Advocate General Bot Finds The CETA Investment Court System Compatible With EU Law

On 29 January 2019, Advocate General Bot (the 'AG') delivered his long-awaited Opinion (the 'Opinion') on whether the investment court system ('ICS') in Chapter Eight, Section F, of the European Union-Canada Comprehensive Economic and Trade Agreement ('CETA') is compatible with European Union (EU) law, in particular with the autonomy of the EU legal order and fundamental rights. The next step in the proceedings before the Court of Justice of the European Union ('ECJ'), initiated by Belgium following complications in its ratification process, is for the ECJ to deliver its Opinion on the same question.

Questions at Issue

Belgium's request pursuant to Article 218(11) of the Treaty on the Functioning of the European Union ('TFEU') for an Opinion from the ECJ was broadly formulated. It asked the ECJ for an Opinion on whether Chapter Eight, Section F of CETA is 'compatible with the Treaties, including with fundamental rights'.

The AG understood that request to raise three distinct questions (para. 36), namely whether the ICS in CETA is compatible with: (i) the exclusive jurisdiction of the ECJ regarding the interpretation of EU law; (ii) the principle of equal treatment and the requirement that EU (competition) law be effective and (iii) the right of access to an independent and impartial tribunal.

He added that the request does not concern the policy decision of whether or not to include ICS in agreements with third States or the economic impact of ICS on attracting foreign investment. Those are matters falling within the discretion of the EU institutions and resulting from a democratic debate within the European Union and the Member States (paras 32-33).

ICS in CETA Does Not Undermine Autonomy of EU Legal Order and Is Compatible with Exclusive Jurisdiction of ECJ

International agreements to which the European Union seeks to become a party must respect the autonomy of the EU legal order. This concept refers to the fact that the EU Treaties establish 'a new legal order, possessing its own institutions, for the benefit of which the Member States thereof have limited their sovereign rights, in ever wider fields, and the subjects of which comprise not only those States but also their nationals' (ECJ Opinion 2/13, para. 157). One important feature is that 'it is for the national courts and for the ECJ to ensure the full application of EU law in all Member States and to ensure judicial protection of an individual's rights under that law' (ECJ Opinion...