Ref. Ares(2017)1963547 - 13/04/2017
The EU's external investment policy has in recent years been subject to a significant public
policy debate to determine the direction it should take. The path forward is now clear.
The EU views it as vital that the broad Free Trade Agreements and Investment agreements
which it negotiates includes robust but reformed investment protection and investment dispute
settlement systems. There are three main angles to this.
First, confirmation but clarification of the substantive standards to leave no doubt that the
right to regulate is preserved. For example, exceptions apply which may justify a breach of
the most-favoured nation or national treatment obligations. The fair and equitable treatment
standard has been clarified, as has the expropriation standard. It needs to be clear that the
protection of investment does not interfere in the right to regulate.
Second, reform of dispute settlement. Some of these changes are changes which have been
discussed for some time. These include, for example, ensuring full transparency, preventing
parallel claims, dealing with frivolous claims. As regards transparency, the EU has been a
strong proponent of the UNCITRAL Transparency Rules, and is providing financing to the
UNCITRAL Transparency Repository, where documents will be made available on-line.
However, the key changes are those which have been proposed in 2015. The EU proposes to
create in its bilateral agreements a permanent tribunal, where the members of the tribunal
hearing a particular case are selected from nominations by the Parties to the agreement and at
random. They will also be subject to very strict rules on ethics. Another key change is the
direct establishment of an appellate mechanism in the agreement, setting down both the
conditions for appeal and the systems for having it in place.
Third, in the Commission's statement of its plans on trade policy, released in October 2015
(the "Trade for All" Communication), the Commission confirmed its intention to move
towards the establishment of a standing multilateral tribunal with an appeal function for
investment disputes. The objective is to have the tribunal be potentially applicable to all
agreements, both future and existing. The instrument creating such a tribunal would be open
to all actors to join.
That new bilateral system has already been included in the agreements which the EU has
negotiated with Canada and Viet Nam. The EU will seek to include it in all of its ongoing
and future negotiations. Finally, the EU is now seeking to move forward on preliminary
discussions on the multilateral court initiative.