European Parliament approves EU-Singapore FTA and EU-Singapore IPA



On 13 February 2019, the European Parliament approved the Free Trade Agreement (FTA) and the Investment Protection Agreement (IPA) between the European Union and Singapore (both available here). Falling in the EU’s exclusive competence, the FTA can now be adopted by the Council according to Art. 218 (6) TFEU. It could enter into force before summer. The IPA, to the contrary, had been extracted from the FTA during renegotiations subsequent to the European Court of Justice’s Opinion 2/15. As a so-called mixed agreement, it will need to be ratified by the EU and all EU Member States.

From the perspective of international investment law, the EU-Singapore IPA is noteworthy, on the one hand, since it is supposed to supersede 12 bilateral investment agreements between Singapore and individual EU Member States, including Germany. On the other hand, it also establishes a bilateral investment court system similar to the one in the Canada-EU agreement CETA. This investment court system would replace dispute settlement by way of arbitration as provided for under the bilateral agreements currently in force. In the long run, the EU and Singapore have committed to unite this system with the ones established under other EU agreements, such as CETA, to set up a multilateral investment court (cf. Art. 3.12.).

Despite the political approval now given by the European Parliament, the EU-Singapore IPA still also shares the legal fate of CETA, since its conformity with EU law as such was explicitly left open by the ECJ in Opinion 2/15 (cf. paras 30, 290 and 300). The conformity with EU law of CETA’s investment chapter is currently under review by the ECJ, following an application by Belgium in September 2017. Back then, Wallonia had declined to give its necessary consent under Belgian law for Belgium to ratify the Treaty.

Just two weeks ago, on 29 January 2019, ECJ Advocate General Bot presented his Opinion on the issue and argued in favor of the compatibility with EU law of CETA’s investment court system. In particular, the Advocate General considered that dispute settlement under CETA was outside the scope of the ECJ’s judgment in Achmea of March 2018, in which the Court had declared intra-EU investment arbitration on the basis of bilateral investment agreements between EU Member States incompatible with the autonomy of the EU’s legal order (see here and here). By contrast, dispute settlement under CETA – according to AG Bot – preserved the autonomy of EU law, as EU law could not serve as applicable law. Further, Art. 8.31.2. CETA obliged the CETA investment court system to follow the ECJ’s authoritative interpretation of EU law (para. 138).

One can only speculate for now whether the ECJ will follow AG Bot’s Opinion. After Achmea, a certain portion of skepticism is apposite. The ECJ’s decision is, however, already expected for the end of March. It is likely to bring about clarity not only for the fate of CETA and the EU-Singapore IPA but also of the EU’s investment court system in general.

Dr Richard Happ

Dr Richard Happ
+49 40 18067 12766

Sebastian Wuschka LL.M. (Geneva MIDS)

Sebastian Wuschka LL.M. (Geneva MIDS)
Of Counsel
+49 40 18067 12944