Moritz Obst
International Trade and Investment Law
Final Draft
Master Thesis
29 July 2016
Supervisor: Prof. Dr. S.W.B. Schill
The Proposal for a Permanent Investment Court System under TTIP: Constitutional Limits of EU Law under article 21 TEU ?
Abstract
This paper explores the constitutionality under EU law of the proposed investment court system of TTIP. The background for the constitutionality assessment of the court system is provided by article 21 TEU. Here, two values, the rule of law and the principle of democracy, are selected. In order to carry out a thorough assessment, first, the importance of values for the EU’s foreign action is established. This leads, in a second step, to a differentiated perspective on how values might apply externally. It is suggested that, similar to member state courts, the CJEU might develop a doctrine of moderated value application externally; such a view is supported by previous CJEU case law. In the following, the meaning of the rule of law and the principle of democracy in the European legal order is analysed. Despite being essentially contested concepts, it will be shown that they have acquired an independent European meaning over time; particularly, the rule of law received further clarification by means of a commission document summarizing the main aspects of the principle. Then, the changes of the investment court system compared to the ‘traditional’ investment tribunals are highlighted. The focus is on aspects of the court system that might have an effect on the compliance with the rule of law and the principle of democracy. While concluding that the investment court system has flaws in terms of the rule of law and the principle of democracy, the court system would nonetheless be compatible with EU constitutional law. Moreover, it is also highlighted that there are several factors that support this finding and could be taken into account by the CJEU in a hypothetical case. However, considering that there still are certain flaws, this paper also makes suggestions for points of improvement regarding both standards of assessment. Essentially, it is an underlying goal of this paper to suggest that the EU should apply different value perceptions externally. This does neither mean to abandon nor to soften European constitutional values beyond recognition in their external application. It only means to not apply them dogmatically in an intra-EU sense, and to allow, within strict limits, for a pragmatic application externally. In so doing, not only the participation in international dispute settlement mechanisms is facilitated but also international cooperation with actors that might have different value perceptions is ensured.
Table of Contents
I. INTRODUCTION ... 5
I.1PROBLEM DESCRIPTION AND THESIS OBJECTIVES ... 5
I.2STRUCTURE AND METHODOLOGY ... 7
II. THE ROLE OF VALUES FOR THE EU’S COMMON COMMERCIAL POLICY ... 9
III. THE EXTERNAL SIGNIFICANCE AND SCOPE OF CONSTITUTIONAL NORMS AND THE POSSIBILITY TO PARTICIPATE IN INTERNATIONAL DISPUTE SETTLEMENT MECHANISMS ... 12
III.1THE KADI SAGA AS INDICATOR OF HOW STRICTLY THE CJEUVIEWS THE EXTERNAL APPLICATION OF VALUES? ... 12
III.2LIMITATIONS ESTABLISHED FOR THE PARTICIPATION IN INTERNATIONAL DISPUTE MECHANISMS UNDER OPINION 1/91 ... 14
III.3THE INTERPRETATIONAL STRINGENCY OF VALUES:DOES THE CJEUALLOW FOR A MORE GENEROUS APPLICATION EXTERNALLY? ... 15
IV. ESTABLISHING THE NORMATIVE FRAMEWORK: THE MEANING OF SELECTED VALUES IN THE EU LEGAL ORDER ... 20
IV.1THE RULE OF LAW ... 20
IV.2THE PRINCIPLE OF DEMOCRACY ... 23
V. FUNDAMENTALS OF THE PROPOSAL FOR AN INVESTMENT COURT IN TTIP - AN OUTLINE ... 27
VI. ‘RULE OF LAW’ AND ‘DEMOCRACY’ AS NORMATIVE PARAMETERS OF THE EU’S CCP CONSIDERED: IS THE ICS COMPATIBLE WITH THESE CONSTITUTIONAL STANDARDS? ... 29
VI.1COMPLIANCE WITH THE RULE OF LAW ASSESSED ... 29
VI.2COMPLIANCE WITH THE PRINCIPLE OF DEMOCRACY ASSESSED ... 32
VI.3‘BALANCING’REMARKS ON THE EXTERNAL APPLICATION OF VALUES ... 35
VII. CONCLUSION ... 37
VIII. BIBLIOGRAPHY ... 39
VIII.1TREATIES ... 39
VIII.2DOCUMENTS OF EUINSTITUTIONS ... 39
VIII.3CASE LAW OF THE CJEU ... 40
VIII.4OPINIONS OF THE CJEU ... 41
VIII.5CASE LAW OF NATIONAL COURTS ... 41
VIII.6SECONDARY SOURCES:SCHOLARLY ARTICLES,BOOKS AND CONTRIBUTIONS TO SUCH ... 42
VIII.7SECONDARY SOURCES:WEBSITES,WORKING PAPERS,BLOGS,NEWSPAPER ARTICLES AND OTHER ONLINE SOURCES ... 45
List of abbreviations
BIT Bilateral Investment Treaty
CCP Common Commercial Policy
CFSP Common Foreign and Security Policy
CJEU Court of Justice of the European Union
ECHR European Convention on Human Rights
EP European Parliament
FDI Foreign Direct Investment
ICS Investment Court System
ISDS Investor-state dispute settlement
NY Convention Convention on the Recognition and Enforcement of Foreign Arbitral Awards
TEC Treaty establishing the European Community
TEU Treaty on the European Union
TFEU Treaty on the Functioning of the European Union
I. Introduction
I.1 Problem Description and Thesis Objectives
“In TTIP, there will not be ‘traditional’ private arbitration tribunals.”1
Sigmar Gabriel, Germany’s minister for economic affairs and energy, made this statement in 2015 before the German parliament. Controversially, in the same speech, he advocated the establishment of a ‘permanent trade court’ within the context of TTIP.2
With this statement, doubtlessly, he had had the finger on the pulse. In particular, the German public was and still is very critical towards TTIP and ISDS in general. In reaction to this critique, the German ministry of economics sent a proposal to the Commission in the beginning of 2015, favouring the creation of a ‘permanent court’ within the framework of TTIP.3
Parallel to member state deliberations, the EU Commission was developing similar ideas to tackle the publicly perceived illegitimacy of traditional ISDS. To accommodate public criticism, the EU commission even conducted an online consultation on investment protection and ISDS in TTIP. Emphasizing the enormous controversy the subject raises, the Commission received nearly 150000 responses, most of which perceived ISDS as being a threat to democracy, public finance or being simply unnecessary between the US and the EU, given their functioning judicial systems.4
As a result of numerous heated debates among the public, the member states and experts, the commission tabled a proposal for a new ‘investment court system’ under TTIP in September 2015.5 The basic idea of this initiative is to establish a court-like system with an “appeal mechanism based on clearly defined rules, qualified judges and transparent proceedings.”6
In this sense, the proposal is a major advancement in the reformation of the global investment regime, which, arguably, requires revision. In response to a common point of criticism, it has been welcomed as a possibility to eliminate inconsistent interpretations of
1 S Gabriel, ‘Handelspolitik und Handelsabkommen TTIP und CETA’ (Speech before the German Parliament, Berlin, 1 November 2015) 12311 <http://dipbt.bundestag.de/dip21/btp/18/18127.pdf#P.12309> accessed 3 April 2016.
2 He refers to ‘Handelsgerichtshof’ in the original German statement.
3 M Bauchmüller, ‘Gabriel Plädiert für Ständigen TTIP-Gerichtshof’ Süddeutsche Zeitung (1 May 2015)
<http://www.sueddeutsche.de/politik/handelsabkommen-ttip-raus-aus-dem-hinterzimmer-1.2460532> accessed 3 April 2016.
4 Commission, ‘Report on Online Public Consultation on Investment Protection and Investor-to-State Dispute Settlement (ISDS) in TTIP’ (Staff Working Document) SWD (2015) 3 final, 14
<http://trade.ec.europa.eu/doclib/docs/2015/january/tradoc_153044.pdf> accessed 4 April 2016.
5 Commission, ‘Proposal for Trade in Services, Investment and E-Commerce-Chapter II-Investment’ (Draft Text, Transatlantic Trade and Investment Partnership, 12 November 2015)
<http://trade.ec.europa.eu/doclib/docs/2015/november/tradoc_153955.pdf> accessed 1 April 2016; hereinafter, ‘proposal.’
6 Commission, ‘EU Finalises Proposal for Investment Protection and Court System for TTIP’ (Press Release, 12 November 2015) <http://europa.eu/rapid/press-release_IP-15-6059_en.htm> accessed 4 April 2016.
an agreement.7 Similarly, it could “eliminate the halo of mistrust surrounding investment arbitration” and enhance the legitimacy and quality of investment arbitration.8
According to the commission, the EU should play a crucial role in the reformation process, because it “is best placed to lead the reform of the global investment regime, as its founder and main actor.”9
In contrast, critics hold that the proposal is, in essence, nothing more than a move to appease public criticism.10 It is also maintained that the proposed ICS would be a biased system in favour of the contracting parties, because it would deprive the claimants from any possibility of participating in the appointment of judges.11 Presumably, the harshest criticism is voiced by the German Association of Judges, which finds that there is neither a necessity nor a legal basis for such a court.12 Thus, it can be inferred that the said proposal is greatly contested.
It is in the context of the aforementioned criticism regarding a valid legal basis for an investment court that concerns as to the constitutionality must be voiced. In particular, article 21 TEU requires EU foreign action to satisfy certain requirements by stipulating a list of core principles, which Union action must adhere to.13 In other words, the principles stated in article 21 TEU provide the EU with a set of normative guidelines, on which it has to base its external action. By way of article 205 TEU, these standards must also be met by the EU’s CCP under which the ICS falls. However, it can be argued that, particularly, the principle of democracy and the rule of law under article 21(1) TEU constitute a significant constitutional hurdle, which may not be cleared by the ICS. Both norms can be termed ‘constitutional values,’ given
7 S Schill, ‘The European Commission’s Proposal of an “Investment Court System” for TTIP: Stepping Stone or Stumbling Block for Multilateralizing International Investment Law?’ (2016) 20(9) ASIL
<https://www.asil.org/insights/volume/20/issue/9/european-commissions-proposal-investment-court-system-ttip-stepping> accessed 1 July 2016.
8 L Pantaleo, ‘Lights and Shadows of the TTIP Investment Court System’ (2016) Cleer Paper Series 1/2016, 77 <http://ssrn.com/abstract=2782008> accessed 8 July 2016.
9 Commission, ‘Trade for All: Towards a more Responsible Trade and Investment Policy’ COM (2015) 497 final, 15.
10 N Lavranos, ‘The Shortcomings of the Proposal for an ‘International Court System’(EFILA Blog, 2 February 2015) <https://efilablog.org/2016/02/02/the-shortcomings-of-the-proposal-for-an-international-court-system-ics/> accessed 7 April 2016.
11 K Ameli and others, ‘Paper Regarding the Proposed International Court System (ICS)’ (1 February 2016) EFILA Task Force Paper, 60
<http://efila.org/wp-content/uploads/2016/02/EFILA_TASK_FORCE_on_ICS_proposal_1-2-2016.pdf> accessed 9 April 2016.
12 Deutscher Richterbund, ‘Stellungnahme zur Errichtung eines Investitionsgerichts für TTIP-Vorschlag der Europäischen Kommission vom 16.09.2015 und 12.11.2015’ (2016), 1
<http://www.drb.de/fileadmin/docs/Stellungnahmen/2016/DRB_160201_Stn_Nr_04_Europaeisches_Investition sgericht.pdf> accessed 27 April 2016.
that they are contained in the EU treaties, which have been referred to as the EU constitution.14
This paper does not attempt at examining the aforementioned difficulties with regard to the allocation of competences between the CJEU and international tribunals or the danger to the EU’s legal autonomy. Instead, it assesses the constitutionality of the ICS against the background of two selected standards contained in article 21 TEU. Against the aforementioned background, it is the object of the paper at hand to examine whether the ICS is constitutionally compatible under article 21 TEU. Thus, the research question is:
To what extent, if at all, is the investment court system, as suggested in the 2015 TTIP Commission proposal compatible with the EU’s guiding principles on external action enshrined in article 21 TEU, particularly, the rule of law and the principle of democracy?
I.2 Structure and Methodology
The research question contains several sub-components, which are mirrored in the structure of the paper. To begin with, the importance of values for EU policies is dealt with. In particular, the Treaty of Lisbon introduced the notion that all fields of external action must conform to the principles under article 21 TEU. Thus, on the basis of selected TEU provisions governing the EU’s external action, statements by EU officials and commission documents, it is demonstrated that the EU increasingly has a clear focus on value-oriented policy-making. This chapter is relevant in that it briefly gives account of the context in which the assessment is carried out. Without being aware of the importance of the relatively newly introduced article 21 TEU, it could be easily overseen that the norms contained in it are crucial policy objectives in themselves, thereby impacting the EU’s CCP, and with it, the ICS.
The third chapter is concerned with outlining three different possible approaches to the external application of EU values and how this may impact the EU’s possibility to partake in international dispute settlement mechanisms. It must be stressed that, in this context, the CJEU has not clarified its standpoint yet; hence, there are only indications how the court might view this issue. As a first possible approach, based on findings from chapter II, the CJEU’s tendency to interpret EU law dynamically is stressed. Kadi is examined in this
14
L Pech, ‘The Rule of Law as a Constitutional Principle of the European Union’ (2009) Jean Monnet Working Paper 04/09, 9 <http://jeanmonnetprogram.org/wp-content/uploads/2014/12/090401.pdf> accessed 15 April 2016.
regard,15 because it stands like no other case for the CJEU’s willingness to protect EU fundamental rights requirements in the external sphere. Analogically, the court could also apply a strict reading of the rule of law and democracy to the ICS. At the same time, as a second possible approach, the strict application of EU values can be contrasted to the CJEU’s generally open stance to international law and extra-EU dispute settlement mechanisms.16 This could suggest a limited application of EU fundamental values to ensure the participation in such mechanisms. As a last possible approach, it could be argued that the CJEU might develop a doctrine of softened application of EU values in the external sphere, comparable the practice of member state courts.
Chapter IV attempts at defining the scope, meaning, and definition in the EU legal framework of the rule of law and the principle of democracy, despite being essentially contested concepts.
In chapter V, brief reference is made to the novelties and details of the ICS proposal. Clearly, significant progress has been made in terms of both values compared to ‘traditional’ investment tribunals.
Last, in chapter VI, the constitutionality of the ICS proposal under article 21 TEU is assessed in light of the rule of law and the principle of democracy. It is found that the ICS raises questions in terms of both standards. However, this chapter makes suggestions on how to remedy any constitutional concerns.
In conclusion, it is the critical underlying notion of this paper that some aspects of the ICS proposal, not all, are problematic in terms of EU constitutional law. However, it also makes the plea to apply EU fundamental values in the external sphere more pragmatically and generously in order for the EU not to isolate itself and to allow for the participation in international dispute settlement mechanisms. Only by doing this, the EU can ensure being subjected- and contributing to the further development of international law.
15
Joined Cases C-402 and C-415/05 P Kadi and Al Barakaat International Foundation v Council and
Commission [2008] ECR I-6351.
II. The Role of Values for the EU’s Common Commercial Policy
Before going into the substantive part of analysis, this chapter is necessary to frame the whole discussion and emphasize the fact that constitutional-type norms now attend EU foreign action in the field of the CCP.17 Moreover, the awareness of the importance of values for the EU reinforces one of the CJEU’s possible reactions to the ICS as are presented in chapter III. Given that the court takes an evolutionary interpretative approach, increased value orientation could suggest a stricter external application of the rule of law and the principle of democracy.
Ever since the Lisbon Treaty, the CCP is integrated into the framework of the “community based on the rule of law.”18
Put differently, both the rule of law and the principle of democracy, among others, have only rather recently become the “unified conceptual framework for all types of EU external activities.”19
In terms of the CCP, it has been argued that it is subject to two layers of principles and objectives after the Lisbon Treaty.20 On the one hand, “the inner layer of objectives” in article 206 TFEU, which contains specific trade policy objectives such the harmonious development of world trade and trade liberalization.21 In this regard, the Lisbon Treaty did no change much, because the preceding TEC Treaty contained similar references and objectives, without, however, denominating the EU as the central actor in external trade policy.22 On the other hand, a crucial change compared to the TEC Treaty came with the introduction of article 21 TEU, which also applies to the CCP by reference to Article 205 TFEU. It forms an outer layer of principles of equal value as those contained in article 206 TEU.23 The importance of article 21 TEU lies in the fundamental significance of the norms contained in it. Thus, as one of the major changes introduced by the Treaty of Lisbon in the field of the CCP, article 21 TEU provides for a ‘quasi-constitutional’ framework of EU external action.24 At the same time, the ‘constitutionalization’ of EU
17 P Eeckhout, ‘A Normative Basis for EU External Relations? Protecting Internal Values Beyond the Single Market’ in M Krajewski (ed), Services of General Interest Beyond the Single Market-External and International
Law Dimensions (Springer 2015) 219.
18 Case 294/83 Les Verts v Parliament [1986] ECR 1339, para 23.
19 S Oeter, ‘The Principles and Objectives of the EU’s External Action’ in H Blanke and S Mangiameli (eds),
The Treaty on European Union (TEU):A Commentary (Springer 2013) 836.
20
M Krajewski, ‘The Reform of the Common Commercial Policy’ in A Biondi and P Eeckhout (eds), EU Law
after Lisbon (Oxford 2012) 294.
21 Ibid, 295. 22 Ibid. 23
Ibid.
24 A Dimopoulos, ‘The Effects of the Lisbon Treaty on the Principles and Objectives of the Common Commercial Policy’ (2010) 15 E.F.A.Rev. 153, 161.
external relations has been questioned as being “wishful thinking,”25
or the wording of article 21 TEU criticized as too vague and abstract.26 Indeed, article 21 TEU is carefully worded by referring to “shall be guided.” This suggests an advising, facultative character of the provision. Nonetheless, given article 21 explicit reference to the founding values in article 2 TEU, confusing the norms under article 21 TEU for non-binding soft law would be erroneous.27 The values are binding just as any other norm in the EU treaties, but the wording of article 21 TEU could be understood as allowing for a certain margin of discretion and flexibility for the CJEU in the interpretation of the provision.28
Within the examination of the significance of fundamental values for the CCP, implicitly, also the importance of certain norms for investment policy increased, which EU institutions repeatedly emphasize. The Commission, for instance, stresses that “…investment agreements should be consistent with the other policies of the Union and its Member States.”29
Similarly, the council finds that there is a “…need for the new investment policy to be “guided by the principles and objectives of the Union’s external action…”30
From a broader perspective, the clear value orientation of EU commercial policy is not an autarkic development, and it is in line with the general EU approach to increasingly tie politics to values and norms. Not without reason, the EU has been described as a ‘normative power.’31
In its surge in value orientation, the EU is not alone. Just like its member states, the EU has progressively developed a mindset that can best be described by the German term ‘Zielbedürfnis,’ the pursuance of codified objectives internally and externally.32
25 Eeckhout, Supra Note 17, 224.
26 P Leino, ‘The Journey Towards All that is Good and Beautiful: Human Rights and ‘Common Values’ as Guiding Principles of EU Foreign Relations Law’ in Cremona and deWitte (eds), EU Foreign Relations
Law-Constitutional Fundamentals (Hart Publishing 2008) 265.
27 J Larik, ‘Shaping the International Order as a Union Objective and the Dynamic Internationalisation of Constitutional Law’ (2011) Cleer Working Paper 2011/5, 26
<http://www.asser.nl/upload/documents/11222011_91506CLEER%20WP%202011-5-LARIK.pdf> accessed 5 July 2016.
28 Ibid, 27.
29 Commission, ‘Towards a Comprehensive European International Investment Policy’ (Communication) 7 COM (2010)343 final, 9.
30 Council of the European Union, ‘Conclusions on a Comprehensive European International Investment Policy’ (3041st Foreign Affairs Council meeting, 25 October 2010)
para 17 <www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/foraff/117328.pdf> accessed 15 April 2016.
31 I Manners, ‘Normative Power Europe: A Contradiction in Terms?’ (2002) 40 J.Com.Mar.St. 235, 246. 32 Larik, Supra Note 27, 30.
Summarized, the principles under article 21 TEU now establish a “point of reference for decision makers,”33
are a source of inspiration for EU foreign policy, and translate the intra-EU foundational values to the external sphere by reference to “principles, which have inspired its own creation, development and enlargement.”34
That originally internal values also apply in external policy fields now could suggest that internal CJEU assessments of certain values are transferable externally. This notion of consistency is also suggested by article 21(3) TEU.
All the same, that the rule of law and the principle of democracy could apply differently internally than externally under article will be described in chapter III.3. Although there does not yet exist much case law on the issue, past CJEU rulings seem to suggest that the court might be willing to accept a weakening of values in the external sphere.
33 Oeter, Supra Note 19, 843. 34 TEU, Supra Note 13, art 21.
III. The External Significance and Scope of Constitutional Norms and the Possibility to Participate in International Dispute Settlement Mechanisms
In the preceding section, it has been shown that the external application of values has become increasingly important for the EU. This section describes several approaches to characterizing the external application of values. Methodologically, the chapter goes from a stricter to a more generous understanding of the CJEU’s case law.
Broadly, there seems to exist a certain contradiction in the CJEU’s view on the external significance of values. On the one hand, by analogy, it can be inferred from fundamental rights and the Kadi decision that also certain values play the same role externally as they do internally. In addition, the CJEU takes EU political developments into account in its rulings. This would indicate a strict reading of the rule of law and democracy in their application to the ICS, rendering the standard of assessment higher for the proposal (section III.1).
Based on Opinion 1/91 and other opinions, a more nuanced reading is proposed, because a general openness towards extra-EU dispute settlement is illustrated (section III.2).
Conversely, a different reading of CJEU case law suggests a more limited application of values externally than internally. Such limited application of values externally would be comparable to domestic courts. It can be carefully concluded that the CJEU will, similar to member state Constitutional courts, develop a doctrine of moderated value use externally (section III.3).
III.1 The Kadi Saga as Indicator of how Strictly the CJEU Views the External Application of Values?
As a recent example of the EU’s emphasis on the external application of values, the CJEU held that “obligations, imposed by an international agreement, cannot have the effect of prejudicing the constitutional values of the EC Treaty.”35
It further stated that “the EC Treaty is an autonomous legal system which is not to be prejudiced by an international agreement,”36
35 Kadi, Supra Note 15, para 285. 36 Ibid, para 316.
and that acts of member states and EU institutions must be in conformity with the “basic constitutional charter, the treaty.”37
Regrettably, the number of cases dealing with the external application of values is limited. However, although Kadi refers to the application of EU fundamental rights, it can carefully be deduced by analogy that the CJEU would protect other important EU constitutional values such as the rule of law and the principle of democracy in a similar fashion as in a purely domestic case. At the same time, one must remember that the Kadi situation is not entirely transferable to the ICS proposal, because it the EU is not a member of the UN, and is not clear whether it is bound by all Security Council decisions.38 In case of TTIP as a whole and the proposal in particular, the EU would be a member to the agreement and ICS decisions would be binding.
Although Kadi has been described as an activist approach by the CJEU,39 it signifies the court’s strict stance on the interpretation of fundamental rights externally. As stated, it could be argued by deduction that the strict external application of fundamental rights also goes for other EU constitutional values and their influence on the participation in extra-EU courts or tribunals.
Contributing to this line of argumentation, as an ‘aggravating factor’ that paramount norms or values apply externally the same way as internally, is the fact the court has a tendency to interpret EU law in the light of current developments. This can be derived from the fact that it looks at “the spirit, the general scheme and the wording” of a provision when interpreting it.40 Furthermore, it held that “…every provision…must be placed in its context and interpreted in light of…its state of evolution…”41
Furthermore, advocate general Jacobs contended that the court’s treaty interpretation should be “generous and dynamic.”42
This means that the enhanced importance of values and norms in all fields of EU policy, not only commercial policy, could find resonance in CJEU rulings. Moreover, with specific regard to the CCP, the court held that it must be interpreted dynamically to prevent disturbances to community trade.43
37
Ibid, para 4.
38 J Kokott and C Sobotta, ‘The Kadi Case - Constitutional Core Values and International Law – Finding the Balanace?’ (2012) 23 EJIL 1015, 1017.
39 A Shekhtman, ‘Kadi v. Commission: A Case Study of the Development of a Rights-Based Jurisprudence for the European Court of Justice’ (Claremont-UC Undergraduate Research Conference on the European Union, 2011), 102 <http://scholarship.claremont.edu/cgi/viewcontent.cgi?article=1055&context=urceu> accessed 6 June 2016.
40 Case 26/62 Van Gend en Loos v Nederlandse Administratie [1963] ECR 1, para 5. 41
Case 283/81 CILFIT v Ministry of Health [1982] ECR 3417, para 20.
42 Case C-50/00 P UPA v. Council [2002] ECR I-6677, Opinion AG Jacobs, para 71. 43 Opinion 1/78 [1979] ECR 2871, para 45.
The overall teleological approach of the CJEU, which often opts for the “…solution that best fits the underlying goals and requirements of the EU legal order and its particular context of application”44
could be understood as a complicating factor, at least for the ICS, because the CJEU will place more accentuation on the investigation whether it would comply with EU values.
What this seems to suggest for the participation in extra-EU tribunals is that, only if the adherence to the fundamental values of the rule of law and democracy can be guaranteed in the same way as domestically, the CJEU would allow such a mechanism. This is reinforced by the court’s tendency to interpret EU legal provisions in the light of the current development of value orientation. Given the described significance of values for the CCP, the CJEU might even take a tighter grip on compliance with them in the future, which would certainly influence the constitutionality assessment of the ICS.
III.2 Limitations Established for the Participation in International Dispute Mechanisms under Opinion 1/91
Aside of the Kadi case, CJEU opinion 1/91 might also give an insight into how it could assess the ICS in light of important values. Here, the CJEU had to opine about, amongst other things, how EU fundamental rights would play a role in the context of the accedence to international agreements establishing a corresponding court or tribunal outside the EU legal order. Once again, in the following section, the court’s views on fundamental rights could be seen to suggest that it would also apply these standards to the interpretation of EU fundamental values.
To begin with the highly influential opinion 1/91,45 the CJEU sets out a general right of the EU to participate in international agreements establishing their own system of courts.46 Yet, emphasizing its autonomy, the court reiterates that no EU law interpretations may be binding on the CJEU.47 This also implies that the CJEU must retain the ultimate control over the interpretation of EU constitutional norms. Moreover, if there is a possibility to ask for a
44
M Maduro, ‘Interpreting European Law-Judicial Adjudication in a Context of Constitutional Pluralism’ (2008) IE Law School Working Paper AJ8-149-I, 7
<http://globalcampus.ie.edu/webes/servicios/descarga_sgd_intranet/envia_doc.asp?id=2875&nombre=AccesoDa tosDocumentIE.Documento.pdf&clave=WPLS08-02> accessed 9 June 2016.
45
Opinion 1/91, Supra Note 16. 46 Ibid, para 40.
preliminary ruling, such a ruling must be binding on the extra-EU court.48 Hence, what becomes very clear, also for the ICS proposal, is that the “homogeneity” of EU law must be preserved; factors suggesting that an international court may have to apply or interpret EU law contrary to the CJEU’s views on values will not be tolerated by the CJEU.
The question whether the ICS would have to rule on questions of EU fundamental values is not easy to assess. However, based on the fact that the ICS would often have to decide on the use of public or regulatory powers by the EU or the member states, questions of the rule of law and legal certainty might come into play.49
What this means for the interpretation of article 21 TEU is difficult to assess. Compared to section III.1, which argued that, based on Kadi, the CJEU would apply values similarly strict abroad as it does internally, opinion 1/91 must be regarded more nuanced. On the one hand, the CJEU takes an open approach to international dispute settlement mechanisms. This would suggest that it would not so stringently examine the fundamental value adherence of such a tribunal in order to ensure the EU’s possibility of participating in such mechanisms. On the other hand, it has set strict limits to the application and interpretation of values by international tribunals.
III.3 The Interpretational Stringency of Values: Does the CJEU Allow for a more Generous Application Externally?
The significance of fundamental values for the EU and its external norm-based objectives has been highlighted. In the foregoing sections, this has been understood to imply a strict interpretation of the norms under article 21 TEU in their application to the ICS. At the same time, CJEU case law suggests that the court might take a rather flexible approach when assessing the fulfilment of the treaty objectives of article 21 TEU, in this case, the compliance with the rule of law and the principle of democracy, in order to facilitate the Union’s actions in the external sphere. For example, the court held that the “aim to contribute...to the harmonious development of world trade...cannot be interpreted as prohibiting the Community from enacting, upon pain of committing an infringement of the Treaty, any measure that is
48
Ibid, para 60.
49 S Gáspár-Szilágyi, ‘A Standing Investment Court under TTIP from the Perspective of the CJEU’ (2016) JWIT (forthcoming), 42.
liable to affect trade.”50 Although this instance concerns a measure contrary to CCP goals and cannot be simply transferred to disproportionately more important fundamental norms, it suggests that the CJEU is partly willing to lower its emphasis on fulfilment of treaty objectives. Particularly, where several treaty objectives are involved, the court grants the EU institutions a certain amount of leeway in deciding which objective to pursue preferentially.51 For the purposes of this paper, this could be understood as the CJEU adopting a less strict approach to treaty fulfilment of article 21 TEU.
In another case, Nold, the court stresses that it is legitimate that certain fundamental rights “should be subject to certain limits justified by the overall objectives pursued by the community.”52 Importantly, this concerns the limitation of fundamental rights within the EU legal order and not externally; in 1974, the possibility was not foreseen that fundamental rights or values could some day play a role in the EU’s external policies. The seeming possibility of limiting fundamental rights in order to reconcile them with other treaty objectives is also underlined by the court’s statement that “the protection of such rights must be ensured within the framework of the structures and objectives of the community.”53 Inferring from these statements concerning fundamental rights to fundamental values, although the rule of law and the principle of democracy are treaty objectives, they arguably also collide with other treaty objectives.
Similarly, in a case with a clearly external reference, the CJEU was willing to accept a violation of an important value such as property rights in order to help the protection of fundamental rights.54
The aforementioned raises two central questions. An answer to them can help to shed light on the question whether the court might deviate from its strict intra-EU application of values when it assesses Union external action. First, Is the CJEU generally willing to accept limitations to the scope of constitutional norms in the EU’s external action? Put differently, does the court construe values with the same stringency externally as it does internally? Second, how will the CJEU treat a conflict of treaty objectives in the external sphere?
50 Case 112/80 Dürbeck v Hauptzollamt Frankfurt [1981] ECR 1095, para 44. 51 Larik, Supra Note 28, 32.
52
Case 4/73 Nold KG v Commission [1974] ECR 985, para 14.
53 Case 11/70 Internationale Handelsgesellschaft [1970] ECR 1126, para 4.
The first question is difficult to answer, given the relative young age of article 21 TEU, and the existence of very little case law on the role of values in external action. Nonetheless, in its development of the relevant case law, it may be assumed that the CJEU will develop an approach similar to constitutional courts in Europe. The German constitutional court, for example, in cases with a foreign element, allows for the modification and weakening of certain constitutional norms.55 In the German context, it has been argued that this implies that domestic constitutional values increasingly attenuate, the greater the foreign element.56
In light of this external relativity of constitutional values, it can be assumed that the CJEU will adopt a similar approach. Aforementioned case law already suggests that it is inclined to allow a limitation of fundamental rights and other treaty objectives in their external scope of application. By analogy, it could be argued that it would also less strictly read the rule of law and the principle of democracy in their application to the ICS. This line of argumentation can also be supported by the wording of article 21 TEU, which refers to “shall be guided by.” This leaves the court a significant amount of discretion in applying the norms, giving it the possibility to deviate from the intra-EU meaning of the rule of law and democracy.
As regards the second question, “the EU’s values and objectives will not always coexist as harmoniously as one would like.”57
On the one hand, the proposal must comply with and advance the norms of article 21 TEU. On the other hand, it is obliged to further multilateral cooperation,58 and to contribute to the development of international law and.59 Arguably, this suggests that the “EU should strengthen the effectiveness of international treaties by means of adjudicatory or other compliance mechanisms.”60
In this reading, supporting the creation of international courts is a clear objective of the EU. Contributing to the contradiction is the fact that the rule of law, instead of limiting the possibility of participating in extra-EU dispute settlement, might actually require participation in such mechanisms to ensure judicial review.
55 BVerfG Beschl.v. 4.5.1971, BVerfGE 31, 58, para C.III.3.
56 E Reichel, ‘Das staatliche Asylrecht im Rahmen des Völkerrechts,’ Schriften zum Öffentlichen Recht (Band 515, 1987) 74.
57 Eeckhout, Supra Note 17‚ 232. 58 TEU, Supra Note 13, article 21(2)(h). 59 Ibid, article 3(5).
60
B De Witte, ‘A Selfish Court? The Court of Justice and the Design of International Dispute Settlement Beyond the European Union’ in M Cremona and A Thies (eds), The European Court of Justice and External
That the EU is, in fact, party to agreements with extra-EU dispute settlement mechanisms is an expression of the EU’s faith in international judicial cooperation. More generally, several TEU provisions indicate the EU’s general openness to international law and multilateralism, including article 21 TEU. 61 Giving expression to the receptivity to international law, the court also emphasized that international agreements are an integral part of EU legal order.62 The importance of multilateralism for investment policy was recently emphasized.63 Hence, the EU has always been in favour of “further institutionalization and multilateralization of international relations.”64
At the same time, the CJEU has repeatedly clamped down attempts to submit to an extra-EU tribunal and with it, limited the openness to international law. Being generally open to extra-EU tribunals and simultaneously setting high standards for their constitutionality sends out highly conflicting signals.
Nevertheless, there is a general openness to international law and with it to extra-EU courts. This is an aspect the CJEU needs to consider when assessing the proposal. Clearly, this involves weighing and balancing of the treaty objectives of the rule of law and democracy in contrast to the objectives of international cooperation and the promotion of international law via international adjudication. In other words, proportional to the importance of another treaty objective pursued, the CJEU may be willing to allow a deviation from certain values in its external action to ensure the fulfilment of another treaty objective.
Given the EU legal order’s generally open stance to international law, the Kadi case, in which international law was not given precedence over EU law and EU fundamental rights were applied equally strict in the external sphere, the CJEU can be criticized for losing sight of the ‘intermediate’ dimension” of values that lie between respect for the fundamental values of others and the promotion of its own values externally,65 because seemingly, it only allows for its standards. Offering solutions to the conflict of EU external objectives, the court’s Kadi decision could be viewed as a one-time approach. Another way of explaining this decision and ensuring at least a certain level of harmony between EU external objectives is to emphasize that human rights protection is a UN objective as well. In this reading, the CJEU maintained its generally open stance to international law, because it simply fulfilled
61 TEU, Supra Note 13, preamble, art 8, art 3(5), art 21. 62
Case 181/73 Haegeman v Belgian State [1974] ECR 4491, para 4. 63 Commission, Supra Note 9, 27.
64 R Gillespie, ‘The European Neighbourhood Policy and the Challenge of the Mediterranean Southern Rim’ in
M Telo F Ponjaert (eds), The EU’s Foreign Policy: What kind of Power and Diplomatic Action? (Routledge 2013) 141.
65 J Rijpma and M Cremona, ‘The Extra-Territorialisation of EU Migration Policies and the Rule of Law’ (2007) EUI Working Paper No 2007/01, 18 <http://ssrn.com/abstract=964190> accessed 2 June 2016.
international obligations of protecting certain rights and therefore, there is no clash of EU external objectives. 66
To conclude tentatively, it can be expected that the CJEU will, over time, develop a doctrine of relativity of constitutional norms applying to the EU’s external action. This would be comparable to national jurisdictions. For the ICS, this could carefully be understood so as to apply the rule of law and the principle of democracy less strictly than internally. Certainly, it has indicated in Nold that it may allow for a limitation of fundamental rights. Based on this, it might take a similar approach concerning the limitation of fundamental values. The ‘soft’ wording of article 21 TEU and the generally open approach to international dispute settlement as expressed in opinion 1/91 could be seen as a way for the court of justifying an alleviated reading. Moreover, in applying the standards of article 21 TEU to the ICS proposal, tensions between treaty objectives become apparent. As a consequence, the realisation of article 3(5) TEU could provide a further justification of limiting the stringency of norms in their external application to the ICS.
Contrarily, Kadi reflects on the inconsistency of the case law and constitutes a contradiction to the tentative conclusion. Seemingly, according to this case, the CJEU persists on a similarly restrictive reading of EU norms in their external function and subordinates international to EU law. However, the preceding section has identified ways of harmonising the court’s approach with other treaty objectives. Moreover it must be kept in mind that the applicability of Kadi to the ICS proposal is limited; this weakens the persuasive power of the argument that EU norms would apply similarly strict externally.
Essentially, it can be argued that CJEU might apply the standards less strictly to ensure that the EU can participate in the ICS. This way of construing the norms would also give expression to the European legal order’s basic openness and receptivity for international law. However, this argument must be treated cautiously not only because of Kadi. Also opinion 1/91 and others show that CJEU wants to protect its autonomy and ensure its prerogative over the interpretation of EU law. Clearly, the court has problems to subordinate itself to the will of extra-EU tribunals or courts.
Further clarification by the court on the external application of values is highly desirable.
IV. Establishing the Normative Framework: The Meaning of Selected Values in the EU Legal Order
This chapter focuses on the scope of both standards, which present the background for the assessment of the proposal’s constitutionality. Therefore, in order to establish a frame of reference, the subsequent section seeks to explain and illustrate the rule of law and the principle of democracy within the EU legal framework.
The tentative character of this chapter must be emphasized because both values are only loosely defined and the CJEU has never given any precise definition. What must be kept in mind as well are the existing indications that fundamental European values might be differently understood internally and externally.
IV.1 The Rule of Law
The rule of law is one of the most cited principles, and yet, its meaning remains vague. Without going into further detail, it basically means “people should obey the law and be ruled by it.”67
More narrowly, it is understood to apply to governments, which “should be ruled by the law and subject to it.”68
This implies a subordination of the law “to another kind of law, which is not up to the sovereign to change at will.”69
Focusing on the how it materializes in the EU, it has been generally criticized that, similar to member state practice, there is no uniform EU definition of the principle.70 Hence, influenced by the traditions of the member states,71 definitions and references are scattered throughout the entire acquis. First and foremost, the rule of law is contained in article 2 TEU as one of the key values of the EU. It is consistently linked to the principle of democracy and the protection of fundamental rights, particularly, “whenever the rule of law is mentioned as an objective of the EU’s external policies.”72
Its seeming link to the democracy principle is
67 J Raz, The Authority of Law: Essays on Law and Morality (1st edn, Clarendon Press 1979) 212. 68 Ibid.
69 G Palombella, ‘Beyond Legality—before Democracy: Rule of Law Caveats in the EU Two-Level System’ in C Closa and D Kochenov (eds), Reinforcing Rule of Law Oversight in the European Union (CUP 2015) 37. 70 L Pech, ‘The EU as a Global Rule of Law Promoter: the Consistency and Effectiveness Challenges’ (2016) 7 Asia Eur J 7, 10.
71 Pech, Supra Note 14, 45. 72
L Pech, ‘The Rule of Law as a Guiding Principle of the European Union’s External Action’ (2012) Cleer Working Papers 2012/3, 10 <http://www.asser.nl/upload/documents/2102012_33322cleer2012-3web.pdf> accessed 18 June 2016.
underlined by the EU’s website, which maintains that the EU is governed by the rule of law “because everything it does is derived from treaties, which are agreed on voluntarily and democratically by all states.”73
Furthermore, the CJEU has held that the rule of law allows for judicial review of the compatibility of acts of the institutions with “general principles of law, which include fundamental rights.”74
Hence, the interconnection and dependence of the rule of law with other values, the principle of democracy and respect for fundamental rights, in particular, suggests that, if one value is violated, the others cannot function satisfactorily either.75
For a long time, there existed only limited guidance on the further meaning of the principle. However, recently, the Commission compiled, for the first time, a number of sub-principles, which “…define the core meaning of the rule of law as a common value of the EU in accordance with article 2 TEU.”76
It was in the context of developments going against the rule of law in certain member states that the Commission introduced the ‘Framework to Strengthen the Rule of Law.’ In order to be able to respond quicker to violations of the principle, the framework provides clarity and predictability as to which kind of actions will evoke a Commission response against that state.77 Therefore, the suitability and benefit of the framework to the ICS proposal is limited. However, it is indicative as regards the principle’s content in the EU legal order.
According to the Commission paper, the concept of the rule of law includes several aspects. First, it includes legality (implying a transparent, accountable, democratic and pluralistic process for enacting laws), legal certainty and predicability.
Second, it refers to independent and effective judicial review, including respect for fundamental rights.78 Generally, “the reviewability of decisions of public authorities by independent courts” has been described as one of the key notions of the rule of law.79 Only recently, the CJEU underlined that the rule of law implies that actions of the EU institutions or the member states are subject to review by the court in the light of the constitutional charter
73 Commission, ‘Rule of Law’ <http://ec.europa.eu/justice/effective-justice/rule-of-law/index_en.htm> accessed 2 July 2016.
74
C-50/00 P, Supra note 43, paras 38-39. 75 L Pech, Supra Note 14, 50.
76 Commission, ‘A New EU Framework to Strengthen the Rule of Law’ (Communication) COM (2014) 158 final/2.
77 Ibid, 6. 78 Ibid, Annex I.
or the EU treaties.80 This reflects on the strong procedural association of the rule of law in that everyone should have the right to judicial protection and judicial review. At the same time, it also indicates one of the core functions of the rule of law, namely, to ensure the application of fundamental rights. Furthermore, the link to fundamental rights was emphasized by the court holding that “the general principle of [Union] law under which every person has a right to a fair trial, inspired by Article 6 of the ECHR... comprises the right to a tribunal that is independent of the executive power.”81
Third, according to the Commission, the rule of law means equality before the law.82 Also the CJEU refers to this by finding that "it must be recalled that the principle of equal treatment is a general principle of EU law, enshrined in Articles 20 and 21 of the Charter of Fundamental Rights of the European Union."83 According to the court’s wording of ‘equal treatment’ in combination with the charter’s phrase “everyone is equal before the law,”84
a certain substantive sense of equality is suggested. Instead of being only a procedural norm, equality before the law can be viewed as a general creed in the EU context.
Until the Commission paper further clarified the rule of law, mainly case law provided direction to the actual substance of the principle. Indeed, the CJEU has recognized under EU law several principles that are a part of the rule of law without expressly mentioning the principle.85 It set out, for instance, procedural aspects of the rule of law such as the right to be heard,86 the right of access to a file,87 or the right of defence.88 These decisions can be categorized into the Commission’s second group of sub-principles, namely, independent and effective judicial review. It can be inferred that, largely, the CJEU has viewed the rule of law as a procedural right.
Given the internal lack of clarity, there also exists uncertainty as to how it applies in the EU’s external policy. Clearly, it is written into numerous treaties and convention as one of the primary objectives. However, a treaty with several African countries provides information about how the EU might view the principle in its external application. In it, the council
80
Kadi, Supra Note 15, para 81.
81 Joined Cases C-174/98 P and C-189/98 P Netherlands and Van der Wal v Commission [2000] ECR I-0001, para 17.
82 Commission, Supra Note 76, Annex I. 83
Case C-550/07 P Akzo Nobel Chemicals and Akcros Chemicals v Commission [2010] ECR I-8301, para 54. 84 Charter of Fundamental Rights of the European Union [2012] OJ C326/02, art 20.
85 T von Danwitz, ‘The Rule of Law in the Recent Jurisprudence of the ECJ’ (2014) 37 Fordham Int’l L.J. 1310, 1315.
86
Case 32/62 Alvis v Council of the EEC [1963] ECR 49, para 55. 87 Case 85/76 Hoffmann-La Roche v. Commission [1979] ECR 464, para 9. 88 Case 155/79 AM & S v. Commission [1982] ECR 1577, para 18.
underlines the interconnection of constitutional principles in that it holds that the rule of law “permits citizens to defend their rights and...implies a legislative and judicial power giving full effect to human rights fundamental freedoms and a fair, accessible and independent judicial system.”89
This confirms the domestic link between different values also exist externally.
Based on the width of the rule of law, it is continuously interpreted and assigned with new meanings. What the aforementioned suggests is that the rule of law is a constitutional principle with substantive as well as procedural facet.90 As indicated by the communication, it is substantive in the sense that it is “intrinsically linked to the respect for democracy and for fundamental rights.”91
In this sense, it is also a mechanism to ensure the application of fundamental rights.
Apart from that, the procedural character of the principle has been also highlighted by the commission document and CJEU rulings. Arguably, the procedural connotation focusing on judicial review and the right to an effective remedy is foregrounded within the EU, whereas in its external field of application, emphasis is laid on the substantive sense of the principle as a mechanism to ensure the respect for fundamental rights.
In conclusion, the rule of law can, without difficulty, be labelled an ‘umbrella principle,’92
not only in the member states’ constitutions, but also in the EU legal order. Owing to the commission’s communication, there now exist more clarity as to the meaning of the rule of law en detail in the EU legal order.
This combination of a procedural and substantive meaning also largely decouples it from the member states’ usage of the principle of democracy, giving it a ‘Europeanized’ meaning.93
IV.2 The Principle of Democracy
Generally, Robert Dahl famously held that democracy is a system that is “completely or almost completely responsive to all its citizens.”94
This implies that the government carries out the will of the people and acts in the interest of the democratic majority. However,
89
Common Position 98/350/CFSP on Human Rights, Democratic Principles and the Rule of Law and Good Governance in Africa, OJ1998, L158/1, art 2(c).
90 Communication, Supra Note 76, 4. 91 Ibid, 4.
92
Pech, Supra Note 14, 46. 93 Pech, Supra Note 14, 11.
democracy stretches far beyond only being a form of government organization, as is it viewed in large parts of society.
That being said, the fundamental idea is, consequently, that power should be based on the citizen’s will in order to be legitimate,95
although, importantly, not everyone would agree that democracy is necessary to achieve legitimacy.96 However, in the EU, democracy and legitimacy are tied closely together. Within the EU legal order, the principle is enshrined in article 2 TEU. It is laid out in further detail in articles 9-12 TEU. All these provisions are general and apply to all EU institutions.97
The underlying idea of all these provisions is that the power must flow from the people. This is stressed by the sentence that the EU ‘shall be founded on representative democracy’ in article 10(1) TEU, which ensures that all citizens can participate. Furthermore, article 10 TEU provides “two lines of democratic representation” in that the EP and the Council, the embodiment of the citizens domestically, represent the European peoples.98 Moreover, article 10(4) TEU refers to the will of the citizens and article 12 TEU ensures a more ‘direct’ will of the European citizens though increased participation of national parliaments. The notion of representative democracy can also be understood to apply to the CJEU, as an example of international court in the EU.99
What these central provisions on democracy already indicate is that, in order to achieve legitimacy, the EU requires a representative democracy. Arguably, according to the treaties, the main tenor is that the EU wants to achieve democratic legitimacy in the entirety of its actions. Increasing the powers of the EP is an example for the efforts to increase legitimacy and allow fore more citizen involvement. To reinforce the its legitimacy, the treaties indicate that the EU uses certain ‘means’ to increase its legitimacy. Such aspects are to be found in articles 9-12 TEU. For instance, transparency and openness as contained in articles 10(3) and 11(2) TEU, may be found to compensate for a lack of representative will. Arguably, these concepts support and supplement the (subjective) belief in the EU’s legitimacy.
95 Legitimacy here is defined as a rather subjective belief that an actor’s exercise of authority is perceived as justified; D Bodansky, ‘The Legitimacy of International Governance: A Coming Challenge for International Environmental Law?’ (1999) 93 Am.J.Int’l. L. 596, 600.
96 F Peter, ‘Political Legitimacy’, The Stanford Encyclopedia of Philosophy (Summer edn, 2016) <http://plato.stanford.edu/archives/sum2016/entries/legitimacy/> accessed 3 July 2016.
97 A von Bogdandy, ‘The Democratic Legitimacy of International Courts: A Conceptual Framework’ (2013) 14 Theo Inq L 361, 375.
98 Ibid, 371. 99 Ibid.
Indeed, transparency has received increasing attention and has crystallised as one of the most important elements of supporting the democracy in the EU.100 It goes not without reason that the principle of openness and access to documents as components of democracy were further enshrined in article 15(1) and 15(3) TFEU. Here it is stated that the Union should promote good governance and ensure the participation of civil society. Access to documents confers, according to the CJEU, “greater legitimacy to the on the institutions in the eyes of the citizens.”101
It states that transparency “enables citizens to participate more closely in the decision-making process…”102 Moreover, it found that “openness in that respect contributes to strengthening democracy by enabling citizens to scrutinize all the information.”103
Another aspect the court adds the idea of democracy is institutional balance. According to the court, institutional balance “reflects...the fundamental democratic principle that the people should take part in the exercise of power...through the intermediary of a representative assembly.”104
Clearly, this suggests that the more power the only elected institution of the EU, the EP, has compared to other bodies, the more is the principle of democracy adhered to.105
As a tentative conclusion, what becomes apparent in the EU’s comprehension of democracy is that democratic participation ensures legitimacy. This conception is similar to the member state’s view. However, the EU has always been criticized for its lack of democracy. As a consequence, it constantly develops strategies to increase its legitimacy where citizen participation is not feasible. It is of note that there clearly is a development discernible in the treaties and case law towards acquiring more legitimacy. CJEU case law suggests that it further develops these strategies. Thus, the CJEU has a “conception of democracy that seeks to enhance the participation of citizens in the adoption of decisions.106
Having emphasized the importance of democratic legitimacy as one of the, if not the, essentially guiding feature of the EU legal order, for the purposes of this paper, reference must be had to the legitimacy of the member state courts and the CJEU. In domestic courts,
100 Ibid. 101
Joined Cases C39/05 P and C52/05 P Sweden and Turco v Council [2008] ECR I-4723, para 59. 102 Joined Cases C-92/09 P and 93/09 P Volker und Markus Schecke [2010] ECR I-11063, para 68. 103 C-39/05 and C52/05, Supra Note 101, para 46.
104 Case 138/79 SA Roquette Freres v Council [1980] ECR 623, para 33. 105
K Lenaerts, ‘The Principle of Democracy in the Case Law of the CJEU’ (2013) 62 International and Comparative law Quarterly 271, 312.
on the one hand, legitimacy is achieved, for instance, in that courts decide in the name of the people.107 Furthermore, the legislative, as representation of the people, is involved in the law-making process and thus, has an impact on how and what courts decide.108 The CJEU, on the other hand, as an example of an international tribunal, cannot be conceptualised in terms of the traditional understanding of democratic legitimacy. Although the EP is involved in the treaty- and law-making process, most of the text is the result of executive negotiations, and the EP has limited oversight.109 Thus, it had to develop other strategies to legitimise its exercise of power. Generally, there are different approaches international courts can decide for: including civil society and ensure democratically justified participation in the selection process of the court members,110 to increase the interaction with national courts or responding to the agendas of domestic politics,111 or to drawing up procedures that focus on aspects of transparency.112 Clearly, these are all strategies the CJEU has implemented to a greater or lesser extent. However, it also a suitable example for an international court that increased its legitimacy by means of “commitment to the underlying normative regime that it is interpreting and applying, and its transparency and relationship with other democratic values.”113
Thus, the power of international courts cannot be legitimised by traditional concepts, different courts utilize a combination of different strategies.
107 A von Bogdanday and I Venzke, ‘In Whose Name? An Investigation of International Court’s Public Authority and its Democratic Justification’ (2012) 23 EJIL 7, 14.
108
Ibid, 20. 109 Ibid.
110 M Glasius, ‘Does the Involvement of Global Civil Society make International Decision-Making more Democratic? The Case of the International Criminal Court’ (2008) 4 Journal of Civil Society 43, 45. 111
S Dothan, ‘How International Courts Enhance their Legitimacy’ (2013) 14 Theo Inq L 455, 463. 112 von Bogdanday and Venzke, Supra Note 107, 24.
V. Fundamentals of the Proposal for an Investment Court in TTIP - an Outline
This chapter is a descriptive account of the particularities and important novelties of the ICS proposal. Mainly, aspects that are of concern to the discussion regarding the constitutionality in the following chapter will find mention.
With due precision, it must labelled investment court system, because a tribunal of first instance and an appeal tribunal is proposed. The tribunal of first instance would be composed of a list of altogether 15 publicly appointed judges with three judges sitting in a case, one from the US, one from the EU and one from a third country acting as chairperson, hearing cases.114 The committee on services and investment appoints the judges of the tribunal of first instance,115 whereas the contracting parties appoint the members of the appeal tribunal. Moreover, the appeal court is composed of only 6 judges with an equal number and distribution of judges hearing cases.116
The composition of the tribunal in every case is random to ensure unpredictability and equal opportunity for all judges to participate. Nonetheless, it remains unclear how rotation and equal opportunity for all judges are guaranteed, and, at the same time, unpredictability in the selection procedure is achieved.117
As regards the qualification of the judges of the tribunal of first instance and the appeals tribunal, they must either have the eligibility for appointment to the highest judicial offices in their respective countries or be jurists of recognized competence.118
Generally, the judges of both the court and the appeal tribunal are subject to comparably stringent ethics criteria;119 there exists a code of conduct.120 Challenges on grounds of bias are possible.121 Furthermore, particular emphasis is laid on transparent proceedings; thus, the UNCITRAL transparency rules apply.122 In addition, third party intervention is possible, if a direct and present interest can be established.123 However, not only third party intervention is possible and allowed, also participation of the non-disputing
114
Proposal, Supra Note 5, art 9(6). 115 Ibid, art 9(2).
116 Ibid, art 10(8).
117 M Krajewski and RT Hoffman, ‘Der Vorschlag der EU-Kommission zum Investitionsschutz in TTIP’ (2016) 13 <http://library.fes.de/pdf-files/wiso/12379.pdf> accessed 29 April 2016.
118 Proposal, Supra Note 5, art 9(4). 119 Ibid, art 11.
120 Ibid, Annex II. 121
Ibid, 11(2). 122 Ibid, art 18(1). 123 Ibid, art 23(1).
state party is clearly welcomed.124 This allows the contracting parties have an influence on the interpretation of the agreement.
In terms of the applicable law, the tribunal has no right or competence to decide whether a measure is a breach of the domestic law of the disputing party.125 It can, thus, not apply EU, US or member state law and can only review whether a measure was in line with the protection standards in TTIP. In fact, in case it does have to consider a question of domestic law, it must follow the “prevailing interpretation of that provision made by the courts or authorities of that party”.126
In addition, the sense the tribunal gave to domestic law is not binding on the domestic courts.127 Overall, this means that the tribunal generally applies the TTIP articles and the rules of international law applicable between the parties.128 Additionally, the committee on services and investment can interpret certain provisions. This is binding on the tribunal and appeal tribunal.129
The awards issued by a tribunal can be appealed.130 If the appeal tribunal rejects the appeal, this decision becomes final.131 Furthermore, any award issued by the tribunal or first instance or appeal, becomes final and cannot be appealed, annulled or set aside.132 In addition, as regards the enforcement of awards, the proposal reads that the parties should enforce an award “as if it were a final judgement of a court in that Party.”133
Also this reads very similarly to article 54 of the ICSID Convention. At the same time, there still exist discussions as to whether enforcement of awards would take place under the ICSID regime or the NY Convention.134 Without going into further detail, arguably, it appears as if the ICS proposal wants to profit from both the “enforcement regime laid down in the ICSID and New York Convention.”135 124 Ibid, art 22. 125 Ibid, art 13(4). 126 Ibid, art 13(3). 127 Ibid, art 13(5).
128 Gáspár-Szilágyi, Supra Note 49, 3. 129
Proposal, Supra Note 5, art 13(5). 130 Ibid, art 29.
131 Ibid, art 29(2). 132 Ibid, art 30(1). 133
Ibid, art 30(2).
134 Pantaleo, Supra Note 8, 86. 135 Ibid, 91.
