Welcome to the 4th issue of the DR Insider, the quarterly Newsletter of the Wolf Theiss Dispute Resolution Practice Group. Given the ongoing lively public discussions regarding the free-trade agreements CETA and TTIP, this issue addresses the topic with an arbitration focus.
Given the ongoing lively public discussions regarding the frtee-trade agreements CETA and TTIP, this issue addresses the topic with an arbitration focus at the very beginning.
We would like to draw your attention to recent developments in Austrian law with regard to the private enforcement of capital markets regulation. Although discussions continue in some EU states as to whether investors may raise liability claims based on a violation of the capital markets regulation, Austrian courts ave already confirmed such claims.
Once again, we have some very interesting contributions from our regional offices in Warsaw and Ljubljana. Inaddition, our colleagues from Sofia share their views on limitation periods regarding the international sale of goods and some latest developmetns in the fight against corruption in Bulgaria.
As you may have already noticed in our recent issues, white collar crime topics are becoming increasingly important across the CEE/SEE region and we will continue to keep you informed on recent developments in this area.
Last but not least, we would like to inform you about our whistle blowing software SecuReveal which wwe introduced to you in our last issue.
We hope that you enojoy it.
CETA, TTIP AND THE NEW APPROACH TO INVESTOR-STATE-DISPUTE RESOLUTION
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 proceding the draft CETA were, insome 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 gie 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 Phillip Morris v. Uruguay dismissed all claims brought by the tobacco company. The cliam was filed under the Switzerland - Uruguay BIT and challenged a series of restrivtice 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 where non-discriminatory and proportionate.
Also in July 2016, the EU and the USA concluded theri 14th round of negotiations for the Transatlantic Trade and Investment PArtnership (TTIP). Even though this Agreemtn 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 incompaticle with the standards Europeans are used to. It remains to be seen whetehr the revised draft of CETA andthe award against Philpp Morris can cakm the current discussions, convince the public and enable a conclusion prior to the end of the Obama Administration.
VENUS VALENTINA WONG
NON-ENFORCEMENT OF ARBITRAL AWARDS IN LIGHT OF EXPROPRIATION OF INVESTMENTS AND THE PRINCIPLE OF DENIAL OF JUSTICE: A REVIEW OF THE STATUS QUO
State liability for the unlawful failure of enforcement of arbitral awards has been subject to a number of claims over the past few years. Despite the Saipem v. Bangladesh award in 2009 declaring the de facto deprivation of the benefits of an ICC award an unlawful expropriation of an investment, tribunals subsequently dealing with this issue in similar cases, including GEA Group Aktiengesellschaft v. Ukraine in 2011, appear to be more reluctant towards holding a state liable for the failure of its courts to enforce an arbitral award.