Jurisdictional Competition: Domestic Courts or Arbitral Tribunals? Lessons from the CJEU Judgments on EU’s Economic Agreements with Non-EU States

Abstract Summary A judgement by a domestic court in an international economic dispute, where the parties have agreed on an International Dispute Settlement Mechanism (IDSM), may be legitimate from the perspective of domestic law. However, it might entail concerns from the perspective of third states and Public International Law (PIL). Such concerns might be aggravated by the broadening of delicate foreign relations elements and protections for investors woven into international economic agreements. In the absence of clear PIL rules for conflicts arising from overlapping jurisdictional claims, such jurisdictional issues are subject to the discretion of the domestic court. A tendency to adjudicate such claims is strongly demonstrated in the caselaw of the EU Court of Justice (CJEU). The CJEU’s jurisdictional attitude towards competing IDSMs is examined in the context of the recent CJEU caselaw on disputes under bilateral and multilateral investment treaties involving non-EU states and investors, where the parties have committed to arbitration. The analysis then focuses on CJEU judgments on disputed EU trade agreements with non-EU states controlling Disputed Territories (DTs), in particular, trade with Israeli controlled DTs, where the parties have agreed on an IDSM. These judgements present substantial competing jurisdictional issues, that were scarcely dealt with in the literature. Consequently, the CJEU’s jurisdictional policy provides an excellent basis on which normative conclusions can be drawn regarding the profound effect it may have on third states, foreign investors and on the development of rules for the resolution of international economic conflicts.