Proposal for a Regulation 2012/0162 and the arbitration within the European Union : analysis and comment

The recognition of the legitimacy of investor-state dispute settlement (ISDS) within the European Union (EU) has become an issue since the Lisbon Treaty granted the EU the exclusive competence over Foreign Direct Investment (FDI). Since then, questions have been raised about how the EU would have acted in the field of FDI and, particularly, about how it would have framed the substance of new investments agreements. With regard to the inclusion of the arbitration clause in treaties negotiated by the EU, the article attempts to show that currently there are two conflicting tendencies. On one side, it seems that ISDS has been legitimized by being included even in proceedings where the EU will act as a respondent. On the other side, we are observing an increasing public debate and concern with regard to ISDS. Given the fervour of the debate, policymakers must ascertain whether an arbitration clause is still necessary and, in case it is, how to find a solution to the objections raised against its presence in future agreements. In particular, the EU has to ensure that it can guarantee the right of a host state to enact legislation aimed at protecting its public interest. An overview will be provided over the EU Reg. 912/2014 followed by a discussion on the way in which the arbitration clause has been framed in the CETA. Our conclusion is that, even if arbitration is not a perfect system and some issues still need to be solved, it remains a valid tool to regulate disputes arising from investment transactions.