French Constitutional Council on CETA

On 31 July 2017, the French Constitutional Council rendered its decision on the constitutionality of the Comprehensive economic and trade agreement between Canada, on the one hand, and the European Union and its Member States, of the other part (Decision No 2017-749 DC). The Constitutional Council was seized by over sixty Members of Parliament on the basis of Article 54 of the Constitution of the Comprehensive Economic and Trade Agreement between Canada on the one hand and the European Union and its Member States (CETA)), signed on 30 October 2016. This agreement was approved by the European Parliament on 15 February 2017. The Constitutional Council has been asked  whether the CETA included a clause contrary to the French Constitution. The general purpose of the CETA is to “create a broad and secure market” for the goods and services of the parties and to establish rules to “regulate trade and investment” . The main aspects of the decision of the Constitutional Council are as follows.

The CETA is a mixed agreement – Most of the matters covered by the CETA fall within the exclusive competence of the European Union, which results from transfers of powers already effected by treaties previously entered into by France. Some of the aspects of the agreement, however, fall under a shared competence between the European Union and its Member States. As regards the areas for which the Union has exclusive competence, the Constitutional Council has limited the scope of its review to verifying that the CETA does not affect any rule or principle inherent to the French constitutional identity. In the present case, having regard to the object of the agreement, which is in the nature of a trade agreement, the Constitutional Council ruled that no rule or principle of this nature was affected.

As regards matters falling under a shared competence between the European Union and its Member States, the Constitutional Council has verified whether the stipulations of the CETA do not contain a clause contrary to the Constitution. In particular, the Council addressed two aspects of the agreement: the investment dispute settlement mechanism and the precautionary principle.

– First, the Council pronounced on the tribunal set up by the agreement to settle disputes between investors and States. The following are the characteristics of the tribunal established by the CETA.
– The purpose of CETA’s Chapter 8 is to contribute to the protection of investments in Contracting States.
– The scope of the dispute settlement mechanism is delimited by the stipulations of the CETA.
– The powers granted to the court are limited to the payment of pecuniary damages and the restitution of property. The court cannot interpret or annul decisions taken by States.
– The tribunal comprises as many members designated by the European Union as by Canada. The members designated by the European Union shall be appointed by a joint committee composed jointly by the European Union and Canada which shall decide by mutual consent. Furthermore, the position of the European Union in this field must be agreed by EU Member States.
– The members of the tribunal and the appeal court must meet certain qualification requirements.
– Any dispute may be referred to the national court where appropriate, and mechanisms are provided to avoid conflicts or divergences between the CETA tribunal and the national courts. In view of these factors, and since they are not such as to impede any measure which States may take to control foreign investment, the Constitutional Council has accepted that the institution of the court provided for by the CETA does not disregard the essential conditions for the exercise of national sovereignty. The agreement also lays down ethical rules to which the members of the tribunal are subject and whose correct application should ensure that the principles of independence and impartiality are not disregarded. Finally, the Constitutional Council held that the rules governing the tribunal did not infringe the principle of equality. In particular, the fact that the access to the court set up by the CETA is reserved in France only to Canadian investors can be justified by two reasons of general interest. On the one hand, the agreement creates, on a reciprocal basis, a protective framework for French investors in Canada. On the other hand, the rules in question make it possible to attract Canadian investment in France.

The Council has, secondly, ruled on the precautionary principle while reaffirming its constitutional value – On this point, the Council first recalled the commitments of the parties contained in CETA Chapter 22 specifically devoted to trade and sustainable development. The Constitutional Council went on to hold, first, that the absence of an express mention of the precautionary principle in the CETA articles which fall within a shared competence between the European Union and the Member States does not violate that principle. Furthermore, the decisions of the Joint Committee must comply with the precautionary principle protected by European Union law, in particular by Article 191 of the Treaty on the Functioning of the European Union.  Lastly, the Constitutional Council relied on Article 24.8 (2) of the CETA, which states that the Parties recognize that, where there is a risk of serious or irreversible damage, the absence of absolute scientific certainty cannot be a pretext for postponing the adoption of economically effective measures to prevent environmental degradation. These provisions authorize the parties to take economically effective measures to prevent environmental degradation in the event of a risk of serious or irreversible damage. In addition, the common interpretative instrument of the CETA specifies that parties are required to ensure and encourage high levels of environmental protection. The Constitutional Council concluded that all these stipulations are appropriate to ensure compliance with the precautionary principle arising from Article 5 of the Environment Charter.

The Council finally ruled on the provisional application of the agreement and on its conditions of denunciation – As far as provisional application is concerned, it only concerns provisions which fall within the exclusive competence of the European Union. The CETA provides for the possibility of suspending this provisional application if it is impossible for a party to ratify it. As regards the conditions for denunciation, it is clear from the terms of the agreement that it is not irrevocable. On the other hand, the agreement does not, in view of its subject-matter, affect an area inherent to national sovereignty. At the end of its analysis, and in the strict framework of its examination of the constitutionality of an agreement, which to a large extent falls under the exclusive competence of the European Union, the Constitutional Council has held that it does not require a revision of the Constitution.

The text of the decision is available in French: Link