CELEX: 52019PC0460
Language: en
Date: 2019-10-11
Title: Proposal for a COUNCIL DECISION on the position to be taken on behalf of the European Union in the Committee on Services and Investment established under the Comprehensive Economic and Trade Agreement (CETA) between Canada, of the one part, and the European Union and its Member States, of the other part as regards the adoption of rules for mediation for use by disputing parties in investment disputes

EUROPEAN COMMISSION
            Brussels, 11.10.2019
            COM(2019) 460 final
            2019/0219(NLE)
            Proposal for a
            COUNCIL DECISION
            on the position to be taken on behalf of the European Union in the Committee on Services and Investment established under the Comprehensive Economic and Trade Agreement (CETA) between Canada, of the one part, and the European Union and its Member States, of the other part as regards the adoption of rules for mediation for use by disputing parties in investment disputes
            
               
         
         
            
               EXPLANATORY MEMORANDUM
            
            
               1.Subject matter of the proposal
            
            
               This proposal concerns the decision establishing the position to be taken on the Union's behalf in the Committee on Services and Investment established under the Comprehensive Economic and Trade Agreement (CETA) between Canada, of the one part, and the European Union and its Member States, of the other part, in connection with the envisaged adoption of a decision concerning rules for mediation for use by disputing parties in investment disputes.
            
            
               2.Context of the proposal
            
            
               2.1.The Comprehensive Economic and Trade Agreement (CETA) between Canada, of the one part, and the European Union and its Member States, of the other part
            
            
               The Comprehensive Economic and Trade Agreement (CETA) between Canada, of the one part, and the European Union and its Member States, of the other part (‘the Agreement’) aims to liberalise and facilitate trade and investment, as well as to promote a closer economic relationship between the European Union and Canada (‘the Parties’). The Agreement was signed on 30 October 2016 and has been provisionally applied since 21 September 2017.
            
            
               2.2.The Committee on Services and Investment 
            
            
               The Committee on Services and Investment, which addresses inter alia matters concerning cross-border investment, is established under Article 26.2.1(b) of the Agreement. In accordance with Article 8.44.1 of the Agreement, the Committee on Services and Investment provides a forum for the Parties to consult on issues related to Chapter Eight (Investment) of the Agreement, including difficulties which may arise in the implementation of Chapter Eight (Investment) of the Agreement and possible improvements of Chapter Eight (Investment) of the Agreement, in particular in light of the experience and developments in other international fora and under the Parties’ other agreements. 
            
            
               In accordance with Article 26.2.4 of the Agreement, the Committee on Services and Investment meets once a year, unless otherwise provided in the Agreement, or if the co-chairs decide otherwise. Additional meetings may be held at the request of a Party or of the CETA Joint Committee. The Committee on Services and Investment is co-chaired by representatives of the Parties. It sets its meeting schedule and agenda by mutual consent. It may set and modify its own rules of procedures, if it deems it appropriate. It may propose draft decisions for adoption by the CETA Joint Committee, or take decisions when the Agreement so provide.
            
            
               In accordance with Rule 10.2 of the Rules of Procedure of the CETA Joint Committee and of the Specialised Committees, including the Committee on Services and Investment,
                  1
                in the period between meetings, the Committee on Services and Investment may adopt decisions or recommendations by written procedure if the Parties to the Agreement decide by mutual consent. For that purpose, the text of the proposal will be circulated in writing from the co-chairs to the members of the Committee on Services and Investment pursuant to Rule 7, with a time limit within which members will make known any concerns or amendments they wish to make. Adopted proposals will be communicated pursuant to Rule 7 once the time limit has elapsed and recorded in the minutes of the next meeting.
            
            
               2.3.The envisaged act of the Committee on Services and Investment 
            
            
               The Committee on Services and Investment is to adopt a decision concerning rules for mediation for use by disputing parties in investment disputes (‘the envisaged act’).
            
            
               The purpose of the envisaged act is to implement the Agreement by establishing a mediation mechanism to facilitate the finding of a mutually agreed solution between the disputing parties in an investment dispute through a comprehensive and expeditious procedure with the assistance of a mediator.
            
            
               The envisaged act will become binding on the Parties. 
            
            
               3.Position to be taken on the Union's behalf
            
            
               As provided in paragraph 6(f) of the Joint Interpretative Instrument on the Agreement, the European Union and its Member States and Canada have agreed to begin immediately further work on the implementation of the provisions on investment dispute resolution of the Agreement, the so-called ‘Investment Court System’.
                  2
               
            
            
               Pursuant to Article 8.44.3(c) of the Agreement, ‘[t]he Committee Services and Investment may, on agreement of the Parties, and after completion of their respective internal requirements and procedures adopt rules for mediation for use by disputing parties as referred to in Article 8.20’.
            
            
               The envisaged act implements Article 8.44.3(c) of the Agreement by including detailed rules on the initiation of the mediation procedure (Article 3); the appointment of the mediator (Article 4); the mediation procedure (Article 5); the implementation of a mutually agreed solution (Article 6); relationship to dispute settlement (Article 7); time limits (Article 8) and costs (Article 9) of the mediation procedure. The envisaged act will enter into force on the date of entry into force of the Agreement (Article 10).
            
            
               This proposal fits in with other initiatives on the implementation of the CETA Investment Court System. Specifically, since June 2018, the Commission has been working with the Member States in the Trade Policy Committee on Services and Investment of the Council and with Canada on a package of four draft decisions regarding: 
            
         
         
            
               –rules setting out administrative and organisational matters regarding the functioning of the Appellate Tribunal in accordance with Article 8.28.7 of the Agreement; 
            
            
               –a code of conduct for Members of the Tribunal, the Appellate Tribunal and mediators in accordance with Article 8.44.2 of the Agreement; 
            
            
               –rules for mediation for use by disputing parties in accordance with Article 8.44.3(c) of the Agreement; and 
            
            
               –rules on the procedure for the adoption of interpretations in accordance with Articles 8.31.3 and 8.44.3(a) of the Agreement.
            
            
               Further work on other areas of implementation of the Investment Court System continues. As provided in paragraph 6(f) of the Joint Interpretative Instrument on the Agreement, ‘[t]he common aim is to conclude the work by the entry into force of CETA’.
            
            
               It is therefore appropriate to establish the position to be taken on the Union's behalf in the Committee on Services and Investment on the envisaged act in order to ensure the effective implementation of the Agreement.
            
            
               4.Legal basis
            
            
               4.1.Procedural legal basis
            
            
               4.1.1.Principles
            
            
               Article 218(9) of the Treaty on the Functioning of the European Union (TFEU) provides for decisions establishing ‘the positions to be adopted on the Union’s behalf in a body set up by an agreement, when that body is called upon to adopt acts having legal effects, with the exception of acts supplementing or amending the institutional framework of the agreement.’
            
            
               The concept of ‘acts having legal effects’ includes acts that have legal effects by virtue of the rules of international law governing the body in question. It also includes instruments that do not have a binding effect under international law, but that are ‘capable of decisively influencing the content of the legislation adopted by the EU legislature’
                  3
               .
            
            
               4.1.2.Application to the present case
            
            
               The Committee on Services and Investment is a body set up by an agreement, namely the Comprehensive Economic and Trade Agreement (CETA) between Canada, of the one part, and the European Union and its Member States, of the other part (‘the Agreement’).
            
            
               The act which the Committee on Services and Investment is called upon to adopt constitutes an act having legal effects. The envisaged act will be binding on the Parties under international law in accordance with Article 26.2.4 of the Agreement. 
            
            
               The envisaged act does not supplement or amend the institutional framework of the Agreement.
            
            
               Therefore, the procedural legal basis for the proposed decision is Article 218(9) TFEU.
            
            
               4.2.Substantive legal basis
            
            
               4.2.1.Principles
            
            
               The substantive legal basis for a decision under Article 218(9) TFEU depends primarily on the objective and content of the envisaged act in respect of which a position is taken on the Union's behalf. If the envisaged act pursues two aims or has two components and if one of those aims or components is identifiable as the main one, whereas the other is merely incidental, the decision under Article 218(9) TFEU must be founded on a single substantive legal basis, namely that required by the main or predominant aim or component.
            
            
               4.2.2.Application to the present case
            
         
         
            
               The main objective and content of the envisaged act relate to the common commercial policy.
            
            
               Therefore, the substantive legal bases of the proposed decision are Article 207(3) and the first subparagraph of Article 207(4)TFEU. 
            
            
               4.3.Conclusion
            
            
               The legal bases of the proposed decision should be Article 207(3) and the first subparagraph of Article 207(4), in conjunction with Article 218(9) TFEU.
            
            
               5.Authentic languages and publication of the envisaged act
            
            
               As the act of the Committee on Services and Investment will implement the Agreement with respect to the resolution of investment disputes between investors and states, it is appropriate to adopt it in all authentic languages of the Agreement
                  4
                and publish it in the Official Journal of the European Union after its adoption.
            
            
               2019/0219 (NLE)
            
            
               Proposal for a
            
            
               COUNCIL DECISION
            
            
               on the position to be taken on behalf of the European Union in the Committee on Services and Investment established under the Comprehensive Economic and Trade Agreement (CETA) between Canada, of the one part, and the European Union and its Member States, of the other part as regards the adoption of rules for mediation for use by disputing parties in investment disputes
            
            
               THE COUNCIL OF THE EUROPEAN UNION,
            
            
               Having regard to the Treaty on the Functioning of the European Union, and in particular Article 207(3) and the first subparagraph of Article 207(4), in conjunction with Article 218(9) thereof,
            
            
               Having regard to the proposal from the European Commission,
            
            
               Whereas:
            
            
               (1)Council Decision (EU) 2017/37
                  5
                provides for the signing on behalf of the European Union of the Comprehensive Economic and Trade Agreement (CETA) between Canada, of the one part, and the European Union and its Member States, of the other part (‘the Agreement’). The Agreement was signed on 30 October 2016.
            
            
               (2)Council Decision (EU) 2017/38
                  6
                provides for the provisional application of parts of the Agreement, including the establishment of the Committee on Services and Investment. The Agreement has been provisionally applied since 21 September 2017.
            
            
               (3)Pursuant to Article 26.2.4 of the Agreement, the Committee on Services and Investment may take decisions when the Agreement so provides.
            
            
               (4)In accordance with Article 8.44.3(c) of the Agreement, the Committee on Services and Investment is to adopt a decision on the rules for mediation for use by disputing parties in investment disputes.
            
            
               (5)It is therefore appropriate to establish the position to be taken on the Union's behalf in the Committee on Services and Investment on the basis of the attached draft decision of the Committee on Services and Investment on rules for mediation in order to ensure the effective implementation of the Agreement,
            
            
               HAS ADOPTED THIS DECISION:
            
         
         
            
               Article 1
            
            
               The position to be taken on behalf of the European Union in the Committee on Services and Investment as regards the adoption of rules for mediation for use by disputing parties in investment disputes shall be based on the draft decision of the Committee on Services and Investment attached to this Council Decision.
            
            
               Article 2
            
            
               1.The Decision of the Committee on Services and Investment shall be adopted in all authentic languages of the Agreement. 
            
            
               2.The Decision adopted by the Committee on Services and Investment shall be published in the Official Journal of the European Union.
            
            
               Done at Brussels,
            
            
               
                     For the Council
               
               
                     The President
               
            
         
         
            
                  
                     (1)
                  
                        Decision 001/2018 of the CETA Joint Committee of 26 September 2018 adopting its Rules of Procedure and of the Specialised Committees (OJ L 190, 27.7.2018, p. 13), available on the DG TRADE website at 
                  http://trade.ec.europa.eu/doclib/docs/2019/february/tradoc_157677.pdf
                  .
               
               
                  
                     (2)
                  
                        Joint Interpretative Instrument on the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union and its Member States (OJ L 11, 14.1.2017, p. 3).
               
               
                  
                     (3)
                  
                        Judgment of the Court of Justice of 7 October 2014, Germany v Council, C-399/12, ECLI:EU:C:2014:2258, paragraphs 61 to 64. 
               
               
                  
                     (4)
                  
                        Pursuant to Article 30.11 (Authentic texts) of the Agreement, the Agreement is drawn up in duplicate in the Bulgarian, Croatian, Czech, Danish, Dutch, English, Estonian, Finnish, French, German, Greek, Hungarian, Italian, Latvian, Lithuanian, Maltese, Polish, Portuguese, Romanian, Slovak, Slovenian, Spanish and Swedish languages, each version being equally authentic.
               
               
                  
                     (5)
                  
                        Council Decision (EU) 2017/37 of 28 October 2016 on the signing on behalf of the European Union of the Comprehensive Economic and Trade Agreement (CETA) between Canada, of the one part, and the European Union and its Member States, of the other part (OJ L 11, 14.1.2017, p. 1).
               
               
                  
                     (6)
                  
                        Council Decision (EU) 2017/38 of 28 October 2016 on the provisional application of the Comprehensive Economic and Trade Agreement (CETA) between Canada, of the one part, and the European Union and its Member States, of the other part (OJ L 11, 14.1.2017, p. 1080).
               
            
      
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               EUROPEAN COMMISSION
            Brussels, 11.10.2019
            COM(2019) 460 final
            ANNEX
            to the
            Proposal for a Council Decision
            on the position to be taken on behalf of the European Union in the Committee on Services and Investment established under the Comprehensive Economic and Trade Agreement (CETA) between Canada, of the one part, and the European Union and its Member States, of the other part as regards the adoption of rules for mediation for use by disputing parties in investment disputes
            
               
         
         
            
               ATTACHMENT 
            
            
               DRAFT
            
            
               DECISION No […/2019] OF THE COMMITTEE ON SERVICES AND INVESTMENT
            
            
               of…
            
            
               adopting rules for mediation for use by disputing parties in investment disputes
            
            
               The CETA COMMITTEE ON SERVICES AND INVESTMENT,
            
            
               Having regard to Article 26.2.1(b) of the Comprehensive Economic and Trade Agreement between Canada, of the one part, and the European Union and its Member States, of the other part (the “Agreement”), 
            
            
               Whereas Article 8.44.3(c) of the Agreement provides that the CETA Committee on Services and Investment may adopt rules for mediation for use by disputing parties as referred to in Article 8.20 (Mediation) of the Agreement, 
            
            
               HAS ADOPTED THIS DECISION:
            
            
               Article 1
            
            
               Definitions
            
            
               For the purposes of this Decision, the following definitions apply:
            
            
               (a)the definitions in Article 1.1 (Definitions of general application) of Chapter One (General definitions and initial provisions) of the Agreement;
            
            
               (b)the definitions in Article 8.1 (Definitions) of Chapter Eight (Investment) of the Agreement; 
            
            
               (c)“agreement to mediate” means an agreement made pursuant to Article 3(4) of this Decision; and
            
            
               (d)“mediator” means a person who conducts mediation in accordance with Article 8.20 (Mediation) of the Agreement.
            
            
               Article 2
            
            
               Objective and Scope
            
            
               The objective of the mediation mechanism is to facilitate the finding of a mutually agreed solution through a comprehensive and expeditious procedure with the assistance of a mediator.
            
         
         
            
               Article 3
            
            
               Initiation of the Procedure
            
            
               1.Either disputing party may request, at any time, the commencement of a mediation procedure. Such request shall be addressed to the other disputing party in writing. 
            
            
               2.If the request concerns an alleged breach of the Agreement by the authorities of the European Union or by the authorities of the Member States of the European Union, and no respondent has been determined pursuant to Article 8.21 (Determination of the respondent for disputes with the European Union or its Member States) of the Agreement, it shall be addressed to the European Union. If the request is accepted, the response shall specify whether the European Union or the Member State concerned will be a disputing party to the mediation
                  1
               . 
            
            
               3.The disputing party to which such request is addressed shall give sympathetic consideration to the request and accept or reject it in writing within 10 days of its receipt. 
            
            
               4.If the disputing parties agree to a mediation procedure, they shall sign an agreement to mediate in writing setting out rules agreed to by the disputing parties, which shall include the rules in this Decision. The agreement to mediate may include an agreement not to commence or not to continue any other dispute settlement proceedings relating to the problems or disputes that are subject to the mediation procedure: 
            
            
               (a)while the mediation procedure is pending; or 
            
            
               (b)if the disputing parties have reached a mutually agreed solution.
            
            
               An agreement pursuant to subparagraph 4(b) shall cease to apply if a disputing party, or both disputing parties, provide written notice, transmitted by way of a letter to the mediator and the other disputing party, terminating the mediation procedure.
            
            
               Article 4
            
            
               Appointment of the Mediator
            
            
               1.If both disputing parties agree to a mediation procedure, a mediator shall be appointed in accordance with the procedure set out in Article 8.20.3 of the Agreement. The disputing parties shall endeavour to agree on a mediator within 15 days from the receipt of the reply to the request. Such agreement may include appointing a mediator from the Members of the Tribunal established according to Article 8.27.2 of the Agreement or of the Appellate Tribunal established according to Article 8.28.3 of the Agreement.
            
            
               2.The disputing parties may by written consent agree to replace the mediator. If a mediator resigns, is incapacitated or otherwise becomes unable to perform his or her duties, a new mediator shall be appointed pursuant to Article 8.20.3 of the Agreement and in accordance with paragraph 1.
            
            
               3.A mediator shall not be a national of either Party, unless the disputing parties agree otherwise.
            
            
               4.The mediator shall assist, in accordance with the Decision of the CETA Committee on Services and Investment on the Code of Conduct for Members of the Tribunal, the Appellate Tribunal and Mediators, the disputing parties in reaching a mutually agreed solution. 
            
            
               Article 5
            
            
               Rules of the Mediation Procedure
            
            
               1.Within 10 days after the appointment of the mediator, the disputing party having invoked the mediation procedure shall present, in writing, a detailed description of the problem to the mediator and to the other disputing party. Within 20 days from the receipt of this submission, the other disputing party may provide, in writing, its comments to the description of the problem. Either disputing party may include in its description or comments any information that it deems relevant. 
            
            
               2.The mediator may decide on the most appropriate way of bringing clarity to the problem concerned. In particular, the mediator may organise meetings between the disputing parties, consult the disputing parties jointly or individually, seek the assistance of or consult with relevant experts and stakeholders and provide any additional support requested by the disputing parties. However, before seeking the assistance of or consulting with relevant experts and stakeholders, the mediator shall consult with the disputing parties. 
            
            
               3.The mediator may offer advice and propose a solution for the consideration of the disputing parties who may accept or reject the proposed solution or may agree on a different solution. However, the mediator shall not make a determination on the consistency of any measure at issue with the Agreement. 
            
         
         
            
               4.The procedure shall take place in the territory of the Party that is a disputing Party, or by mutual agreement in any other location or by any other means. 
            
            
               5.The disputing parties shall endeavour to reach a mutually agreed solution within 60 days from the appointment of the mediator. Pending a final agreement, the disputing parties may consider possible interim solutions. 
            
            
               6.On request of the disputing parties, the mediator shall issue to the disputing parties, in writing, a draft factual report, providing a brief summary of (1) any measure at issue in these procedures; (2) the procedures followed; and (3) any mutually agreed solution reached as the final outcome of these procedures, including possible interim solutions. The mediator shall provide the disputing parties 15 days to comment on the draft report. After considering the comments of the disputing parties submitted within this period, the mediator shall submit, in writing, a final factual report to the disputing parties within 15 days. The factual report shall not include any interpretation of the Agreement. 
            
            
               7.In accordance with Article 8.20.5 of the Agreement, the mediation procedure shall be terminated by written notice of a disputing party, or of both disputing parties, transmitted by way of a letter to the mediator and the other disputing party, on the date that the notice is given.
            
            
               Article 6
            
            
               Implementation of a Mutually Agreed Solution
            
            
               1.If a mutually agreed solution has been adopted by the disputing parties each disputing party shall take the measures necessary to implement the mutually agreed solution within the agreed timeframe.
            
            
               2.The implementing disputing party shall inform the other disputing party in writing of any steps or measures taken to implement the mutually agreed solution.
            
            
               Article 7
            
            
               Relationship to Dispute Settlement
            
            
               1.The procedure under this mediation mechanism is not intended to serve as a basis for dispute settlement procedures under the Agreement or another agreement. A disputing party shall not rely on or introduce as evidence in such dispute settlement procedures, nor shall any adjudicative body take into consideration: 
            
            
               (a)positions taken, admissions made or views expressed by a disputing party in the course of the mediation procedure;
            
            
               (b)the fact that a disputing party has indicated its willingness to accept a solution to the measure subject to mediation; 
            
            
               (c)advice given, proposals made or views expressed by the mediator; or
            
            
               (d)the content of a draft or final factual report by a mediator.
            
            
               2.Subject to Article 3(4) of this Decision, the mediation mechanism is without prejudice to the rights and obligations of the Parties and the disputing parties under Section F (Resolution of investment disputes between investors and states) and Chapter Twenty-nine (Dispute Settlement).
            
            
               3.The disputing parties’ agreement to mediate and any mutually agreed solutions shall be made publicly available. The versions disclosed to the public may not contain any information that a disputing party has designated as confidential. Unless the disputing parties agree otherwise, all other steps of the mediation procedure, including any advice or proposed solution, shall be confidential. However, any disputing party may disclose to the public that mediation is taking place. 
            
            
               Article 8
            
            
               Time Limits
            
            
               Any time limit referred to in this Decision may be modified by mutual agreement between the disputing parties. 
            
         
         
            
               Article 9
            
            
               Costs
            
            
               1.Each disputing party shall bear its own expenses derived from the participation in the mediation procedure.
            
            
               2.The disputing parties shall share jointly and equally the expenses derived from organisational matters, including the remuneration and expenses of the mediator. Remuneration of the mediator shall be in accordance with that foreseen for Members of the Tribunal under Article 8.27.14 of the Agreement. 
            
            
               Article 10
            
            
               Entry into force
            
            
               This Decision shall be published and shall enter into force on the date of entry into force of Section F (Resolution of investment disputes between investors and states) of Chapter Eight (Investment) of the Agreement, subject to the Parties’ exchange of written notifications, through diplomatic channels, certifying that they have completed the necessary internal requirements and procedures.
            
            
               Done at … on …
            
         
         
            
                  
                     (1)
                  
                        For greater certainty, if the request concerns treatment by the European Union, the disputing party to the mediation shall be the European Union and any Member State concerned shall be fully associated in the mediation. If the request concerns exclusively treatment by a Member State, the disputing party to the mediation shall be the Member State concerned, unless it requests the European Union to be a disputing party.