Working Paper Delivered At Conference:
‘International and Comparative Law in the 21st Century: Lessons learned?’
10th June 2016, Griffith College, South Circular Rd., Dublin 8, Ireland.
“European Court of Justice Must Rule on Coherence of ISDS with EU Law Prior to the Provisional Application of CETA”
Investor-State Dispute Settlement (ISDS) is an arbitration mechanism inserted into a ‘new generation’ of international free trade and investment agreements allowing foreign businesses to bypass domestic courts and to sue governments for financial compensation, in private, in front of a panel of part-time, for-profit arbitrators, when they feel state legislation, regulations, licencing decisions and EU directives impact negatively on their existing assets and/or their perceived future, unearned profit (UNCTD, 2015; Van Harten, 2016).
Increasingly, legal scholars and associations claim ISDS and the threat of it has a chilling effect on potential legislation, overturns the cherished principles of the independence of the judiciary, equality before the law and the democratic state’s right to regulate public policy (University of Kent, 2014). For example, in their opinion of the European Commission’s “reformed” ISDS which is set for adoption by the European Union next Autumn under the terms of the EU-Canada free trade and investment agreement (CETA), the German Magistrates’ Association, “sees neither a legal basis nor a need for such a court” (DRB, 2016).
This paper serves three functions: firstly it critiques the arguments that the ISDS usurps the powers of the Courts of Justice of the European Union (CJEU) and contravenes the TFEU (ClientEarth, 2015); secondly it critiques the “provisional application” authority of the Treaties of the Functioning of the European Union (TFEU) which allows for CETA, with its ‘ISDS’, to apply in law prior to the approval of it by members states’ national parliaments and even in the case where the European Parliament rejects it; and thirdly, the paper identifies that in order to ensure the coherence of the application of the Treaties, in particular the legitimacy of the ECJ to interpret the Treaties and to establish whether ISDS contravenes EU law, either a Member State or the European Parliament must invoke Article 218(11) of the TFEU and ask the European Court of Justice (ECJ) to rule on the legality of ISDS (EurLex, 2012).
In Conclusion, the paper demonstrates that Article 29.5.2 of the Irish constitutions places a requirement on the Irish government to obtain the approval of the Dáil should they wish the Irish state to be bound by an international agreement which may lead to the placing of a financial charge on the state. The purpose of the ISDS in the CETA, is to do just that. Therefore the EU Council of Ministers cannot ‘provisionally apply’ the CETA prior to the approval of the Dáil, and the Dáil cannot vote on it unless the Irish state satisfies itself that ISDS is legal under EU law.
1.0 ISDS Incompatibility With the Treaty on the Functioning of the European Union (TFEU)
The body of material critiqued in this section as to the likelihood that the ISDS of the CETA and the EUSFTA are incompatible with EU law includes: (i) statements and observations from legal academics and serving judiciary; (ii) the EU’s ‘European Economic and Social Committee’, and the European Commission itself; (iii) The lack of coherence in EU foreign investment policy, (iv) some detail on the ECJ’s rulings 1/09 and 2/13.
1.1: Statements and observations from legal academics and serving judiciary:
In 2014, over 120 legal scholars from faculties of law at universities across 17 countries, including Peter Muchlinski (SOAS School of Law), Horatia Muir Watt (Sciences Po Law School), Gus Van Harten (Osgoode Hall Law School), and Harm Schepel (Kent Law School), made a detailed submission to the European Commission’s 2014 public consultation on ISDS (University of Kent, 2014). In it they claim that the Commission has failed to provide evidence as to why they are, “including investor-state arbitration in the TTIP at all”, and voiced, “strong criticism of the proposed [investor-state] provisions in particular”. They said that the ISDS proposal, “profoundly challenges” Member States’ “judicial, legal and regulatory systems”. With regard to the EU’s competence on ISDS, they said, “this public consultation offers a good opportunity for the European Union to reflect seriously on its competences in matters of FDI [foreign direct investment] under the Common Commercial Policy”.
In a similar vain, in February this year in their published ‘Opinion’, The German Magistrates Association [DRB] rejected: “the proposal of the European Commission to establish an investment court within the framework of the TTIP. The DRB sees neither a legal basis nor a need for such a court. [ … ] The clearly implied assumption in the proposal for an International Investment Court that the courts of the EU Member States fail to grant foreign investors effective judicial protection, lacks factual basis. [ … ]
An ICS would not only limit the legislative powers of the Union and the Member States; it would also alter the established court system within the Member States and the European Union. In the opinion of the German Magistrates Association, there is no legal basis for such a change by the Union. [ … ]
The German Magistrates Association has serious doubts whether the European Union has the competence to institute an investment court [… and that] there is no legal basis for such a change by the Union, [ … adding that ISDS] would alter the essential character of the powers which the Treaties confer on the institutions of the European Union and on the Member States and which are indispensable to the preservation of the very nature of European Union law” (DRB, 2016).
1.2 The EU’s ‘European Economic and Social Committee’, and the European Commissions itself:
With the support of 73% of the members of the EU’s European Economic and Social Committee (EESC), their 2015 ‘Own-Initiative Opinion On ISDS’ stated:
“ISDS elevates trans-national capital to that of a sovereign state and enables foreign investors to challenge the right of governments to regulate and determine their own affairs [ … and it allows for] discrimination against domestic investors who cannot use the system. [ … ] The original concept behind ISDS has long since departed. It has now become a hugely profitable outlet for a small number of specialist investment law firms who dominate the business [ … ] The EESC therefore concludes that an ISDS provision is not necessary in TTIP or CETA and is opposed to its inclusion. [ … ] Private arbitration courts have the capacity to make rulings which do not comply with EU law or infringe the CFR [Charter of Fundamental Rights]” (EESC, 2015).
In a European Commission staff working document of 2013, they grappled with the issue of intra-EU member state bilateral investment treaties (BITs) which contained an investor-state dispute settlement (ISDS) mechanism and stated that: “Such agreements clearly lead to discrimination between EU investors and are incompatible with EU law. … This form of international arbitration is incompatible with the exclusive competence of EU courts to rule on the rights and obligations of Member States under EU law. In contrast to national courts, arbitral tribunals are not bound to respect the primacy of EU law and, in case of doubt, are neither required nor in a position to refer questions to the CJEU [Court of Justice of the European Union] for a preliminary ruling” (Commission, 2013: 11).
Further to this, in numerous incidences, the Commission’s legal service has made amicus curiae submissions to ISDS cases involving intra-EU BITs in order to make their legal case, that ISDS is incompatible with EU law. The majority of these cases involved on the one hand, a company or person running a business based in one member state country, suing a different member state government through an ISDS. In most of these instances where the Commission got involved, the ISDS forms part of a bilateral investment treaty (BIT) negotiated and finalised in the early to mid-1990s between a Western EU member state and what was then, an ex-Eastern bloc country, the latter country subsequently becoming a full EU member state, and yet the BIT with ISDS still stands in law. These are referred to as intra-EU BITs.
The substantive points the Commission makes with relation to the functioning and principles of ISDS remains the same whether the ISDS is between two EU member states, or whether it is between the EU and a third country, namely that:
– ISDS denies the ECJ its exclusive competence to rule on the interpretation of the EU Treaties;
– ISDS denies the role allowed for in the Treaties for the courts of the Member States to preliminary interpretation EU law;
– ISDS distorts the EU’s internal free market by privileging one type of business (i.e.: the foreign investor, or a domestic firm owned by a foreign company) over and above another type of business (a domestic company) by giving it exclusive access to a special legal remedy (ISDS) not open to EU citizens or EU-domiciled and owned business;
– ISDS arbitrators’ decisions can impose financial penalty on the EU which could overrule not only the stated purpose of EU Directives, but also overrule the interpretation of EU law which had previously been handed down by the ECJ;
– ISDS sets aside Article 340 of the TFEU which identifies that the exclusive forum for legal personalities seeking redress, financial compensation or otherwise, against the EU itself, is in the ECJ.
The ISDS case of Achmea B.V. (formerly known as “Eureko B.V.”) v The Slovak Republic is quite instructive in this regard (ITA Law, 2012; ITA Law, 2014). The substance of the case involves the privatisation and subsequent re-regulation of part of the health insurance industry in Slovakia to which Achmea objected and made claim for financial compensation at the ISDS mechanism of the 1991 Czechoslovakia-Netherlands BIT. In its amicus curiae submission the European Commission argued:
“These provisions [Article 8 and 10 of the Dutch-Slovak BIT] conflict with EU law on the exclusive competence of EU courts for claims which involve EU law, even for claims where EU law would only partially be affected. The European Commission must therefore … express its reservation with respect to the Arbitral Tribunal’s competence to arbitrate the claim brought before it by Eureko B.V.” (ITA LAW, 2010).
Subsequently, the Slovak government, pursuing the matter through the domestic German courts, rejected the ISDS award in the case which was made against them to the amount of €22 million (plus €3 million in costs to cover both parties’ legal fees), claiming that the Dutch-Slovak BIT contravened the TFEU and that as such that the arbitrators’ award was null and void. The Higher Regional Court of Frankfurt rejected the Slovakian government’s argument that the ISDS contravened EU law, and the Slovakian government subsequently appealed this decision to Germany’s supreme court, the Federal Court of Justice of Germany (BGH), who in turn has referred the case for a ruling to the Court of Justice of the European Union (CJEU). In particular, a ruling on the compatibility of TFEU Articles 344, 267 and 18 with the ISDS mechanism of intra-EU BITs is sought. The ECJ may quite likely expand its perspective on the case to include many other Articles of the TFEU, for example Article 18 which outlaws discrimination based on nationality, or Article 340 which gives the ECJ exclusive competence as the legal body to whom one must address issues relating to breech of contact by the EU, and claims of damages against the EU, and thus side with the Commission in it’s interpretation of the incompatibility of ISDS with he TFEU (Allen & Overy, 2016). The CJEU is not expected to issue its ruling until 2017 (Frohloff, Jan & Max Oehm, 2016).
The matter of the incompatibility of ISDS with EU law continues to be a matter of legal contention as the Commission, as of 2015, is engaged in legal action at the ECJ against five member states requiring that they terminate their intra-EU BITs. The argument being used by the Commission is instructive vis-à-vis the Commission’s plans for ISDS in the EU-Singapore and the EU-Canada FTAs and runs thus:
“ [ … ] all Member States are subject to the same EU rules in the single market, including those on cross-border investments (in particular the freedom of establishment and the free movement of capital). All EU investors also benefit from the same protection thanks to EU rules (e.g. non-discrimination on grounds of nationality). By contrast, intra-EU BITs confer rights on a bilateral basis to investors from some Member States only: in accordance with consistent case law from the European Court of Justice, such discrimination based on nationality is incompatible with EU law. [ … ] [I]ntra-EU BITs fragment the single market by conferring rights to some EU investors on a bilateral basis” (Commission, 2015).
It is difficult to identify coherence of argument on behalf of the Commission here as to how they can resolve, that on the one hand intra-EU BITs promote “discrimination based on nationality”, but that somehow, in a post-CETA legal landscape, allowing Canadian businesses, or EU-businesses with a Canadian owner, to have privileged access to a legal remedy (namely ISDS) somehow does not allow for “discrimination based on nationality”. Irish businesses and individual Irish investors, will clearly be discriminated against based on their nationality post-CETA implementation in that they will not be allowed to challenge EU and Irish laws, regulations, licencing procedures and directives at the CETA’s ISDS, while Canadian businesses and individual investors will be.
This situation would clearly be a cause for alarm and be contrary to the TFEU. Despite this, without any explanation being offered, in the case of the Commission’s insistence that five member states terminate their intra-EU BITs, the Commission claims that:
“ [ … ] these considerations [i.e. the rupturing of the principles of the internal market by allowing for discrimination based on nationality] are limited to bilateral treaties which EU Member States maintain in force with each other. They do not concern investment treaties Member States or the European Union may have with third countries for which different considerations apply” (Commission, 2015).
Only the ECJ can resolve whether the Commission’s position is accurate (see section 3 below).
1.3 The lack of Coherence in EU Foreign Investment Policy.
In ‘Challenging the Notion of Coherence in EU Foreign Investment Policy’, Hannes Lenk (2015) claims that ISDS “challenges the idea of coherence as an underlying principle of EU foreign investment policy”. He draws our attention to Articles 13.1 and 21.3 of the Treaty on European Union (TEU) which imposes the necessity of coherence on the actions of the EU’s institutions. Specifically, he claims coherence is a “multi-dimensional concept” in that it must be pursed both “horizontally within a policy field”, as well as “between policies of different EU institutions as well as policies formulated in different departments of the same EU institution”. In the latter regard one is reminded of the obvious incoherence between the Commission’s legal service’s position which claims intra-EU ISDS mechanisms are incompatible with EU law, and DG Trade’s insistence that an ISDS which discriminates against EU investors in favour of Canadian investors (with regard to CETA) is entirely compatible with EU law.
1.4 Some Detail on the ECJ’s Rulings 1/09 (rejection of a European Patent Court) and 2/13 (rejection of the ECHR):
In Opinion 1/09, the ECJ rejected the European Commission’s proposed ‘European and Community Patent Court’, ruling that the creation of this patents court (PC) would fall outside the scope of EU law. One legal opinion summed up the ruling as follows:
“It reasoned that the PC would be an “international court” and “an organisation with a distinct legal personality under international law”. It would therefore fall outside the EU legal order. The “guardians” of the EU legal order are the tribunals of the Member States and the ECJ itself. The PC would answer to neither. The ECJ concluded that the creation of the PC “would alter the essential character of the powers which the treaties confer on the institutions of the European Union and on the Member States and which are indispensable to the preservation of the very nature of European Union law” ” (Ingram, 2011).
Further to this, in Opinion 2/13 the ECJ rejected the ‘draft agreement on the accession of the European Union to the European Convention for the Protection of Human Rights and Fundamental Freedoms’ stating that it was “not compatible with EU law”. Their prime reasoning was that “the decisions and judgments of the European Court of Human Rights” (ECtHR) would not allow for the fact under EU law it is the ECJ who has exclusive competence over the interpretation of EU law (ECJ, 2014).
Given the proposed functioning and powers of the CETA’s and the EUSFTA’s ISDS, and its arbitrators’ right to interpret EU law when disbursing legally binding financial awards, it is difficult to understand, given the opportunity to deliver a ruling on the legality of these proposed ISDS’s, how the ECJ could not come to similar conclusions as it did in Opinions 1/09 and 2/13 and deem the proposed ISDS’s for those international agreements to be incompatible to EU law.
2.0 The Commission’s Intentions to Provisionally Apply the CETA Prior to Approval by Members States’ Parliaments
Article 218(5) of the TFEU states: “The Council, on a proposal by the negotiator, shall adopt a decision authorising the signing of the agreement and, if necessary, its provisional application before entry into force.”
Governments provisionally applying an international agreement after they have finalised negotiations and agreed a text, and before their parliament votes either for or against ratifying it, is a reasonably common phenomena. As to whether or not this makes the agreement actionable, the answer is clear: A report by the United Nations last year into the ‘Provisional Application of Treaties’, states: “the rights and obligations of the State which had consented to provisionally apply a treaty were the same as the rights and obligations that stemmed from the treaty itself as if it were in force” (UN, 2015).
In late June or early July 2016, the European Commission will most likely present a proposal to the Council of Ministers asking them for permission to sign the EU-Canada ‘Comprehensive Economic and Trade Agreement’ (CETA) at an EU-Canada summit in the Autumn.
Additionally, using Article 218.5 of the TFEU, it is also likely that the Commission may also present a “proposal” to the Council requesting their “provisional application” of the CETA. Indeed, according to a recent article in the Financial Times, “To maintain political momentum, the European Commission has asked member states to approve CETA’s “temporary implementation” this autumn” (FT.com, 2016). One legal opinion as to why the Commission and Council of Ministers would do this prior to the ratification of CETA by member state national parliaments is that: “The decision to provide in the CETA for its provisional application was driven by concerns that ratification on the EU side could be a drawn-out process. [While conceding that] the respective roles of the Commission and Member States in the post-Lisbon Treaty era remains the subject of some debate” (Kronby, et al, 2014).
Indeed, the question looms large, do any of the contents of CETA lie within the exclusive competence of the member states? If one or more components of the CETA did, then could the EU provisionally apply all of the CETA and then subsequently withdraw provisional application from that aspect of the CETA which may be rejected by a member state’s national parliament? Or, if one or more aspects of the CETA do lie within the exclusive competence of member states, will the national parliaments be voting on just that aspect or aspects, or will they be voting on the entire deal? If the latter were the case, and one or more national parliaments rejected the CETA, would the Council of Minsters then be compelled to withdraw provisional application of the entire deal?
The simple answer to these questions is that no one, except the ECJ, knows for sure. While mainstream media and politicians have either ignored or expressed poorly informed opinions on the matter, a small number of academics are writing about it. In this article for example, David Leys (2015), lawyer at the Brussels Bar and fellow at the European Law Institute, untangles the different legal views as to whether or not Member States’ parliaments have any legal power over the adoption of a key area of the CETA, the investor-to-state dispute settlement (ISDS) arbitration mechanism. While he argues they do, would the Council of Ministers withdraw provisional application of CETA if say, five or ten small or mid-sized member states rejected the ISDS and/or the whole of CETA? As is further elaborated below in section 3, and as Leys concludes, we need the ECJ to tell us, and for that to happen, someone needs to ask them.
There is however, a confidence in the Commission who have been consistently clear in their opinion that the ratification of the EUSFTA and the CETA do not require approval from Member States’ national parliaments. See here for example where they say in relation to CETA that, “the agreement will need to be approved by the Council and the European Parliament” (Commission n.d. – A). They make no reference to the need of voting, approval or ratification from national parliaments. And yet, while the text of CETA is emphatic as to what “‘entry into force of this Agreement means”, Article 30.7.4(d) of CETA stating:
“If this Agreement, or certain provisions of this Agreement, is provisionally applied, the Parties shall understand the term ‘entry into force of this Agreement’ as meaning the date of provisional application” (CETA, 2106),
the Commission claim that CETA will only become “binding under international law” after “the completion of the ratification process” (Commission n.d. – A).
And again in relation to the EUSFTA, the Commission claim that it, “needs now to be formally approved by the European Commission and then agreed upon by the Council of Ministers and ratified by the European Parliament” (Commission n.d. – B). The only oblique reference they make as to the legal standing or otherwise of member state parliaments is where they highlight that, “An opinion of the Court of Justice will clarify on the EU competence to sign and ratify the free trade agreement with Singapore before the approval procedure of the FTA is launched” (Commission n.d. – B). And yet, as the ECJ’s ruling as to the who has the competence to ratify or reject the EUSFTA is not expected until 2017, they are prepared to go ahead with the provisional application of the very similar trade deal, CETA, this Autumn, prior to the ECJ’s ruling on the EUSFTA.
A further aspect of the issue of provisionally applying the CETA with its ISDS, prior to national parliamentary approval needs to be considered here, and which should, one hopes, focus the minds of member state national parliamentarians and the legal fraternity alike: Article 30.8.4 of CETA says that if the CETA is provisionally applied, and then that provisional application is withdrawn, Canadian companies, or Canadian-owned European companies, would still have three years in which to take ISDS cases against the EU and the member states; to quote the Article:
“ [ … ] if the provisional application of this Agreement is terminated and this Agreement does not enter into force, a claim may be submitted under Section F of Chapter Eight (Investment) within a period no longer than three years following the date of termination of the provisional application, regarding any matter arising during the provisional application of this Agreement, in accordance with the rules and procedures established in this Agreement” (CETA, 2016).
The legal quagmire envisaged here could mean that after the CETA has been provisionally applied, the ECJ deliver a ruling declaring that on the one hand, member states still have exclusive competence over investment protection and as such have the legal right to reject the EU’s ISDS proposals, and/or on the other hand, the ECJ delivers a ruling declaring that ISDS in fact contravenes the TFEU. So we have the appalling vista of ISDS claims being brought against member states and/or the EU itself for the duration of the period of provisional application plus, a period of a subsequent three years post-withdrawal, where in fact neither member states and/or neither the EU itself should ever have been subjected to this peculiar legal mechanism.
Finally, TFEU Article 218.5 clearly only empowers the EU to provisionally apply an international agreement “if necessary”. As to what the necessity test in this case would be, again, one ask to ask the ECJ. One may be safe in assuming that to avert some kind of imminent social, political, environmental or economic disaster one could envisage a necessity. But as none of these potential disasters are on the horizon vis-à-vis EU-Canada diplomacy and trade , one is perplexed as to what constitutes “if necessary”.
3.0 Member State, Parliament, Council or Commission: someone must take the 218.11 case:
Article 218.11 of the TFEU states:
“A Member State, the European Parliament, the Council or the Commission may obtain the opinion of the Court of Justice as to whether an agreement envisaged is compatible with the Treaties. Where the opinion of the Court is adverse, the agreement envisaged may not enter into force unless it is amended or the Treaties are revised” (EurLex, 2012)
There are multiple reasons why either a Member State, the European Parliament, the Council of Ministers, or the European Commission must invoke Article 218.11 prior to both the presentation of a proposal to the Council of Misters by the Commission to provisionally apply the CETA, to sign the CETA or to vote on the CETA as will be outlined below. Chief among them is that should the CETA be provisionally applied, or indeed ratified and brought in to force, Article 218.11 may not be invoked as it explicitly refers to “the agreement envisaged” and not the ‘agreement in law’.
Briefly though, it must be countenanced, that it in fact may be that via a circuitous route, it could be the national courts of a member state which may be the entity to illicit an opinion from the ECJ as to the legality of ISDS (cf: Allen & Overy, 2016; Carthy, 2016; Eric, 2016).
Further, many claim that the “reformed” ISDS provision in the CETA contravenes the caveats laid down in July 2014 by the European Parliament as to what kind of ISDS they might be inclined to approve (cf: Wessels, 2016).
To return to the Commission’s request off the ECJ for a ruling as to whether it is the Union, or the Member States, or partially both, that has “the competence to sign and ratify a trade agreement with Singapore” the substance of the ECJ’s Opinion 2/15 is:
“Does the Union have the requisite competence to sign and conclude alone the Free Trade Agreement with Singapore? More specifically:
Which provisions of the agreement fall within the Union’s exclusive competence?
Which provisions of the agreement fall within the Union’s shared competence? And
Is there any provision of the agreement that falls within the exclusive competence of the Member States?” (Eur-lex.europa.eu, 2015).
Surely, to ensure the coherence of the EU institution’s actions, one must at least wait for the ECJ’s ruling on Opinion 2/15 prior to a vote on provisional application at the Council of Ministers.
On the matter as to whether ISDS contravenes EU law as outlined in section 1 above, the Commission is emphatic, they are not asking the ECJ to rule on the legality of ISDS in the EUSFTA. According to comments made to the press, “EU officials confirmed to EurActiv that they had no plans to also ask EU judges if rulings by international arbitration tribunals could undermine the ECJ’s role as sole and supreme arbiter of EU law. [ … ] The Commission does not think that the ISDS provisions of TTIP and CETA ‘raise an issue of compatibility with EU law’ officials said” (Euractiv.com, 2015).
Furthermore, despite what any ruling of the ECJ says as to the current investment protection provisions outlined in CETA may be, one has to remember that the CETA text makes provision that any of the rules of its ISDS may be altered by the mutual consent of the Commission and the Canadian department of trade (CETA, 2016). In any ECJ ruling on the ISDS of CETA, reference must be made to this aspect of the agreement.
One would like to envisage that should member state trade ministers arrive at a juncture where they must vote by a Qualified Majority Vote system on the Commission’s proposal to provisionally apply the CETA, that they would do so with informed consent, namely that they would have definitive legal answers provided by the ECJ as to the questions:
– Is ISDS legal under EU law?
– Is the Council empowered under the Treaties to provisionally apply an investor protection mechanism such as ISDS?
– What if any components of CETA do national parliaments have legal control to reject and have these been explicitly carved out of any proposal to provisionally apply CETA?
Indeed, a further question stands out: when, if at all, prior to the Council’s possible provisional application vote on CETA, will the text of the Commission’s proposal on it, be released to the public, and to the member states? Surely the member state’s civil service need a substantive period of time to attain their own, if not definitive, then at least some legal opinion as to the implications of their voting intentions.
There is a sense of urgency here as, “An opinion [on ISDS by the ECJ] can only be asked [for] after a treaty is negotiated, but before it is in force” (Euractiv.com, 2015) [emphasis added]. As we have seen above, the text of CETA regards ‘being in force’ at the point of its provisional application. The time window is small. There is the real risk here, that should an EU institution ask for a ruling on legality of ISDS, or should a member state require a ruling as to their constitutional and EU law clarity, and/or coherence between same and/or between components of the EU, and the CETA is already provisionally applied by the Council, while it could be interpreted that this means the treaty is not in force, the ECJ could weigh up the potential perspective of the reputational damage to the EU of withdrawal from provisionally applying a high profile trade agreement with a developed Western country with, the intention of the Council and the Commission as being in good faith and that regardless as to any potential conflict of ISDS under EU law, CETA would at that point be a matter of international law, and as such perhaps protecting the internal legal integrity of the EU would take a lower importance, balanced with the political will and intentions of those in power vis-a-vis the treaties.
This paper has identified a serious of reasons as to why the Council of Ministers must defer any decision to provisionally apply or approve the CETA, and for that matter that the European Parliament should also defer vote on CETA, (a) until after the ECJ has ruled as to the competences between the member states and the EU in relation to Opinion 2/15 on the EUSFTA [a ruling which would logically also apply to the CETA and all the other EU FTA’s with ISDS’s], and, (b) until after the ECJ has made a definitive ruling as to the compatibility or otherwise, in the broadest sense invoking all aspects of EU law, as to whether ISDS is compatible with EU law.
Finally, there is a further sense of urgency for the Irish state in these matters. The Irish state needs to accept that ISDS was never envisaged in the minds of the Irish electorate when approving various EU treaties, neither is there evidence that it was envisaged in the minds of the authors of the Treaties themselves, and that ISDS creates a new legal power over and above the EU and the ECJ with power to interpret the Treaties and make a charge on the state, and as such, should the Irish state participate in any way in the provisional application, implementation or ratification of the CETA, it would be acting beyond its powers. As such it behoves the Irish state to remain within its constitution boundaries, satisfy itself that it is acting appropriately and ask the ECJ for the ruling on ISDS as it is empowered to do so under TFEU Article 218.11.
The sense of urgency for the Irish state to take definitive action at the ECJ in order to obtain legal clarity is brought into sharp focus in the context of Article 29.5.2 of the Irish constitution which places a requirement on the state to seek approval of the Dáil should any international agreement to which the Irish state is party be likely to place a charge on the state. Clearly an ISDS is designed specifically to do just that. In this context, should a qualified majority vote on the provisional application of CETA be obtained at the Council of Ministers, the ISDS of CETA would be binding on Ireland and lead to the possibility of a charge on the Irish state. In this context, that vote at the Council, cannot be allowed to go ahead should the Irish state wish to retain its constitutional integrity. Further to this, prior to such vote in the Dáil on Article 29.5.2 as it relates to CETA, the Irish state needs to satisfy itself that ISDS is in fact compatible with EU law, and as such places a requirement on the state to seek a ruling on ISDS from the ECJ as it relates to EU law prior to any such vote.
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