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EU: Dispute resolution tribunal under free trade agreement with Canada upheld

EU: Dispute resolution tribunal, free trade agreement

The Court of Justice of the European Union (CJEU) today issued an opinion finding that a mechanism for resolution of disputes between investors and EU Member States as provided for by the free trade agreement between the EU and Canada (CETA) is compatible with EU law.

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The CETA would allow for the creation of a tribunal, an appellate tribunal, and eventually a multilateral investment tribunal—thereby, establishing an “investment court system.”

As explained in today’s CJEU release [PDF 115 KB], there were doubts as to the effects of the dispute resolution tribunal system and specifically concerning its exclusive jurisdiction over the definitive interpretation of EU law and as to whether the tribunal’s dispute resolution mechanism would comply with the right of EU persons to have access to an independent and impartial tribunal.

The CJEU found that EU law does not preclude the creation of a tribunal, an appellate tribunal, and subsequently a multilateral investment tribunal or the conferral by the CETA on those tribunals of jurisdiction to interpret and apply the provisions of that trade agreement. Yet, the CJEU also noted that because those tribunals would stand outside the EU judicial system, they cannot have the authority to interpret or apply provisions of EU law other than measures under the CETA or to make decisions that might have the effect of preventing the EU institutions from operating in a manner that the EU constitutional framework requires.

In a related release, the European Commission noted that the trade agreement with Canada has been under provisional application since September 2017 and can only enter fully into force once ratified by all EU Member States and concluded by the European Council. Only when these steps are concluded can the investment court system become operational. Until then, CETA will continue to be provisionally applied to the extent provided for in a Council Decision on its provisional application. CETA was approved by the European Parliament on 15 February 2017.

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