EUROPEAN COMMISSION

Brussels, 11.10.2019

COM(2019) 459 final

2019/0216(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 of the other part as regards the adoption of a code of conduct for Members of the Tribunal, the Appellate Tribunal and mediators

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 a code of conduct for Members of the Tribunal, the Appellate Tribunal and mediators to be applied in disputes arising out of Chapter Eight (Investment) of the Agreement.

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 a code of conduct for Members of the Tribunal, the Appellate Tribunal and mediators to be applied in disputes arising out of Chapter Eight (Investment) of the Agreement (‘the envisaged act’).

The purpose of the envisaged act is to supplement the rules in application under Article 8.30 (Ethics) of the Agreement.

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 8.44.2 of the Agreement, ‘[t]he Committee on Services and Investment shall, on agreement of the Parties, and after completion of their respective internal requirements and procedures, adopt a code of conduct for the Members of the Tribunal to be applied in disputes arising out of this Chapter, which may replace or supplement the rules in application, and may address topics including: (a) disclosure obligations; (b) the independence and impartiality of the Members of the Tribunal; and (c) confidentiality. The Parties shall make best efforts to ensure that the code of conduct is adopted no later than the first day of the provisional application or entry into force of this Agreement, as the case may be, and in any event no later than two years after such date’.

Paragraph 6(f) of the Joint Interpretative Instrument on the Agreement expressly refers to ‘further work on a code of conduct to further ensure the impartiality of the members of the Tribunals’.

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: ‘[t]he ethical requirements for members of the Tribunals, already provided for in CETA, will be set out in detail as soon as possible and allowing sufficient time so that Member States can consider them in their ratification processes, in an obligatory and binding code of conduct (which is also already provided for in CETA). This Code will include in particular: detailed rules of conduct applicable to candidates for appointment as members of the Tribunal or the Appellate Tribunal, in particular concerning of disclosure of their past and current activities that might affect their appointment or the exercise of their duties; detailed rules of conduct applicable to members of the Tribunal and the Appellate Tribunal during their term of office; detailed rules of conduct applicable to members of the Tribunal and the Appellate Tribunal at the end of their term of office, including the prohibition of the exercise of specific duties or professions for a specified period after the end of their term of office; a sanction mechanism in the event of non-compliance with the rules of conduct which is effective and fully respects the independence of judicial power’ 3 .

The envisaged act fully implements these commitments by including detailed rules on ethics for the Members of the Tribunal, the Appellate Tribunal and mediators. Specifically, the code of conduct includes provisions on responsibilities to the process (Article 2 of the envisaged act); disclosure obligations (Article 3); independence, impartiality and other obligations (Article 4); obligations of former Members (Article 5); confidentiality obligations (Article 6); obligations on transparency as regards time and expenses devoted to proceedings (Article 7); sanctions (Article 8); obligations on mediators (Article 9); and the establishment of Consultative Committees (Article 10). The envisaged act will enter into force on the date of entry into force of the Agreement (Article 11).

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’ 4 .

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 5 and publish it in the Official Journal of the European Union after its adoption.

2019/0216 (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 of the other part as regards the adoption of a code of conduct for Members of the Tribunal, the Appellate Tribunal and mediators

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 6 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 7 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 8.44.2 of the Agreement, the Committee on Services and Investment is to adopt a decision on a code of conduct for Members of the Tribunal, the Appellate Tribunal and mediators to be applied in disputes arising out of Chapter Eight (Investment) of the Agreement.

(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 a code of conduct 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 a code of conduct for Members of the Tribunal, the Appellate Tribunal and mediators 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,

(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)    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.

(5)    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.

(6)    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).

(7)    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).

EUROPEAN COMMISSION

Brussels, 11.10.2019

COM(2019) 459 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 of the other part as regards the adoption of a code of conduct for Members of the Tribunal, the Appellate Tribunal and mediators

ATTACHMENT

DRAFT

DECISION No […/2019] OF THE COMMITTEE ON SERVICES AND INVESTMENT

of…

adopting a code of conduct for Members of the Tribunal, the Appellate Tribunal and mediators

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 8.44.2 of the Agreement provides that the CETA Committee on Services and Investment shall adopt a code of conduct to be applied in disputes arising out of Chapter Eight of the Agreement, which may replace or supplement the rules in application,

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)“assistant” means a person, other than a person employed by the ICSID Secretariat, who, under the terms of appointment of a Member, assists the Member in his or her research or supports him or her in his or her duties;

(d)“candidate” means a person who has submitted an application or is otherwise aware that he or she is under consideration for selection as a Member;

(e)“mediator” means a person who conducts mediation in accordance with Article 8.20 (Mediation) of the Agreement; and

(f)“Member” means a Member of the Tribunal or 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

Responsibilities to the Process

Candidates, Members and former Members shall avoid impropriety and the appearance of impropriety, and shall observe high standards of conduct so that the integrity and impartiality of the dispute settlement mechanism is preserved.

Article 3

Disclosure Obligations

1.Candidates shall disclose to the Parties any past and present interest, relationship or matter that is likely to affect, or that could reasonably be seen as likely to affect, their independence or impartiality, that creates or could reasonably be seen as creating a direct or indirect conflict of interest, or that creates or might reasonably be seen as creating an appearance of impropriety or bias. To this end, candidates shall make all reasonable efforts to become aware of any such interests, relationships or matters. The disclosure of past interests, relationships or matters shall cover at least the last five years prior to a candidate submitting an application or otherwise becoming aware that he or she is under consideration for selection as a Member.

2.Members shall communicate matters concerning actual or potential violations of this code of conduct in writing to the Parties and, when relevant to a dispute, to the disputing parties.

3.Members shall at all times continue to make all reasonable efforts to become aware of any interests, relationships or matters referred to in paragraph 1 of this Article. Members shall at all times disclose such interests, relationships or matters throughout the performance of their duties by informing the Parties and, where relevant, the disputing parties.

4.In order to ensure that relevant information is provided by candidates and Members, disclosures shall be made through a standardised form with the possibility to add or enclose any document, and in accordance with any other procedures established by the Parties.

Article 4

Independence, Impartiality and Other Obligations of Members

1.In addition to the obligations established in Article 2 of this Decision, Members shall be and shall appear to be independent and impartial, and shall avoid direct and indirect conflicts of interest.

2.Members shall not be influenced by self-interest, outside pressure, political considerations, public clamour, loyalty to a Party, disputing party or any other person involved or participating in the proceeding, fear of criticism or financial, business, professional, family or social relationships or responsibilities.

3.Members shall not, directly or indirectly, incur any obligation, accept any benefit, enter into any relationship, or acquire any financial interest that is likely to affect or appear to affect their independence or impartiality.

4.Members shall not engage in ex parte contacts concerning the proceeding.

5.Members shall perform their duties thoroughly and expeditiously throughout the course of the proceeding and shall do so with fairness and diligence.

6.Members shall consider only those issues raised in the proceeding and which are necessary for a decision or award and shall not delegate this duty to any other person.

7.Members shall take all appropriate steps to ensure that their assistants are aware of, and comply with, Articles 2 (Responsibilities to the Process), 3(2) and (3) (Disclosure Obligations), 4(1)-(5) (Independence and Impartiality and Other Obligations of of Members), 5(1) and (3) (Former Members) and 6 (Confidentiality) of this Decision mutatis mutandis. 

8.Members shall take appropriate account of other dispute settlement activities under the Agreement and, in particular, of decisions or awards rendered by the Appellate Tribunal. 

Article 5

Obligations of Former Members

1.Former Members shall avoid actions that may create the appearance that they were biased in carrying out their duties or derived advantage from the decisions or awards of the Tribunal or the Appellate Tribunal.

2.Members shall undertake that for a period of three years after the end of their term, they shall not act as representatives of any of the disputing parties in investment disputes before the Tribunal or the Appellate Tribunal.

3.Without prejudice to the possibility to continue to serve on a division until the closure of the proceedings of that division, Members shall undertake that after the end of their term, they shall not become involved:

(a)in any manner whatsoever in investment disputes which were pending before the Tribunal or the Appellate Tribunal before the end of their term;

(b)in any manner whatsoever in investment disputes directly and clearly connected with disputes, including concluded disputes, which they have dealt with as Members of the Tribunal or the Appellate Tribunal.

4.If the President of the Tribunal or of the Appellate Tribunal is informed or otherwise becomes aware that a former Member is alleged to have acted inconsistently with the obligations set up in paragraphs 1 through 3 of this Article, or any other part of this Decision while a Member, he or she shall examine the matter, provide the opportunity to the former Member to be heard, and, after verification, inform thereof:

(a)the professional body or other such institution with which that former Member is affiliated;

(b)the Parties;

(c)if it involves a specific dispute, the disputing parties; and

(d)the President of any other relevant international court or tribunal in view of the initiation of appropriate measures.

The President of the Tribunal or of the Appellate Tribunal shall make public its decision to take the actions referred to in subparagraphs (a) through (d) above, together with the reasons therefor.

Article 6

Confidentiality

1.Members and former Members shall not at any time disclose or use any non-public information concerning a proceeding or acquired during a proceeding, except for the purposes of the proceeding, and shall not, in any case, disclose or use any such information to gain personal advantage or advantage for others or to adversely affect the interest of others.

2.Members shall not disclose an order, decision, or award or parts thereof prior to its publication in accordance with the transparency provisions of Article 8.36 (Transparency of proceedings) of the Agreement.

3.Members or former Members shall not disclose any deliberation of the Tribunal or Appellate Tribunal, or any Member’s views, except in an order, decision or award.

Article 7

Expenses

Each Member shall keep a record and render a final account of the time devoted to the procedure and of the expenses incurred, as well as the time and expenses of their assistant.

Article 8

Sanctions

1.For greater certainty, the provisions of this code of conduct shall be applied together with the obligations set out in Article 8.30.1 of the Agreement and the procedures foreseen in Article 8.30 paragraphs 2 and 3 and Article 8.30.4 of the Agreement shall apply to violations of this code of conduct.

2.For greater certainty, the CETA Joint Committee shall provide a Member the opportunity to be heard prior to the issuance of any decision pursuant to Article 8.30.4 of the Agreement.

Article 9

Mediators

1.The rules set out in this Decision as applying to candidates shall apply, mutatis mutandis, to persons who are aware that they are under consideration for appointment as mediators.

2.The rules set out in this Decision as applying to Members shall apply, mutatis mutandis, to mediators from the date on which he or she is appointed as mediator to the date on which:

(a)the disputing parties adopt a mutually agreed solution;

(b)the mediator provides a written declaration resigning from his or her duties as mediator; or

(c)a disputing party, or both disputing parties, provide written notice by way of a letter transmitted to the mediator and the other disputing party terminating the mediator or the mediation procedure, whichever is earlier.

3.The rules set out in this Decision as applying to former Members shall apply, mutatis mutandis, to former mediators.

Article 10

Consultative Committees

1.The President of the Tribunal and the President of the Appellate Tribunal shall each be assisted by a Consultative Committee for ensuring the proper application of this code of conduct, of Article 8.30 (Ethics) of the Agreement and for the execution of any other task, where so provided.

2.The Consultative Committees shall be composed of the respective Vice-President and of the two most senior Members of the Tribunal or of the Appellate Tribunal.

Article 11

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 …