The Helping Hand of the MFN for the Intra-EU Bilateral Investment Treaties

Rimantas Daujotas, Motieka & Audzevicius PLP*

As it was recently announced, Slovakia has succeeded in referring the legality of intra-EU bilateral investment treaties to the European Court of Justice, as part of its bid to stop Dutch insurer Achmea from enforcing a €22 million UNCITRAL award. In a decision on 3 March 2016, Germany’s Federal Court of Justice ruled that it would make a preliminary reference to the ECJ on the question of whether the arbitration clause in the Slovakia-Netherlands bilateral investment treaty conflicts with EU law.

Achmea won the award in 2012 from a tribunal at the Permanent Court of Arbitration in The Hague. The tribunal found the state had breached the Slovakia-Netherlands BIT when it adopted measures prohibiting private health insurers from distributing profits to shareholders. Those measures were overturned by Slovakia’s Constitutional Court in 2010.

But Slovakia argued that the tribunal lacked jurisdiction because the BIT’s offer to arbitrate disputes expired when the state acceded to the European Union. It also contended that the tribunal failed to apply EU law, which the state argued forbids arbitration of investor-state disputes under intra-EU BITs where questions of EU law are involved.

In 2014, the Higher Regional Court of Frankfurt am Main dismissed Slovakia’s argument, ruling that the EU law in question merely prevents member states from submitting EU law disputes with one another to arbitration. Disputes between states and EU national private investors, the court said, could still go to arbitration. Based on the decision of 3 March 2016 by Germany’s Federal Court of Justice, that question will now go to the European Court of Justice to be decided.

The preliminary reference asks the ECJ to consider whether the BIT’s arbitration clause is consistent with Article 344 of the EU Treaty, which provides that “member states undertake not to submit a dispute concerning the interpretation or application of the [EU] Treaties to any method of settlement other than those provided for therein.” It also asks whether the arbitration clause in the Netherlands-Slovakia BIT constitutes discrimination against EU nationals whose home states do not have such a treaty with either the Netherlands or Slovakia, and therefore cannot benefit from the treaty’s arbitration clause. It notes, however, that should the clause be ruled discriminatory, that would not necessarily make it a dead letter: rather, the court suggests, any EU national might be able to access the arbitration clauses of any intra-EU BIT.

The last point of the Germany’s Federal Court ruling is particularly interesting, as it potentially argues on the possibility of any EU national to be able to access the arbitration clauses of any intra-EU BIT. Scholars and practitioners, such as Nikos Lavranos, secretary general of ISDS think tank EFILA, said that EU discrimination law might open the BITs’ arbitration provisions up to all EU nationals – “All EU investors should be treated the same, even if formally the BITs only apply to the signatory parties and their nationals, they should under EU law be open to all EU investors. We all have EU nationality, and discrimination on grounds of nationality is clearly prohibited under the treaties. The BITs have to be interpreted in light of that aspect of the EU treaties”.

The argument that all EU companies have EU nationality is particularly relevant. Similar issue was raised by the respondent in Poštová banka and Istrokapital v. Greece where the Respondent argued that as a societas europeas (“SE”), Istrokapital was formed and existing under the law of the EU and not under Cypriot law. In view of the fact that the EU is not a Contracting State of the ICSID Convention, Istrokapital allegedly did not qualify as an investor under Article 25(1) of the ICSID Convention. In addition, the Respondent contended that if, due to its SE nature, Istrokapital was considered to have been incorporated in Cyprus, as Claimants claimed, it had to be equally considered as incorporated in any of the other EU Member States, including Greece, and would therefore bear Greek nationality as well.

Claimants, on the other hand, argued that the nationality of a juridical person under Article 25(1) of the ICSID Convention is determined by its place of incorporation or registered office. Thus Claimants contended that the Respondent’s arguments to the effect that Istrokapital was not deemed a “national of another Contracting State” under Article 25 of the ICSID Convention mischaracterized and disregarded applicable EU law. Claimants asserted that pursuant to the European Company Regulation, SEs must be treated as public limited-liability companies of the Member State in which they have their registered office. Moreover, Claimants sustained that, per the European Company Regulation, SEs are domiciled in one single State and the fact that they can transfer their registered office within the EU did not mean that they had multiple nationalities or no nationality because such transfer was subject to registration in a Member State at a time.

Unfortunately, the tribunal firstly concluded that it lacked jurisdiction ratione materiae to entertain the dispute and deemed not necessary to examine the remaining objections to jurisdiction concerning absence of jurisdiction ratione personae and ratione temporis.

However, arguments of both sides seem particularly relevant when discussing whether all EU companies have EU nationality and any EU national might be able to access the arbitration clauses of any intra-EU BIT. Notwithstanding the problem concerning EU not being signatory to ICSID Convention (which may be rebutted by the fact that tribunal’s jurisdiction is firstly derived from the relevant BIT or that it would not work in non-ICSID arbitrations), another important aspect should be considered when discussing assess to any intra-EU BIT by EU nationals and that is – the MFN clause.

It is clear that all or most of the intra-EU BITs include the MFN clause which particularly prohibits discrimination on grounds of nationality. Thus, due to the MFN clause, distinctions based on nationality or additional requirements concerning nationality which are not allowed at the merits stage of the dispute, should also be prohibited when considering the jurisdictional phase of the dispute.

For example, if the MFN clause is also applied to the definition of the investor, i.e. to the requirements the investor should possess in order to be afforded protection granted under the basic treaty, does it mean that treatment afforded under the third party treaty (also intra-EU BIT) which is more favourable (e.g. less nationality based requirements) should also be applied to the investor bringing its claim under the basic treaty? In particular, could the investor use more favourable intra-EU BIT in order to be afforded protection under the basic treaty (also intra-EU BIT)? It is clear that this is a question of the scope of the MFN clause and since the definitions of “investor” and “investment” are pre-conditions of the investment-treaty tribunal’s jurisdiction, these questions could only be answered while analyzing the basis for the tribunal’s jurisdiction and relationship of the MFN clause thereof.

The view, as it stands right now on the scope and applicability of the MFN clause for jurisdictional purposes, is very divergent. Some practitioners had fiercely denied the possibility to apply MFN clause to either ratione personae or ratione materiae requirements.

However, applicability of the MFN clause to the jurisdictional provisions of the BITs was confirmed by the tribunals in Bayindir v Pakistan, MTD Equity v Chile were they argued that access to these procedural mechanisms is a part of the protection afforded under the treaty. The tribunal in Siemens v Argentina which considered the applicability of the MFN clause to dispute resolution provision had stated that “dispute settlement is as important as other matters governed by the BIT and is an integral part of the investment protection”. In RosInvestCo UK Ltd v Russia the tribunal held that the MFN clause in the UK-Russia BIT extended to dispute resolution provisions, however, the tribunal found that the UK claimant’s claims alleging breaches of the BIT’s expropriation provisions fell outside the scope of the BIT’s arbitration clause, which limited arbitration to a determination of the amount of compensation once expropriation had been established. Notwithstanding the latter, the tribunal concluded that it had jurisdiction over the expropriation claims because the Denmark-Russia BIT contained an arbitration clause broad enough to encompass the claims. Therefore, the UK-Russia BIT’s most-favored-nation clause allowed the claimant to expand jurisdiction ratione materiae.

Thus, taking into account the above, it seems that there are legitimate grounds to analyze the application of the MFN clause to the definition of investor or the ratione personae as well.

Since the prevailing view is that the appropriate comparator for the aggrieved investor are other investors in the same sector or who are competitors, a hypothetical scenario may be construed where two investors, legal persons, both from the EU invest in similar business sectors in other EU host-states. In this sample scenario, it is clear that the MFN clause would prohibit to impose heavier burdens for such similar investors coming from different EU Member states.

The result is that if one the EU investors is incorporated in the EU Member state or is incorporated as a societas europeas (“SE”) coming from other EU member state, it would only need to prove that it is constituted under the laws of any EU member state and nothing more, similarly as to the investor coming from other EU member state. Since Recital 6 and Article 1(1) of SE Regulation confirms that a SE derives its existence and legal personality from EU law, it could be claimed that such an investor is the EU national for the purposes of tribunal’s jurisdiction. That implies that other EU investors may not be afforded treatment less favourable than any other investor coming from the EU.  Now, if due to its SE nature, EU investor would be considered to have been incorporated in EU as a whole, it would be equally considered as incorporated in any of the other EU Member States, including the host-state. However, this does not seem a problem since most of the BITs also require to accord national treatment, that is, treatment no less favorable than that accorded to its nationals. Thus the result is the same as in the case of the MFN.

Effectively, based on this example, it could be argued that any intra-EU BITs, which provide any additional nationality requirements, in addition to the one which requires establishment in the EU Member state, would be contradictory to the MFN clause. Such a theoretical approach is confirmed by the analogous practice of investment treaty tribunals’ addressing the relationship between dispute resolution clauses or substantive protection clauses and the MFN clause referred to above.


Rimantas Daujotas – PhD Scholar at the Queen Mary University, Senior associate at Motieka & Audzevicius PLP

 

DAA General Meeting of Members and Investment Committee Event – 20 May 2016

The DAA has the pleasure of inviting you to its third General Meeting of Members as well as to the first event of its Investment Committee on the topic:

“The Hague: How to make it a more attractive arbitral seat”.

The General Meeting and the event of the Investment Committee will take place on Friday, 20 May 2016, from 12:00 to 16:30h at the offices of Freshfield, Strawinskylaan 10 in Amsterdam. Please find a draft programme attached.

Can Investors Use the Proposed Unified Patent Court for Treaty Shopping?

Pratyush Nath Upreti*, Upreti & Associates

In recent years, there have been several discussions on Investor-State Dispute Settlement (ISDS) and its impact on states’ sovereign right to regulate. The latest cases of Philip Morris and Eli Lilly are evident where intellectual property claims were brought under the scrutiny of investment tribunals. These cases have received greater attention, bringing serious debate upon ISDS provisions in the ongoing Investment Agreementa, such as Transatlantic Trade and Investment Partnership (TTIP) between the European Union and the United States. On the other hand, the European Commission has proposed the Unified Patent Court (UPC) as a common patent court for all member states of the European Union. In other words, a step towards achieving further harmonization of the patent system in the European Union. On this note, let’s examine whether the proposed Unified Patent Court Agreement can be used to challenge IP claims under the ISDS.

Under International Investment Law, investment treaties offer an investor a choice of either ICSID or UNCITRAL arbitration. At the national level, an investor may choose European Court of Human Rights for additional claims of property rights or pursue a host country’s local court before the tribunal. The recent IIAs restrict investor to seek local remedies in the form of monetary compensation after consenting arbitration under the agreement. Although, forum shopping under investment law is not a new phenomenon. It rests on parties to choose the forum. But the important question is: can an investor have the liberty to do treaty shopping to enforce their intellectual property rights?

Treaty shopping refers to the strategy used by multinational corporations to ‘steal’ not only a higher level of protection, advantages or benefit, but also the jurisdiction of arbitral tribunals. For example, an Indian investor wants to protect its investment in South Africa, in spite of India does not have investment treaty with South Africa. This would be achieved by establishing a subsidiary Indian company in the country (China) in which South Africa has an investment treaty with.  For example, in China, the investor will be able to enjoy protection through treaty. In effect, investors tried to seek protection through China-South Africa treaty as corporate nationalities of China. The treaty shopping is mainly done (i) to seek to ensure treaty protection where none would otherwise be available (ii) to seek to benefit from specific substantive protections in particular treaties or (iii) to seek to benefit from certain procedural or other aspects of the dispute settlement provisions of a particular treaty.

In general, investors use treaty shopping through specific clauses of the investment agreement. But it may not always be so. Under the proposed Unified Patent Court, an investor may get the advantage of treaty shopping with respect to patent cases.  The preamble of the proposed Unified Patent Court states;

Considering that the Unified Patent Court should be a court common to the Contracting Member States and thus part of their judicial system, with exclusive competence in respect of European patents with unitary effect and European patents granted under the provisions of the EPC.”

Similarly, Article 1 of UPC states “The Unified Patent Court shall be the court common to the Contracting Member States and thus subject to the same obligations under Union Law as any national court of the Contracting Member States”.  In addition, Article 2 defines court as the Unified Patent Court created by the Agreement. The combined reading of the preamble and Article 1 of the UPC makes clear that for European Patent, Unified Patent Court is the National Court of Contracting Member States.

Now let’s turn into ongoing Eli Lilly vs. Canada under the North American Free Trade Agreement (NAFTA). The case involves investment claims in tribunal on the ground that the patent invalidation by the Canadian Supreme Court violated the principle of fair and equitable treatment, as well as the expropriation of property. Although, it is very difficult to assume that arguments of Eli Lilly will succeed.  But in light of Eli Lilly case, an investor may challenge the decision of invalidity or any decision on patent given by UPC.

Article 32(1) describes UPC as having exclusive competence in respect of actions for revocation of Patents. Also, Article 65 empowers the court to decide on the validity of a patent on the basis of an action for revocation or a counterclaim for revocation. Thus, the Court may revoke a patent, either entirely or partly on the grounds referred in the EPC. So, revocation/invalidation of the patent under UPC may give rise to the expropriation of property and violate the legitimate expectation of an investor along with full protection and security to the investor.  It is important to note that these terminologies are the golden rules of investment agreements. However, lack of clear and reliable interpretation has given investors an opportunity to litigate intellectual property under investor-state dispute settlement.

When UPC is considered to be the national court of a contracting member state, an investor has an option of treaty shopping to bring the case to the tribunal under a particular BIT. Therefore, an unhappy investor may bring a claim against the decision of UPC (being the national court of all member states) on the basis of any IIAs agreed by any participating member state, as well as new EU IIAs. The objective of the investor is to bring claims under investor-friendly investment agreement. Therefore, the investor may eye on most favorable IIAs, to succeed in their favor.

For example, the Netherlands are considered as one of the liberal proponents of BITs in the world. The recent model BIT adopted by Netherlands has a very wide definition[1] of an investment. Unlike other BITs, it does not require the investor’s presence in a host state to qualify for an investment. Similar to the most liberal approach under BITs, the Dutch model protects investments irrespective of whether they are significant, lasting or any contribution to host country economic development are made in accordance with host country law. Moreover, any investor not satisfied by UPC decision has the option of bringing claims under the provision of Netherlands BITs. Thus, a Patent holder may treaty shop for the most convenient IIAs available in Europe. This may result in more frivolous IP litigation in investor-state dispute settlement.


[1] Under 2004 Dutch Model BIT, definition of investment also includes goodwill, know-how, even right granted under public law, including rights to prospect, explore, extract and win natural resources.


Pratyush Nath Upreti – is a Lawyer at Upreti & Associates a Kathmandu based law firm, where he is leading commercial and research department. He holds Advanced Master (LLM) Intellectual Property Law & Knowledge Management (IPKM) degree from Maastricht University, Netherlands. He is also an executive member of New IP Lawyers Network, a wing of school of Law and its research centre SCule (Science, Culture and the Law) under University of Exeter, United Kingdom. He can be reached by  upretipratyush@gmail.com

Across the Strait: The Case for a Special EU-Taiwan Trade and Investment Partnership

 

by Horia Ciurtin LL.M., Managing Editor of the EFILA Blog*

Not Just a Bridgehead: Mercantile Reflections on EU’s Taiwan Position

 At the crossroads of global trade, Taiwan represents a hot spot that unites the flows of goods and capital from near mainland China, from the South-East Asian cauldron, as well as a bridgehead for Western transoceanic commerce and investment. Not truly an island (in the sense of isolation), but a focal meeting point between two seas and an (open) ocean, Taiwan strategically lies in one of the best positions in opening up the Asian markets to larger influxes of EU-based products and capital.

Economically speaking, the relation between the supra-national European entity and the quasi-national Taiwanese one presents quite balanced trading features and a totally asymmetric degree of FDI. Thus, according to the 2015 EU Factfile on the matter, in 2014, while Taiwan exported goods and services in value of around 26.5 billion EUR to the European conglomerate, the EU exported somewhat less to Taiwan, around 22 billion EUR. On the other hand, the FDI situation is reversed in respect to the two actors: while the investment flows originating from the EU rise to approximately 0.8 billion EUR (9.1 billion stocks), those of Taiwan going to Europe are of 0.1 billion EUR (1.1 billion stocks).

In this regard, the European Union is the most prominent investor in Taiwan, representing nearly 25% of all the FDI received by the insular entity. The striking disequilibrium between the investment flows in and out of Taiwan is paradoxical in the conditions in which this particular Asian economy invests in other parts of the world at a much higher level (for example in the Caribbean, its investments flows are 4 times higher than in the EU) or at a similar level with its EU investments, despite not receiving the same investment inputs (for example, in Vietnam or Japan). Moreover, when looking at the accumulated investments in the 1952-2014, it appears that the EU ranks first in Taiwan, while the island’s investment in the EU is only the 7th destination of its funds, ranking far below the Caribbean zone, the US, Singapore or Vietnam.

This asymmetric investment relation between EU and Taiwan takes place in the context of a European adherence to a formal strict One China policy, in line with its member states and transatlantic allies. No political or diplomatically ties are officially admitted among the two entities, in deference to China’s position toward the Taiwanese islands. The strategical factor here plays a fundamental role. It was not until the China-Taiwan relations were formalized in the cross-strait agreements in 2010 that the EU actively began to approach Taiwan in search for a bilateral arrangement.

Muddying the Waters: Hermeneutic Reflections on the EU’s Taiwan Position

Later on, in 2013, the Parliament mandated the Commission to seek ways to accommodate these geopolitical imperatives with a more economic-oriented perspective. At a first glance, a complete warming-up was appearing on the Taiwanese horizon. The rhetoric seemed to go beyond what is usually expected when dealing with Taiwan and its uncertain legal status, portraying a future relation from authority to authority (and not informal-commercial surrogates) and an institutional grounding.

However, as always, the devil is in the details. In this case, the language details of the resolution. Thus, the Parliament’s formal acknowledgement reveals the limits of such a mandate and the caveats it intrinsically implies. When confronted with the Chinese ‘elephant in the room’, the drafters feel the need to justify their decision on the PRC’s approach to enter itself into such prior agreements with Taiwan. Moreover, the resolution states that “whereas closer economic ties with Taiwan do not in any way contradict the EU’s ‘one China’ policy” and that “the decision to start such negotiations with Taiwan should be based on economic reasons, and should not be interlinked with an assessment of relations between the EU and the People’s Republic of China”.

A continuous hesitation of the EU side to assume the initiative subsists in the entire document. It heavily relies on other states’ decision to do so, on the multilateral framework of which Taiwan is already a part (WTO, for example) or – the crown-jewel of justificatory rhetoric – the normalization of China-Taiwan relation and the mainland’s prior recourse to such agreements. We did it just because others did it. Even China did it.

Hermeneutic analysis reveals an indecisive language, far below the intensity expected even in diplomatic documents. The emphasis on the purely economic dimension of the relation is relevant. No trade and investment treaty is simply economic. And everybody knows it. It is also strategic and a geopolitical statement. By formally – and vehemently – denying it such value, any future agreement is left in a mercantile limbo, deprived of symbolic – and effective – power. Among the risks of not being clear enough is not being able to settle a conflict once it occurs.

Simply economic, without a diplomatic – and, yes, political – dimension, the possibility of such a treaty appears as a rhetorical exercise. Two contracting parties with only ‘business interests’ and no identifiable political relation are not really playing the ‘great’ game of international relations. And no subsequent enforceability of their agreement might arise. Muddy (legal) waters allow no divers, no swimmers and no steady flux of boats to carry goods across them.

Beyond Sovereignty: An Interaction with Systemic Stakes

The truth is that the EU should not be afraid of institutionalizing its relations with Taiwan. From a legal point of view, none of them is truly and traditionally a ‘sovereign’. None of them can be – at the moment – perfectly circumscribed within the Westphalian system. And no actual risk exists for the individual state entities involved in the international agora. Rather, such a post-sovereign mode of interaction might open the possibilities of a different systemic configuration: supra-national entities contracting with quasi-national ones in a newly found order. Beyond the sovereign state.

On the other hand, the EU’s reluctance (as that of its member states or the US) to formally institutionalize its engagement with Taiwan is simply a historical and circumstantial position that lives on by inertia. In the post-Cold War environment where everybody rushed to admit Kosovo to the new ‘concert’ of states, Taiwan’s uncertain status lingers without any principled reason. By itself, such a decision was bound to upset major powers (i.e. Russia), even cause discord within the community of the EU member states, to trouble the fragile order of the Balkans even more. However, there was no impediment in going further in this direction and even considering the possibility of a future Kosovo accession to the EU.

In the same fashion, there is a significant support from EU institutions for the establishment of an independent Palestinian state, continuously urging for its future recognition despite vehement Israeli opposition. Of course, Taiwan’s situation is less tragic and incommensurately more complex, but it poises similar conceptual problems regarding recognition.

While understandable for classical sovereigns, such a hesitant position appears paradoxical when stemming from the EU, the self-styled postmodern entity that was to break away with Vattel’s system. In its assumed mission of using ‘soft power’ and moving away from frivolous geopolitical calculations, the EU appears as the most likely source for taking the debate a step further in the Taiwan case. Given the 2016 elections in which the DPP party won the presidential campaign, it might be possible that Taiwan’s rhetoric of autonomy rises in intensity, rather than decreases. In such conditions, it is interesting to see how the EU reacts to a legitimate desire for self-determination of a democratic community.

The post-sovereign reality of EU itself could present the Western states a chance to nuance their position towards Taiwan. The European colossus is not in any acute danger of being excluded from commerce with the discontent actors. It only faces an immediate period of diplomatic pressures (both from competitors and allies), but its irreplaceable locus is not threatened in any fundamental way. However, failing to live up to its promises as a benevolent and avant-garde hegemon might damage its reputation and the reach of EU ‘soft power’.

Moreover, the interaction of two entities that are ‘deviant’ from the classical assumptions of Westphalian sovereignty might not cause too much of a turmoil. It can – at any moment – be presented as a rather ‘exotic’ and unrepeatable manner of establishing relations in the international agora. The broad – and decoupled – mandate of the Commission might preserve the image of its member states in front of virtual Sinic dissatisfaction. The Commission did it. Not us.

On the other hand, the manner in which the EU can interact with Taiwan might not really disrupt the Westphalian status quo in an essential manner, as it is able to speak a language very different from that of sovereignty. Therefore, the established relations neither need to conform to traditional diplomatic categories of sovereign-to-sovereign parlance, nor do they have to resort to informal surrogates of such institutions. A different, post-sovereign and non-statist mode of interaction can emerge. EU can thus accommodate Taiwan’s need for recognized autonomy without bringing into discussion the notion of sovereignty or its diplomatic corollary. Such a new type of relation would appear as one that maintains EU’s rhetorical coherence and does not threaten China’s position.

The Win-Win Perspective: (Not Only) Trade and Investment

In this sense, a proper way forward could take the form of a fully-assumed trade and investment treaty, of a comprehensive instrument regulating international business flow. This would be consistent with EU’s active policy of signing expansive FTAs over the world (take, for example, the EU-Vietnam FTA, the EU-Singapore FTA or the highly-debated CETA and TTIP). Its negotiation power would be higher than with most other contracting parties, offering EU the opportunity to implement its wildest innovations in the field of ISDS and investment protection.

However, such an agreement would be of little use if the avoidant language of diplomatic-surrogates is deployed. The existing mode of interaction (for example, in the India-Taiwan BIT, the Thailand-Taiwan BIT, Vietnam-Taiwan BIT) places the agreement under the aegis of the Taipei Economic and Cultural Office/Centre and its corresponding institution from the other state. This type of ‘treaties’ serves no practical purpose when confronted with the harsh reality of cross-border investment. Take, for example, the anti-Chinese riots in Vietnam where numerous Taiwanese individuals and businesses were also strongly affected. The threat of using the Vietnam-Taiwan BIT (improperly called so) brought on no true reaction from the other side, as the Vietnamese officials knew all too well the limits of such an agreement. As did the Taiwanese side.

With no possibility of further using the ICJ if arbitration fails, Taiwan is left in a legal limbo. The ‘representative offices’ signing such agreements in a quasi-official capacity do not really create binding obligations under international law. At least not truly enforceable. And thus such ‘BITs’ are left at the will and whim – or idealistically said, at the good-will – of the other party to accept the jurisdiction of an arbitral tribunal. And then to voluntarily comply with the outcome of the arbitral proceedings.

In reality, the EU needs to move further from this existing model of interaction. But neither go in the opposite direction of engaging in an endless – and, finally, sterile – discussion about sovereignty. As a post-sovereign hegemon of global caliber, the EU is able to treat Taiwan in its ‘eccentric’ manner and establish a sui generis type of interaction. One that does not avoid direct institutional and formal relations, but also does not get entangled in the Westphalian vocabulary of inter-state connections.

From a mercantile perspective, this would also permit EU to bolster its SME focus as Taiwan presents itself as a success story of small businesses that sustain a vibrant market economy. Its democratic institutions (although quite new and imperfect, but not unlike those of some Eastern EU member states) are a guarantee for the relative degree of fairness in treating foreign investors and complying with its commitments. In addition, once allowing the access of Taiwanese investors on a more comprehensive level on the European market, the disequilibrium of outbound and inbound investment might ameliorate and help the EU diversify its sources of capital.

On the other hand, the Taiwanese subsidiaries of EU companies would largely benefit from Taiwan’s position and – in the safe harbor of a stable and free market environment – could expand in the near South-East Asian zone while avoiding some of the inherent turbulence of the area. Their double quality (of EU origin and Taiwanese operational mechanisms) would allow the European companies to take all the benefits of working from such a privileged geographic and political position, as well as circumventing the problems of being a purely Taiwanese economic entity.

And thus – symbolically – both EU and Taiwan would gain from such a bargain, allowing the European entity to advance its systemic agenda of transforming international relations and permitting Taiwan to escape its uncertain status. In this win-win scenario, the only major loser is the notion of sovereignty. A concept that seems to function rather erratically in our multipolar world. For these reasons, the sovereignty discussion would not be put under silence because it is uncomfortable, but rather because both parties – postmodern entities – regard it as irrelevant for their relation. A sui generis interaction. At the twilight of Westphalia.



 * Horia Ciurtin, Managing Editor, EFILA Blog; Legal Adviser – International Arbitration, Scandic Distilleries S.A; Editor, VERSO Journal [Romania]; Freelance researcher [see SSRN author page].