In response to my post about the German constitutional complaint against CETA, focusing on the ISDS issues, Chris Riffel sends the following thoughts:
It is contested whether the envisaged establishment of the CETA Tribunal is at variance with the German constitution, notably Art. 3(1) Basic Law, because legal standing is conferred on foreign investors, but not nationals (Arts 8.18, 8.23.1 CETA). Art. 3(1) Basic Law establishes the principle of equality before the law for the German legal order. It reads as follows: “All persons shall be equal before the law.” This precept binds all branches of German government, including the legislature, § 95(3) Law on the Federal Constitutional Court (www.bundesverfassungsgericht.de/EN/Verfahren/Rechtsquellen/rechtsquellen_node.html). It obligates the German legislature to treat as equal what is basically equal and as different what is basically different (see, eg, BVerfG, Judgment of the First Senate of 30 July 2008 - 1 BvR 3262/07 [150]). Thus, the German legislature must ensure equality before German law, ie, the law the legislature is responsible for. What about equality before international law? The issue in the present case is whether the principle of equality precludes Germany from acceding to an international regime that grants foreigner investors procedural rights that are not available to national investors.
As a preliminary point, it should be noted that international law is not concerned with the discrimination of nationals. Investment law sets an international minimum standard, which harks back to the law of aliens. Ergo, CETA does not guarantee German investors any rights in Germany. Still, both German and Canadian investors in Germany have an international avenue at their disposal where they can pursue their proprietary interests: As seen, foreign investors will be able to rely on CETA. The “possessions” held by Germans in Germany are protected internationally by virtue of Art. 1 Protocol to the European Convention on Human Rights (ECHR). That is, the designated forum before which Germans can assert their proprietary interests against the German government, after having exhausted all domestic remedies (Art. 35(1) ECHR), is the European Court of Human Rights. Unlike the German constitutional court, the Federal Constitutional Court, which can void a law that violates the German constitution, the European Court of Human Rights does not have the authority to void national law that is inconsistent with the European Convention on Human Rights. Instead, the Court can find a violation of the Convention and grant “just satisfaction” within the meaning of Art. 41 ECHR, which encompasses pecuniary damages (ECtHR, ‘Practice Direction – Just satisfaction claims’ (1 January 2016) [10]–[12]).
Note that Canadians within the jurisdiction of Germany enjoy the rights and freedoms of the European Convention on Human Rights, Art. 1 ECHR. Contrariwise, the basic rights of the German constitution, such as the protection of property (Art. 14 Basic Law), do not apply to Canadian juridical persons, Art. 19(3) Basic Law. That is, Canadian companies may have standing before the European Court on Human Rights, but cannot challenge German law before the Federal Constitutional Court. Commensurate with German law, the seat of a juridical person determines whether it is treated as “domestic” within the meaning of Art. 19(3) Basic Law (HD Jarass and B Pieroth, Grundgesetz für die Bundesrepublik Deutschland (14th edn, CH Beck 2016) Art. 19 [22]). If a foreign company operates through a subsidiary incorporated in Germany, the subsidiary is deemed to be domestic from the point of view of German law. That is, the subsidiary could invoke Art. 14 Basic Law in a constitutional complaint (BVerfG, Order of the First Senate of 19 July 2011 - 1 BvR 1916/09 [69]).
Any claim of inequality presupposes comparability. The comparators at issue are national investors as governed by German law, on the one hand, and foreign investors as protected under CETA, on the other hand. Art. 3(1) Basic Law would not apply if the unequal treatment could be ascribed to different legislatures (B Pieroth and others, Grundrechte. Staatsrecht II (29th edn, CF Müller 2013) 111). Thus, the Federal Constitutional Court did not find a violation of Art. 3(1) Basic Law when Germans residing in one federal state had special privileges on the basis of a state law that deviated from federal law or the law of other states, privileges which were not obtainable to Germans residing somewhere else in the Federal Republic (BVerfG, Order of the Second Senate of 30 May 1972 - 2 BvL 41/71 [35]). Nonetheless, the prevailing view regards Art. 3(1) Basic Law as applicable to situations where the discrimination of nationals results from European Union law (Jarass and Pieroth, Grundgesetz für die Bundesrepublik Deutschland Art. 3 [75a]). Following this, Art. 3(1) Basic Law can remedy the discrimination of nationals by forcing the German government to treat Germans like EU citizens.
It is true that the German legislature is involved in the making of international law when, for example, ratifying a treaty in accordance with Art. 14 Vienna Convention on the Law of Treaties. However, CETA is a mixed agreement, undergoing ratification at both EU and Member State level (for the EU, see Arts 207, 216 TFEU; for Germany, see Art. 59(2) Basic Law). As to “foreign direct investment”, the European Union has the exclusive competence pursuant to Art. 3(1)(e) in conjunction with Art. 207(1) TFEU. This includes the resolution of investment disputes. Hence, the German ratification act to CETA would not concern the investment chapter thereof, as it falls within the purview of the European legislature. All things considered, we can conclude that different legislatures are responsible for the treatment of foreign investors, on the one hand, and national investors, on the other hand. Consequently, the precondition for an application of Art. 3(1) Basic Law is not given, namely comparability. The German legislature could not afford nationals the same treatment as foreign investors and, without the consent of Canada and the European Union, grant nationals legal standing before the CETA Tribunal. It would lack the competence to do so. In the final analysis, Art. 3(1) Basic Law does not guarantee equal access of nationals to international tribunals, only to courts within the jurisdiction of the Federal Republic.
