The treaty deals largely with two issues: (1) more details on the removal of existing internal EU bits and (2) the handling of new, pending and closed arbitration procedures. Third, investors may ultimately attempt to challenge whether the termination agreement can have a retroactive effect under international law on ongoing arbitration proceedings and even on future arbitration proceedings, which are introduced under so many sunset clauses (i.e. ILO clauses that extend the protection of that contract after termination) – which the termination contract also provides for an end. It is interesting to note that the whistleblowing agreement only requires the ratification of two Member States to enter into force. In addition, the provisional application of the termination agreement is provided for. The Sunset clauses allow the ILO to remain in operation for a certain period of time after their termination and thus to protect investments made before the end of this ILO (often for an additional 10 or 20 years). Although the text of the termination contract has not yet been officially published, a draft contract has been disclosed and will be used for the analysis below. “For investments made prior to the termination date of this agreement, the above articles remain applicable for a period of fifteen years from that date.” 14. In the event of an agreement on the terms of the transaction, the parties to the proceedings will immediately accept these legally binding conditions. The terms of the transaction: 8. The mediator is appointed by mutual agreement by the investor and the contracting party concerned as intimating in the pending arbitration procedure. He is chosen from among those whose independence and impartiality are beyond doubt and who have the requisite qualifications, including an in-depth knowledge of EU law.
He cannot be a national of the Member State in which the investment took place or of the investor`s home Member State and must not be in conflict of interest. In the absence of a mutual agreement on the election of the impartial ombudsman within one month of the opening of the settlement procedure, the investor or party concerned acting as a respondent in the pending arbitration proceeding asks the Director General of the European Commission`s legal department to appoint a former member of the European Court of Justice who , after hearing from any party to the dispute, appoint a person who meets the criteria set out in this paragraph. Appendix D establishes an indicative fee structure for the intermediary. With regard to pending arbitration procedures, the termination agreement provides for a “structured dialogue” between the investor and the EU Member State (Article 9). To access this amicable resolution mechanism, investors must withdraw their debts before entering into negotiations. However, the State concerned is not required to participate in negotiations or to conclude a transaction agreement. This does not make this mechanism particularly attractive to investors involved in ongoing internal EU arbitration proceedings. 2. In addition, this agreement does not interfere with an agreement on an out-of-court settlement of an arbitration dispute initiated before 6 March 2018. Given that ECT is also engaged in modernisation negotiations, the EU could almost at once redefine the settlement of investor-state disputes within the European region.
Given that the COVID 19 pandemic is expected to result in an unknown increase in investment contract disputes (such as being discussed in the archives of this blog on COVID-19), the removal of the internal ILO in the EU has the added advantage of avoiding the possible liability of traditional ISDS channels within the EU.