Furthermore, established under the auspices of the Permanent Court

Topic: EconomicsMacroeconomics
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Last updated: August 14, 2019

Furthermore, since investorstate tribunals interpret and apply investment treaty obligations in a highly selfrefering manner, it is difficult to know when an arbitral tribunal interpretsdomestic law and when it merely applies it as facts to the case1.

The Iron Rhine case between the Netherlands and Belgium provides a good example2. In this case Belgiumsought to reopen a railway line, which passed through a protected area in the Netherlands,based on a treaty it signed with the Netherlands in the 19th century3.An arbitral tribunal was established under the auspices of the Permanent Courtof Arbitration. The parties sent a letter to the Commission, informing it thatthey shall comply with their Article 344 TFEU obligations, if the question ofinterpretation of EU law would arise4.According to the parties agreement, the arbitral tribunal would refer a preliminaryquestion to the ECJ, if during the proceedings it engaged in the interpretationof EU law5. Despitethis, the arbitral tribunal ended up interpreting and applying EU law withoutthe Commission ever launching infringement proceedings against the two countriesfor clearly breaching Article 344 TFEU6.  Other case Commission v Slovak Republic7, concerningthe Swiss Czech and Slovak BITs, is another example of how in practice even theECJ blurs the distinction between application and interpretation.

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Even thoughthe ECJ acknowledged that it was not for it to interpret the Investment ProtectionAgreement, the ECJ in fact ended up interpreting the Agreement when it determinedthat an investment was made8.  While Iron Rhine andCommission v Slovakia concerned agreements to which the EU was not a party,TTIP would be a mixed agreement, concluded by the EU and its Members States onthe one side, and the USA on the other. Under the ECJ’s longstanding Haegemanjurisprudence, international agreements which are binding on the EU become anintegral part of the EU legal order9.This means that the ECJ would consider a bilateral or multilateral agreement aspart of the EU’s domestic law, the same domestic law which the ICS is prohibitedfrom interpreting in a binding manner. Coupled with the ECJ’s exclusivejurisdiction over EU law provisions, this could lead to the presumption that thethe EU’s autonomy is “threatened every time that another body can render bindinginterpretations over EU law10”.1 Stephan W Schill, Deference in Investment Treaty Arbitration: Re-Conceptualizingthe Standard of Review (2012) 3(3) JIDS 577, 591.

2 Arbitration regarding the IronRhine (Ijzeren Rijn) Railway (The Kingdom of Belgium and The Kingdom of theNetherlands ), Award of the Arbitral Tribunal (24 May 2005) XXVII RIAA 35.3 Ibid paras 16-25.4 Nikos Lavranos, Which Court Isthe Supreme Arbiter? (2006) 19 Leiden Univercity p. 223, 228.5 Iron Rhine para 103.

6 Supra note 219.7 Case C -264/09, Commission vSlovak Republic 2011 ECR I -8065.8 Konstanze von Papp, Clash of “Autonomous Legal Orders”: Can EUMember State Courts Bridge the Jurisdictional Divide Between InvestmentTribunals and the ECJ? A Plea for Direct Referral from Investment Tribunals tothe ECJ (2013) 50 CMLR p. 1039.9 Case C -240/09, Lesoochranárske zoskupenie v SlovakMinistry 2011 ECR I -1255, para 30.

10 Stephan Schill, The Proposed TTIPTribunal and the Court of Justice: What Limits to Investor-State DisputeSettlement under EU Constitutional Law? (Verfassungsblog, 2015)http://www.verfassungsblog.de/en/the-proposed-ttip-tribunal-and-the-court-of-justice-what-limits-to-investor-state-dispute-settlement-under-eu-constitu tional-law/#.VhPdKPkYMmA.

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