July 2016 was a path-breaking month in the ongoing discussion of investment protection by arbitral tribunals because there were two incidents which were not related to each other that occurred within only a few days of each another.

First, on July 5, 2016, the European Commission provided a draft text and formally proposed to the Council of the EU the signature and conclusion of the Comprehensive Economic and Trade Agreement between the EU and Canada (CETA). Upon the positive decision by the Council, CETA may be applied on a provisional basis. Its entering into full force is, amongst others, subject to the approval of all member states through their respective national ratification process.

The negotiations preceding the draft CETA were, in some Member States, accompanied by debates on various levels: in the political arena, by the media, and also among NGO's.. It is in response to this broad and extensive debate in some of the Member States (in particular Austria and Germany), that the European Commission has revised previous drafts of CETA in fundamental aspects. Two of these aspects deserve particular attention.

On the institutional and procedural level, CETA constitutes a significant departure from the traditional approach provided for in most of the existing BITs, as it establishes a permanent investment tribunal and an appeal tribunal. Members of both bodies will be nominated by the EU and Canada. On the substantive level, the EU and national governments, and Canada respectively, explicitly preserve their right to regulate and pursue legitimate public interests relating to health protection, safety or the environment. In order to avoid any wide or abusive interpretation, the investment protection rules have been clearly defined. For instance, the rule of Fair and Equitable Treatment includes a list of elements that could potentially give rise to a violation, as well as situations constituting an indirect expropriation which are defined in a special Annex.

Second, on July 8, 2016, an investment tribunal in the matter Philip Morris v. Uruguay dismissed all claims brought by the tobacco company. The claim was filed under the Switzerland-Uruguay BIT and challenged a series of restrictive tobacco control measures. However, the tribunal found that Uruguay had acted in a bona fide desire to protect public health when enacting the regulations and that those measures were non-discriminatory and proportionate.

Also in July 2016, the EU and the USA concluded their 14th round of negotiations for the Transatlantic Trade and Investment Partnership (TTIP). Even though this Agreement should include similar issues as in CETA, the public is even more concerned. This is because the United States is perceived as a country with particular liberal market standards which could be incompatible with the standards Europeans are used to. It remains to be seen whether the revised draft of CETA and the award against Philipp Morris can calm the current discussions, convince the public and enable a conclusion prior to the end of the Obama Administration.