Annexes to COM(2023)708 - EU position in the CETA Joint Committee established under the Comprehensive Economic and Trade Agreement (CETA) with Canada, as regards the adoption of a decision on the interpretation of Article 8.10, Annex 8-A, Article 8.9.1 and Article 8.39.3 of CETA in accordance with Article 26.1.5(e) of CETA - Main contents
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| dossier | COM(2023)708 - EU position in the CETA Joint Committee established under the Comprehensive Economic and Trade Agreement (CETA) with Canada, ... |
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| document | COM(2023)708  |
| date | January 29, 2024 |
(2) 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.
(3) 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.
(4) 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).
(5) 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, 17.11.2023
COM(2023) 708 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 on the interpretation of Article 8.10, Annex 8-A, Article 8.9.1 and Article 8.39.3 of CETA in accordance with Article 26.1.5(e) of CETA
ATTACHMENT
Draft
DECISION No […/…] OF THE CETA JOINT COMMITTEE
of [date]
on the interpretation of Article 8.10, Annex 8-A, Article 8.9.1 and Article 8.39.3
THE CETA JOINT COMMITTEE,
Having regard to Article 26.1.5.(e) 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,
Having regard to Decision No 2/2021 of the CETA Joint Committee of 29 January 2021,
Recalling the common understanding expressed in Section 6 of the Joint Interpretative Instrument,
Aiming to further clarify the intentions of the Parties under Chapter 8, with respect to Article 8.10 (Fair and equitable treatment) and Annex 8-A (Indirect expropriation), Article 8.9.1 (Investment and regulatory measures) and Article 8.39.3 (Final award)
HAS DECIDED AS FOLLOWS:
1.Fair and equitable treatment
For greater certainty, Article 8.10 shall be interpreted as follows:
(a)The list of elements in Article 8.10.2 is exhaustive;
(b)A claim of denial of justice under Article 8.10.2(a) requires prior exhaustion of local remedies except if there are no reasonably available local remedies to provide effective redress, or the local remedies provide no reasonable possibility of such redress.
In determining whether there is a denial of justice, the Tribunal should be mindful that it is not a court of appeal of domestic court decisions and it should not engage in reviewing the merits of domestic court decisions.
(c)For there to be breach of denial of justice and a fundamental breach of due process within the meaning of Article 8.10.2(a) and (b), there must be improper and egregious procedural conduct in judicial or administrative proceedings, which does not meet the basic internationally accepted standards of administration of justice and due process, and which shocks or surprises a sense of judicial propriety such as the unfounded refusal of access to courts or legal representation, failure to provide an opportunity to be heard, discriminatory treatment by the courts, clearly biased and corrupt adjudicators, complete or unjustifiable lack of transparency in the proceedings such as a failure to provide notice for the proceedings or reasons for the decision.
(d)A measure is manifestly arbitrary within the meaning of Article 8.10.2(c) when it is evident that the measure is not rationally connected to a legitimate policy objective, such as when a measure is based on prejudice or bias rather than on reason or fact.
(e)For greater certainty, a measure or series of measures constitute “targeted discrimination on manifestly wrongful grounds such as gender, race or religious belief” within the meaning of Article 8.10.2(d) if the measure or series of measures single out the investor in providing differential treatment based on illegitimate grounds such as gender, race or religious belief. Article 8.10.2(d) shall not be construed as preventing the Parties from granting preferential treatment to promote gender or racial equality or otherwise address under-representation of socio-economically disadvantaged groups.
(f)A determination that a measure or series of measures constitute “abusive treatment of investors, such as coercion, duress and harassment” within the meaning of Article 8.10.2(e), requires a finding of serious misconduct by a Party. In making this determination, relevant considerations may include the harm or threatened harm to the investor such as whether the episodes of alleged harassment or coercion were repeated and sustained; and the rationale for the Party’s actions, for example whether the authorities were acting within the scope of their authority or whether there was an abuse of power.
(g)Under Article 8.10.4, representations made to an investor may only be taken into account to the extent they are relevant as a factor in determining a breach of fair and equitable treatment as set out in Article 8.10.2. Legitimate expectations cannot arise from representations if a prudent and informed investor would not have reasonably relied upon the representations in making the investment, notably because the representations were not sufficiently specific and unambiguous and did not have the requisite degree of formality such as those made in writing by the competent authority of a Party.
2.Indirect expropriation
(a)For greater certainty, an indirect expropriation may only occur if the investor has been radically deprived of the use, enjoyment and disposal of its investment, as if the rights related thereto had ceased to exist.
(b)When assessing the “duration of the measure or series of measures” within the meaning of Paragraph 2 b) of Annex 8-A, consideration should be given to whether the interference with the property right is temporary, in which case it is unlikely to amount to an indirect expropriation, or permanent, although the sole fact that a measure is permanent does not establish that an indirect expropriation has occurred.
(c)The “distinct, reasonable investment-backed expectations” in paragraph 2 c) of Annex 8-A, refer to the expectations that a prudent and informed investor could have reasonably formed and that were relied upon in making the investment. For greater certainty, whether an investor’s investment-backed expectations are reasonable depends, to the extent relevant, on factors such as whether the government provided the investor with binding written assurances and the nature and extent of governmental regulation or the potential for government regulation in the relevant sector.
(d)The impact of a measure or series of measures appears “manifestly excessive” within the meaning of Paragraph 3 of Annex 8-A if it is clearly and obviously excessive in light of the intended policy objectives.
(e)For greater certainty, measures of a Party that are designed and applied to protect legitimate public welfare objectives in paragraph 3 of Annex 8-A include measures taken to combat climate change or addressing its present or future consequences. Such measures do not constitute indirect expropriation unless they are clearly and obviously excessive in light of the intended policy objectives.
3.Climate Change
(a)The Parties reaffirm their right to regulate in the public interest to achieve legitimate public policy objectives to protect the environment as set out in Article 8.9.1, including by taking measures to mitigate or combat climate change or to address its present or future consequences.
(b)When interpreting the provisions of the Investment chapter, the Tribunal shall give due consideration to the commitments of the Parties under multilateral environmental agreements, including the Paris Agreement. In particular, the Parties’ rights and obligations under Chapter 8 should be interpreted in a manner that supports the ability of the Parties to give effect to their respective commitments to reduce greenhouse gas emissions by adopting or maintaining measures designed and applied to mitigate climate change or address its present or future consequences.
4.Protection of essential security interests
The Parties reaffirm that, pursuant to Article 28.6 of CETA, nothing in this Agreement shall be construed to prevent Canada and the European Union and its Member States from taking an action that either Party considers necessary to protect its essential security interests in time of war or other emergency in international relations, including any measure affecting investors or their investments.
5.Protection of fundamental rights
For greater certainty, the Parties’ right to regulate to achieve legitimate public policy objectives, as referred to in Article 8.9.1 of CETA, includes measures taken for the protection of fundamental rights, as laid down in the Universal Declaration of Human Rights done at Paris on 10 December 1948.
6.Calculation of monetary damages resulting from investor claims
For greater certainty, monetary damages under Article 8.39.3,
(a)shall not be greater than the loss or damage incurred by the investor, or, as applicable, by the locally established enterprise, as valued on the date of the breach;
(b)shall only reflect loss or damage incurred by reason of, or arising out of, the breach; and
(c)shall be determined with reasonable certainty, and shall not be speculative or hypothetical.
The Tribunal shall calculate monetary damages based only on the submissions of the disputing parties, and shall consider, as applicable:
(a)contributory fault, whether deliberate or negligent;
(b)failure to mitigate or prevent damages;
(c)prior damages or compensation received for the same loss including compensation received under a domestic compensation scheme; or
(d)restitution of property, or repeal or modification of the measure.
Done at …, ….
For the CETA Joint Committee
The Co-Chairs
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