NGFTAs and the Autonomy of EU Law The constitutional dimension of loyalty   Loyalty and autonomy

ISDS and compatibility with the Treaties (pending Opinion 1/17) Autonomy claim Preservation of the fundamental principles of the EU legal order Preservation of the exclusive jurisdiction of the Court of Justice to ensure their respect ISDS and compatibility with the Treaties (pending Opinion 1/17)

Autonomy of the EU legal order Opinion 1/91 EEA Court Opinion 1/09 Creation of a unified patent litigation system Opinion 2/13 Accession to the ECHR

Opinion 1/09 68.    It should also be observed that the Member States are obliged, by reason, inter alia, of the principle of sincere cooperation, set out in the first subparagraph of Article 4(3) TEU, to ensure, in their respective territories, the application of and respect for European Union law (see, to that effect, Case C‑298/96 Oelmühle and Schmidt Söhne [1998] ECR I‑4767, paragraph 23). Further, pursuant to the second subparagraph of Article 4(3) TEU, the Member States are to take any appropriate measure, general or particular, to ensure fulfilment of the obligations arising out of the Treaties or resulting from the acts of the institutions of the European Union. In that context, it is for the national courts and tribunals and for the Court of Justice to ensure the full application of European Union law in all Member States and to ensure judicial protection of an individual’s rights under that law (see, to that effect, Case C‑432/05 Unibet [2007] ECR I‑2271, paragraph 38 and case-law cited).

Opinion 2/13 202. Furthermore, the obligation of Member States to have recourse to the procedures for settling disputes established by EU law — and, in particular, to respect the jurisdiction of the Court of Justice, which is a fundamental feature of the EU system — must be understood as a specific expression of Member States’ more general duty of loyalty resulting from Article 4(3) TEU (see, to that effect, judgment in Commission v Ireland, EU:C:2006:345, paragraph 169), it being understood that, under that provision, the obligation is equally applicable to relations between Member States and the EU.

Competence to approve IDS provisions Distinction between competence-based approach and the issue of compatibility (autonomy) II. ISDS: Autonomy and Loyal cooperation

I. The competence to approve IDS provisions of FTAs EU’s support to the establishment of permanent investment courts: objective to act efficiently as a global international actor. Limits of the principle of conferral Competence of the Union to approve an ICS Competence to approve IDS provisions of FTAs

I. The competence to approve IDS provisions of FTAs Opinion 2/15, EUSFTA   Dispute settlement between the Parties 298. As regards the competence of the European Union to approve Chapter 15 of the envisaged agreement, it should be recalled at the outset that the competence of the European Union in the field of international relations and its capacity to conclude international agreements necessarily entail the power to submit to the decisions of a court which is created or designated by such agreements as regards the interpretation and application of their provisions

I. The competence to approve IDS provisions of FTAs Opinion 2/15 299. In the same way, the competence of the European Union to conclude international agreements necessarily entails the power to submit to the decisions of a body which, whilst not formally a court, essentially performs judicial functions, such as the Dispute Settlement Body created within the framework of the WTO Agreement. 300. As has been stated in paragraph 30, and recalled in paragraph 290, of this opinion, the present procedure does not relate to the question whether the provisions of the envisaged agreement are compatible with EU law. 301. Accordingly, contrary to the situation in the opinion procedures cited in paragraph 298 of this opinion, it is not appropriate to examine whether the dispute settlement regime laid down by Chapter 15 of the envisaged agreement fulfils the criteria set out by those other opinions, in particular the criterion relating to the autonomy of EU law.

I. The competence to approve IDS provisions of FTAs Opinion 2/15 302. As Chapter 15 of the envisaged agreement relates to disputes between the European Union and the Republic of Singapore regarding the interpretation and application of that agreement, neither does this opinion cover the issue of the jurisdiction of the Court so far as concerns the settlement of disputes within the European Union relating to the interpretation of EU law (see inter alia, in respect of that jurisdiction, judgment of 30 May 2006, Commission v Ireland (MOX plant), C‑459/03, EU:C:2006:345, paragraph 132, and Opinion 1/09 (Agreement creating a Unified Patent Litigation System) of 8 March 2011, EU:C:2011:123, paragraph 78).

I. The competence to approve IDS provisions of FTAs Opinion 2/15 303. In the present procedure, it need only be stated that the dispute settlement regime laid down by that chapter forms part of the institutional framework for the substantive provisions of the envisaged agreement. Since that regime relates to disputes between the European Union and the Republic of Singapore, it, unlike the investor-State dispute settlement regime laid down in Section B of Chapter 9 of the envisaged agreement, is not liable to remove disputes from the jurisdiction of the courts of the Member States or of the European Union. Accordingly, the rule laid down in the case-law, recalled in paragraph 276 of this opinion, is applicable.

I. The competence to approve IDS provisions of FTAs Opinion 2/15 –       Investor-State dispute settlement 290. Without prejudice to what is stated in paragraph 30 of this opinion, the Court has the task of ruling on the nature of the competence to establish such a dispute settlement regime. In that regard, whilst it is true that, as is clear from Article 9.17 thereof, the envisaged agreement does not rule out the possibility of a dispute between a Singapore investor and a Member State being brought before the courts of that Member State, the fact remains that that is merely a possibility in the discretion of the claimant investor. 291. The claimant investor may indeed decide, pursuant to Article 9.16 of the envisaged agreement, to submit the dispute to arbitration, without that Member State being able to oppose this, as its consent in this regard is deemed to be obtained under Article 9.16.2 of the agreement.

I. The competence to approve IDS provisions of FTAs Opinion 2/15 292. Such a regime, which removes disputes from the jurisdiction of the courts of the Member States, cannot be of a purely ancillary nature within the meaning of the case-law recalled in paragraph 276 of this opinion and cannot, therefore, be established without the Member States’ consent. 293. It follows that approval of Section B of Chapter 9 of the envisaged agreement falls not within the exclusive competence of the European Union, but within a competence shared between the European Union and the Member States.

I. The competence to approve IDS provisions of FTAs Opinion 2/15 suggests that the existence of ISDS provisions is not as such incompatible with the autonomy of EU law, even if disputes are liable to be removed from the jurisdiction of domestic courts. What may be incompatible with the autonomy of EU law is the functioning of the dispute settlement mechanism ISDS provisions in the Union’s FTAs fall under the Member States’ competence as they are related to the implementation of EU law by the domestic courts

I. The competence to approve IDS provisions of FTAs ISDS provisions fall under a Member States’ exclusive competence or under a shared competence between the Union and the Member States ? Opinion 2/15: (portfolio investment provisions) cannot be approved by the European Union alone (para 304) / (ISDS provisions) fall not within the exclusive competence of the European Union, but within a competence shared between the European Union and the Member States (para 293) C-600/14, Germany v Council (para 68): reference to the exercise of a shared competence only with regard to portfolio investment provisions and not with regard to ISDS provisions of the EUSFTA. ISDS provisions: if MS’ competence : compulsory mixity ?

II. Autonomy and loyal cooperation : the ACHMEA ruling Compatibility with EU law of the dispute settlement provisions in a bilateral investment treaty (BIT) between Member States CJUE, 6 March 2018, Slowakische Republik (Slovak Republic v Achmea BV, C‑284/16 1   This request for a preliminary ruling concerns the interpretation of Articles 18, 267 and 344 TFEU. 2  The request has been made in proceedings between the Slovak Republic and Achmea BV concerning an arbitral award of 7 December 2012 made by the arbitral tribunal provided for by the Agreement on encouragement and reciprocal protection of investments between the Kingdom of the Netherlands and the Czech and Slovak Federative Republic (‘the BIT’).

II. Autonomy and loyal cooperation : the ACHMEA ruling -Article 8 of the BIT is such as to call into question the principle of mutual trust between the Member States and the preservation of the particular nature of the law established by the Treaties -The preservation of the particular nature of EU law is ensured through the preliminary reference procedure, while Article 8 of the BIT affects the powers of domestic courts - As a consequence, Article 8 of the BIT is not compatible with the principle of sincere cooperation of Article 4, paragraph 3, TEU, which operates in a context of mutual trust

II. Autonomy and loyal cooperation : the ACHMEA ruling Specific context of the autonomy claim in intra-EU investment treaties, which distinguishes it from the autonomy claim in the context of FTAs A provision that removes disputes from the jurisdiction of domestic courts, in an agreement between Member States, affects the Member States’ obligation of Article 19 TEU and, thus, mutual trust. As a consequence, the judicial system at the basis of the specific characteristics of the EU legal order is affected

II. Autonomy and loyal cooperation : the ACHMEA ruling CJUE, 6 March 2018, Slowakische Republik (Slovak Republic v Achmea BV, C‑284/16 34      EU law is thus based on the fundamental premiss that each Member State shares with all the other Member States, and recognises that they share with it, a set of common values on which the EU is founded, as stated in Article 2 TEU. That premiss implies and justifies the existence of mutual trust between the Member States that those values will be recognised, and therefore that the law of the EU that implements them will be respected. It is precisely in that context that the Member States are obliged, by reason inter alia of the principle of sincere cooperation set out in the first subparagraph of Article 4(3) TEU, to ensure in their respective territories the application of and respect for EU law, and to take for those purposes any appropriate measure, whether general or particular, to ensure fulfilment of the obligations arising out of the Treaties or resulting from the acts of the institutions of the EU (Opinion 2/13 (Accession of the EU to the ECHR) of 18 December 2014, EU:C:2014:2454, paragraphs 168 and 173 and the case-law cited).

II. Autonomy and loyal cooperation : the ACHMEA ruling CJUE, 6 March 2018, Slowakische Republik (Slovak Republic v Achmea BV, C‑284/16 17      Finally, the purpose of Article 344 TFEU is to safeguard the allocation of powers laid down by the Treaties, and hence the autonomy of the EU legal system, observance of which is ensured by the Court, and at the same time it is a specific manifestation of the duty of the Member States to cooperate with the Court within the meaning of Article 4(3) TEU. It cannot, however, be concluded from that that Article 344 TFEU safeguards the jurisdiction of the Court with respect to any dispute in which EU law may be applied or interpreted. That provision in fact protects the exclusive jurisdiction of the Court only to the extent that the Member States have to make use of the procedures before the Court laid down by the Treaties. Yet a dispute such as that in the main proceedings cannot be resolved in proceedings before the EU judicature. The Treaties make no provision for any judicial procedure in which an investor such as Achmea can bring a claim, before the EU judicature, for compensation from a Member State under a bilateral investment treaty such as the BIT.

II. Autonomy and loyal cooperation : the ACHMEA ruling CJUE, 6 March 2018, Slowakische Republik (Slovak Republic v Achmea BV, C‑284/16 54      It is true that, in relation to commercial arbitration, the Court has held that the requirements of efficient arbitration proceedings justify the review of arbitral awards by the courts of the Member States being limited in scope, provided that the fundamental provisions of EU law can be examined in the course of that review and, if necessary, be the subject of a reference to the Court for a preliminary ruling (see, to that effect, judgments of 1 June 1999, Eco Swiss, C‑126/97, EU:C:1999:269, paragraphs 35, 36 and 40, and of 26 October 2006, Mostaza Claro, C‑168/05, EU:C:2006:675, paragraphs 34 to 39).

II. Autonomy and loyal cooperation : the ACHMEA ruling CJUE, 6 March 2018, Slowakische Republik (Slovak Republic v Achmea BV, C‑284/16 55      However, arbitration proceedings such as those referred to in Article 8 of the BIT are different from commercial arbitration proceedings. While the latter originate in the freely expressed wishes of the parties, the former derive from a treaty by which Member States agree to remove from the jurisdiction of their own courts, and hence from the system of judicial remedies which the second subparagraph of Article 19(1) TEU requires them to establish in the fields covered by EU law (see, to that effect, judgment of 27 February 2018, Associação Sindical dos Juízes Portugueses, C‑64/16, EU:C:2018:117, paragraph 34), disputes which may concern the application or interpretation of EU law. In those circumstances, the considerations set out in the preceding paragraph relating to commercial arbitration cannot be applied to arbitration proceedings such as those referred to in Article 8 of the BIT.

II. Autonomy and loyal cooperation : the ACHMEA ruling CJUE, 6 March 2018, Slowakische Republik (Slovak Republic v Achmea BV, C‑284/16 56      Consequently, having regard to all the characteristics of the arbitral tribunal mentioned in Article 8 of the BIT and set out in paragraphs 39 to 55 above, it must be considered that, by concluding the BIT, the Member States parties to it established a mechanism for settling disputes between an investor and a Member State which could prevent those disputes from being resolved in a manner that ensures the full effectiveness of EU law, even though they might concern the interpretation or application of that law.

II. Autonomy and loyal cooperation : the ACHMEA ruling CJUE, 6 March 2018, Slowakische Republik (Slovak Republic v Achmea BV, C‑284/16 57      It is true that, according to settled case-law of the Court, an international agreement providing for the establishment of a court responsible for the interpretation of its provisions and whose decisions are binding on the institutions, including the Court of Justice, is not in principle incompatible with EU law. The competence of the EU in the field of international relations and its capacity to conclude international agreements necessarily entail the power to submit to the decisions of a court which is created or designated by such agreements as regards the interpretation and application of their provisions, provided that the autonomy of the EU and its legal order is respected (see, to that effect, Opinion 1/91 (EEA Agreement — I) of 14 December 1991, EU:C:1991:490, paragraphs 40 and 70; Opinion 1/09 (Agreement creating a unified patent litigation system) of 8 March 2011, EU:C:2011:123, paragraphs 74 and 76; and Opinion 2/13 (Accession of the EU to the ECHR) of 18 December 2014, EU:C:2014:2454, paragraphs 182 and 183).

II. Autonomy and loyal cooperation : the ACHMEA ruling CJUE, 6 March 2018, Slowakische Republik (Slovak Republic v Achmea BV, C‑284/16 58      In the present case, however, apart from the fact that the disputes falling within the jurisdiction of the arbitral tribunal referred to in Article 8 of the BIT may relate to the interpretation both of that agreement and of EU law, the possibility of submitting those disputes to a body which is not part of the judicial system of the EU is provided for by an agreement which was concluded not by the EU but by Member States. Article 8 of the BIT is such as to call into question not only the principle of mutual trust between the Member States but also the preservation of the particular nature of the law established by the Treaties, ensured by the preliminary ruling procedure provided for in Article 267 TFEU, and is not therefore compatible with the principle of sincere cooperation referred to in paragraph 34 above. 59      In those circumstances, Article 8 of the BIT has an adverse effect on the autonomy of EU law.