Abstract
AbstractThis Article answers the question of whether investor-state dispute settlement (“ISDS”) discriminates against nationals by providing foreign investors with an extra avenue to challenge state measures. The complaint that ISDS is discriminatory as a matter of principle has surfaced before several European constitutional courts—including the German Federal Constitutional Court and the European Court of Justice—in connection with the ratification of the Comprehensive Economic and Trade Agreement between Canada and the European Union (“CETA”). This Article rejects this complaint. The Federal Constitutional Court was able to leave the question of discrimination open in the applications for a preliminary injunction to stop ratification. It will have to take a stand, however, in the principal proceedings. If the Court were to side with the applicants, it would sound the death knell not only for the CETA in its present form, but also for the multilateral investment court system promoted by the European Union and, in particular, Germany. The point made by the applicants in the CETA complaint is not only of importance in a European constitutional law context. Whether ISDS is per se discriminatory is a fundamental issue which requires answering before any reform steps in relation to ISDS are addressed.
Highlights
Impugnability of the Ratification ActIn the German CETA complaint, the Federal Constitutional Court has been called to review the legality of the German ratification act in light of the German constitution, the Basic Law.[37] A preliminary question is why the ratification act should be impugnable
This Article answers the question of whether investor-state dispute settlement (“ISDS”) discriminates against nationals by providing foreign investors with an extra avenue to challenge state measures
The complaint that ISDS is discriminatory as a matter of principle has surfaced before several European constitutional courts—including the German Federal Constitutional Court and the European Court of Justice—in connection with the ratification of the Comprehensive Economic and Trade Agreement between Canada and the European Union (“CETA”)
Summary
In the German CETA complaint, the Federal Constitutional Court has been called to review the legality of the German ratification act in light of the German constitution, the Basic Law.[37] A preliminary question is why the ratification act should be impugnable. Functioning of the European Union (“TFEU”),[44] pursuant to which “[a]greements concluded by the Union are binding : : : on its Member States,” making compliance with the CETA an obligation arising from European Union law as well. For that reason, it is in the legal interest of the applicants to have the ratification act declared incompatible with the Basic Law.[45]
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