Ref. Ares(2018)6087220 - 28/11/2018
the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base
Erosion and Profit Shifting
(BEPS). On financing, DG TRADE referred to the
importance of breaking the link between disputing parties and adjudicators hence
adjudicators' salaries should be paid by contracting parties, with the expectation that their
respective contributions would be weighed on the basis of a scale. User fees, while not
ideal, could become part of the system.
Addressing comments on the mixed nature of the Convention establishing the Court, DG
TRADE explained that all Member States support the project. On costs, DG TRADE
explained why ultimately the MIC would be cheaper than having multiple ICS operative
under various trade agreements. Asked about the impact of the
Achmea judgment on the
MIC, DG TRADE commented that this case concerned intra-EU BITs and that its impact
on the MIC initiative is therefore limited. DG TRADE recalled that it is confident about
the outcome of the CJEU opinion on the CETA ICS requested by Belgium, expected for
the first half of 2019.
Session 3: The functioning of the Multilateral Investment Court
DG TRADE outlined key aspects related to the functioning of the MIC including
qualifications of adjudicators (which could be modelled on those of the ICJ or of other
international tribunals) and appointment procedures of permanent adjudicators. DG
TRADE dismissed concerns about pro-state bias since states will consider their offensive
interests when appointing adjudicators. DG TRADE explained that, on enforcement of
awards, the target would be to recreate a system that provides for enforceability through
either ICSID or the New York Convention.
ICSID presented its role in ISDS and expressed its willingness to assist in the process of
reform of multilateral investment dispute resolution. It stressed that the ICSID system is
self-contained and that ICSID awards need not be enforced through the ICSID or the
New York Convention. Domestic courts do not have a relevant role in the process. ICSID
arbitration is also the major forum for the settlement of investment disputes, with about
60% of the about 700 ISDS cases being ICSID cases. ICSID stressed that a new MIC
would have to expect to handle a similar workload.
Following questions from the audience, ICSID clarified that the recent increase in ICSID
cases can be explained by several factors including an increase in FDI, an ever-growing
number of BITs and increased awareness of investment arbitration.
Session 4: The Appeal Tribunal of the Multilateral Investment Court
DG TRADE then presented the main advantages of a permanent investment court over
current ISDS, including increased predictability and consistency as well as quicker and
cheaper proceedings thanks to the inclusion of an appeal mechanism. Under the current
ISDS system an investor incurs the risk of seeing an award annulled by domestic courts,
in which case it must re-activate proceedings from the beginning with the consequent
loss of time and funds. Conversely, an appeal instance would allow for a second check of
the award. The scope of the appeal would have to be relatively narrow and limited (i.e.
errors of law, manifest errors of fact or severe procedural shortcomings) to ensure its
proper functioning. It should be possible to develop a system of remand through which
the appeal tribunal would send cases back to the tribunal of first instance.
3
[Art. 4.1(a)]
Desirability and feasibility of
consistency were discussed, in light of the existing thousands of BITs. DG TRADE
clarified that there are obvious limits to it and noted that many provisions across BITs, or
even entire BITs, are substantially identical.
The WTO presented the mechanisms used by the WTO to ensure consistency and
coherence, emphasising the clear differences between the WTO and international
investment systems. The WTO highlighted the standing nature of the Appellate Body
(where decision making happens collegially) as opposed to panels. It clarified that no
consistency is absolute, but permanent bodies have the tendency to develop a certain
tradition, since the same people who have dealt with an issue in the past are recurrently
seized. Discussions revolved inter alia around how to avoid possible entrenchment of
undesirable interpretations.
Comments
This full-day seminar was useful to clarify technical issues and allowed for detailed
discussions on aspects of this file that are of particular interest to BusinessEurope and its
members. The participation of speakers from other organisations provided for an
interesting exchange of views and allowed timely discussions. Both for transparency
reasons and from the viewpoint of DG TRADE's internal reflection and discussions it is
desirable to continue to invest reasonable time and efforts explaining the initiative to EU
stakeholders.
Attachment: DG TRADE presentation
Cc:
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Electronically signed on 03/05/2018 13:59 (UTC+02) in accordance with article 4 2 (Validity of electronic documents) of Commission Decision 2004/563