HARMFUL EFFECT OF ARBITRATION DISPUTE SETTLEMENT EU INTRA BITS TO THE LEGAL ORDER OF THE EUROPEAN UNION

The issue of interpreting and applying intra BITs, especially in cases where their solutions conflict with EU law or international law, are a reflection of the still unresolved relationship between EU law and international law. Despite the exceptional theoretical significance, the issue of hierarchy is, first and foremost, a political issue. The answer to it defines the legal nature of the EU and the direction of its further development: as a sui generis federal community or a regional community of a confederal type. In the legal theory, the opinion on sui generis and the autonomous legal order of the EU is prevalent. This was also confirmed by the Court of Justice in a series of cases. However, the analyzed decisions of investment arbitrations engaged on the basis of the ISDS mechanism call into question such a position. Arbiters believe that the rights and obligations of the BIT should be interpreted in accordance with the rules of international law and that, in the event of a conflict with EU law, priority should be given to the rules of international public law. For this reason, the European Commission and the Court of Justice only see the existence of ISDS clauses in the BITs as a threat to the preservation of the unity and autonomy of the EU legal order, because their activation is jeopardized by the „interpretative monopoly“ of the Court of Justice entrusted with the decision of previous issues to ensure unity of rights EU.

The fact that the question of the effect of the ISDS mechanism is not only of theoretical importance is testified by the fact that the EU negotiations on a new generation of trade and investment agreements are examining proposals to establish a more democratic and transparent multilateral international judicial mechanism in place of the existing mechanism.