1. A new investor-State dispute settlement system? The TTIP proposal ANNA JOUBIN-BRET AVOCAT À LA COUR – PARISMOEA MARCH 2016

2. Content of the presentation Introduction to Investor-State dispute settlement (ISDS) The back-lash against ISDS in Latin America in the aftermath of the Argentina crisis: Bolivia, Ecuador and Venezuela walk out of ICSID and the proposal of the UNASUR Court The evolution after the NAFTA and the 2000 models Streamlined and limited scope for ISDS in treaty models Strengthening ADR and DPPs The draft proposal of an international investment court by the EU

3. Trends and historical perspective Sustained growth of BITs and FTAs with ISDS provisions Investor-State v. State-State: Investment treaties v. WTO and Mercosur Significant increase of ISDS cases Reactions by countries: Australia, Latin America, South Africa.

4. In 2013, 56 new ISDS cases were filed - the second largest annual number in history 15 Trends in known ISDS cases, 1987–2013

5. 5 Known investment treaty claims, by defendants Number of cases

6. 6 international investment agreements in investment treaty arbitrations, end 2011

7. Known investment treaty claims, by defendants Source UNCTAD

8. Historical perspective 1958: the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1959: the first BIT – Germany/Pakistan 1965: the ICSID Convention 1976: the UNCITRAL Arbitration Rules 1994: the first BITs case: AAPL v. Sri Lanka 2006: revision of the ICSID Rules 2010: revision of the ICC Rules 2010-2013: revision of the UNCITRAL Rules 2015: the UNCITRAL Convention on Transparency To date: over 550 known investment treaty disputes

9. Investor-State v. State-State DS ISDS: Direct access by the aggrieved investor No diplomatic protection Compensation No appeal – Award final and binding Enforcement: ICSID or NY Convention State-State in WTO Espousal of the claim Action by member States Remedy: withdraw the measure or withdraw concession No monetary compensation Appellate body Enforcement by the WTO

10. Traditional approaches 10 Alternative Dispute Resolutions MediationConciliation Consultation & Negotiation Domestic Courts Domestic Tribunals Arbitration ICSIDUNCITRAL Other Agreed Rules

11. From the NAFTA onwards: consistent approach Key objective: giving back control to the Contracting Parties over their treaties Predictability, control over each phase of the procedure, streamlining access to ISDS. Predictability: each phase of the procedure is described and provided for. ◦Strict conditions for bringing claims ◦Broader choice for investors but fork in the road provisions ◦Avoiding multiple claims ◦Selection of arbitrators and conduct of the procedure Transparency in ISDS, publication, amicus, public hearings Control of each phase: consolidation, appellate mechanism, interpretation, role of Free Trade Commissions, role of technical authorities, non-disputing party submissions Limiting access: the three years period, scope of claims, …..

12. The EU approach to ISDS The political and public opinion backlash against ISDS: ◦the Wattenfall case: Germany’s political decision to stop the construction of nuclear power plants. An intra-EU BIT ◦ the Veolia case against Egypt: claim against Egypt’s decision to raise minimum wages (allegdly) ◦the Philip Morris cases against Uruguay and Australia: plain packaging for cigarettes, violation of IPR ◦ the Spanish solar and wind energy cases under the ECT: the decision by the government to end incentives packages. 25 cases pending. ◦the Yukos case: 50 billion US$ and 70 million US$ of legal fees Pointing fingers at lack of accountability of arbitrators The political reaction: EU wants an appeal mechanism and a code of conduct for arbitrators

13. The EU proposal: the draft TTIP Step 1- Alternative dispute resolution and consultations 1- Amicable resolution: at any time. 2- Mediation: at any time, including parallel to an arbitration. Stand-alone mediation annex. 3- Consultations: when a dispute cannot be resolved as provided above, request for consultation. The consultations shall be held within 60 days from the request. Step 2- Bringing a case 90 days later: Request for determination of the respondent 60 days later: Response from the EU as to whether the EU or a member State will be respondent. 6 months after the submission of a request for consultations 3 months after the submission of a request for determination of the respondent: Submission of a claim

14. Submission of a claim Submission of a claim to the Tribunal under one of the following sets of rules on dispute settlement: A) the ICSID Convention B) The Additional Facility rules C) The UNCITRAL arbitration rules D) Any other rules agreed by the disputing parties at the request of the Claimant. Rules on dispute settlement shall apply subject to the rules set out in this chapter, as supplemented by any rules adopted by the ….. Committee, by the Tribunal or by the Appeal Tribunal.

15. Investment court system 1- The Tribunal of First Instance is established. Appointment of 15 Judges: qualifications, appointment for 7 years renewable once. President of the Tribunal shall appoint the Judges composing each panel. The Tribunal draws up its own working procedures. Payment on the basis of monthly retainer fee (Euros 2000/month). 2- An Appeal Tribunal: a permanent Appeal Tribunal is established to hear appeals from the awards issued by the Tribunal. Appointment of 6 members. 6 years term. Retainer of Euros 7000/month. 3- Role of ICSID/PCA as Secretariat: payment by parties into funds managed by ICSID/PCA. Act as the Secretariat and provide appropriate support.

16. Investment Court System Ethics: strong rules on independence, freedom from affiliation with any government, free from conflict of interest. Multilateral dispute settlement mechanisms Upon the entry into force between the Parties of an international agreement providing for a multilateral investment tribunal and/or a multilateral appellate mechanism applicable to disputes under thie Agreement, the relevant parts of this section shall cease to apply. The XX Committee may adopt a decision specifying any necessary transitional arrangement.

17. Article 29 – Grounds for appeal That the Tribunal has erred in the interpretatio or application of the applicable law That the Tribunal has manifestly erred in the appreciation of the facts, including the appreciation of relevant domestic law; or Those provided for in Article 52 of the ICISD Convention, in so far as they are not covered by the above. [the grounds for annulment].

18. Additional novel features The role of the Committee to issue binding interpretation: Where serious concerns arise as regards matters of interpretation relating to the Investment Protection or the Resolution of Investment Disputes and Investment Court System Applicable law : the domestic law of the Parties shall not be part of the applicable law and rules of interpretation: the VCLT The Tribunal shall not determine the legality of a measure under the domestic law of the disputing party. Requirement of disclosure of third-party funding Anti-circumvention: to avoid manufacturing treaty claims

19. Alternative Dispute Resolutions Mediation Collaborative process Third party mediator to assist parties in disputes Conciliation Available at all stages Complementary to mediation and arbitration Use of conciliator as third party to assist disputing parties Consultation and Negotiation Request for consultation in writing to the other party Commence within 30 days of request Parties to deliver information on disputes 19

20. A role for Domestic Courts Domestic courts are “on the ground” and have local knowledge; Affordable; Binding resolution of most disputes; More prepared that ad-hoc judges; International law solution 20

21. THANK YOU ajb@joubin-bret.com