Opinion 2/15

Opinion pursuant to Article 218(11) TFEU

(Opinion pursuant to Article 218(11) TFEU — Free Trade Agreement between the European Union and the Republic of Singapore — ‘New generation’ trade agreement negotiated after the entry into force of the EU and FEU Treaties — Competence to conclude the agreement — Article 3(1)(e) TFEU — Common commercial policy — Article 207(1) TFEU — Trade in goods and services — Foreign direct investment — Public procurement — Commercial aspects of intellectual property — Competition — Trade with third States and sustainable development — Social protection of workers — Environmental protection — Article 207(5) TFEU — Services in the field of transport — Article 3(2) TFEU — International agreement which may affect common rules or alter their scope — Rules of secondary EU law concerning freedom to provide services in the field of transport — Non-direct foreign investment — Article 216 TFEU — Agreement necessary in order to achieve one of the objectives of the Treaties — Free movement of capital and of payments between Member States and third States — Succession of treaties concerning investment — Replacement of the investment agreements between Member States and the Republic of Singapore — Institutional provisions of the agreement — Investor-State dispute settlement — Dispute settlement between the Parties)

Summary — Opinion 2/15 of the Court (Full Court), 16 May 2017

International agreements—Competences of the European Union and of the Member States—Competences of the Member States concerning administrative and judicial procedure—Free Trade Agreement between the European Union and the Republic of Singapore—Commitments obliging the European Union and the Member States to observe the principles of good administration and of effective judicial protection—Interference with national competences—No such interference

International agreements—Conclusion—Competence of the European Union—Competence to lay down institutional provisions in an agreement—Scope—Establishment of a dispute settlement regime enabling a national of a third State to remove a dispute from the jurisdiction of the courts of a Member State—Not included—Shared competence of the European Union and the Member States

International agreements—Conclusion—Competence of the European Union—Exclusive competence in respect of an agreement which may affect common rules or alter their scope—Free Trade Agreement between the European Union and the Republic of Singapore—Provisions relating to the conduct of public procurement procedures—Effect on the rules laid down in Directives 2014/24 and 2014/25

International agreements—Conclusion—Competence of the European Union—Exclusive competence in respect of an agreement which may affect common rules or alter their scope—Relevance of Protocols No 21 and No 22 on the position of the United Kingdom, Ireland and Denmark, annexed to the EU and FEU Treaties, in respect of an agreement not relating to the fields covered by those protocols—No relevance

International agreements—Conclusion—Competence of the European Union—Exclusive competence in respect of an agreement which may affect common rules or alter their scope—Need to verify whether there is a risk of such an effect for provisions of the envisaged agreement that are of limited scope—No such need

International agreements—Conclusion—Competence of the European Union—Exclusive competence in respect of an agreement which may affect common rules or alter their scope—Free Trade Agreement between the European Union and the Republic of Singapore—Commitments relating to the supply of maritime, rail and road transport services—Effect on the rules laid down in Regulations No 4055/86, No 1071/2009, No 1072/2009 and No 1073/2009 and in Directive 2012/34

Common commercial policy—International agreements—Conclusion—Competence of the European Union—Obligation to exercise competence in observance of the principles and objectives of the European Union’s external action—Free Trade Agreement between the European Union and the Republic of Singapore—Commitments intended to ensure compliance with international obligations concerning social protection of workers and environmental protection—Existence of a specific link with trade between the parties

European Union—Rules governing the system of property ownership—Principle of neutrality—Application of the fundamental rules of the Treaty—Conclusion of an international agreement limiting the ability of the Member States to nationalise or expropriate investments made by nationals of a third State—Infringement of the principle of neutrality—No such infringement

Common commercial policy—International agreements—Conclusion—Competence of the European Union—Scope—Agreements in the field of transport subject to the body of rules governing the common transport policy—Inapplicability where an agreement relating to services has no inherent link to a transport service—Commitments relating to aircraft repair and maintenance services and to arrangements for participation in public procurement in respect of transport services—No inherent link to a transport service—Exclusive competence of the European Union

It follows from Article 207(1) TFEU, in particular from its second sentence, according to which the common commercial policy belongs within the context of the European Union’s external action, that that policy relates to trade with third States. An EU act falls within that policy if it relates specifically to such trade in that it is essentially intended to promote, facilitate or govern such trade and has direct and immediate effects on it. It follows that only the components of the envisaged agreement that display a specific link with trade between the European Union and the third State concerned fall within the field of the common commercial policy. Chapter 2 of the Free Trade Agreement between the European Union and the Republic of Singapore, which provides that each Party is to grant non-discriminatory treatment to goods from the other Party and is to reduce or to eliminate, depending on the specific commitments annexed to that chapter, its import and export duties, falls within that policy and, therefore, within the exclusive competence of the European Union pursuant to Article 3(1)(e) TFEU. Chapter 2 also provides that each Party is to refrain from adopting or maintaining non-tariff restrictions on the import and export of goods. That chapter is thus composed of tariff and trade commitments relating to trade in goods, within the meaning of Article 207(1) TFEU. The same also applies as regards Chapter 3 of the agreement, which specifies the manner in which each Party may, where the requirements resulting from the rules of the World Trade Organisation are met, adopt antidumping and countervailing measures and safeguard measures concerning imports from the other Party. That chapter thus relates to measures to protect trade, within the meaning of Article 207(1) TFEU. It is apparent from Chapters 4 and 5 of the Free Trade Agreement between the European Union and the Republic of Singapore that, first, products exported by a Party must meet the technical and sanitary standards laid down by the Party importing them and, secondly, that products imported by the latter must not be made subject to standards that are discriminatory or disproportionate compared with those that are applied to its own products. Chapters 4 and 5 are accordingly specifically intended to facilitate trade in goods between the European Union and the Republic of Singapore. Chapter 6 of the agreement provides that the customs legislation of each Party will be non-discriminatory and that the fees and charges imposed for services provided when those goods are imported or exported will not exceed the approximate cost of those services. That chapter is therefore essentially intended to govern and facilitate trade in goods between the Parties. Chapter 7 of the Free Trade Agreement between the European Union and the Republic of Singapore is intended to govern and facilitate market access in the sector of energy generation from sustainable non-fossil sources, and does not establish any environmental standard on the matter. Since it seeks thereby to open up the market of each of the Parties, Chapter 7 is also such as to have a direct and immediate effect on trade in goods and services between the European Union and the Republic of Singapore in this sector. It consequently falls within the exclusive competence of the European Union pursuant to Article 3(1)(e) TFEU. (see paras 35-37, 40-47, 72-74)

The competence of the European Union to approve an agreement relating, inter alia, to the supply of services in the field of transport cannot be covered by Article 3(1)(e) TFEU alone. This field is excluded from the common commercial policy by Article 207(5) TFEU, according to which the negotiation and conclusion of international agreements in the field of transport is to be subject to Title VI of Part Three of the FEU Treaty. That title concerns the common transport policy. Article 207(5) TFEU, which corresponds, in essence, to the third subparagraph of Article 133(6) EC, seeks to maintain, with regard to international trade in transport services, a fundamental parallelism between internal EU competence, whereby EU rules are unilaterally adopted, and external EU competence, which operates through the conclusion of international agreements, each competence remaining — as previously — anchored in the title of the Treaty specifically relating to the common transport policy. (see paras 56-59)

When interpreting Article 207(5) TFEU, which excludes international agreements in the field of transport from the common commercial policy, account is to be taken of the concept of services in the field of transport, a concept which encompasses not only transport services in themselves, but also other services, provided, however, that the latter are inherently linked to a physical act of moving persons or goods from one place to another by a means of transport. As regards the commitments contained in Chapter 8 of the Free Trade Agreement between the European Union and the Republic of Singapore, neither aircraft repair and maintenance services during which an aircraft is withdrawn from service nor services for the sale, marketing or reservation of air transport services, whether they are supplied by travel agencies or by other commercial service-providers, are inherently linked to transport services, within the above meaning. First, aircraft repair and maintenance services during which an aircraft is withdrawn from service have, at most, a remote link with the act of moving persons or goods from one place to another. Secondly, as regards services for the sale, marketing or reservation of air transport services, it is apparent from recital 33 of Directive 2006/123 on services in the internal market that the services covered by that directive also encompass travel agencies, which are the principal suppliers of such services. Since aircraft repair and maintenance services during which an aircraft is withdrawn from service, the selling and marketing of air transport services and computer reservation system services consequently do not fall within Article 207(5) TFEU, they are among the services covered by Article 207(1) TFEU. Also, Chapter 10 of the Free Trade Agreement between the European Union and the Republic of Singapore has the specific aim of determining the arrangements under which the economic operators of each Party may participate in procurement procedures organised by the other Party’s public authorities. As those arrangements are founded on considerations of non-discriminatory access, transparency and efficiency, they are such as to have direct and immediate effects on trade in goods and services between the Parties. Chapter 10 of the agreement consequently falls within the exclusive competence of the European Union pursuant to Article 3(1)(e) TFEU, without prejudice however to public procurement in respect of international maritime transport services, rail transport services, road transport services and internal waterways transport services, and to public procurement in respect of services inherently linked to those transport services, as listed in points 11 and 12 of Appendices 8-A-1 and 8-B-1 and points 16 and 17 of Appendices 8-A-2 and 8-A-3 in the annexes to Chapter 8 of the agreement. (see paras 61, 66-68, 76, 77)

Article 207(1) TFEU provides that EU acts concerning foreign direct investment fall within the common commercial policy. It follows that the European Union has exclusive competence, pursuant to Article 3(1)(e) TFEU, to approve any commitment vis-à-vis a third State relating to investments made by natural or legal persons of that third State in the European Union and vice versa which enable effective participation in the management or control of a company carrying out an economic activity. The use, by the framers of the FEU Treaty, of the words ‘foreign direct investment’ in Article 207(1) TFEU is an unequivocal expression of their intention not to include other foreign investment in the common commercial policy. Accordingly, commitments vis-à-vis a third State relating to other foreign investment do not fall within the exclusive competence of the European Union pursuant to Article 3(1)(e) TFEU. This definition of the scope of the common commercial policy so far as concerns foreign investment reflects the fact that any EU act promoting, facilitating or governing participation — by a natural or legal person of a third State in the European Union and vice versa — in the management or control of a company carrying out an economic activity is such as to have direct and immediate effects on trade between that third State and the European Union, whereas there is no specific link of that kind with trade in the case of investments which do not result in such participation. (see paras 81-84)

The legal rules agreed between the European Union and the Republic of Singapore, in Chapter 9 of their free trade agreement, concerning protection of direct investments fall within the common commercial policy when they display a specific link with trade between the European Union and that third State. Article 207(1) TFEU refers generally to EU acts concerning foreign direct investment, without drawing a distinction according to whether the acts concern the admission or the protection of such investments. In that regard, the set of commitments providing for ‘no less favourable treatment’ and of prohibitions of arbitrary treatment laid down in Chapter 9 — which relate in particular to natural and legal persons of each Party exploiting, increasing and selling their holdings in companies that are carrying out economic activities and are located in the territory of the other Party — contributes to the legal certainty of investors. The establishment of such a legal framework is intended to promote, facilitate and govern trade between the European Union and the Republic of Singapore. Furthermore, in so far as the provisions of Section A of Chapter 9 of the Free Trade Agreement between the European Union and the Republic of Singapore relate to direct investment, they are such as to have direct and immediate effects on that trade, since they concern the treatment of the participation of entrepreneurs of one Party in the management or control of companies carrying out economic activities in the territory of the other Party. (see paras 87, 94, 95)

Article 345 TFEU expresses the neutrality of the European Union in relation to the rules existing in Member States governing the system of property ownership, but does not mean that those rules are not subject to the fundamental rules of the European Union. Article 9.6 of the Free Trade Agreement between the European Union and the Republic of Singapore, which lays down that neither Party is to nationalise or expropriate, or subject to measures having effect equivalent to nationalisation or expropriation, the covered investments of investors of the other Party, except for a public purpose, does not contain any commitment relating to the rules in Member States governing the system of property ownership. It reflects the simple fact that, whilst the Member States remain free to exercise their competences regarding property law and to amend accordingly the rules governing the system of property ownership so far as they are concerned, they are nonetheless not absolved from compliance with general principles and fundamental rights. (see paras 91, 107)

As provided in Article 207(1) TFEU, the common commercial policy includes the commercial aspects of intellectual property. International commitments concerning intellectual property entered into by the European Union fall within those commercial aspects when they display a specific link with international trade in that they are essentially intended to promote, facilitate or govern such trade and have direct and immediate effects on it. As regards the commitments concerning intellectual property set out in Chapter 11 of the Free Trade Agreement between the European Union and the Republic of Singapore, the set of provisions relating to copyright and related rights, trade marks, geographical indications, designs, patents, test data and plant varieties, consisting of, first, a reminder of existing multilateral international obligations and, secondly, bilateral commitments, has as its basic aim, as stated in Article 11.1.1(b) of the agreement, to guarantee entrepreneurs of the European Union and Singapore an adequate level of protection of their intellectual property rights. Those provisions enable entrepreneurs of the European Union and Singapore to enjoy, in the territory of the other Party, standards of protection of intellectual property rights displaying a degree of homogeneity and thus contribute to their participation on an equal footing in the free trade of goods and services between the European Union and the Republic of Singapore. The same is true of Articles 11.36 to 11.47 of the agreement, which oblige each Party to provide for certain categories of procedures and of civil judicial measures enabling the persons concerned to rely on and enforce their intellectual property rights, and of Articles 11.48 to 11.50, which oblige each Party to establish methods for identification of counterfeit or pirated goods by the customs authorities and to provide for the possibility for holders of intellectual property rights to obtain suspension of the release of such goods if infringement or piracy is suspected. It follows that the provisions of Chapter 11 of the Free Trade Agreement between the European Union and the Republic of Singapore do seek, as Article 11.1 of the agreement states, to facilitate the production and commercialisation of innovative and creative products and the provision of services between the Parties and to increase the benefits from trade and investment. Chapter 11 in no way falls within the scope of harmonisation of the laws of the Member States of the European Union, but is intended to govern the liberalisation of trade between the European Union and the Republic of Singapore. Therefore, Chapter 11 relates to commercial aspects of intellectual property within the meaning of Article 207(1) TFEU. (see paras 111-113, 121-126, 128)

Articles 12.1 and 12.2 of the Free Trade Agreement between the European Union and the Republic of Singapore unequivocally form part of the liberalisation of trade between the European Union and the Republic of Singapore. Indeed, they relate specifically to the combatting of anti-competitive activity and of concentrations whose object or effect is to prevent trade between the European Union and that third State from taking place in healthy conditions of competition. Those provisions consequently fall within the field of the common commercial policy and not the field of the internal market. Chapter 12 of the agreement also includes provisions on subsidies. Those provisions recall the obligations of the Parties under the Agreement on Subsidies and Countervailing Measures that forms part of Annex 1A to the Agreement establishing the World Trade Organisation, determine which subsidies related to trade in goods and services between the European Union and the Republic of Singapore are prohibited, and oblige each Party to use its best endeavours to remedy or remove the effects on trade with the other Party of subsidies that are not prohibited. (see paras 134, 135, 137)

The FEU Treaty differs appreciably from the EC Treaty previously in force, in that it includes new aspects of contemporary international trade in the common commercial policy. The extension of the field of the common commercial policy by the FEU Treaty constitutes a significant development of primary EU law. One of the features of that development is the rule laid down in the second sentence of Article 207(1) TFEU that the common commercial policy is to be conducted in the context of the principles and objectives of the European Union’s external action. Those principles and objectives are specified in Article 21(1) and (2) TEU and, as is stated in Article 21(2)(f) TEU, relate inter alia to sustainable development linked to preservation and improvement of the quality of the environment and the sustainable management of global natural resources. The obligation on the European Union to integrate those objectives and principles into the conduct of its common commercial policy is apparent from the second sentence of Article 207(1) TFEU read in conjunction with Article 21(3) TEU and Article 205 TFEU. Account must, furthermore, be taken of Articles 9 and 11 TFEU. In addition, Article 3(5) TEU obliges the European Union to contribute, in its relations with the wider world, to free and fair trade. It follows that the objective of sustainable development henceforth forms an integral part of the common commercial policy. (see paras 141-143, 146, 147)

Chapter 13 of the Free Trade Agreement between the European Union and the Republic of Singapore falls within the common commercial policy and, therefore, within the exclusive competence of the European Union referred to in Article 3(1)(e) TFEU. By the provisions of that chapter, the European Union and the Republic of Singapore undertake, essentially, to ensure that trade between them takes place in compliance with the obligations that stem from the international agreements concerning social protection of workers and environmental protection to which they are party. Chapter 13 concerns neither the scope of the international agreements to which it refers nor the competences of the European Union or the Member States relating to those agreements. On the other hand, it displays a specific link with trade between the European Union and the Republic of Singapore. Indeed, Chapter 13 governs that trade by ensuring that it takes place in compliance with those agreements and that no measure adopted under them is applied so as to create arbitrary or unjustifiable discrimination or a disguised restriction on such trade. Chapter 13 is also such as to have direct and immediate effects on that trade. As regards in particular the commitments, referred to in Article 13.7(b) and Article 13.8(b) of the agreement, to address trade in illegally harvested timber and timber products and to combat illegal, unreported and unregulated fishing, the Parties undertake in the agreement to implement or encourage documentation, verification and certification schemes. Schemes of that kind are such as to have a direct impact on trade in the products concerned. Furthermore, the link which the provisions of Chapter 13 of the agreement display is also specific in nature because a breach of the provisions concerning social protection of workers and environmental protection, set out in that chapter, authorises the other Party — in accordance with the rule of customary international law codified in Article 60(1) of the Convention on the law of treaties, which applies in relations between the European Union and third States — to terminate or suspend the liberalisation, provided for in the other provisions of the envisaged agreement, of that trade. (see paras 152, 155-157, 160, 161, 167)

The exclusive competence of the European Union referred to in Article 3(1)(e) TFEU cannot be exercised in order to regulate the levels of social and environmental protection in the respective territory of the parties to an international agreement concluded by the European Union with a third State. The adoption of such rules would fall within the division of competences between the European Union and the Member States that is laid down, in particular, in Article 3(1)(d) and (2) and Article 4(2)(b) and (e) TFEU. Article 3(1)(e) TFEU does not prevail over these other provisions of the FEU Treaty, Article 207(6) TFEU indeed stating that the exercise of the competences conferred in the field of the common commercial policy is not to affect the delimitation of competences between the European Union and the Member States. (see para. 164)

Article 216 TFEU grants to the EU competence to conclude, inter alia, any international agreement which may affect common rules or alter their scope. There is a risk of common rules being affected or altered where the commitments contained in an international agreement fall within the scope of those rules. A finding that there is such a risk does not presuppose that the area covered by the international commitments and that covered by the EU rules coincide fully. The scope of the common EU rules may also be affected or altered by those commitments where the latter fall within an area which is already covered to a large extent by those rules. As regards the commitments relating to the supply of international maritime transport services that are contained in Chapter 8 of the Free Trade Agreement between the European Union and the Republic of Singapore, the area within which those commitments fall is covered to a large extent by the common rules laid down by Regulation No 4055/86 applying the principle of freedom to provide services to maritime transport between Member States and between Member States and third countries. The commitments contained in the agreement affect, or even alter, considerably, as regards maritime transport services between the European Union and the Republic of Singapore, the scope of those common rules established by Regulation No 4055/86. Indeed, it follows from Article 8.56.3 of the agreement that EU suppliers of maritime transport services and nationals of a Member State controlling a shipping company established in Singapore will have free access to traffic to and from that third State, without a requirement that the EU nationals’ vessels fly the flag of a Member State. That regime differs appreciably from the regime established by Regulation No 4055/86. The competence of the European Union to approve those commitments is, therefore, exclusive pursuant to Article 3(2) TFEU. The same is true of the commitments concerning rail transport services as between the European Union and the Republic of Singapore. The no less favourable conditions from which Singapore service providers will benefit, in accordance with those commitments, in order to have access to rail transport networks and activities in the European Union, and in order to establish themselves there, correspond to the matters, laid down by Directive 2012/34 establishing a single European railway area, that are governed by the rules of that area. The commitments relating to road transport services also fall within an area largely covered by common EU rules. The no less favourable conditions from which Singapore service providers will benefit, in accordance with those commitments, in order to supply road transport services in the European Union correspond to a large extent to the matters governed by the common rules laid down in Regulations No 1071/2009 establishing common rules concerning the conditions to be complied with to pursue the occupation of road transport operator, No 1072/2009 on common rules for access to the international road haulage market and No 1073/2009 on common rules for access to the international market for coach and bus services. (see paras 171, 180-182, 189, 190, 193, 195, 198, 206, 207)

Where an agreement between the European Union and a third State provides for the application, to the international relations covered by that agreement, of rules that will overlap to a large extent with the common EU rules applicable to intra-Community situations, that agreement must be regarded as capable of affecting or altering the scope of those common rules. Despite there being no contradiction with those common rules, the meaning, scope and effectiveness of the latter may be affected. (see para. 201)

When examining the nature of the competence to conclude an international agreement, there is no need to take account of the provisions of that agreement which are extremely limited in scope. (see para. 217)

When examining the competence of the European Union so far as concerns commitments contained in an international agreement envisaged in the field of transport, Protocol No 21 on the position of the United Kingdom and Ireland in respect of the area of freedom, security and justice, annexed to the EU and FEU Treaties, is irrelevant provided that the envisaged agreement does not relate to the matters governed by Title V of Part Three of the FEU Treaty. The same is true of Protocol No 22 on the position of Denmark, annexed to the EU and FEU Treaties. First, the common commercial policy and the common transport policy are not covered by Protocol No 21. Secondly, it is the aim and the content of the measure in question which determine the protocols that may be applicable, and not vice versa. (see para. 218)

Chapter 10 of the Free Trade Agreement between the European Union and the Republic of Singapore contains a body of rules designed to lay down a framework for public procurement in the European Union and Singapore, so as to ensure that the principles of non-discrimination and transparency are observed when public procurement procedures take place. Directive 2014/24 on public procurement and Directive 2014/25 on procurement by entities operating in the water, energy, transport and postal services sectors establish a body of common rules designed, in essence, to guarantee that public procurement inter alia in the transport sector is consistent, in the European Union, with those principles, as is stated in recital 1 and Article 18 of Directive 2014/24 and recital 2 and Article 36 of Directive 2014/25. Upon the entry into force of the agreement, access of Singapore service providers to public procurement within the European Union in the field of transport will therefore fall within the scope of commitments covering the same matters as those governed by Directives 2014/24 and 2014/25. Therefore, the European Union has exclusive external competence pursuant to Article 3(2) TFEU in respect of the international commitments contained in Chapter 10 of the Free Trade Agreement between the European Union and the Republic of Singapore concerning public procurement for services in the field of transport, as those commitments fall within an area which is already covered to a large extent by common EU rules and they may affect or alter the latter’s scope. (see paras 221-224)

Provisions of secondary law which the European Union has progressively laid down are common rules the scope of which may be affected or altered by commitments contained in an international agreement concluded by the European Union. When the European Union has thus exercised its internal competence, it must, in parallel, have exclusive external competence in order to prevent the Member States from entering into international commitments that could affect those common rules or alter their scope. Regard would not be had to the reasoning inherent in the rule as to exclusive external competence if the scope of that rule, currently laid down in the final limb of Article 3(2) TFEU, were extended to a situation which concerns not rules of secondary law laid down by the European Union in the exercise of an internal competence that has been conferred upon it by the Treaties, but a rule of primary EU law adopted by the framers of those Treaties. (see paras 233, 234)

The conclusion of an international agreement concerning non-direct foreign investment is, as EU law currently stands, not provided for in a legislative act of the European Union, within the meaning of Article 3(2) TFEU. Nor does the conclusion of such an agreement appear necessary to enable the European Union to exercise its internal competence, within the meaning of that provision. It follows that the European Union does not have exclusive competence to conclude an international agreement in so far as it relates to the protection of non-direct foreign investments. On the other hand, the conclusion by the European Union of an international agreement relating to such investments may prove necessary in order to achieve, within the framework of the European Union’s policies, one of the objectives referred to in the Treaties, within the meaning of Article 216(1) TFEU. In particular, in the light of the fact that the free movement of capital and payments between Member States and third States, laid down in Article 63 TFEU, is not formally binding on third States, the conclusion of international agreements which contribute to the establishment of such free movement on a reciprocal basis may be classified as necessary in order to achieve fully such free movement, which is one of the objectives of Title IV (‘Free movement of persons, services and capital’) of Part Three (‘Union policies and internal actions’) of the FEU Treaty. Title IV falls within the competence relating to the internal market that is shared between the European Union and the Member States pursuant to Article 4(2)(a) TFEU. The competence conferred on the European Union by Article 216(1) TFEU is also shared, since Article 4(1) TFEU provides that the European Union is to share competence with the Member States where the Treaties confer on it a competence which does not relate to the areas referred to in Articles 3 and 6 TFEU. (see paras 236-242)

The fact that the European Union and a third State have inserted in an international agreement a provision making expressly clear that bilateral investment agreements between Member States and that third State are terminated and accordingly no longer give rise to rights and obligations upon the entry into force of the agreement concluded with that third State at EU level cannot be regarded as encroaching upon a competence of the Member States, in so far as that provision relates to a field in respect of which the European Union has exclusive competence. When the European Union negotiates and concludes with a third State an agreement relating to a field in respect of which it has acquired exclusive competence, it takes the place of its Member States. The European Union can succeed the Member States in their international commitments when the Member States have transferred to it, by one of its founding Treaties, their competences relating to those commitments and it exercises those competences. It follows that, as regards the exclusive competence of the European Union concerning foreign direct investment, from 1 December 2009, the date on which the FEU Treaty, which confers that competence on the European Union, entered into force, the European Union has competence to approve, by itself, a provision of an agreement concluded by it with a third State which stipulates that the commitments concerning direct investment contained in bilateral agreements previously concluded between Member States of the European Union and that third State must, upon the entry into force of that agreement concluded by the European Union, be regarded as replaced by the latter. By virtue of Article 2(1) TFEU, the Member States, unless so empowered by the European Union, are prohibited from adopting acts producing legal effects in areas which fall within an exclusive competence of the European Union. It is true that Regulation No 1219/2012 establishing transitional arrangements for bilateral investment agreements between Member States and third countries empowers the Member States, subject to strict conditions, to maintain in force, or even to conclude, bilateral agreements with a third State concerning direct investment as long as an agreement between the European Union and that third State concerning direct investment does not exist. On the other hand, as soon as such an agreement between the European Union and that third State enters into force, that authorisation ceases to exist. Consequently, the line of argument that the Member States should have the ability to adopt, after commitments concerning foreign direct investment contained in an agreement concluded by the European Union have entered into force, acts which determine what happens to commitments concerning this matter that are contained in the bilateral agreements which they have previously concluded with the same third State cannot succeed. (see paras 247-251)

Article 351 TFEU is intended to permit the Member States to respect the rights which third States derive, in accordance with international law, from earlier agreements concluded before 1 January 1958 or, for acceding States, before the date of their accession. (see para. 254)

The competence of the European Union to enter into international commitments includes competence to couple those commitments with institutional provisions. Their presence in the agreement has no effect on the nature of the competence to conclude it. Those provisions are of an ancillary nature and therefore fall within the same competence as the substantive provisions which they accompany. However, the position is different in the case of provisions establishing a regime for settlement of a dispute between a claimant of one party to the agreement and the other party concerning treatment alleged to breach the agreement, which breach allegedly causes loss or damage to the claimant or its locally established company. Inasmuch as a claimant investor may decide to submit a dispute to arbitration, without the Member State concerned being able to oppose this, such a regime, which removes disputes from the jurisdiction of the courts of the Member States, cannot be of a purely ancillary nature and cannot, therefore, be established without the Member States’ consent. Approval of such a regime falls not within the exclusive competence of the European Union, but within a competence shared between the European Union and the Member States. (see paras 276, 285, 291-293)

The commitments contained in Chapter 14 of the Free Trade Agreement between the European Union and the Republic of Singapore, which oblige the authorities in the European Union, including those of the Member States, to observe the principles of good administration and of effective judicial protection, cannot be regarded as encroaching upon the competences of the Member States alone. The rules contained in that chapter do not involve any commitment relating to the administrative or judicial organisation of the Member States, but reflect the fact that both the European Union and the Member States will, when applying the agreement, have to observe the general principles and fundamental rights of the European Union, such as those of good administration and effective judicial protection. (see para. 284)