Author: Gabriele Mazzini*
Published: June 2014
Investor-state arbitration is currently the most widely used method for the settlement of international investment disputes between investors and host States. In the near future, foreign investors in those countries belonging to the European Union (“EU”) may have to file those claims against the EU instead of against the European Member State where the investment has been physically made. This development is due to the classification by the Treaty of Lisbon of foreign direct investment (“FDI”) as within the exclusive competence of the EU. The Treaty of Lisbon, which entered into force on December 1, 2009, constitutes a substantial reform of the two core EU treaties, the Treaty on the European Union (“TEU”) and the Treaty establishing the European Community (“TEC”), the latter renamed the Treaty on the Functioning of the European Union (“TFEU”).
While the European institutions are still in the process of articulating the characteristics of the EU’s new exclusive competence on FDI, there are unequivocal indications that the EU intends to play a primary and direct role in respect of the settlement of future international investment disputes. As an international organization with a legal personality distinct from its Member States, the EU and its predecessors (in particular the European Community) have long been considered capable of assuming international commitments, including submitting to international dispute settlement mechanisms, for which there is an established practice. In the field of FDI, however, things are quite different: the largely prevailing dispute settlement mechanism is investor-state arbitration, a concept that, although not completely new to the EU legal system, has not been tested in practice with the EU as an autonomous participant. In other words, while the EU has risen to the level of an acknowledged litigant in classic public international law tribunals and fora, in primis and most prominently before the World Trade Organization, the EU has no experience with international dispute settlement mechanisms involving private parties. As of today, the Energy Charter…
*Visiting Scholar at the Center of International Commercial and Investment Arbitration (Columbia Law School). The author wishes to thank Professor George Bermann, Daniela Gauci and Kimberly Harbin for their valuable comments.