Alessandra Asteriti

Article 21 TEU and the EU’s Common Commercial Policy: A Test of Coherence

This contribution investigates the role of Article 21 TEU in the context of the EU’s common commercial policy (CCP), with specific reference to its new investment competence. Article 21, introducing non-commercial objectives in the CCP, has been both hailed for rebalancing and expanding the EU’s foreign policy and criticised for needlessly politicising the external action of the EU. This article is an attempt to assess the true import of the changes introduced by the Lisbon Treaty in this area, for what is possible given the limited temporal extent of their application. Section 2 will briefly review the role of foreign investment in the CCP, while Section 3 will do the same for the non-commercial objectives pursued by the EU in the context of its CCP competences. Section 4 is dedicated to an analysis of Article 21 TEU and its legal value. In doing so, the section will consider issues such as to what extent Article 21 TEU constrains the foreign policy of the EU and its effect with specific reference to the CCP. Further, the article will consider the relationship between Article 21 TEU and other programmatic articles of the TEU, such as Article 3 TEU, and the incorporation of non-commercial objectives in the EU’s Free Trade Agreements (FTAs) and Preferential Trade Arrangements (PTAs). In Section 5, there will be a review and implications of the recent Front Polisario case, in which the General Court determined the EU’s scope of responsibility for what concern non-commercial objectives in a trade agreement, taking also into account the latest developments on the case in the Court of Justice of the EU’s Judgment. Finally, Section 6 will offer some concluding remarks.

Environmental Law in Investment Arbitration: Procedural Means of Incorporation

The present article explores the relationship between investment and environmental law by examining the use of counterclaims and jurisdictional and applicable law clauses in IIAs. Environmental issues arising contextually to investment disputes have given rise to sustained debates on the legitimacy deficit of the system; one possible way forward for the debates is through the incorporation of environmental law in the investment regime, and many substantive avenues have been explored, including the reconceptualisation of certain provisions, the adoption of proportionality and balancing by tribunals, and the adjustment of the quantum of compensation. This article focuses on the procedural means of incorporation as the first, inevitable step towards any of the above solutions. Additionally, the article deals in detail with the possibility of asserting counterclaims as a little explored avenue potentially allowing for international and domestic environmental obligations to enter the investment dispute.

Climate Change Policies and Foreign Investment: Some Salient Legal Issues

Climate change has arisen as the most pressing global challenge of our time. In the post-1989 economic consensus based on market mechanisms and eschewing command and control regulation, the concerted global response to this problem has taken the form of flexibility mechanisms harnessing the market in order to steer development in the direction of a low-carbon economy. From this perspective, the flow of foreign investment towards developing countries – and in 2012 for the first time investment flows to developing countries surpassed those between developed countries – can be one of the most effective tools to pursue an environmentally sustainable and climate-friendly economic development. The legal response to climate change, exemplified by the measures contained in the Kyoto Protocol – Clean Development Mechanism (CDM), Joint Implementation (JI) and International Emission Trading (IET) – is designed to harness foreign investment for sustainable development and emission reduction projects by providing economic incentives for the transition to a low-carbon economy. On the downside, the mechanisms, when employed within global value chains for the production of consumption goods for developed countries’ markets, can be used to offshore emissions from developed to developing and least developed countries without achieving an overall reduction in carbon emissions. As these countries do not have emission reduction targets, any failure down the chain of production in projects started under the aegis of the CDM, for example, might result in a net increase of emissions (so-called ‘carbon leakage’). The picture from within the investment regime is equally mixed. Traditionally, the investment regime has been instrumental in reducing the regulatory risk for foreign investors; in the case of environmental measures this meant protection against the ratcheting up of standards to the detriment of investors engaged in highly polluting and/or carbon intensive sectors such as mining and extractive industries. Numerous investment arbitrations have concerned environmental measures and this has been the case especially under the umbrella of the NAFTA. The rise of ‘environmental’ arbitrations has functioned as a catalyst for changes within the investment regime in the direction of its diversification, clarification and hybridisation. In fact, the latest UNCTAD Investment Report confirms the trend towards the inclusion of ‘sustainable-development-friendly provisions’ in International Investment Agreements (IIAs), via the insertion of clauses dealing with environmental, labour and human rights measures. The fact that investors might avail themselves of IIAs to protect climate-friendly investments from non-commercial regulatory risk is certainly not noteworthy per se – the ‘legitimate expectations’ doctrine and contractual stabilization clauses have been developed precisely to deal with this sort of risk – and yet, in the quest for legitimacy of the investment regime, this has been presented as another added value. From this synergic perspective, IIAs are presented as providing a further layer of protection of ‘green investors,’ against loosening/reducing of support mechanisms used to attract low-carbon investments and switching projects. This synergic potential notwithstanding, conflicts arising by regime intersection have attracted more attention. In this chapter, as in much of the available literature, the focus is on the conflicts generated within the investment regime, which, as a consequence of its sophisticated system of dispute resolution, is more likely to have to deal with them and better equipped to do so. This interaction can be read on a purely international plane, whereby climate change legal obligations, enshrined in the 1992 United Nations Framework Convention on Climate Change (UNFCCC) and its 1997 Kyoto Protocol (as amended in the 2012 Doha Amendment), conflict with the obligations contained in IIAs. International law possesses several tools, from interpretation to general rules of conflict resolution and specific conflict clauses in the applicable IIAs, to prevent or resolve these conflicts.