THE INVESTMENT COURT SYSTEM UNDER THE EU-CANADA COMPREHENSIVE ECONOMIC AND TRADE AGREEMENT: PROPOSAL AND SOME UNADDRESSED ISSUES

Abstract

Investor-State dispute settlement [“ISDS”] has been the preferred mechanism for resolution of disputes between foreign investors and States over the last few decades. However, despite the preference, the system has come under severe criticism in the recent past. Among numerous suggestions that have been floated to address the shortcomings of the system, a multilateral investment court proposed by the European Union [“EU”] and its Member States holds potential to bring about a paradigm shift in the way disputes are settled between foreign investors and sovereign States. The EU has, in fact, already incorporated provisions for such a court in some of its recent trade and investment treaties. For instance, the EU-Canada Comprehensive Economic and Trade Agreement proposes setting up an investment court system [“ICS”] and submitting their investment disputes to such a court. At the outset, this paper attempts to assess the model proposed by the treaty parties to this agreement by analysing the structure proposed for the court, its composition, the law applicable to proceedings before it and the nature of the decisions rendered by such an investment court. It then goes on to analyse the reasons for which the validity of the proposed court was challenged before the Court of Justice for the European Union [“CJEU”] and the reasoning provided by it to uphold validity of the proposed ICS. In the third part, the author has identified issues that have, thus far, been left unaddressed by the CJEU and which may cause hinderance in smooth functioning of the proposed model of investor-State dispute resolution. The author concludes that the proposed court system is merely a modified version of the prevalent ad-hoc arbitration with no real promise to be the panacea to the current ills of the system. The proposed court may lend legitimacy to the dispute-resolution process by giving sovereigns the authority to appoint judges but there is nothing to ensure that it would address the other issues faced by ISDS today, including quality and consistency of decisions rendered.