The recognition of the legitimacy of the investor-state dispute settlement within the EU

The recognition of the legitimacy of the investor-State dispute settlement (ISDS) within the EU has become an issue since the entry into force of the Lisbon Treaty, which granted the EU with the exclusive competence on foreign direct investments (FDI). Questions have been raised on how the EU would have acted in this new field. Particularly, many doubts have concerned the way through which the EU, alone or together with the Member States, would have framed the substance of the new generation of investments agreements – i.e., protection clauses and arbitration as the dispute settlement mechanism. With regard to the inclusion of the arbitration clause, the attempt is to show that there are nowadays two conflicting tendencies. On one side, it seems that the investor-State arbitration as a dispute settlement mechanism has been legitimized even in proceedings where the EU will act as a respondent. On the other side, we assist to a growing public debate and concerns with regard to ISDS. For example, very recent is the firm opposition raised by Germany with regard to the introduction of the arbitration clause in the Comprehensive and Economic Trade Agreement with Canada (CETA). More precisely, it seems that ISDS lacks of transparency and publicity and, moreover, it does not guarantee the right of host States to enact laws in the public interest. Indeed, it seems that, so far, the State sovereignty has been reduced in order to better shelter foreign investors and their assets. Therefore, it shall be ascertained if the arbitration clause is still necessary and, in case of positive answer, how the EU can find a solution to the objections raised against its permanence in future agreements. In particular, it should be verified how to better guarantee the right of the host State to enact legislation in order to protect its public interest. To answer the above-mentioned questions, attention will be paid to the most recent practice within the EU. Firstly, a brief overview will be provided over the source of law recently enacted within the EU (i.e., the EU Regulation no. 912/2014). Secondly, the way the arbitration clause has been framed in the new EU generation agreement, especially in the CETA, will be discussed. At the end of the analysis, it will be possible to point out some conclusions. Accordingly, we will see that the EU has shown its clear intention to find a balance between the above mentioned opposite tendencies: the one claiming for the arbitration clause and the other one raising objections on it. As a consequence, our conclusion is that the EU seems to have found the way to guarantee an always-wise development of the arbitration proceedings within the EU and a higher balance between the shelter of the investments and the protection of the public interest in the host State. In fact, even if arbitration is not a perfect system and has some lacks, which with no hesitation need to be solved, it still remains a favourable tool to regulate the disputes arising out of an investments transaction.