CETA’s Investment Court System, Irish Ratification and the Constitutional Case for a Referendum

AuthorRuth Cormican
Pagespp 65 - 94
Published date12 July 2022
Date12 July 2022
65
CETA’s Investment Court System,
IrishRatication and the Constitutional
Casefora Referendum
RUTH CORMICAN*
I. Introduction
When is a constitutional referendum required before Ireland may ratify an
international treaty? is thorny question has previously been addressed in
several seminal decisions of the superior courts. Yet in the context of an ever more
complex network of international legal institutions, as well as the enhanced role
of the European Union in foreign policy since the entry into force of the Treaty
of Lisbon, much remains unclear about the scope of the principle of popular
sovereignty under the Irish Constitution (the ‘Constitution’). ese questions
have now come to the fore once again in relation to the proposed ratication of the
Comprehensive Economic and Trade Agreement between Canada, the European
Union and its Member States (‘CETA ’).
Representatives of the EU and Canada signed CETA on 30 October 2016,1 and the
European Parliament subsequently approved it on 15 February 2017 by a margin
of 408 to 254.2 While many of the provisions of CETA are already being applied
on a provisional basis, some require ratication by each individual EU Member
State. Yet more than ve years since CETA was rst signed, it has still not been
ratied by a number of Member States, Ireland included. At the level of domestic
politics, the issue of ratication has become the subject of considerable controversy
in recent years, with opposition parties labelling it ‘a very dangerous step’,3 the Irish
Congress of Trade Unions expressing concern,4 and an activist group having been
* Ruth Cormican is a trainee solicitor with MacGuill & Company, working primarily in criminal law
and public law. Previously she worked on the human rights team at Ireland’s Permanent Mission
to the UN in Geneva. She is a graduate of NUI Galway (B.A., LL.B.) and the University of Notre
Dame (LL.M.), where she attended as a Fulbright scholar. Any views or opinions expressed in this
article are the personal views and opinions of the author.
1 European Commission, ‘EU-Canada summit: newly signed trade agreement sets high standards
for global trade’ (30 October 2016)
IP_16_3581> accessed 28 March 2022.
2 European Parliament, ‘Legislative Train Schedule: A Balanced and Progressive Trade Policy to Harness
Globalisation’ parl.europa.eu/legislative-train/theme-a-balanced-and-progressive-trade-
policy-to-harness-globalisation/le-ceta> accessed 28 March 2022.
3 John Brady TD, ‘Sinn Féin will hold Government to account on CETA – John Brady TD’ (12
February 2021) ts/59827> accessed 28 March 2022.
4 Irish Congress of Trade Unions, ‘No Deal: Why Unions Oppose TTIP & CETA’ .ictu.ie/
sites/default/les/legacy/pdf/no_deal.pdf> accessed 28 March 2022.
66  
formed with the specic purpose of opposing ratication.5 e intense opposition
to CETA centres around one aspect of the treaty in particular: the proposed
Investment Court System (‘ICS’) to be established under Chapter 8.
Critics argue not only that CETA and the ICS are bad policy, but also that the
proposal to ratify CETA without putting it to the people by referendum is
unconstitutional. ey contend that, if ratied, the provisions on investment
protection in Chapter 8 would result in fundamental aspects of Ireland’s sovereignty
being transferred to CETA institutions. is, critics argue, would constitute a
threat to democracy and human rights, and detract from the State’s constitutional
roles in relation to law-making and the administration of justice.6
is article supports the proposition that a referendum is a prerequisite to
ratication of CETA. e article will rst consider the terms of CETA itself
in order to evaluate the claim that it will undermine domestic human rights,
labour and environmental protections if ratied. It will acknowledge that CETA
represents a signicant textual improvement on its predecessors in the area of
international investment law but note that its provisions are untested and it remains
to be seen how the ICS will operate in practice. Secondly, and relatedly, this article
will analyse the recent High Court decision in Patrick Costello v e Government of
Ireland, Ireland and the Attorney General, in which it was argued that a referendum
is required before ratication can take place.7 While Butler J decided against the
plainti at rst instance, the Supreme Court has recently granted leave to appeal8
and a separate case is also pending.9 It will be argued that the Supreme Court
should overturn the High Court decision and hold that a referendum is indeed
necessary due to CETA’s potential impact on domestic constitutional structures,
specically in the area of the administration of justice.
Part II of this article provides an outline of the background to the system of
Investor-State Dispute Settlement (‘ISDS’) in international investment law, and of
the longstanding concerns regarding its operation. Part III procee ds to a review of
the relevant provisions of CETA itself and considers whether these are adequate
to address these criticisms and to preserve the sovereignty of State Parties. In Part
IV, the question of Irish ratication as a matter of constitutional law is presented.
PartV then analyses the High Court decision in Costello, focusing on the impact of
ratication in three key areas: on Ireland’s sovereignty in the eld of foreign policy;
5 Kayle Crosson, ‘Grassroots campaign launches to stop CETA ratication’ (Green News, 11 February
2021) accessed 28 March 2022.
6 Oisin Suttle, ‘Why the EU and Canada’s CETA deal is not just another treaty’
maynoothuniversity.ie/research/spotlight-research/why-eu-and-canadas-ceta-deal-not-just-
another-treaty> accessed 28 March 2022.
7 Costello v e Government of Ireland, Ireland and the Attorney General [2021] IEHC 600.
8 Costello v e Government of Ireland, Ireland and the Attorney General [2022] IESCDET 1.
9 Daniel Murray, ‘Green Party TD lodges appeal against high court CETA ruling’ (Business Post,
30 November 2021) spost.ie/legal/green-party-td-lodges-appeal-against-high-
court-ceta-ruling-ea0d7d0e> accessed 28 March 2022.
CETA’s Investment Court System 67
on the law-making power of the Oireachtas; and on the administration of justice
by the Irish courts. e article concludes by highlighting the principal aspects of
CETA which support the case for a constitutional referendum on ratication and
by looking to the future of this litigation before the superior courts.
II. e Development of ISDS and the Need for Reform
While there is no unied system of international investment law, provisions on
ISDS are contained in a multitude of bilateral and multilateral investment treaties.
ere are currently 2,257 bilateral investment treaties in force worldwide, along
with a further 324 treaties with investment provisions.10 e United Nations
Conference on Trade and Development (‘UNCTAD’) reports a total of 1,104
known treaty-based ISDS cases.11 e argument that CETA and the ICS in
particular are fundamentally anti-democratic has its roots in longstanding concerns
regarding these ISDS mechanisms. In essence, a system has developed under which
individual foreign investors are empowered to sue host countries for damages for
loss of prots, where changes to domestic laws or regulations negatively aect
their investment or where there is unfair or discriminatory treatment by national
authorities.
e rationale for such ISDS provisions in international investment treaties is based
on the vulnerability of foreign investors to decisions of host governments over
which they have no control.12 In theory, ISDS allows foreign investors direct access
to a remedy in cases of unfair or discriminatory treatment by the host State, rather
than relying on the government of their home country to advance their claim at the
State-to-State le vel.13 ISDS also means that investors are not obliged to rely on the
domestic judicial system of the host State, which may not (so the theory g oes) meet
the necessary standards of neutrality and impartiality.14
However, the way in which ISDS has operated in practice has generated serious and
legitimate concerns regarding its potential impact on the democratic process and
on domestic human rights, public health, environmental and labour protections.15
10 UNCTAD, ‘Investment Policy Hub: International Investment Agreements Navigator’
investmentpolicy.unctad.org/international-investment-agreements> accessed 28 March 2022.
11 UNCTAD, ‘Investment Policy Hub: Investment Dispute Settlement Navigator’
investmentpolicy.unctad.org/investment-dispute-settlement> accessed 28 March 2022.
12 Tecnicas Medioambientales Tecmed S.A. v United Mexican States (Mexico), ICSID Case No ARB
(AF)/00/2, (2004) 43 ILM 133, [122].
13 Barnali Choudhury, ‘Recapturing Public Power: Is Investment Arbitration’s Engagement of
the Public Interest Contributing to the Democratic Decit?’ (2008) 41 Vanderbilt Journal of
Transnational Law 775, 781.
14 Emily Osmanski, ‘Investor-State Dispute Settlement: Is ere a Better Alternative?’ (2018) 43(2)
Brooklyn Journal of International Law 639, 640-641.
15 OHCHR , ‘UN experts voice concern over adverse impact of free trade and investment agreements
on human rights’ (2 June 2015) .ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?
68  
As noted above, ISDS features in a wide range of investment treaties and the rules
that apply are therefore not uniform. Nonetheless, there are certain defects that
have become common to the system as a whole. e ISDS regime as it has operated
to date is deeply awed for institutional, procedural and substantive reasons.
At an institutional level, the lack of a permanent international investment court
means that investment disputes are typically heard by ad hoc arbitral tribunals. e
vast majority of such tribunals are convened under the auspices of the International
Centre for Settlement of Investment Disputes (‘ICSID’), or under the
Arbitration Rules of the United Nations Commission on International Trade Law
(‘UNCITRAL’).16 Both the ICSID Convention and the UNCITRAL Arbitration
Rules provide that, where the parties fail to agree on a sole arbitrator or any other
uneven number of arbitrators, the tribunal shall consist of three arbitrators.17 Each
party to the dispute appoints one of the arbitrators, while the third arbitrator
serves as president of the tribunal.18 is has given rise to a perceived tendency for
each party to the dispute to nominate arbitrators considered sympathetic to their
case.19 Another source of concern is the frequent ‘changing of hats’ by arbitrators,
who oen serve as arbitrators in some cases and as counsel in others.20 Arbitrators
fees are typically linked to the length of proceedings, creating an apparent conict
of interest when they decide on whether the tribunal has jurisdiction to hear a
dispute or whether issues can be dismissed summarily.21 Individual arbitrators
NewsID=16031> accessed 28 March 2022; Human Rights Council, ‘Protect, Respect and
Remedy: A Framework for Business and Human Rights – Report of the Special Representative
of the Secretary-General on the issue of human rights and transnational corporations and
other business enterprises, John Ruggie’ (7 April 2008) UN Doc A/HRC/8/5, para 12; Kyla
Tienhaara, ‘Regulatory Chill in a Warming World: e reat to Climate Policy Posed by
Investor-State Dispute Settlement’ (2018) 7(2) Transnational Environmental Law
cambridge.org/core/journals/transnational-environmental-law/article/regulatory-chill-in-
a-warming-world-the-threat-to-climate-policy-posed-by-investorstate-dispute-settlement/
C1103F92D8A9386D33679A649FEF7C84> accessed 28 March 2022.
16 Turkuler Isiksel, ‘e Rig hts of Man and the Rights of the Man-Made: Corporations and Human
Rights’ (2016) 38 Human Rights uarterly 294, 306.
17 Convention on the Settlement of Investment Disputes Between States and Nationals of Other
States (ICSID Convention) (adopted 18 March 1965, entered into force 14 October 1966) 575
UNTS 160, Article 37(2)(b); UNCITRAL Arbitration Rules (as revised in 2013) Article 7,
available at un.org/les/media-documents/uncitral/en/
uncitral-arbitration-rules-2013-e.pdf> accessed 15 April 2022.
18 ICSID Convention (n 17) art 37(2)(b); UNCITRA L Arbitration Rules (n 17) art 9(1).
19 Stefanie Schacherer, ‘TPP, CETA and TTIP Between Innovation and Consolidation –
Resolving Investor-State Disputes under Mega-Regionals’ (2016) 7 Journal of International
Dispute Settlement 628, 634; David Gaukrodger and Kathryn Gordon, ‘Investor-State Dispute
Settlement: A Scoping Paper for the Investment Policy Community’ (2012) OECD Working
Papers on International Investment 45-46 vestment-policy/
WP-2012_3.pdf> accessed 28 March 2022.
20 UNCTAD, ‘Reform of Investor-State Dispute Settlement: In Search of a Roadmap’ (June 2013)
4 accessed 28 March
2022; Schacherer (n 19) 637.
21 Gaukrodger and Gordon (n 19) 47–48; e Economist, ‘Investor-state dispute settlement: e
arbitration game’ (e Economist, 11 October 2014)
CETA’s Investment Court System 69
are typically not bound by clear ethical guidelines, and there are currently no
common standards of conduct applicable generally in ISDS proceedings (though
the secretariats of ICSID and UNCITRAL have recently collaborated on a dra
Code of Conduct for Adjudicators in Investor-State Dispute Settlement).22 While
arbitrators are regulated by various rules under international treaties, domestic laws
and arbitral rules, in general these sources do not provide detailed rules on issues
such as disclosure or conicts of interest.23 Finally, the ad hoc nature of arbitral
tribunals and the lack of any form of appellate review have been linked to the
much-criticised inconsistency of certain arbitral decisions, where dierent results
have been reached on the basis of similar treaty provisions and comparable facts.24
Another frequent criticism of ISDS is that the system is lacking in transparency, with
proceedings frequently conducted on the basis of strict condentiality.25 In addition,
the extremely high level of damages awarded against the State in some cases has been
criticised by commentators; one recent study reported that there were y known
cases in which a tribunal had awarded damages in excess of USD 100 million.26
Some analysis has highlighted notably large awards in individual arbitrations,27 but
concerns have also been raised more generally about upward trends in awards of
damages over time and the method by which such damages are calculated.28 is is
further exacerbated by the fact that only one side, the investor, is able to initiate
economics/21623756-governments-are-souring-treaties-protect-foreign-investors-arbitration>
accessed 28 March 2022.
22 S chacherer (n 19) 634; Chiara Giorgetti, ‘e Dra Code of Conduct for Adjudicators in Investor-
State Dispute Settlement: An Important Step Forward in the Reform Process?’ (EJIL: Talk!, 13
August 2020) or-state-
dispute-settlement-an-important-step-for ward-in-the-reform-process/> accessed 28 March 2022.
23 Gaukrodger and Gordon (n 19) 49-50.
24 Schacherer (n 19) 640; Luca Pantaleo, ‘Investment Disputes Under CETA. Taking the Best from
Past Experience?’ (27 February 2016) 71–72 accessed 28
March 2022.
25 Stephan Schill ‘Reforming Investor-State Dispute Settlement (ISDS): Conceptual Framework
and Options for the Way Forward’ (July 2015) International Centre for Trade and Sustainable
Development and World Economic Forum, E15 Task Force on Investment Policy, 2
e15initiative.org/publications/reforming-investor-state-dispute-settlement-isds-conceptual-
framework-and-options-for-the-way-forward/> accessed 28 March 2022; Report of the Special
Representative of the Secretary General (n 15) para 37.
26 Jonathan Bonnitcha and Sarah Brewin, ‘Compensation Under Investment Treaties’ (International
Institute for Sustainable Development, November 2020)
publications/compensation-treaties-best-practicies-en.pdf> accessed 28 March 2022. See also
Tai-Heng Cheng, ‘ICSID’s Largest Award in History: An Overview of Occidental Petroleum
Corporation v the Republic of Ecuador’ (Kluwer Arbitration Blog, 19 December 2012)
kluwerarbitrationblog.com/2012/12/19/icsids-largest-award-in-history-an-overview-of-
occidental-petroleum-corporation-v-the-republic-of-ecuador/> accessed 28 March 2022.
27 Rachel Wellhausen, ‘Recent Trends in Investor-State Dispute Settlement’ (2016) 7(1) Journal of
International Dispute Settlement 117, 133.
28 Jonathan Bonnitcha and others, ‘Damages and ISDS Reform: Between Procedure and Substance’
(2021) Journal of International Dispute Settlement
malcolml/idab034.pdf> accessed 28 March 2022.
70  
proceedings: ISDS provisions ‘allow investors to sue States but not vice-versa’.29
Furthermore, critics of ISDS have highlighted that investors are not subject to
a requirement of exhaustion of domestic remedies before bringing a claim to an
arbitral tribunal.30
e substantive protections provided to investors under investment treaties have also
been a cause for concern. Typically, such treaties have granted investors a ‘powerful
but amorphous’ right to fair and equitable treatment.31 is term is generally not
dened in detail, but a trend towards expansive interpretation has been noted.32 At
its broadest, the concept can be taken to mean that any circumstances that negatively
aect the value of an investment are a breach of the investor’s rights.33 Without clear
legal standards, it becomes near impossible for governments to determine with any
degree of certainty what conduct a tribunal may consider to violate the obligation.
e broad protection aorded to investors is exacerbated by the lack of provisions
in many investment treaties establishing defences based on human rights, the
public interest or the government’s right to regulate.34 In the past, ISDS challenges
to government action have implicated policies relating to human rights,35 public
health,36 environmental protection,37nancial stability,38 and labour rights.39
29 OHCHR (n 15).
30 Gus Van Harten, ‘ISDS in the Revised CETA: Positive Steps, but is it the “Gold Standard”?’
(20 May 2016) Centre for International Governance Innovation, Investor-State Arbitration
Commentary Series No 6 s/isds-revised-ceta-positive-steps-it-
gold-standard> accessed 28 March 2022.
31 Julian Arato, ‘Corporations as Lawmakers’ (2015) 56 Harvard Journal of International Law 229,
249.
32 ibid 265.
33 UNCTAD, ‘Fair and Equitable Treatment: A Sequel’ (UNCTAD Series on Issues in International
Investment Agreements II, 2012) 10 tp://unctad.org/en/Docs/unctaddiaeia2011d5_en.pdf>
accessed 28 March 2022.
34 Joseph Weiler, ‘European Hypocrisy: TTIP and ISDS’ (EJIL: Talk!, 21 January 2015)
ejiltalk.org/european-hypocrisy-ttip-and-isds/> accessed 28 March 2022.
35 ICSID, Biwater Gau (Tanzania) Ltd v United Republic of Tanzania (ICSID Case No
ARB/05/22).
36 NAFTA Arbitration, Eli Lilly and Company v Government of Canada (ICSID Case No
UNCT/14/2); NAFTA Arbitration, Ethyl Corporation v Government of Canada (Award on
Jurisdiction, 24 June 1998); Philip Morris Brands Sàrl v Oriental Republic of Uruguay (8 July
2016, ICSID Case No ARB/10/7); Philip Morris Asia Limited v e Commonwealth of Australia
(17 December 2015, PCA Case No 2012-12).
37 NAFTA Arbitration, TransCanada Corporation and TransCanada PipeLines Limited v United
States of America (ICSID Case No ARB/16/21); ICSID, Vattenfall AB v Federal Republic of
Germany (I) (ICSID Case No. ARB/09/6); e Renco Group, Inc v Republic of Peru (ICSID
Case No UNCT/13/1); NAFTA Arbitration, Metalclad Corporation v e United Mexican States
(ICSID Case No ARB(AF)/97/1; NAFTA Arbitration, Clayton, Bilcon of Delaware v Government
of Canada (PCA Case No 2009-04).
38 UNCITRAL, Saluka Investments B.V. v Czech Republic (Partial Award, 17 March 2006); ICSID,
CMS Gas Transmission Company v Republic of Argentina (ICSID Case No ARB/01/8); ICSID,
Marn Investment Group Holdings S.A. v Republic of Cyprus (ICSID Case No ARB/13/27).
39 ICSID, Veolia Propreté v Arab Republic of Egypt (ICSID Case No ARB/12/15).
CETA’s Investment Court System 71
It has been persuasively argued that the cumulative eect of all of the above defects
is to create a ‘chilling eect’, discouraging governments from legislating in the public
interest for fear of being sued for vast damages by foreign investors.40 ere are
diculties in analysing the prevalence of this chilling eect, given that such claims
frequently involve a degree of speculation as to why regulatory activity did not take
place.41 Nonetheless, commentators report ‘an increasing amount of anecdotal and
case-based evidence for various types of regulatory chill eects from ISDS’.42 ese
concerns became particularly prominent in the context of ISDS challenges to plain
packaging laws by tobacco companies.43 More recently, Tienhaara has highlighted
the risk that ISDS may undermine the ability of States to introduce environmental
regulations.44 Her analysis highlights various ways in which a chilling eect may
operate: from dampening regulation across all areas due to a generalised concern
about ISDS claims, to undermining specic measures in response to an investor’s
threat to bring a claim, to cross-border cases where claims brought in one jurisdiction
aect the consideration of policy measures elsewhere.45 Studies seeking empirical
evidence of a regulatory chilling eect at a more systematic level have yielded mixed
results. While one study reported a lack of observable evidence of regulatory chill,46
others noted evidence of government ministries changing their decision-making as
a result of concerns relating to ISDS.47 More recent studies have reported a negative
relationship between ISDS claims and environmental and anti-smoking regulations,
though raising questions about the scale and duration of this eect.48 e potential
for a chilling eect on regulatory activity is one of the most frequently cited
arguments against ISDS, and it is clear from the negotiating history of CETA that
such criticism had a signicant impact on the nal version of the text.
III. CETA and the ICS
e concerns outlined above rose to greater prominence in the context of the
negotiation of CETA and several other regional trade and investment agreements.
40 OHCHR (n 15).
41 Tarald Laudal Berge and Axel Berger, ‘Do Investor-State Dispute Settlement Cases Inuence
Domestic Environmental Regulation? e Role of Respondent State Bureaucratic Capacity’
(2021) 12(1) Journal of International Dispute Settlement 1, 23.
42 ibid 2.
43 Lukasz Gruszczynski, ‘Australian Plain Packaging, International Litigations and Regulatory
Chilling Eect’ (2014) 2 European Journal of Risk Regulation 242.
44 Tienhaara (n 15).
45 ibid.
46 Christine Côté, ‘A Chilling Eect? e impact of international investment agreements on national
regulatory autonomy in the areas of health, safety and the environment’ (DPhil thesis, London
School of Economics 2014).
47 Gus Van Harten and Dayna Nadine Scott, ‘Investment Treaties and the Internal Vetting of
Regulatory Proposals: A Case Study from Canada’ (2016) Osgoode Legal Studies Research Paper
Series 151.
48 Berge and Berger (n 41); Caroline Moehlecke, ‘e Chilling Eect of International Investment
Disputes: Limited Challenges to State Sovereignty’ (2020) 64(1) International Studies uarterly 1.
72  
In particular, CETA’s investment chapter underwent signicant revisions, with
the European Commission arguing that the nal version‘represents a clear break’
from the old ISDS approach.49 Many of the CETA provisions designed to allay the
concerns of critics of the earlier ISDS model are specically relied on by Butler J in
the High Court decision in Costello, discussed below.
Firstly, disputes between investors and States under CETA will not be settled
by way of ad hoc arbitration. CETA’s ICS model involves the establishment of a
permanent investment tribunal. Claims will initially be decided by a tribunal
of rst instance, composed of een members.50 e CETA Joint Committee
is responsible for appointing the members of the Tribunal: ve will be nationals
of an EU Member State, ve will be nationals of Canada, and the remaining ve
will be nationals of third countries.51 Each case will be heard by a division of three
members: one EU national, one Canadian national, and one national of a third
country who will chair the division.52 Members are appointed for a ve-year term,
renewable once.53 e President of the Tribunal will be responsible for composing
the division ‘on a rotational basis, ensuring that the composition of the divisions is
random and unpredictable’.54 e President and Vice-President are to be appointed
for a two-year term, drawn by lot from among the members who are third country
nationals.55 Overall, C ETA addresses many of the criticisms that have been directed
at the composition of ad hoc arbitration panels: it represents ‘a signicant step away
from the ad hoc arbitration model.56
CETA also imposes certain requirements on members of the Tribunal, with a view
to ensuring their professionalism and impartiality. Members are required to possess
the qualications required in their respective countries for appointment to judicial
oce or be jurists of recognised competence.57 ey are not to be aliated with
any government, or to take instructions from any organisation or government
with regard to matters related to the dispute.58 ey shall not participate in the
consideration of any disputes that would create a direct or indirect conict of
interest.59 Moreover, once appointed, they are prohibited from acting as counsel or
49 European Commission, ‘CETA: EU and Canada agree on new approach on investment in trade
agreement’ (29 February 2016)
accessed 28 March 2022.
50 Comprehensive Economic and Trade Agreement between Canada, of the one part, and the
European Union and its Member States, of the other part [2017] OJ L11/23 (CETA), art 8.27(1).
51 ibid art 8.27(2).
52 ibid art 8.27(6).
53 ibid art 8.27(5).
54 ibid art 8.27(7).
55 ibid art 8.27(8).
56 J A VanDuzer, ‘Investor-state Dispute Settlement in CETA: Is it the Gold Standard?’ (2016) C.D.
Howe Institute Commentary No 459, 3.
57 CETA (n 50) art 8.27(4).
58 ibid art 8.30(1).
59 ibid.
CETA’s Investment Court System 73
as a party-appointed expert or witness in any pending or new investment dispute
under CETA or any other international agreement.60 e Joint Committee may
remove a member from the Tribunal for behaviour inconsistent with these ethical
obligations.61 Members are to be paid a monthly retainer fee, which will be paid
equally by the EU and Canada.62 CETA also provides for the Joint Committee to
transform the retainer fee into a regular salary.63 At least initially, however, Tribunal
members will not serve as full-time judges and CETA stops short of prohibiting
them from working as arbitrators in cases under other treaties.64 e ICS therefore
does not represent a fully ‘judicial’ model equivalent to that which exists under
domestic law.
CETA also provides for the establishment of an Appellate Tribunal. Members of
the Appellate Tribunal are required to have the same professional qualications
and follow the same ethical rules as members of the Tribunal.65 e Appellate
Tribunal may uphold, modify or reverse the Tribunal’s award based on errors in the
application or interpretation of applicable law or manifest errors in the appreciation
of the facts.66 e division constituted to hear the appeal will consist of three
randomly appointed members of the Appellate Tribunal.67 e establishment
of an appellate review mechanism is designed to provide greater certainty and
consistency in terms of the results of Tribunal proceedings. Furthermore, the Joint
Committee is given the power to adopt binding interpretations of CETA.68 is
provision allows the Parties to retain some control over the interpretation of CETA
aer its adoption.
At the procedural level, CETA provides for higher standards of transparency in
the conduct of ICS proceedings than in earlier arbitration arrangements. Firstly,
it incorporates the UNCITRAL Transparency Rules,69 which had been seen as
containing ‘the most wide-ranging set of transparency commitments seen thus
far in international practice’.70 In addition, CETA provides that exhibits must
be made public71 and that all hearings shall, without exception, be open to the
public.72 CETA therefore provides some of the most expansive rules on procedural
60 ibid.
61 ibid art 8.30(4).
62 ibid art 8.27(12) & (13).
63 ibid art 8.27(15).
64 VanDuzer (n 56) 3, 11.
65 CETA (n 50) art 8.28(4).
66 ibid art 8.28(2).
67 ibid art 8.28(5).
68 ibid art 8.31(3).
69 ibid art 8.36(1).
70 N Jansen Calamita, ‘Dispute Settlement Transparency in Europe’s Evolving Investment Treaty
Policy: Adopting the UNCITRAL Transparency Rules Approach’ (2014) 15 Journal of World
Investment and Trade 645, 667.
71 CETA (n 50) art 8.36(3).
72 ibid art 8.36(5).
74  
transparency yet seen in an international investment agreement: its ‘UNCITRAL-
Plus model…represents an unprecedented development’.73 With a view to curbing
the costs and length of proceedings, a fast-track procedure is provided for rejecting
claims that are ‘manifestly without legal merit’74 or claims ‘unfounded as a matter
of law’.75 e parties are required to comply with a strict timeline at all stages of
the proceedings.76 As a general rule, the Tribunal must issue its nal award within
twenty-four months of the date the claim is submitted.77 CETA also provides for
the equivalent of a statute of limitations: proceedings must be initiated within three
years aer the date on which the investor rst acquired or should have acquired
knowledge of the alleged breach, or within two years of ceasing to pursue claims
before a domestic tribunal.78
As regards the level of awards that may be ordered by the Tribunal, monetary
damages must not be greater than the loss suered by the investor, and the Tribunal
does not have the power to award punitive damages.79 However, CETA does not
dene what is meant by ‘loss’ or elaborate as to the method by which monetary
damages are to be calculated: this lack of detail is unfortunate given concerns
regarding inconsistency in calculation techniques and award outcomes from
ISDS proceedings.80 As regards the costs of Tribunal proceedings, one of the most
innovative aspects of CETA is its introduction of the ‘loser pays’ principle.81 In
principle, the costs are to be borne by the unsuccessful disputing party, although the
Tribunal may in exceptional circumstances apportion costs between the parties.82
is provides some protection for a respondent State that is ultimately found to
have acted lawfully, and may dissuade investors from bringing frivolous cases in
hopes of forcing the host State to settle. Other provisions of CETA seek to prevent
abuse of process by investors, who are precluded from bringing a claim if the
investment has been made through ‘fraudulent misrepresentation, concealment,
corruption, or conduct amounting to an abuse of process’.83 e denition of
investor excludes branches or representative oces, so CETA does not protect
so-called ‘shell’ companies.84 Claimants are also precluded from bringing parallel
proceedings before any other international or domestic court or tribunal.85
73 Pantaleo (n 24) 63.
74 CETA (n 50) art 8.32.
75 ibid art 8.33.
76 ibid arts 8.19(1), 8.20(4), 8.21(1) & (4), 8.22(1)(b), and 8.35.
77 ibid art 8.39(7).
78 ibid art 8.19(6).
79 ibid art 8.39(3) and (4).
80 Bonnitcha and others (n 28) 14-20.
81 Schacherer (n 19) 646.
82 CETA (n 50) art 8.39(5).
83 ibid art 8.18(3).
84 ibid art 8.36(5).
85 ibid art 8.22(1)(f ) & (g ).
CETA’s Investment Court System 75
Turning then to the substantive protections aorded to investors, CETA
denes the required standards of treatment much more precisely than previous
investment treaties. Investors can only submit claims concerning Sections C (non-
discriminatory treatment) and D (investment protection) of Chapter 8 to the
ICS.86 In terms of investment protection, Parties are required to provide investors
with fair and equitable treatment and full protection and security.87 Article 8.10(2)
provides what appears to be an exhaustive list of measures which constitute a breach
of the obligation of fair and equitable treatment: denial of justice in criminal, civil
or administrative proceedings; a fundamental breach of due process; manifest
arbitrariness; targeted discrimination on manifestly wrongful grounds such as
gender, race or religious belief; abusive treatment of investors, such as coercion,
duress and harassment; or any further elements subsequently adopted by the
Parties.88 e concept of legitimate expectation requires that a Party make a specic
representation to an investor to induce an investment.89 Full protection and security
is dened as referring to ‘the Party’s obligations relating to the physical security of
investors and covered investments’.90 Claimants cannot rely on provisions of other
international agreements in order to establish a breach of CETA’s investment
protections.91 A denition of what constitutes ‘indirect expropriation’ is also
provided.92
Finally, and perhaps most signicantly in the context of the recent High Court
challenge, CETA explicitly arms the right of governments to regulate ‘to achieve
legitimate policy objectives, such as the promotion of public health, safety, the
environment or public morals, social or consumer protection or the promotion and
protection of cultural diversity’.93 It species that the mere fact that a Party reg ulates
in a manner that negatively aects an investment or interferes with an investor’s
expectations does not amount to a breach of an obligation.94 In later chapters,
CETA re-arms this right to regulate specically in relation to labour protections
and environmental standards.95 A Joint Interpretative Instrument accompanies
CETA and provides an agreed interpretation of a number of its provisions.96 It
further elaborates on the right to regulate,97 and states that CETA will not lower
86 ibid art 8.18(1).
87 ibid art 8.10(1).
88 ibid art 8.10(2). In Opinion 1/17 of the Court (Full Court) (30 April 2019), [158], the CJEU
understood this list to be exhaustive.
89 CETA (n 50) art 8.10(4).
90 ibid art 8.10(5)
91 ibid art 8.10(6).
92 ibid Annex 8-A art 1(b).
93 ibid art 8.9(1).
94 ibid art 8.9(2).
95 ibid art 23(2) and 24(3).
96 Joint Interpretative Instrument of the Comprehensive Economic and Trade Agreement (CETA)
between Canada and the European Union and its Member States [2017] OJ L11/3 (Joint
Interpretative Instrument), art 1(e).
97 ibid art 2.
76  
Canada and the EU’s respective standards and regulations related to food safety,
product safety, consumer protection, health, environment or labor protection.98
It also states that CETA will not result in foreign investors being treated more
favourably than domestic investors.99 e specic recognition of governments’ right
to regulate under CETA is a welcome development. However, the extent to which
these protections will be meaningful very much depends on how they are applied
in practice. Van Harten notes that the clause is ‘broadly worded’ and suggests that
CETA ‘still does not deliver a balanced agreement in the allocation of rights and
responsibilities’.100 Moreover, Fanou makes the point that the Joint Interpretative
Instrument is essentially a political statement.101 While the Instrument states that
it is intended as an agreed interpretation in the sense of Article 31 of the Vienna
Convention on the Law of Treaties,102 it is uncertain what weight may be accorded
to it by a future Tribunal.
Taking all of the above into account, it cannot be denied that CETA’s provisions
in relation to dispute settlement represent a signicant improvement on the
traditional ISDS model. Institutionally, procedurally and substantively, the rights
and protections aorded to investors are more evenly balanced against the State’s
ability to regulate in the public interest, though it remains to be seen how these
provisions will be interpreted in practice. At the same time, CETA does not fully
address the concerns that have been raised by critics of ISDS. For instance, while it
moves away from the system of party-appointed arbitrators and includes important
ethical standards for Tribunal members, it stops short of providing for a xed salary
and a prohibition from all outside activities that could be seen as compromising
their independence.103 It has also been criticised for not including a procedural
requirement for investors to exhaust domestic remedies before bringing a claim to
the Tribunal.104 Equally, it does not provide for the participation of third parties
in proceedings as amici curiae, which has been suggested as a way of allowing
greater consideration of the public interest in investment disputes. 105 Accordingly,
legitimate concerns remain about the future operation of the ICS and its potential
impact on domestic institutions. With this in mind, the next section presents
the constitutional issues raised in the context of Ireland’s proposed ratication of
CE TA .
98 ibid art 1(d).
99 ibid art 6.
100 Van Harten (n 30).
101 Maria Fanou, ‘e CETA ICS and the Autonomy of the EU Legal Order in Opinion 1/17 – A
Compass for the Future’ (2020) 22 Cambridge Yearbook of European Legal Studies 106, 127.
102 Joint Interpretative Instrument (n 96) art 1(e).
103 VanDuzer (n 56) 16.
104 Alessandra Arcuri and others, ‘Expropriating democracy: on the right and legitimacy of not
ratifying CETA’ (EJIL: Talk!, 20 October 2020) ejiltalk.org/expropriating-
democracy-on-the-right-and-legitimacy-of-not-ratifying-ceta/> accessed 28 March 2022.
105 Pantaleo (n 24) 68-69.
CETA’s Investment Court System 77
IV. e Constitutional Challenge: Referendum or
NoReferendum?
Clearly, much of the opposition to CETA relies on arguments in the realm
of politics or public policy, rather than that of law and constitutionality. e
constitutional argument has been limited to the question of the method of
ratication required: specically, whether a vote of the Dáil is sucient or whether
a referendum is necessary. e answer to this question turns on the extent to which
ratication of CETA represents a transfer of Ireland’s constitutionally-protected
sovereignty to an international institution.
Article 5 of the Constitution provides that Ireland is a sovereign, independent,
democratic State. Article 6 establishes that all powers of government – legislative,
executive and judicial – derive from the people, and that the powers of government
are exercisable only by or on the authority of the organs of State established by
the Constitution. Under Article 15.2, the sole and exclusive power of making
laws for the State is vested in the Oireachtas. Under Article 34.1, justice is to be
administered in courts established by law by judges appointed in the manner
provided by the Constitution.
e conduct of international relations is specically dealt with under Article
29. Article 29.4.1° vests the executive power of the State in or in connection
with its external relations in the Government, and Article 29.4.2° envisages the
Government entering into international agreements to this end. However, Article
29.5.1° provides that every international agreement to which the State becomes
a party shall be laid before Dáil Éireann, and where an international agreement
involves a charge upon public funds, the terms of the agreement must be approved
by the Dáil under Article 29.5.2°. Article 29.6 establishes Ireland’s dualist approach
to international law, whereby no international agreement forms part of domestic
law unless so provided for by the Oireachtas.
e current government has accepted that CETA is an agreement involving a
charge upon public funds and that a Dáil vote on ratication will therefore be
necessary, though it appears that this will be delayed until all legal challenges
have concluded.106 ere is of course no guarantee that CETA will ultimately be
approved by the Dáil, should the vote be held. A recent report of the Oireachtas
Joint Committee on European Union Aairs revealed an even split among
Committee members, with seven believing that nal ratication should proceed
but seven believing that further inquiry and debate is necessary on the implications
of ratication.107 While spokespersons for both Fianna Fáil and Fine Gael have
106 Daniel Murray, ‘Dáil vote on Ceta to be delayed until legal actions run course’ (Business Post, 3
October 2021)
run-course-bdb65fd9> accessed 28 March 2022.
107 Joint Committee on European Union Aairs, e Comprehensive Economic and Trade Agreement
(CETA) (33/EUA/06, 2021).
78  
voiced support for ratication,108 opposition parties and individual members of the
Green Party have expressed serious reservations about CETA.109 e constitutional
challenges will by no means be determinative of the fate of the ratication process
in Ireland. e consequences of non-ratication are complex and unclear, given
that CETA is a mixed agreement encompassing areas of shared competence
between the EU and its Member States.110 Fennelly observes that if any Member
State fails to ratify, CETA in its current form cannot enter into force and the issues
will ultimately fall to be reserved at the political level.111
e plainti’s case in Costello is that ratication of CETA involves a signicant
and irreversible transfer of sovereignty to international bodies not provided for
under the Constitution, and that a vote of the people is necessary to enable this. He
advanced three principal arguments in support of this position in the High Court.
e rst, discussed below in Part V.I, was that ratication involves an abdication of
sovereignty in the eld of foreign policy, relying on a line of jurisprudence beginning
with Crotty v An Taoiseach, in which the Supreme Court found that Title III of the
Single European Act involved an unconstitutional transfer of the State’s sovereignty
in the area of foreign policy.112 e argument on this point in Costello emphasised
in particular the commitment in CETA to ‘pursue with other trading partners the
establishment of a multilateral investment tribunal and appellate mechanism for
the resolution of investment disputes’.113 is commitment, it was argued, would
operate to bind Ireland to supporting the establishment of a multilateral investment
tribunal (‘MIT’) in future.
In the second argument, discussed under Part V.II, the plainti contended that
CETA would interfere with the exclusive power of the Oireachtas to make laws
for the State. is argument relied on the provisions establishing the CETA Joint
108 Fianna Fáil, ‘Ireland must complete CETA free trade agreement ratication – Kelleher’ (19
May 2019) must-complete-ceta-free-trade-agreement-
ratication-kelleher> accessed 28 March 2022; Leo Varadkar, ‘Opening Statement by An
Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar, T.D.’ (26 May
2021, Statement to Oireachtas Joint Committee on European Union Aairs)
oireachtas.ie/ie/oireachtas/committee/dail/33/joint_committee_on_european_union_aairs/
submissions/2021/2021-05-26_opening-statement-leo-varadkar-t-d-tanaiste-and-minister-for-
enterprise-trade-and-employment-department-of-enterprise-trade-and-employment_en.pdf>
accessed 28 March 2022.
109 Brady (n 3); Paul Cunningham, ‘CETA stand-o takes another twist for Greens’ (RTE News,
7 March 2021) accessed 28 March
2022.
110 Guillaume Van Der Loo and Ramses A Wessel, ‘e non-ratication of mixed agreements: Legal
consequences and solutions’ (2017) 54(3) Common Market Law Review 735.
111 David Fennelly, ‘CETA and the Irish Constitution’ (6 April 2021, Opening Statement
to Oireachtas Joint Committee on European Union Aairs) paras 32-33
oireachtas.ie/ie/oireachtas/committee/dail/33/joint_committee_on_european_union_aairs/
submissions/2021/2021-04-06_opening-statement-dr-david-fennelly-assistant-professor-
school-of-law-trinity-college-dublin-the-university-of-dublin_en.pdf> accessed 28 March 2022.
112 Crotty v An Taoiseach [1987] IESC 4, [1987] IR 713.
113 CETA (n 50) art 8.29.
CETA’s Investment Court System 79
Committee, which is responsible for all questions concerning trade and investment
between the Parties and the implementation of CETA.114 Signicantly, it has a
number of discretionary powers including to agree on amendments and to adopt
interpretations of the provisions of CETA, which shall be binding on the tribunals
of the ICS.115 Its decisions are binding on the Parties, ‘subject to the completion
of any necessary internal requirements and procedures’.116 It is this power to adopt
binding decisions that the plainti in Costello argued contravenes Article 15.2 of
the Constitution.
e third and strongest argument advanced by the plainti, discussed below under
Part V.III, is that ratication of CETA without a constitutional amendment would
violate Article 34.1 and interfere with the role of the courts in the administration of
justice. is argument focused on the role of the ICS in deciding disputes between
investors and host States, and the extent to which the damages it awards will be
enforceable at domestic level. e detailed provisions on the functioning of the
ICS have been considered above in Part III. e next section will examine Butler J’s
decision in the High Court proceedings, in which she rejected the constitutional
challenge and upheld the arguments of the defendants on each of these three
central questions. It will be argued that, while the existing case law supports Butler
J’s decision in relation to the rst two issues, the plainti ’s argument regarding
CETA’s impact on the judicial branch should have been upheld. e Supreme
Court determination granting leave to appeal has accepted that the application
raises ‘[s]ignicant issues regarding state sovereignty and the administration of
justice’,117 and it is hoped that the decision of the High Court on this last point will
be reversed when the Supreme Court delivers judgment.
V. e High Court Judgment in Costello
e plainti in Costello is a Green Party T.D., who has expressed concerns regarding
CETA’s impact on the State’s ability to regulate in the eld of environmental
protection and climate action.118 e case was lodged on 3 March 2021,119 and
Butler J’s decision in the High Court was delivered on 16 September 2021. e
judgment runs to seventy-eight pages and provides an in-depth analysis of the
114 ibid art 26.1(3).
115 ibid art 26.1(5)(c) and (f).
116 ibid art 26.3(2).
117 Costello, Supreme Court determination (n 8) [10].
118 Patrick Costello TD, ‘Costello responds to judgement on CETA High Court Case’ (16 September
2021) -costello-responds-to-judg ement-on-
ceta-high-court-case/> accessed 28 March 2022.
119 Hugh O’Connell, ‘Green Party TD lodges High Court case against own government over
controversial CETA trade deal’ (Independent, 3 March 2021) .independent.ie/irish-news/
politics/green-party-td-lodges-high-court-case-against-own-government-over-controversial-
ceta-trade-deal-40154150.html> accessed 28 March 2022.
80  
many complex issues of international, EU, and constitutional law raised in the case.
is article does not seek to address every aspect of the judgment but will focus on
the three central issues outlined above.
V.I. Foreign Policy and the Executive Power of the Government
As outlined above, Article 5 of the Constitution addresses the concept of
sovereignty, which requires ‘that the State is not amenable to any external
authority for its conduct’.120 CETA’s alleged impact on Ireland’s sovereignty in
the area of foreign policy formed a central part of the plainti’s case in the High
Court, particularly in light of the earlier Supreme Court jurisprudence in Crotty
and Pringle v Ireland.121 e principle that the Government cannot curtail its
sovereign power to formulate foreign policy without reference to the people was
rst established in Crotty, where Walsh J held that the Government’s freedom to
decide matters of foreign policy does not extend to the power to enter into binding
agreements which abdicate that freedom.122 e plainti in Costello argued that
ratication of CETA involves such an abdication of sovereignty by committing
Ireland to the ‘CETA project’ and making it impossible for Ireland to veto future
changes to the CETA rules or to opt out of the project.123 In particular, he raised
concerns in relation to the Parties’ commitment under Article 8.29 to pursue the
establishment of an MIT with other trading partners.
In response, the defendants highlighted that the Supreme Court in Crotty accepted
that most of the Single European Act, with the exception of Title III relating to
European political cooperation, did not require approval by referendum in order
to be ratied.124 e obstacle in relation to Title III was that foreign policy had
not previously been within the competence of the European Communities and
therefore entailed an additional surrender of sovereignty beyond that which had
been ceded under the constitutional amendments to allow Ireland’s accession to the
EU. 125 e defendants also relied on the more recent judgment in Pringle, where the
Supreme Court rejected the argument that ratication of the treaty establishing the
European Stability Mechanism (‘ESM’) required a constitutional amendment. In
that case, Clarke J held that the Government enjoys ‘a wide discretion’ to enter into
international treaties, and that the limit on this discretion ‘arises where the relevant
treaty involves Ireland in committing itself to undened policies not specied in
the treaty and in circumstances where those policies, which Ireland will be required
to support, are to be determined not by the Government but by institutions or
120 Byrne v Ireland [1972] IR 241 (SC) 264 (Walsh J).
121 Pringle v Ireland [2012] IESC 47, [2013] 3 IR 1.
122 Crotty (n 112) 783 ( Walsh J).
123 Costello (n 7) [118].
124 ibid [95].
125 Crotty (n 112) 787–788 (Henchy J).
CETA’s Investment Court System 81
bodies specied in the treaty. It is an abdication, alienation or subordination of
policy formation and adoption which is not permitted’.126
In light of this case law, Butler J concluded that ratication does not involve a
new abdication of sovereignty in the eld of foreign policy. She held that the
policies pursued by CETA are clearly dened by CETA itself, in contrast to those
considered it Crotty which ‘potentially covered an unlimited range of issues that
might arise concerning unspecied third parties in undened circumstances into
the future’.127 Following extensive reference to Pringle, she summarised the position
as follows:
Every international agreement seeks to obtain the commitment of the parties
as to how they will act as regards the subject matter of that agreement into
the future. To limit the State’s ability to enter into such agreements purely
because they may inuence how the Government or the Oireachtas may
choose to act in light of the international commitments thereby entered into
would restrict rather than protect its sovereignty.128
A further complicating factor in this regard is that the vast majority of CETA’s
provisions already fall within the exclusive competence of the EU, while certain
aspects of Chapter 8 (in particular as it relates to indirect investment) constitute
a shared competence between the EU and Member States. is was accepted by
both parties in Costello.129 Under the terms of the Treaty on the Functioning of
the European Union (‘TFEU’), in an area of shared competence, Member States
may only act ‘to the extent that the Union has not exercised its competence’.130 e
plainti argued, however, that as the EU has not yet exercised its competence in
relation to foreign indirect investment, it remains a Member State competence
and that the eect of ratication would therefore be to vest this competence with
the EU.131 Yet the terms of Article 2.2 of the TFEU provide that the EU may act
in an area of shared competence by adopting ‘legally binding acts’.132 Entry into
an international agreement does not, under Article 288 of the TFEU, constitute
a legal act of the EU.133 Accordingly, Butler J concluded that ratication of
CETA could not of itself convert what is now a shared competence in the area of
foreign indirect investment into an exclusive EU competence precluding further
Member State action.134 Moreover, as Butler J points out in her judgment, a
126 Pringle (n 121) [4.25] (Clarke J).
127 Costello (n 7) [97].
128 ibid [101].
129 ibid [104]
130 Consolidated Version of the Treaty on the Functioning of the European Union [2012] OJ C
326/47 (TFEU), art 2(2).
131 Costello (n 7) [112].
132 TFEU (n 130) art 2(2).
133 ibid art 288.
134 Costello (n 7) [113].
82  
shared competence ‘can, at any time, be exercised by the EU without any further
change to the Treaties being required’.135 erefore, the EU’s entitlement to act
in areas of shared competence to the exclusion of Ireland’s current competence ‘is
contemplated by Article 29.4.5 of the Constitution and cannot of itself represent
an unconstitutional ceding of sovereignty which would require approval of the
People in a referendum.136
Finally, the plainti’s concern that, on ratication of CETA, Ireland would be
irrevocably committed to pursuing the establishment of an MIT was also rejected
by the Court, primarily by reference to Opinion 2/15 of the Court of Justice of the
European Union (‘CJEU’). In that case, which concerned provisions for arbitration
of disputes under an EU trade agreement with Singapore, the CJEU held that such
a regime could not be of a purely ancillary nature given its impact on the jurisdiction
of the courts of Member States and therefore could not be established without the
consent of Member States.137 On that basis, the Court in Costello concluded that
the actual establishment of an MIT in future would still require ratication by
Ireland, even if CETA should already have been ratied.138 is would seem to be
a correct application of the CJEU’s Opinion, though its recognition of the impact
of the dispute settlement regime in that case on the jurisdiction of the courts of
Member States is somewhat at odds with Butler J’s conclusion that CETA does not
interfere with the administration of justice at the domestic level, discussed further
below.
Given the ‘signicant narrowing’ of the scope of Crotty by the Supreme Court in
Pringle,139 Butler J’s decision on this point appears to be a correct application of
the existing case law. While ratication does undoubtedly involve a signicant
commitment by Ireland to act in line with the objectives of CETA in future, the
same could be said of the ESM, which was found to be constitutionally compliant
in Pringle. e objectives pursued by CETA are necessarily limited to the area of
trade and investment between the EU (including Ireland) and Canada, and are
further dened in considerable detail in the text of CETA itself. Had the plainti
had been able to demonstrate that ratication would commit Ireland to pursuing
the establishment of an MIT, the result might have been dierent, given that
Article 8.29 of CETA does not clearly dene the scope, make-up or jurisdiction
of the proposed MIT. However, CJEU Opinion 2/15 does suggest that such
a development would require further ratication by Ireland and therefore the
plainti ’s case could not succeed on this basis.
Yet it has been argued that the Pringle decision is not entirely clear on the test
to be applied to determine whether a constitutional referendum is required and
135 ibid [108].
136 ibid.
137 Opinion 2/15 of the Court (Full Court) (16 May 2017), [292].
138 Costello (n 7) [122].
139 Fennel ly (n 111) [17].
CETA’s Investment Court System 83
that some of the judgments seem to apply a test of treaty comparison (considering
the treaty by reference to the provisions of previous treaties) rather than one
of strict constitutional consistency.140 Moreover, Hogan has suggested (prior
to his appointment to the Supreme Court) that while Pringle has the eect of
neutralising at least part of the decision in Crotty, this should not be taken to mean
‘that the Government now has a free hand’.141 He argues that while Pringle dea ls
with restrictions on the executive power of the State, there will continue to be
objections where a treaty imposes specic obligations ‘over and above any perceived
restrictions on the right to conduct foreign policy’.142 is analysis suggests that
Pringle may not exclude a requirement for a constitutional amendment in a case
where a treaty aects not only the Government’s discretion in relation to foreign
policy, but also the powers of the legislative and judicial branches. With this in
mind, the following sections consider the potential impact of CETA in these areas.
V.II. Article 15.2 and the Legislative Power of the Oireachtas
e second aspect of the plainti ’s argument was that the rule-making powers
conferred on the CETA Joint Committee would infringe the exclusive power of the
Oireachtas to make laws for the State under Article 15.2 of the Constitution. As
the Court of Appeal held in Bederev v Ireland, this provision requires that ‘policy
decisions having a legislative character are taken by the body directly accountable
to the People (namely, the Dáil and the wider Oireachtas)’.143 While the Oireachtas
may delegate power to subordinate bodies for stated purposes, it has been held that
any excessive exercise of this discretion may undermine democratic principle and
the rule of law itself.144
As noted above, Article 26.3 of CETA provides that decisions of the Joint
Committee shall be binding on the parties, subject to the completion of any
necessary internal requirements and procedures. e plainti in Costello
highlighted that there is no guarantee that Ireland will have representation on
the Joint Committee when any such decisions are taken.145 e Joint Committee
can adopt ‘further elements’ of the State’s obligation to provide fair and equitable
treatment to investors,146 can adopt binding interpretations of CETA,147 and can
140 Maria Cahill, ‘Crotty aer Pringle: e Revival of the Doctrine of Implied Amendment’ (2014)
17(1) Irish Journal of European Law 1, 4.
141 Gerard Hogan, ‘Ireland: e Constitution of Ireland and EU Law: e Complex Constitutional
Debates of a Small Country’ in Anneli Albi and Same Bardutzky (eds), National Constitutions in
European and Global Governance: Democracy, Rights, the Rule of Law (Asser Press 2019) 1330.
142 ibid.
143 Bederev v Ireland [2015] IECA 38, [2016] 3 IR 1 [61] (Hogan J).
144 Kennedy v Law Society of Ireland (No. 3) [2001] IESC 35, [2002] 2 IR 458 (Fennelly J).
145 Costello (n 7) [58].
146 CETA (n 50) art 8.10(2)(f ) & art 8.10(3).
147 ibid art 26.1(5)(e).
84  
agree on amendments to CETA.148 It was argued in the High Court that all of these
activities amount to law-making.
However, the High Court found that the phrase ‘subject to the completion of any
necessary internal requirements and procedures’ suggests that the CETA Joint
Committee is not in fact making law, as its decisions are subject to further sanction
by the Parties.149 While the power to adopt interpretations of CETA is not
expressly subject to this subsequent sanction, the Court nevertheless held that this
is merely a power to interpret and not to make law, and that such interpretations
are binding only on CETA Tribunals and not on State Parties.150 It is true that
the rule-making powers of the CETA Joint Committee are subject to signicant
limitations by virtue of these provisions. However, it is questionable whether the
reference to internal requirements and procedures in fact empowers Member States
eectively to overrule the substantive decisions of the CETA Joint Committee or
merely acknowledges that certain domestic procedural steps may be required in
order for these decisions to take eect. Butler J refers to this potential ambiguity in
her judgment, but addresses it only in the context of the Joint Committee’s powers
under Article 30.2.2 to decide on amendments to CETA.151 uestions remain as to
the ability of Member States to overrule decisions of the Joint Committee adopting
‘further elements’ of the fair and equitable treatment obligation.
e more fundamental obstacle to the plainti’s argument under Article 15.2
is that CETA itself expressly provides that it does not confer rights or impose
obligations on persons other than those created between the Parties under public
international law, and that it cannot be directly invoked in the domestic legal
systems of the Parties.152 e defendants in Costello relied heavily on the argument
that CETA does not have direct eect in Irish law and therefore cannot aect the
Oireachtas’s constitutional power to make law. is submission also relied on the
explicitly dualist approach to international law adopted under Article 29.6 of the
Constitution. Both by virtue of Ireland’s constitutional position and the explicit
text of CETA itself, Butler J accepted that its provisions are incapable of aecting
Ireland’s domestic legal order. Accordingly, the Court concluded that Article 15.2
was not breached as ‘neither CETA itself nor any decisions taken by the CETA
Joint Committee have legal eect in Ireland’.153
It would appear that the plainti ’s concern regarding CETA’s impact on the
Oireachtas’s role as legislator is, at its core, not primarily focused on the role of the
CETA Joint Committee, which is limited to specic functions and the decisions
of which have no applicability in the domestic legal system. e more persuasive
148 ibid art 26.1(5)(c) & art 30.2(2).
149 Costello (n 7) [97].
150 ibid [63].
151 ibid [60].
152 CETA (n 50) art 30.6.
153 Costello (n 7) [91].
CETA’s Investment Court System 85
objection relates to the potential for investment treaties such as this to have a chilling
eect on the adoption of legislation across a wide range of public policy areas, for
fear of attracting liability in damages for harm to foreign investments. As discussed
in Part I above, this has long been a criticism of the traditional ISDS regime and
there is evidence of such an eect having occurred in practice in at least some
instances, particularly in response to specic threats by investors. However, even
taking the existence of this chilling eect as demonstrated, it would be a stretch to
equate such an external factor with an eective restriction on the State’s legislative
power contrary to Article 15.2. e potential for litigation, domestic or otherwise,
may certainly generate reluctance among lawmakers to adopt certain legislative
measures; it does not, however, deprive the legislature of its constitutional power to
make laws for the State. e more persuasive argument is that where the potential
for such a chilling eect on public policy exists, disputes should be referable to the
bodies tasked under the Constitution with achieving a balance between the public
good and individual rights. e next section therefore considers the decision in
Costello regarding the role of the courts in the administration of justice.
V.III. Article 34.1 and the Judicial Power of the Courts
e nal aspect of the Costello case which will be addressed in this section is,
it is submitted, the basis upon which the Supreme Court should hold that a
referendum is required in order for ratication to proceed. e plainti argued
that the establishment of the ICS undermines the role of the courts in relation
to the administration of justice, contrary to Article 34.1 of the Constitution.
is provision vests in the courts ‘the exclusive right to determine justiciable
controversies between citizens or between a citizen or citizens, as the case may
be, and the State’.154 e relevant test in determining whether this right has been
infringed is whether a body other than the courts is engaged in the administration
of justice, by reference to the criteria initially set out in the seminal McDonald
v Bord na gCon decision.155 However, while Butler J accepted that the CETA
Tribunal will in principle be involved in the administration of justice, and that
its awards will be enforceable at the domestic level, she ultimately held that the
disputes referred to these Tribunals are non-justiciable before the Irish courts, given
that the jurisdiction exists at the level of international law.156
Ireland is currently party to several treaties with associated courts or tribunal
mechanisms, some of which have been ratied pursuant to a referendum while
others have not. e most signicant example in terms of impact on domestic
law is the CJEU, the role of which was ratied by way of the original referendum
on membership of the European Communities and subsequent referenda on
154 Buckley v Attorney General [1950] IR 67 (SC) 84 (O’Byrne J).
155 McDonald v Bord na gCon [1965] IR 217 (SC).
156 Costello (n 7) [154].
86  
more recent EU Treaties.157 Similarly, Ireland’s ratication of the Rome Statute
establishing the International Criminal Court was approved by referendum.158
On the other hand, Ireland’s ratications of the UN Convention on the Law of
the Sea (‘UNCLOS’) and the World Trade Organisation (‘WTO’) Agreement,
both of which include provisions on dispute settlement, were not the subject of
referenda.159 In the case of UNCLOS, the jurisdiction of the International Tribunal
for the Law of the Sea is largely conned to disputes between States Parties or
between States Parties and the International Seabed Authority. Natural or juridical
persons can be party to such disputes only where they concern contracts relating
to activities in the ‘Area’ (the seabed and ocean oor and subsoil thereof, beyond
the limits of national jurisdiction).160 Similarly, the WTO’s Dispute Settlement
Understanding only addresses disputes between WTO Members, with no
provision for private parties to refer disputes to the Dispute Settlement Body.161
In both cases, the tribunals established adjudicate disputes at the inter-State level
and private parties are not entitled to bring cases before them (subject to the very
narrow exception under UNCLOS for entities who are party to contracts for the
exploration and exploitation of the Area). Accordingly, given Ireland’s dualist
approach to international law, these dispute settlement mechanisms cannot be said
to interfere with the role of the domestic courts in the administration of justice.
Perhaps the most apt comparison is with the European Convention on Human
Rights (‘ECHR’) system, to which Ireland is party and which establishes the
European Court of Human Rights (‘ECtHR ’).162 Under the ECHR, individuals
and NGOs are entitled to make applications to the Court alleg ing a violation by a
State of the rights protected by the ECHR.163 State Parties undertake to abide by
the nal judgment of the ECtHR in any case to which they are parties.164 Ireland
ratied the ECHR without recourse to a constitutional referendum and the rights
it enshrines have since been indirectly incorporated into Irish law by the European
Convention on Human Rights Act 2003 (‘ECHR Act 2003’).165 However, there
157 As implemented by the ird Amendment of the Constitution Act 1972, Tenth Amendment
of the Constitution Act 1987, Eleventh Amendment of the Constitution Act 1992, Eighteenth
Amendment of the Constitution Act 1998, Twenty-sixth Amendment of the Constitution Act
2002, Twenty-Eighth Amendment of the Constitution (Treaty of Lisbon) Act 2009 and the
irtieth Amendment of the Constitution (Treaty on Stability, Co-ordination and Governance
in the Economic and Monetary Union) Act 2012, which all amended Art 29.4.4-10º.
158 As implemented by the Twenty-third Amendment of the Constitution Act 2001, which inserted
art 29.9.
159 Fennelly (n 111) [20].
160 United Nations Convention on the Law of the Sea (adopted 10 December 1982, entered into
force 16 November 1994) 1833 UNTS 397 (UNCLOS) arts 1.1, 153 and 187.
161 Understanding on Rules and Procedures Governing the Settlement of Disputes, Marrakesh
Agreement Establishing the World Trade Organisation, Annex 2, 1869 UNTS 401 (DSU) art 1.1.
162 Convention for the Protection of Human Rights and Fundamental Freedoms (European
Convention on Human Rights, as amended) (ECHR) art 19.
163 ibid art 34.
164 ibid art 46.
165 Suzanne Kingston and Liam ornton, ‘Report on the Application of the European Convention
CETA’s Investment Court System 87
are two signicant ways in which the ECHR system diers from the proposed ICS
under CETA: these concern rstly admissibility and the requirement to exhaust
domestic remedies, and secondly the enforcement of decisions. e following
subsections will address each of these distinctions in turn, before discussing how
these considerations relate to the potential for a regulatory chill ing eect.
(a) Admissibility and the Exhaustion of Domestic Remedies
Under the ECHR, individual applications will only be admissible aer all domestic
remedies have been exhausted.166 is means that cases will generally have been
the subject of extensive domestic litigation before they reach the ECtHR and the
domestic courts will have had the opportunity to rule on all conicting interests
involved. Indeed, the ECtHR has recognised that it is appropriate that national
courts should initially have the opportunity to determine questions of compatibility
of domestic law with the ECHR,167 and that it ‘should have the benet of the views
of the national courts, as being in direct and continuous contact with the forces
of their countries’.168 According to the ECtHR’s case law, whether a domestic
procedure constitutes an eective remedy will depend on various factors, including
the applicant’s complaint, the scope of the State’s obligations under the particular
ECHR provision, the available remedies and the specic circumstances of the
case.169 In addition to the rule on exhaustion of domestic remedies, the ECHR
also provides for several other admissibility requirements. e ECtHR will not
deal with any application that is substantially the same as a matter that has already
been examined by it.170 It will declare any individual application inadmissible if it
considers that the application is incompatible with the provisions of the ECHR,
manifestly ill-founded, an abuse of the right of individual application,171 or where
the applicant has not suered a signicant disadvantage.172
By contrast, CETA does not stipulate that an investor must exhaust domestic
remedies before referring a dispute to the ICS. Investors are only required to
withdraw or discontinue any existing proceedings before a tribunal or court under
domestic law, and waive the right to initiate any such proceedings, in order to
submit a claim to the Tribunal:173 both avenues cannot be pursued simultaneously.
on Human Rights Act 2003 and the European Charter of Fundamental Rights: Evaluation and
Review’ (November 2015, UCD Working Papers in Law Criminology & Socio-Lega l Studies
Research Paper No 12/2015) act_id=2686537>
accessed 28 March 2022, 29.
166 ECHR (n 162) art 35(1).
167 A, B & C v Ireland App no 25579/05 (ECtHR, 16 December 2010) [142].
168 Burden v UK App no 13378/05 (ECtHR, 29 April 2008) [42].
169 Lopes de Sousa Fernandes v Portugal App no 56080/13 (ECtHR, 19 December 2017) [134].
170 ECHR (n 162) art 35(2)( b).
171 ibid art 35(3)(a).
172 ibid art 35(3)(b).
173 CETA (n 50) art 8.22(1)(f ) & (g).
88  
e eect is that, even where equivalent protections are aorded to investors under
Irish law and under CETA, and even where it would be open to an investor to sue
before the Irish courts in respect of the loss sustained as a result of a particular
measure, Canadian investors will have the option of going to the CETA Tribunal
instead. is is despite the fact that there are remedies under domestic law which
in many cases would be open to foreign investors, some of which are referred to
by the High Court in Costello: for instance, challenges based on the constitutional
protection aorded to property rights,174 or judicial review.175 Similarly, CETA does
not include the other admissibility requirements provided for under the ECHR,
though it is open to a respondent to bring a preliminary objection that a claim is
manifestly without legal merit or unfounded as a matter of law.176
e lack of admissibility requirements in CETA similar to those which apply
under the ECHR means that the ICS’s impact on the administration of justice by
the Irish courts would be far more signicant. Under CETA, Canadian investors
alleging unfair treatment will have the right to bypass the Irish courts altogether
and go directly to the CETA Tribunal. Yet in the High Court, Butler J did not
accept that this constitutes a subtraction of jurisdiction from the Irish courts.177
She concluded that, given CETA’s status as an international treaty, disputes
arising under it could never fall within the exclusive jurisdiction of the Irish
courts, and therefore distinguished the ICS regime from the Workplace Relations
Commission (‘WRC’) system considered by the Supreme Court in Zalewski.178
Zalewski concerned the constitutionality of the adjudicative process established
under the Workplace Relations Act 2015 and whether that process amounted to
an administration of justice required to be administered by the courts.179 Butler
J observed that the legislation under scrutiny there concerned ‘a purely domestic
matter’, whereas disputes under CETA ‘could never fall within the exclusive
jurisdiction of the courts of any of the parties’.180
While the simplicity of the distinction between the CETA Tribunal resolving
disputes under international law while the Irish courts deal with disputes under
domestic law is appealing, it is a somewhat articial one. It is accepted in the course
of Butler J’s judgment that many of the protections provided to investors under
CETA are very similar to those which already exist under Irish domestic law.181 Yet
under the terms of CETA, a Canadian investor may submit a claim directly to the
CETA Tribunal, even where a right of action exists under Irish law in respect of the
174 Costello (n 7) [33].
175 ibid [34].
176 CETA (n 50) arts 8.32 and 8.33.
177 Costello (n 7) [133–134].
178 Zalewski v An Adjudication Ocer, e Workplace Relations Commission, Ireland & e Attorney
General [2021] IESC 24.
179 ibid [1] (O’Donnell J).
180 Costello (n 7) [134]–[135].
181 ibid [28], [33].
CETA’s Investment Court System 89
same impugned measure for recovery of the same damages. Furthermore, Butler J’s
conclusions on this point seem somewhat at odds with her earlier reliance on CJEU
Opinion 2/15, where the CJEU held that a regime providing for the arbitration of
disputes between investors and State Parties under another free trade agreement
would ‘remove disputes from the jurisdiction of the courts of the Member States’.182
Finally, Butler J’s observation that there is no subtraction of jurisdiction from the
Irish courts given that ‘[i]n the context of international business, litigants will
frequently have a choice of jurisdiction in respect of any disputes which arise’183
is questionable. Although commercial disputes frequently arise which may be
litigated in more than one national jurisdiction, this is not necessarily analogous
to the situation created under CETA, whereby investors may pursue the Irish State
for damages in an international tribunal in response to measures adopted at the
domestic level. It is not presently open to Canadian investors to judicially review
the actions of the Irish government before the Canadian courts, for instance. In
the context of disputes involving measures adopted at the domestic level, it is
appropriate that the Irish courts should have the opportunity to consider the
measures before a private party can refer the matter to an international tribunal
for recovery of damages. e lack of such a requirement is one reason why the
ratication of the ICS would involve a subtraction from the constitutional role of
the courts in the administration of justice, necessitating a referendum.
(b) Enforcement of Decisions
e second crucial distinction between the ICS mechanism under CETA and the
ECHR system concerns the process by which decisions are supervised and enforced.
Under the ECHR, the supervision of execution of judgments is undertaken at the
international level, by the Committee of Ministers of the Council of Europe.184
is, again, is in line with Ireland’s dualist legal system: a nding of a violation by
the ECtHR implies that Ireland is in breach of its international obligations and
this breach is addressed in an international forum. As the Supreme Court has made
clear in McD v L:
‘[t]he Convention does not of itself provide a remedy at national level for
victims whose rights have been breached by reference to the provisions of
the Convention … e ECtHR in exercising its jurisdiction to nd that a
contracting state has breached its obligations under the Convention may,
and does, award damages to victims … Even then orders or declarations of the
Court are not enforceable at national level unless national law makes them
so .’185
182 CJEU Opinion 2/15 (n 137) [292].
183 Costello (n 7) [155].
184 ECHR (n 162) art 46.
185 McD v L [2010] 2 IR 199 (SC) 248 (Murray CJ).
90  
While it is possible under section 3 of the ECHR Act 2003 (as amended) for a
person to claim damages in respect of breaches of ECHR rights by the State in
some circumstances, this remedy is based on the domestic legislation rather than
on the ECHR itself, and it is the Irish courts that determine the appropriate level
of damages.186
By contrast, if CETA is ratied, awards made by the ICS will be enforceable at
domestic level. Butler J acknowledges in her judgment that such awards will be
‘for all practicable purposes, enforceable’.187 e defendants in Costello had sought
to argue that this was not the case, as enforcement will be subject to leave of the
High Court being granted.188 However, the Court rejected these arguments,
holding that the enforcement mechanism is similar to that which existed in the
WRC system in Zalewski, which the Supreme Court nonetheless found to be
engaged in the administration of justice.189 ere, decisions of the WRC required
an application to the District Court in order to obtain an order capable of being
enforced.190 O’Donnell J observed that despite the requirement for such an
application, enforcement was ‘almost automatic’ on presentation of the appropriate
proofs, and that ‘the court process is conscripted in aid of enforcement of the
decision of the WRC’.191 Butler J correctly concluded that the requirement for
leave of the High Court to execute a CETA award is analogous to the enforcement
mechanism considered in Zalewski and that ‘[i]n both cases, enforcement is almost
automatic’.192
Yet despite this conclusion on enforceability, the High Court accepted that the
disputes to be determined by the CETA Tribunal are non-justiciable before the
Irish courts, because Irish courts do not have jurisdiction to apply international
law.193 While this cannot be disputed, a tension nonetheless exists where a tribunal
which applies principles of international law has the power to make awards which
are, in essence, directly enforceable within Ireland’s domestic legal system. Such a
system appears to conict with the Constitution’s dualist approach to international
law, as Irish courts are made responsible for the enforcement of awards of the CETA
Tribunal where they have had no opportunity to consider the merits of the cases. It
is in stark contrast to the status of the ECHR before the domestic courts, where a
violation can only be found by reference to the ECHR Act 2003 rather than to the
ECHR itself, and where the Irish courts rule on the merits of the case and on the
appropriate level of damages.
186 ECHR Act 2003 s 3(2) and s 3A.
187 Costello (n 7) [150].
188 ibid [147].
189 ibid [149].
190 Zalewski (n 178) [101] (O’Donnell J).
191 ibid [104].
192 Costello (n 7) 149.
193 ibid [154].
CETA’s Investment Court System 91
(c) e ICS and Regulatory Chill
e combined eect of the above two aspects of the ICS system is to create a
signicant potential for a chilling eect on public interest regulation. e lack of
a requirement to exhaust domestic remedies means that existing Irish authorities
such as Glencar Explorations Plc v Mayo County Council (No 2)194 and Cromane
Seafoods Ltd v Minister for Agriculture,195 under which it is not generally possible
for damages to be awarded against the State for negligence in the formulation
or implementation of legislative policy absent a specic duty of care, will not be
considered in the context of claims of unfair treatment by Canadian investors. No
such exclusion of liability is provided for under CETA. is raises the possibility
that the CETA Tribunal may make an award of damages in respect of an Irish
regulatory measure in circumstances where recovery would not be possible before
the Irish courts for reasons of public policy.
While it is clear from the terms of CETA that it will not be open to the Tribunal to
invalidate domestic legal measures, its awards will be enforceable against the State
by the courts, subject to limited procedural controls. As acknowledged by Butler
J in the course of the judgment in Costello, the jurisdiction of the CETA Tribunal
concerns ‘multi-million euro claims’.196 Such claims create a risk of huge liability in
damages being imposed on the State, leading to a signicant potential impact on
the public nances.
However, Butler J rejected the plainti ’s arguments in relation to the potential
chilling eect. In doing so, she placed considerable reliance on CJEU Opinion
1/17, given in response to a request from Belgium regarding the compatibility of
the ICS mechanism with the autonomy of the EU’s legal order.197 e CJEU had
regard to Article 8.31(2) of CETA, which provides that the CETA Tribunal shall
not have jurisdiction to determine the legalit y of a measure under the domestic law
of a Party. Moreover, the CJEU rejected the argument that the possibility of high
awards of damages in favour of Canadian investors could negatively aect the level
of protection aorded to public interests by the EU, concluding that the powers of
the CETA Tribunal ‘do not extend to permitting them to call into question the level
of protection of public interest determined by the Union following a democratic
process’.198 is conclusion was founded on the provisions of CETA arming the
Parties’ right to regulate in the public interest, and on the denition of the fair and
equitable treatment obligation, which ‘lists exhaustively the situations in which
such a nding can be made’.199 Butler J held that these observations also hold true
for the impact of CETA on the domestic legal system, given that there is a ‘range
194 Glencar Explorations Plc v Mayo County Council (No 2) [2001] IESC 64, [2002] 1 IR 84.
195 Cromane Seafoods Ltd v Minister for Agriculture [2016] IESC 6, [2017] 1 IR 119.
196 Costello (n 7) [161].
197 CJEU Opinion 1/17 (n 88).
198 ibid [156].
199 ibid [158].
92  
of measures built into CETA which preserve the entitlement of the parties, which
includes Ireland as much as the EU, to protect those interests’.200 e judgment is
not clear as to whether such a chilling eect could in principle rise to the level of
an unconstitutional interference with the legislative and judicial functions of the
State, or whether this could only arise if the Tribunal were empowered to invalidate
domestic regulatory measures.
It is undoubtedly true that CETA denes what is meant by the fair and equitable
treatment obligation in a much clearer and more limited fashion than previous
investment treaties. However, it remains to be seen how the Tribunal will interpret
terms such as ‘manifest arbitrariness’ or ‘abusive treatment of investors’. In addition,
Article 8.10(2)(f) leaves it open to the Parties to adopt ‘further elements’ of the
fair and equitable treatment obligation. Similarly, while it is a positive development
that CETA now explicitly recognises the right of Parties to regulate in the public
interest, it is impossible to know how these provisions will be applied in practice
at this point in time. Other recent investment treaties have also incorporated
provisions recognising the right to regulate, including the EU-Singapore Free Trade
Agreement and the United States-Mexico-Canada Agreement.201 However, it does
not appear that such clauses have featured prominently in many ISDS decisions
to date and the extent to which they will aect the outcome of cases remains
uncertain.202 Furthermore, although investors may not necessarily succeed in their
claims before the Tribunal, part of the concern raised by the plainti in Costello
and others is that the very possibility of such claims being made may discourage
governments from adopting regulatory measures, which negatively aect foreign
investors.
For all of the above reasons, it is submitted that the High Court decision in relation
to the Article 34.1 argument was incorrect and that Ireland’s ratication of the ICS
would involve an interference with the administration of justice which can only be
validated by way of referendum. In the absence of a rule requiring the exhaustion
of domestic remedies, and given that the CETA Tribunal will be empowered to
make vast awards of damages, which will be enforceable under Irish law, the
potential impact on the jurisdiction of the courts is very signicant. CETA would
allow Canadian investors to bypass the Irish courts altogether where they have an
200 Costello (n 7) [139].
201 Inga Martinkute and Anastasiya Ugale, ‘Right to Regulate in the Public Interest: Treaty Practice’
(Jus Mundi, 15 October 2021) ment/wiki/en-right-to-regulate-
in-the-public-interest> accessed 28 March 2022; Free Trade Agreement Between the European
Union and the Republic of Singapore [2019] OJ L294/3, art 8.1(3); Agreement between the
United States of America, the United Mexican States, and Canada (adopted 30 November 2018,
entered into force 1 July 2020), art 14.16.
202 David Gaukrodger, ‘e balance bet ween investor protection and the right to regulate in
investment treaties: A scoping paper’ (OECD Working Papers on International Investment
2017/02, 24 February 2017) vestment/the-balance-
between-investor-protection-and-the-right-to-regulate-in-investment-treaties_82786801-en>
accessed 28 March 2022.
CETA’s Investment Court System 93
alternative claim under CETA, and may prevent the courts from deciding on the
appropriate balance between public and private interests in investment disputes. It
is to be hoped that this portion of the High Court decision will be overturned on
appeal and that the Supreme Court will rule that a referendum is necessary for the
ratication of CETA to proceed.
VI. Conclusion
is article has sought both to critique CETA as a treaty in the realm of
international law and, relatedly, to consider the various constitutional issues that
arise in relation to its proposed ratication at the domestic level. e criticisms that
have been levelled against the traditional approach to ISDS in international law
are numerous and legitimate, relating to its institutional mechanics, its procedural
opaqueness, and its substantive aws. Yet as detailed above, the provisions on
investment protection in CETA represent a signicant improvement on its
predecessors. However, it remains untested and concerns persist regarding its
potential impact should it be ratied by Ireland, in particular on the adoption of
legislation in areas of public interest and on the administration of justice by the
Irish courts. While some of these arguments are more political than legal in nature,
there is a signicant constitutional issue to be resolved as to whether ratication
can take place without rst being approved by referendum. e High Court at
rst instance has held that it can, but with a Supreme Court appeal pending and a
further case still to be heard, the matter is far from closed.
e High Court judgment in Costello sets out the many complex issues of
international, EU and constitutional law relating to Irish ratication of CETA. It
provides a cogent analysis of the relevant case law and ultimately relies on these
authorities to conclude that a referendum is not required. It is accepted here
that Butler J was correct in holding that ratication of CETA does not involve
an abdication of the Government’s freedom to formulate foreign policy, nor an
infringement of the exclusive power of the Oireachtas to make laws for the State.
However, the High Court decision does not adequately address the impact of the
ICS on the administration of justice by the courts. CETA will establish a system
whereby an international tribunal is empowered to make awards of damages,
potentially in the level of millions, which will be enforceable at domestic level,
and whereby foreign investors are entitled to bypass the Irish courts in order to
recover against the State. e implications of this are particularly signicant given
the commitment under CETA to pursue the establishment of an MIT with other
trading partners.
e CETA Tribunal will, as accepted by the High Court, be engaged in the
administration of justice, albeit applying principles derived from an international
treaty. e mechanism will be directly accessible to Canadian investors in Ireland,
94  
who will not be subject to a requirement to exhaust domestic remedies before
applying to the CETA Tribunal. Although CETA recognises the right of States
to regulate, it does not limit the potential for private parties to recover damages
against a public authority to the same extent as existing Irish case law. Moreover,
awards made by the Tribunal will eectively be enforceable in the Irish domestic
system, rather than operating only in the international arena. Notwithstanding
CETA’s improvements to the traditional ISDS system, the cumulative eect of
these features amounts to subtraction of jurisdiction from the Irish courts in favour
of the ICS and a constitutional amendment is indeed appropriate in order for
ratication to proceed. e further decisions of the superior courts on this point
are awaited with interest.

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