Investor-State Arbitration in EU International Investment Agreements with Third States

Both the European Commission and the European Parliament are committed to include investor-state arbitration clauses in EU international investment agreements (IIAs) with third states. However, the EU is not and is unlikely to become a Contracting Party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention).

While this deficiency may be remedied to some extent by replicating the relevant provisions of the ICSID Convention, EU investors still cannot benefit from the institutional clout of ICSID, which could possibly facilitate enforcement of awards. The main obstacle to investor-state arbitration in EU IIAs with third states, however, is unlikely to stem from the non-availability of the ICSID Convention, but rather from the jurisprudence of the CJEU. The EU could only include investor-state arbitration clauses in EU IIAs with third states following a change in EU primary law such that investment tribunals could be deemed 'courts or tribunals of a Member State' within the meaning of Article 267 Treaty on the Functioning of the European Union (TFEU).

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