European Law and Investment Treaties Peter J. Turner, Freshfields Bruckhaus Deringer LLP, Paris BIICL, 4 December 2008 To insert other ready-formatted pages: go to the insert menu/slides from files/ select ‘on-screen inserts.ppt’ Click the display button, then click the button on the right (marked with red below). Click on the slide(s) to insert then insert and close.

Applicable Laws  The law applicable to the substantive protections under the investment treaty  The law applicable to jurisdictional issues (scope of arbitration clause)  The law applicable to the procedure of the arbitration  Eastern Sugar issue concerned the law applicable to the substantive rights despite raising a question of jurisdiction

The law applicable to the merits  Can be seen as a composite  Hybrid nature of investment-treaty law  Investment made under municipal law  Law applicable to contract, if any, likely to be municipal law  Investment treaty an instrument to be construed under public international law  Investment treaty a lex specialis

Netherlands-Czech Republic BIT  Article 8(6)  The arbitral tribunal shall decide on the basis of the law, taking into account in particular though not exclusively: the law in force in the Contracting Party concerned; the provisions of this Agreement, and other relevant Agreements between the Contracting Parties; the provisions of special agreements relating to the investment; the general principles of international law.  CME v Czech Republic  Tribunal construed art 8(6) as follows:  tribunal has broad discretion  sources listed not exclusive  no specific order or heirarchy

Art 42(1) ICSID Convention  Vivendi annulment:  in respect of a claim based upon a substantive provision of the BIT … the inquiry which the tribunal is required to undertake is one governed by … the BIT and by applicable international law. Such an inquiry is neither in principle determined, nor precluded, by any issue of municipal law.  Compañia de Desarollo de Santa Elena v Costa Rica:  Under Art 42(1), international law prevails over municipal law

Place of EC law  Tribunal’s inquiry:  Treaty is to be interpreted under international law  Applicability of VCLT  EC treaty as a later treaty covering the same subject-matter  Termination in whole or in part  Arts 59 and 30 VCLT  EC law as part of either (a) international and/or (b) municipal law

Other thoughts  Unilateral denunciation and transitional provisions  No practical effect even if challenging Member States right about effect of EC Treaty  Importance of investor-state arbitration:  Eastern Sugar tribunal found it was an important differentiating factor between the BIT and the EC Treaty  Query result if in all other respects EC Treaty held to cover the same subject-matter

© Freshfields Bruckhaus Deringer LLP 2008 This material is for general information only and is not intended to provide legal advice.