETA to the EU-Japan proposal, European Union in International Affairs, Brussels, Belgium (academic conference)
April 2018, The future of investment arbitration, Masters degree seminar, invited by professor Kun Fan, McGill University, Montreal, Canada (lecture)
March 2018, Panel moderator for the Student Circle conference, Quebec Society of International Law, McGill University, Montreal, Canada (moderator)
February 2018, Implementing CETA – impending doom for the EU’s investment policy?, Gem-Stones Annual Conference, Hamburg, Germany (conference)
October 2017, The Strategic Partnership Agreement between Canada and the European Union, Autumn School in European Law, Jean Monnet Chair in European Integration, Laval University, Quebec, Canada (academic conference)
June 2017, “A review of ICC procedure under the ICC Arbitration Rules”, at the International Arbitration Summer Course, Mexico City, Mexico (lecture)
November 2016, “The investment chapter of the TPP: between the classic American solution and a European renewal”, as part of the colloquium held in Montreal and Ottawa from November 16- 18, 2016, Les partenariats transatlantiques et transpacifiques à l’ère de l’interconnexion (academic conference)
October 2016, “The Role of Provinces in the negotiations of international trade agreements: the comparison between NAFTA, CETA and the TPP”, The Multilevel Politics of Trade, CIGI, Balsillie School of International Affairs and the Wilfrid Laurier University, Waterloo (academic conference)
October 2016, « The Strategic Partnership Agreement between Canada and the European Union », double degree masters programme between the Université Bordeaux and Université Laval, Quebec (lecture)
September 2016, « The new mega-regional free trade agreements: between myth and reality », Faculty of Law, University of Sherbrooke (lecture)
July 2016, « How to break into international arbitration », Young Arbitrators Forum, as part of the International Arbitration Summer Course, Madrid
June 2016, « The investment chapter of the Trans-Pacific Partnership: what’s new, what’s not, and so what?», 25 June 2016, International Studies Association annual conference, City University, Hong Kong (academic conference)
May 2016, « The Strategic Partnership Agreement between Canada and the European Union – The role of Canada in its relations with the Caribbean, with Robert Ready, former Ambassador for Canada and lead negotiator of CARICOM» Faculty of Law, Université Laval, as part of the colloquium on relationships between the European Union, the Caribbean and North America, by the Jean Monnet Chair (academic conference)
June 2015, Université de Sherbrooke, Summer school in applied international law and political science, International investment law with J. Fouret (lecture)
November 2014, President of the “Panel on sovereign debt”, Canadian Council on International Law Annual Conference, Ottawa,