As a result of the intense, and mostly hostile, public discussion on investment protection in the context of the negotiation of the European Union’s first post-Lisbon trade and investment agreements, it appears that the European Commission, the European Union’s negotiator, has taken a new direction with regard to investor-state dispute settlement (ISDS). Both the (not-yet-ratified) text of the EU-Vietnam Free Trade Agreement of January 2016 and the (non-binding) Commission proposal for Investment Protection and Resolution of Investment Disputes in the EU-US Transatlantic Trade and Investment Partnership (TTIP) contain a novel two-tier settlement mechanism for investment disputes, combining elements of traditional investor-state arbitration (ISA) with judicial features. As further evidence of the Commission’s new direction, the “scrubbed” and revised version of the Canada-EU Comprehensive Economic and Trade Agreement (CETA) contains features of an investment court-like dispute settlement institution.
Generally, the new CETA text adopts and further defines ideas that had already been formulated in the text of September 2014. Notably, the provisions on, for example, manifestly unfounded claims (articles 8.32 and 8.33) and transparency of proceedings (article 8.36) remain unchanged. The plan to provide for International Centre for Settlement of Investment Disputes (ICSID) arbitration is also maintained, although the contracting parties to the ICSID Convention are (most of) the individual EU member states, not the European Union itself.
Clearly, the most innovative change is the introduction of a new two-tier system for ISDS that is composed of a tribunal of first instance (article 8.27), and an appellate tribunal (article 8.28).
The 15 members of the tribunal of first instance will be appointed by the CETA Joint Committee for a renewable five-year term (article 8.27(2)). In order to provide for equal participation, five of the members of the tribunal must be nationals of a member state of the European Union, five must be nationals of Canada and the final five must be third-country nationals. Qualifications for appointment are similar to those of other international courts and tribunals, requiring specialized knowledge of the field. In particular, article 8.27(4) states that members of the tribunal must possess “qualifications required in their respective countries for appointment to judicial office, or be jurists of recognised competence,” and must have demonstrated expertise in the field.
Individual cases under CETA will be adjudicated by “divisions” of three members of the tribunal, with third-country nationals presiding over such tribunals (article 8.27(6)). While this arrangement is to some extent similar to traditional ISA, a novel feature lies in the introduction of a case-allocation mechanism (article 8.27(7)) similar to that found in some domestic judicial systems. Pursuant to this provision, the three members of the tribunal are to be appointed by the president of the tribunal on a yet-to-be specified “random and unpredictable” rotation system. It is fair to say that this is contrary to the traditional ISA approach in which disputing parties are free to select “their” arbitrators, subject to the condition that they are not nationals of the disputing parties.
In what appears to be deference to the often-voiced concern that investment arbitrators are inclined to “wear two hats” (that is, serving as arbitrators and also advising clients in other, sometimes similar, cases), article 8.30 on ethics contains specific incompatibility provisions. Notably, members of the tribunal shall not be “affiliated with any government” and they shall “refrain from acting as counsel or as party-appointed expert or witness in any pending or new investment dispute under this or any other international agreement.” It appears, however, that the demand for full-time judges has not been included, given the provision (article 8.27(12)) for a “retainer fee” system that ensures a modest monthly stipend for tribunal members to remain available for actual disputes.
A significant change to the revised CETA text is the possibility to appeal awards rendered by the tribunal of first instance before the appeal tribunal within 90 days of the awards’ issuance (article 8.28(9)(a)). Article 8.28(2) enlarges the annulment grounds of the ICSID Convention with the power to review errors of law and manifest errors in the appreciation of facts. Based on these grounds, the appeal tribunal may uphold, modify or reverse the tribunal’s award. Some ambiguity remains concerning the finality and enforceability of awards under the new system. While article 8.28(9) provides that the award of the appeal tribunal becomes final 90 days after its issuance and that disputing parties shall not seek to review, set aside, annul, revise or initiate any other similar procedure as regards an award under the new procedure, article 8.41 provides that enforcement of a final award under the ICSID Convention shall not be sought until 120 days after the award was rendered “and no disputing party has requested revision or annulment of the award.”
Looking at the latest CETA text, one can clearly discern the treaty negotiators’ attempt to introduce “court-like” modifications. It remains to be seen whether this will satisfy the critics on both sides of the Atlantic. Whether the new EU approach has the potential to set the trend for future international investment agreements and eventually lead to a multilateral investment tribunal and appellate mechanism, as envisaged in article 8.29, will depend, to a large extent, on whether the United States will also accept this new vision of the future.
 All references to CETA taken from the revised text, made public on 29 February 2016, online: <http://trade.ec.europa.eu/doclib/docs/2016/february/tradoc_154329.pdf.>.
 According to article 26.1, the CETA Joint Committee is to be composed of “representatives of the European Union and representatives of Canada” and “co-chaired by the Minister for International Trade of Canada and the Member of the European Commission responsible for Trade, or their respective designees.”
 See e.g. articles 38, 39, Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 18 March 1965, 575 UNTS 159.
 Rules on the composition of the tribunal and on incompatibility apply mutatis mutandis to the members of the appellate tribunal. See article 8.28(4).