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(LUXEMBOURG) – The EU Commission cannot conclude trade deals without the approval of national parliaments,when they contain investment dispute systems that supersede national courts, the EU’s top court ruled on Tuesday.
The Luxembourg-based European Court of Justice said that EU trade agreements cannot remove investors’ disputes from the jurisdiction of the courts of EU Member States without the Member States’ consent.
The ruling, which related to the EU’s free trade agreement with Singapore, confirmed that the jurisdiction of national courts needs to be respected and that the EU executive cannot negotiate a parallel court system for investors without getting the approval of national parliaments.
The EU-Singapore agreement is one of the first ‘new generation’ bilateral free trade agreements, trade deals which, in addition to provisions on reducing customs duties and non-tariff barriers in the field of trade in goods and services, contain provisions on various matters related to trade, such as intellectual property protection, investment, public procurement, competition and sustainable development.
The Commission had submitted a request to the Court of Justice for an opinion to determine whether the EU has exclusive competence enabling it to sign and conclude the envisaged agreement by itself – a view not shared by the EU Council and the governments of all the Member States.
The Court held that the free trade agreement with Singapore cannot, in its current form, be concluded by the European Union alone, because some of the provisions envisaged fall within competences shared between the European Union and the Member States.
It follows that “the free trade agreement with Singapore can, as it stands, be concluded only by the European Union and the Member States acting together.”
