Section 2.

2 – Opinion 1/17 (CETA)

On 30 April 2019 the CJEU handed down its Opinion 1/17 on the compatibility of the
Comprehensive Economic and Trade Agreement (CETA) with EU law after Belgium’s
request for an advisory opinion pursuant to article 218(11) TFEU. This subsection will focus
on (one of the questions submitted to the Court namely,) the question whether the Investor-
State Dispute Settlement (ISDS) mechanism envisaged in CETA is compatible with the
autonomy of the EU legal order. The agreement only is compatible with EU law if it has no
adverse effect on the autonomy of the EU legal order.1 This means, according to the Court, (1)
that the agreement cannot confer on the envisaged tribunals the power to interpret or apply
EU law other than the provisions of the agreement itself and (2) that the agreement does not
structure the powers of these tribunals in a way that they can issue awards which have the
effect of preventing the EU institutions from operating in accordance with the EU
constitutional framework.2

The Court then turns to the first point, the jurisdiction to interpret and apply rules of EU law.
It follows from article 8.31 of the agreement that the tribunals lack the power to interpret and
apply rules of EU law other than those of CETA, i.e., the interpretation and application by the
tribunals is confined to CETA provisions. The tribunals are to take domestic (and Union) law
as a matter of fact and are obliged to follow the prevailing interpretation given by the relevant
courts.3 This distinguishes CETA from the unified patent litigation system at issue in Opinion
1/09 and the Achmea case. In both cases the possibility existed for the interpretation and
application of EU law by a non-EU body. 4 Further, the power to determine whether the EU or
a Member State is the respondent in a dispute brought by a Canadian investor is conferred on
the EU in article 8.21 of the agreement, which preserves the exclusive jurisdiction of the
Court with regard to the division of power between the EU and its Member States. 5 According
to the Court, the foregoing eliminates the need for prior involvement of the Court via a
reference for a preliminary ruling by the tribunal. 6 The CJEU then concludes that the tribunals
lack the jurisdiction to interpret or apply EU law other than the provisions of CETA.7

The next question the Court needs to answer is whether the agreement has an effect on the
operation of EU institutions in accordance with the EU constitutional framework. The Court
mainly considers whether the tribunals can call into question the level of protection of public
interests established by the EU as this might lead to a situation in which that level of
protection needs to be abandoned due to repeated payment of damages to a claimant. 8 Such a
development would undermine the EU’s autonomy within its constitutional framework and
would thus not be acceptable to the CJEU.9 In order to prevent such a development, the
agreement provides that Section C cannot be interpreted as to prevent a party from adopting
measures protecting certain public policy interests and that parties have the right to regulate in
order to achieve legitimate policy objectives.10 This leads the Court to the conclusion that the

1
CETA, para. 108
2
CETA, para. 119
3
131
4
123-126, maybe reference to the other cases directly?
5
132
6
134
7
136
8
148-149
9
150
10
152-154
powers of the tribunals do not include jurisdiction to call into question the choices made by a
party relating to the level of protection of certain legitimate policy interests.11

The Court then concludes that CETA does not adversely affect the autonomy of the EU legal
order and continues with an assessment of the compatibility of the ISDS system with the
principles of equal treatment and effectiveness and with the right of access to an independent
tribunal,12 an assessment which is beyond the scope of this paper.

11
160
12
161