Principles and practices of EU external representation - Asser Institute

CLEER WORKING PAPERS 2012/5Casolarisince the obligation to take all appropriate steps to eliminate incompatibilities(including renegotiation and denunciation of the pre-existing agreements) cannotbe considered as a best efforts obligation. 68As Lavranos rightly pointed out, this ‘hypothetical incompatibility’ test elaboratedin the BITs rulings, which echoes the Court’s reasoning in the InlandWaterways cases, particularly expands the scope of application of Article 351(2)TFEU; 69 on the other hand, it also drastically reduces the discretion whichMember States may exercise in fulfilling the obligations stemming from that. Itis undeniable that such an approach may contribute to enhancing the internationalidentity of the Union in the field of free movement of capital and of investments.On the other hand, it is questionable whether the test elaborated by theCourt represents the most appropriate solution in this respect: its abstractnature shows indeed a less ‘international law-friendly’ attitude of the EU legalorder which may easily entail the responsibility of Member States for not havingfulfilled their international pre-existing commitments, and, ultimately, risksexcessively undermining their foreign-policy interests.That being said, to appreciate fully the impact of the loyalty clause on thepre-existing commitments of the Member States, one needs to mention theKadi and Al Barakaat Foundation cases, decided by the Court in 2008. 70 In thisjudgment, the Court assessed the relationship between UN law and EU law 71and, thus, indirectly, the role played by the EU Member States in the UN.Yet, the judgment does not contain any explicit reference to the MemberStates’ loyalty to the Union when implementing UN law. This notwithstanding,it implies that, according to the principle of loyalty, Member States should actin the ambit of other international organizations whose competences may affectthe scope of application of EU law (including the UN), taking into account theneed to respect EU law (in particular, EU primary law and the constitutionalprinciples of the EU legal order).Of particular interest in that regard is the reference to Article 351 TFEU(former Article 307 TEC), which is contained in the judgment. Indeed, like theCourt of First Instance, 72 the Court assumed that this Article may be invokedin assessing the relationship between EU law and UN law. 73 In considering68 Ibid. at 344.69 N. Lavranos, ‘European Court of Justice – infringement of Art. 307 – failure of memberstates to adopt appropriate measures to eliminate incompatibilities between the Treaty Establishingthe European Community and bilateral investments treaties entered into with third countriesprior to accession to the European Union’, 103 American Journal of International Law (2009) 716,at 720.70 Joined Cases C-402/05 P and C-415/05 P Yassin Abdullah Kadi and Al Barakaat InternationalFoundation v Council of the European Union and Commission of the European Communities[2008] ECR I-06351.71 See F. Casolari,‘La Corte di giustizia e gli obblighi convenzionali assunti dall’insieme degliStati membri verso Stati terzi: obblighi comuni o ...obblighi comunitari?’, 14 Il Diritto dell’Unioneeuropea (2009) 267, at 273.72 Case T-315/01 Yassin Abdullah Kadi v Council of the European Union and Commission ofthe European Communities [2005] ECR II-3649, para. 196.73 Joined Cases C-402/05 P and C-415/05 P Yassin Abdullah Kadi and Al Barakaat InternationalFoundation v Council of the European Union and Commission of the European Communities,supra note 70, para. 301.26