CELEX: 52019PC0457
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 CETA Joint Committee 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 a decision setting out the administrative and organisational matters regarding the functioning of the Appellate Tribunal

EUROPEAN COMMISSION
            Brussels, 11.10.2019
            COM(2019) 457 final
            2019/0217(NLE)
            Proposal for a
            COUNCIL DECISION
            on the position to be taken on behalf of the European Union in the CETA Joint Committee 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 a decision setting out the administrative and organisational matters regarding the functioning of the Appellate Tribunal
            
               
         
         
            
               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 CETA Joint Committee 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 setting out the administrative and organisational matters regarding the functioning of the Appellate Tribunal.
            
            
               2.Context of the proposal
            
            
               2.1.The Comprehensive Economic and Trade Agreement (CETA) between the European Union and its Member States, of the one part, and Canada, 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 CETA Joint Committee 
            
            
               The CETA Joint Committee is established under Article 26.1 of the Agreement, which provides that the CETA Joint Committee comprises representatives of the European Union and representatives of Canada and is be co-chaired by the Minister for International Trade of Canada and the Member of the European Commission responsible for Trade, or their respective designees. The CETA Joint Committee meets once a year, or at the request of a Party, and agrees on its meeting schedule and its agenda. The CETA Joint Committee is responsible for all questions concerning trade and investment between the Parties and the implementation and application of this Agreement. A Party may refer to the CETA Joint Committee any issue relating to the implementation and interpretation of this Agreement, or any other issue concerning trade and investment between the Parties.
            
            
               In accordance with Article 26.3 of the Agreement, the CETA Joint Committee has the power to make decisions, by mutual consent, in respect of all matters when the Agreement so provides. The decisions made by the CETA Joint Committee are binding on the Parties, subject to the completion of any necessary internal requirements and procedures, and the Parties have to implement them.
            
            
               In accordance with Article 26.2.4 of the Agreement, the specialised committees, including the Committee on Services and Investment, may propose draft decisions for adoption by the CETA Joint Committee.
            
            
               In accordance with Rule 10.2 of the Rules of Procedure of the CETA Joint Committee and of the Specialised Committees
                  1
               , in the period between meetings, the CETA Joint Committee 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 CETA Joint Committee 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 CETA Joint Committee 
            
            
               The CETA Joint Committee is to adopt a decision setting out the administrative and organisational matters regarding the functioning of the Appellate Tribunal pursuant to Article 8.28.7 of the Agreement (‘the envisaged act’).
            
            
               Therefore, the purpose of the envisaged act is to implement Article 8.28.7 of the Agreement. 
            
            
               The envisaged act will become binding on the Parties. Article 26.3.2 of the Agreement provides: ‘The decisions made by the CETA Joint Committee shall be binding on the Parties, subject to the completion of any necessary internal requirements and procedures, and the Parties shall implement them’.
            
            
               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 8.28.7 of the Agreement, ‘The CETA Joint Committee shall promptly adopt a decision setting out the following administrative and organisational matters regarding the functioning of the Appellate Tribunal: (a) administrative support; (b) procedures for the initiation and the conduct of appeals, and procedures for referring issues back to the Tribunal for adjustment of the award, as appropriate; (c) procedures for filling a vacancy on the Appellate Tribunal and on a division of the Appellate Tribunal constituted to hear a case; (d) remuneration of the Members of the Appellate Tribunal; (e) provisions related to the costs of appeals; (f) the number of Members of the Appellate Tribunal; and (g) any other elements it determines to be necessary for the effective functioning of the Appellate Tribunal’.
            
            
               Paragraph 6(g) of the Joint Interpretative Instrument on the Agreement provides: ‘CETA is the first agreement to include an Appeal mechanism which will allow the correction of errors and ensure the consistency of the decisions of the Tribunal of first instance’. In addition, Statement No 36 by the Commission and the Council, entered into the Council minutes on the occasion of the adoption by the Council of the decision to authorise the signature of CETA on behalf of the Union, provides: ‘The appeal mechanism laid down in Article 8.28 of the CETA will be organised and improved to render it wholly fit to ensure consistency of decisions rendered at first instance and thus to contribute to legal certainty. This presupposes in particular: The composition of the Appellate Tribunal will be organised so as to ensure the greatest possible continuity. Each member of the Appellate Tribunal will have the obligation to keep informed of decisions by divisions of the Appellate Tribunal of which he or she is not a member. The Appellate Tribunal should have the option to sit as a ‘Grand Chamber’ in cases raising important questions of principle or on which the divisions of the Appellate Tribunal are divided’
                  3
               .
            
         
         
            
               The envisaged act implements these commitments by including detailed rules on the composition of the Appeal Tribunal and administrative arrangements (Article 2 of the envisaged act); and the conduct of appeals (Article 3). The envisaged act will enter into force on the date of entry into force of the Agreement (Article 4).
            
            
               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, including on the selection, appointment and remuneration of the Members of the Tribunal and Appellate Tribunal. Although the amount of the remuneration of the Members of the Tribunal and Appellate Tribunal is subject to discussions with the Member States and Canada, the Commission has in the past estimated that the annual fixed costs of the CETA Investment Court System would amount to around EUR 800.000, to be divided equally between Canada and the EU.
                  4
                Therefore, the impact of these fixed costs on the EU budget would be of around EUR 400.000 per year. These costs will be factored in the EU budget for 2021.
            
            
               It is therefore appropriate to establish the position to be taken on the Union's behalf in the CETA Joint Committee 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’
                  5
               .
            
            
               4.1.2.Application to the present case
            
            
               The CETA Joint Committee 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 CETA Joint Committee 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 26.3.2 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 CETA Joint Committee 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
                  6
                and publish it in the Official Journal of the European Union after its adoption.
            
            
               2019/0217 (NLE)
            
            
               Proposal for a
            
            
               COUNCIL DECISION
            
            
               on the position to be taken on behalf of the European Union in the CETA Joint Committee 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 a decision setting out the administrative and organisational matters regarding the functioning of the Appellate Tribunal
            
            
               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
                  7
                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
                  8
                provides for the provisional application of parts of the Agreement, including the establishment of the CETA Joint Committee. The Agreement has been provisionally applied since 21 September 2017.
            
            
               (3)Pursuant to Article 26.3.1 of the Agreement, the CETA Joint Committee shall, for the purpose of attaining the objectives of this Agreement, have the power to make decisions in respect of all matters when this Agreement so provides.
            
            
               (4)Pursuant to Article 26.3.2 of the Agreement, the decisions made by the CETA Joint Committee shall be binding on the Parties, subject to the completion of any necessary internal requirements and procedures, and the Parties shall implement them.
            
         
         
            
               (5)In accordance with Article 8.28.7 of the Agreement, the CETA Joint Committee is to adopt a decision setting out the administrative and organisational matters regarding the functioning of the Appellate Tribunal.
            
            
               (6)It is therefore appropriate to establish the position to be taken on the Union's behalf in the CETA Joint Committee on the basis of the attached draft decision of the CETA Joint Committee on the Appellate Tribunal 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 CETA Joint Committee as regards the adoption of a decision setting out the administrative and organisational matters regarding the functioning of the Appellate Tribunal shall be based on the draft decision of the CETA Joint Committee attached to this Council Decision.
            
            
               Article 2
            
            
               1.The Decision of the CETA Joint Committee shall be adopted in all authentic languages of the Agreement. 
            
            
               2.The Decision adopted by the CETA Joint Committee 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)
                  
                        Statements to be entered in the Council minutes (OJ L 11, 14.1.2017, p. 9). 
               
               
                  
                     (4)
                  
                        These are the estimates of the fixed annual costs of the CETA Investment Court System (when there are no disputes), i.e. of the base remuneration of the Members of the Tribunal and Appellate Tribunal.
               
               
                  
                     (5)
                  
                        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. 
               
               
                  
                     (6)
                  
                        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.
               
               
                  
                     (7)
                  
                        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).
               
               
                  
                     (8)
                  
                        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).
               
            
      
    ---documentbreak--- 
      
         
               EUROPEAN COMMISSION
            Brussels, 11.10.2019
            COM(2019) 457 final
            ANNEX
            to the
            Proposal for a Council Decision
            on the position to be taken on behalf of the European Union in the CETA Joint Committee 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 a decision setting out the administrative and organisational matters regarding the functioning of the Appellate Tribunal
            
               
         
         
            
               ATTACHMENT 
            
            
               DRAFT
            
            
               DECISION No […/2019] OF THE CETA JOINT COMMITTEE
            
            
               of…
            
            
               setting out the administrative and organisational matters regarding the functioning of the Appellate Tribunal 
            
            
               The CETA JOINT COMMITTEE,
            
            
               Having regard to Article 26.1 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 8.28.7 of the Agreement provides that the CETA Joint Committee shall adopt a decision setting out the administrative and organisational matters regarding the functioning of the Appellate Tribunal,
            
            
               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; and
            
            
               (c)“Member” means a Member of the Appellate Tribunal established pursuant to Section F (Resolution of investment disputes between investors and states) of Chapter Eight (Investment) of the Agreement.
            
            
               Article 2
            
            
               Composition and administrative arrangements
            
            
               1.The Appellate Tribunal shall be composed of six Members appointed by the CETA Joint Committee with a view to the principles of diversity and gender equality. For the purposes of this appointment: 
            
            
               (a)two Members shall be selected from nominations proposed by Canada; 
            
         
         
            
               (b)two Members shall be selected from nominations proposed by the European Union; and 
            
            
               (c)two Members shall be selected from nominations proposed by Canada or the European Union, and shall not be nationals of either Canada or any Member State of the European Union.
            
            
               2.The CETA Joint Committee may decide to increase the number of Members by multiples of three. Additional appointments shall be made on the same basis as provided for in paragraph 1.
            
            
               3.Members shall be appointed for a nine-year non-renewable term. However, the terms of three of the first six persons appointed pursuant to Article 8.28.3 of the Agreement shall be limited to six years. Those three persons shall be determined by lot with one Member selected from each of the groups of Members appointed pursuant to subparagraphs 1(a), 1(b) and 1(c). In principle, a Member serving on a division of the Appellate Tribunal when his or her term expires may continue to serve on the division until the closure of the proceedings of that division, unless the President of the Appellate Tribunal after consulting with the other Members of the division decides otherwise, and shall, for that purpose only, be deemed to continue to be a Member. Vacancies in the Appellate Tribunal shall be filled as they arise.
            
            
               4.The Appellate Tribunal shall have a President and Vice-President responsible for organisational issues, who shall be selected by lot by the Chair of the CETA Joint Committee for a two-year term from among the Members who are nationals of third countries. They shall serve on the basis of a rotation. The Vice-President shall replace the President when the President is unavailable.
            
            
               5.The division of the Appellate Tribunal constituted to hear each case under Article 8.28.5 of the Agreement shall consist of three Members, of whom one Member has been appointed pursuant to subparagraph 1(a), one Member has been appointed pursuant to subparagraph 1(b) and one Member has been appointed pursuant to subparagraph 1(c). The division shall be chaired by the Member who has been appointed pursuant to subparagraph 1(c). 
            
            
               6.The composition of the division of the Appellate Tribunal hearing each appeal shall be established in each case by the President of the Appellate Tribunal on a rotation basis, ensuring that the composition of the divisions is random and unpredictable, while giving equal opportunity to all Members to serve.
            
            
               7.The Appellate Tribunal may sit in a division of six Members where a case pending before a division raises a serious question affecting the interpretation or application of Chapter Eight of the Agreement. The Appellate Tribunal shall sit in a division of six Members when both disputing parties so request or where a majority of Members decides that it is desirable. The President of the Appellate Tribunal shall preside over the division of six Members.
            
            
               8.The Appellate Tribunal may draw up its own working procedures.
            
            
               9.Members shall ensure that they are available and able to perform the functions set out under this Decision and under Section F (Resolution of investment disputes between investors and states) of Chapter Eight (Investment) of the Agreement.
            
            
               10.In order to ensure their availability, Members shall be paid a monthly retainer fee to be determined by the CETA Joint Committee.
            
            
               11.The fees referred to in paragraph 10 shall be paid equally by both Parties into an account managed by the Secretariat of ICSID. In the event that one Party fails to pay the retainer fee, the other Party may elect to pay. Any such arrears will remain payable, with appropriate interest. 
            
            
               12.The fees and expenses of Members on a division constituted to hear a claim, other than the fees referred to in paragraph 10, shall be determined by the CETA Joint Committee and allocated among the disputing parties on the same basis as Article 8.39.5 of the Agreement.
            
            
               13.Upon a decision by the CETA Joint Committee, the retainer fee and the fees for days worked may be transformed into a regular salary. In such an event, Members shall serve on a full-time basis and the CETA Joint Committee shall fix their remuneration and related organisational matters. In that event, the Members shall not be permitted to engage in any occupation, whether gainful or not, unless exemption is exceptionally granted by the President of the Appellate Tribunal.
            
            
               14.The Secretariat of ICSID shall act as Secretariat for the Appellate Tribunal and provide it with appropriate support. The expenses for such support shall be met by the Parties equally.
            
            
               Article 3
            
            
               Conduct of Appeals
            
            
               1.Either disputing party may appeal before the Appellate Tribunal an award rendered by the Tribunal pursuant to Section F (Resolution of investment disputes between investors and states) of Chapter Eight (Investment) within the time frame established by Article 8.28.9(a) of the Agreement and the grounds set out in Article 8.28.2 of the Agreement.
            
            
               2.If the Appellate Tribunal upholds the appeal in whole or in part, it shall modify or reverse the legal findings and conclusions of the Tribunal in whole or in part. The Appellate Tribunal shall specify precisely how it has modified or reversed the relevant findings and conclusions of the Tribunal. 
            
            
               3.If the facts established by the Tribunal so permit, the Appellate Tribunal shall apply its own legal findings and conclusions to such facts and render a final award. If that is not possible, it shall issue a decision referring the matter back to the Tribunal to render an award in accordance with the findings and conclusions of the Appellate Tribunal. If possible, the Appellate Tribunal shall refer the matter back to the same division of the Tribunal that was previously constituted to decide the matter. 
            
         
         
            
               4.The Appellate Tribunal shall reject the appeal where it finds that the appeal is unfounded. It may also reject the appeal on an expedited basis where it is clear that the appeal is manifestly unfounded. If the Appellate Tribunal rejects the appeal, the award rendered by the Tribunal shall become the final award.
            
            
               5.As a general rule, the appeal proceedings shall not exceed 180 days from the date a disputing party formally notifies its decision to appeal to the date the Appellate Tribunal issues its decision or award. If the Appellate Tribunal considers that it cannot issue its decision or award within 180 days, it shall inform the disputing parties in writing of the reasons for the delay together with an estimate of the period within which it will issue its decision or award. Every effort should be made to ensure that the appeal proceedings should not exceed 270 days.
            
            
               6.A disputing party lodging an appeal shall provide security for the costs of appeal as determined by the division of the Appellate Tribunal constituted to hear the case. The disputing party shall also provide any other security as may be ordered by the Appellate Tribunal.
            
            
               7.The provisions of Articles 8.20 (Mediation), 8.24 (Proceedings under another international agreement), 8.26 (Third party funding), 8.31 (Applicable law and interpretation), 8.34 (Interim measures of protection), 8.35 (Discontinuance), 8.36 (Transparency of proceedings),
                  1
                8.38 (Non-disputing Party), 8.39 (Final award) and 8.40 (Indemnification or other compensation) of the Agreement shall apply mutatis mutandis in respect of the appeal procedure.
            
            
               Article 4
            
            
               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, the notice of appeal, the notice of intent to challenge a Member and the decision on challenge to a Member shall be included in the list of documents to be made available to the public under Article 3(1) of the UNCITRAL Transparency Rules.