Faculty of Law

This brief policy paper outlines likely causes of this unsatisfactory situation in particular for new Member States. It identifies the structure of the legal arguments in these arbitrations and the lack of a comprehensive overall policy approach as likely main causes. To remedy these shortcomings, the paper suggests new Member States adopt a three pillar strategy, consisting of legal, policy and public awareness elements.

A comparison between the manner Russian law and any BIT regime would react to a fact scenario that is similar to what was then publicly believed to be the Yukos case. The article highlights that there are substantial differences and it is not a given that those differences are bound to disappear over time.

The article compares the Russian law procedural rules for investment protection and concluded that, compared with what is required to ensure protection against indirect expropriation under BITs, the Russian rules are not adequate, and tries to design a strategy for diminishing the gap.

Investor-State Dispute Settlement (ISDS) clauses in international investment agreements have traditionally been based on an approach which may be termed ‘light touch regulation’ of investment protection. The avenue taken by the recently negotiated EU draft agreements, the Comprehensive Economic and Trade Agreement (CETA) and the EU-Singapore Free Trade Agreement (EUSFTA), can be described as ‘more comprehensive regulation’. Likewise, EUSFTA and CETA provide a rather detailed body of law on substantive standards for the protection of foreign investment. While this may add to the clarity and predictability of the current regime of international investment law, it may also lead to a reduced standard of protection. Compared with other agreements, EUSFTA and CETA have attempted to rebalance the protection of private property and the host state’s regulatory autonomy. In terms of the regulation of ISDS proceedings, EUSFTA and CETA preserve its principle characteristics but deliver moderate change in five areas: (1) consultation mechanisms, (2) the relationship between ISDS and domestic remedies, (3) the appointment and conduct of arbitrators, (4) cost allocation, and (5) transparency rules. This study proposes (1) further development regarding the coordination between effective domestic legal systems and ISDS and (2) the start of negotiations for the establishment of a permanent appeals mechanism in a regional or bilateral context.

The debate concerning reform of international investment protection law has expanded beyond the technical level and into general political discourse. Now, more than ever, it is important to identify specific legal problems and to offer solutions. This is the aim of this paper.

On April 17, 2015, in Berlin’s Harnack-Haus, and upon invitation of the Association of German Chambers of Commerce and Industry (DIHK) e.V. and the Department of Law at Free University Berlin, 19 scholars and practitioners discussed various aspects and alternatives of international investment protection reform, as well as the opportunities, risks and challenges for the German economic, science and legal community and location. With input from participants, several working groups expanded on a thesis paper by the colloquium hosts to create concrete proposals for investment protection law reform. One of the points given special consideration was the current question of reasonable access to investment protection by small and medium-sized enterprises (SMEs).

The results of the "Harnack-Haus Reflections" are now available. They reflect ideas, experiences, discussions and compromises among the members of the group. This paper represents a summary of views and broad lines of consensus achieved by the participants. The statements, therefore, do not necessarily express the position of each individual contributor or even the positions of the institutions to which they belong. Rather, the proposals shall provide a solid basis for the process of forming an opinion – as it will be the case within DIHK. Concerning certain highly controversial aspects the diverging views are made explicit.

The editors expect that the proposed provisions (which were edited on the basis of the CETA text) and recommendations may contribute to the reform of international investment protection law and strengthen Germany as an attractive venue for international investment arbitration. They offer suggestions not only for the current discussions concerning TTIP and CETA, but also for the numerous existing agreements and those to be negotiated in the near future and currently under debate throughout the world.

Steffen Hindelang und Stephan Wernicke (eds.)

International investment law is in transition. Whereas the prevailing mindset has always been the protection of the economic interests of individual investors, new developments in international investment law have brought about a paradigm shift. There is now more than ever before an interest in a more inclusive, transparent, and public regime.

Shifting Paradigms in International Investment Law, edited by Steffen Hindelang and Markus Krajewski, addresses these changes against the background of the UNCTAD framework to reform investment treaties. The book analyses how the investment treaty regime has changed and how it ought to be changing to reconcile private property interests and the state's duty to regulate in the public interest. In doing so, the volume tracks attempts in international investment law to recalibrate itself towards a more balanced, less isolated, and increasingly diversified regime.

By bringing together a geographically and ideologically diverse team of academics and practitioners to engage with the issues, the individual chapters of this edited volume address the contents of investment agreements, the system of dispute settlement, the interrelation of investment agreements with other areas of public international law, constitutional questions, and new regional perspectives from South Africa, Europe, Latin America, and the Pacific Rim Region. Together they provide an invaluable resource for scholars, practitioners, and policymakers.

Contents

Steffen Hindelang and Markus Krajewski: Introductory Observations
I: Giorgio Sacerdoti: Investment Protection and Sustainable Development: Key Issues
II: Peter Muchlinski: Negotiating New Generation International Investment Agreements: New Sustainable Development Oriented Initiatives
III: Roland Kläger: Revising Treatment Standards: Fair and Equitable Treatment in Light of Sustainable Development
IV: Lukas Stifter and August Reinisch: Expropriation in the Light of the UNCTAD Investment Policy Framework for Sustainable Development
V: Jonathan Ketcheson: Investor-State Dispute Settlement and Sustainable Development: Modest Reform
VI: Gus Van Harten: The EC and UNCTAD Reform Agendas: Do They Ensure Independence, Openness, and Fairness in Investor-State Arbitration
VII: J. Anthony VanDuzer: Sustainable Development Provisions in International Trade Treaties: What Lessons for International Investment Agreements?
VIII: Katharina Berner: Reconciling Investment Protection and Sustainable Development: A Plea for an Interpretative U-Turn
IX: Helmut Philipp Aust: Investment Protection and Sustainable Development: What Role for the Law of State Responsibility
X: Karsten Nowrot: Termination and Renegotiation of International Investment Agreements
XI: Sean Woolfrey: The Emergence of a New Approach to Investment Protection in South Africa
XII: Maria Luque: Reliance on Alternative Methods for Investment Protection through National Laws, Investment Contracts, and Regional Institutions in Latin America
XIII: Leon E. Trakman and Kunal Sharma: Jumping Back and Forth between Domestic Courts and ISDS: Mixed Signals from the Asia-Pacific Region
XIV: Peter-Tobias Stoll and Till Holterhus: The 'Generalization' of International Investment Law in Constitutional Perspective
XV: Frank Hoffmeister: The Contribution of EU Trade Agreements to the Development of International Investment Law
Steffen Hindelang and Markus Krajewski: Concluding Remarks

Intra-EU BITs are the dinosaurs in the EU's multi-level legal system. They sit uneasily with EU law, yet they provide an important tool for foreign investors to manage political risk in some EU Member States. When pondering alternative instruments for intra-EU BITs we should accept that differences in protection in EU and international investment law do not necessarily translate into protection deficits. The degree of afforded protection is to some extent a policy judgement. However, there are indeed also deficits of protection in EU law independent of political choice: It is the clarity of the standard of protection afforded by substantive rules in EU law aiming at the protection of foreign investment and their enforcement in some EU Member State courts which are insufficient. This paper suggests, that alternatives to intra-EU BITs should best be developed from existing functional equivalents in EU law, ie substantive standards of protection in EU law should be made more transparent by the way of a 'restatement' of the pertinent legal practice. On principle, foreign investors should make use of functioning domestic courts. Where such institutions lack quality, the EU and the EU Member States should work towards their improvement. Meanwhile, a 'safety net' should be provided for foreign investors in case domestic courts fail to dispense justice. This 'safety net' may take the form of a PCA-administered arbitral forum or that of a 'Unified Investment Court'.

The study compares the revised and signed text of the Comprehensive Economic and Trade Agreement (CETA) with the EU-Vietnam Free Trade Agreement (EUVFTA) and the EU Singapore Free Trade Agreement (EUSFTA) in respect of important procedural aspects relating to investor State dispute settlement. The findings are juxtaposed to the procedural rules governing the preliminary reference procedure and direct action (action for annulment) before the Court of Justice of the European Union as well as the individual application before the European Court of Human Rights. In doing so, it provides a tool and manual to evaluate the EU’s todays and future progress in reforming the international investment law regime. By outlining key features of the procedural frameworks governing two international courts, some ‘tried and tested’ concepts as source of inspiration for the possible design of a ‘multilateral investment court’ might be found.