EU Proposes New Trans-Atlantic Court for Trade Disputes

The new system, dubbed “the Investment Court System“, will replace the existing investor-to-state dispute settlement (ISDS) mechanism, the EU’s executive arm the European Commission said in a press release.

Under the EU’s plan, which must be ratified by national European governments and the European Parliament, the ISDS would be replaced by an Investment Court System modeled on other permanent international courts such as the international Court of Justice in The Hague.

Though the EU-US trade deal was launched in June 2013, negotiations have been progressing slowly, due to significant public opposition to the scheme, particularly in countries such as Germany and Austria.

“Greenpeace calls on the Commission to permanently end negotiations on any form of ISDS”, it added.

In the EU-US agreement, judges would be appointed by the EU and the US and could not act as lawyers in cases.

That particular deal has attracted significant public scrutiny over the ISDS question.

Parliament’s rapporteur on TTIP, Benrd Lange, noted that, “the new proposal from the European Commission is the only way forward in trade policy, and the last nail in the coffin for ISDS”. The latter tribunal would have six members, with two EU nationals, two US nationals, and two from other countries.

There are “fundamental” changes compared with the old ISDS system which operated on an ad-hoc basis with arbitrators chosen by disputing parties, the Commission said, adding the changes represented “a new era” in the settlement of investment disputes.

Should a disputing party deem that there is a conflict of interest for a tribunal judge, they may challenge the appointment, with procedures in place for the judge to either resign from that position or for the tribunal’s president to hear the complaint and issue a decision. But campaigners say the suggested changes are merely cosmetic, and would still allow corporations to sue governments in secret court settings.

The draft proposal thus includes language specific to the “right to regulate” question.

Campaigners against the deal have said that this has already led to a race to the bottom on health and safety, consumer and labour rights in signatory countries to similar trade deals. To file a complaint with the Investment Court, an investor would have to claim that one of these guarantees has been violated by a host country.

Grievances brought to the court by firms would be limited to areas like expropriation, losses linked to war or armed conflict, and government contractual obligations.

“As under ISDS, businesses would retain their prerogative to sue state authorities and they would continue to be able to choose to do so through private courts outside the legal system”, said French Green MEP Yannick Jadot.

The document also includes a series of provisions regarding the interpretation of domestic laws when addressing these international investment disputes. Furthermore, the tribunal’s interpretation would not be at all binding on domestic courts.

Malmström demonstrated she was well aware of the level of resistance to TTIP in Europe, and how it will be impossible to placate all of its many detractors.

Such a meeting would serve as a planned “political stocktaking” ahead of additional TTIP negotiating rounds this year, though the dates and venues for those have not been formally announced.

The plan, outlined Wednesday, follows criticism of existing investor-protection rules by top European officials, which has threatened to derail trans-Atlantic trade talks.