Dr. Michael de Boeck:

Let me the address the question on Article 16. It acts like what I would call a ratchet in that it always provides the highest possible protection to the investor and it never goes down. The argument on the part of the European Commission, in some of the cases where it has intervened as amicus curiaein this area, is that the ECT had in fact been replaced between the member states because they acceded to the EU treaties. The legal basis for that was article 59 of the Vienna Convention on the Law of Treaties, namely, that a prior agreement was terminated by accession to a later agreement. That was never accepted by any of the investment tribunals that had to rule on this. It was also because there was in fact a failure of express notification and it was not clear at all whether the intention was to terminate the ECT, given there was also a need for internal markets in energy.

The following argument is then whether, on the basis of a conflict between successive treaties, one could also argue that the EU treaties should prevail over the application of the ECT, under Article 30 of the Vienna Convention on the Law of Treaties. This was also not accepted by any of the investment tribunals, as a consequence of which we are at present simply faced with two legal regimes and two treaty regimes that apply side by side. I agree with Dr. Saheb that there is the high likelihood that the ECJ rulings recently involving Achmea, Komstroy and PL Holdings will not stop investment arbitrations between member states, that is to say, between an investor of one member state and another member state.

As a legal analysis, that is not because it is invalid but simply because it is beyond the reach of EU law. EU law, as the court famously said in Van Gend en Loos and Costa v. ENEL, is a new and autonomous legal order and it is distinct from national and international law. The consequence, on the flipside of the coin, is that if the ECJ makes a ruling between member states, it is not necessarily binding in international law. Therefore, the validity of the commitments under international law is simply not affected by the Achmea and Komstroy judgments.

Hence, investment tribunals will simply continue for as long as the legal regime applies. Senator Boylan also asked whether we are simply wasting our time in trying to amend the ECT. I would say “No”; we are not wasting our time at all. Given the lack of decent alternatives, we need to keep pushing and going for that as there is no alternative. It is an effort we must seriously make.