Trade Commissioner Cecilia Malmström tried to convince MEPs that there are ways to keep the Investment-State Dispute Settlement in the Transatlantic Trade and Investment partnership deal (TTIP). But unimpressed lawmakers failed to greet it as a full-fledged reform.
“The proposal is a step in the right direction but it still does not go far enough to restore public confidence on the issue,” said S&D MEP Bernd Lange, who chairs the international trade committee in the European Parliament, and is also the author of the parliamentary report on TTIP.
“We need reassurance that a standing court is a clear commitment and not merely part of a plan for the future. The Commission must take this into account, as well as the other demands we have outlined, if we are to support the agreement in the European Parliament,” he added.
Currently, the ISDS system allows investors to take governments to international arbitration tribunals rather than to domestic courts.
Even though the US has insisted that ISDS be included in the landmark free trade agreement, it is unlikely to be kept in its current form when the trade pact is finally agreed on, because of wide protests across Europe.
— James Kanter (@jameskanter) May 6, 2015
Lawmakers insist that ISDS remains an extrajudicial system, which has no place in European jurisdiction.
“We need investment protection chapter in TTIP, but not ISDS,” said one MEP.
The Commission’s proposal supporting what has already been achieved in the EU-Canada Comprehensive Economic and Trade agreement (CETA) was considered insufficient.
Take the right to regulate, say MEPs: Having it only in the preamble is not enough. It has to be spelled out in the text.
The proposals to have a permanent investment court with full-time judges, and a clear appeal mechanism, is a possible option.
“We have always argued that this is a much better solution than the opaque private arbitration previously proposed. However on this and on other issues the paper is still too vague,” said Lange.
“We need reassurance that a standing court is a clear commitment and not merely part of a plan for the future,” he added, warning the Commission should take on-board all the other concerns.
The Commissioner published proposals for an ISDS reform in a concept paper on Tuesday (4 May).
Politicians and campaigning organisations have been unanimous in welcoming the move to reform. However, the paper failed to make the case for reformed ISDS.
— Daniela Vincenti (@VincentiDaniela) May 6, 2015
Professor Gus Van Harten of Toronto’s Osgoode Hall Law School, an expert on ISDS, said his primary message was that the Commission’s approach to reform is seriously inadequate.
“The Commission must by now be well aware of fundamental flaws in ISDS and the threat it poses to democracy, courts and public budgets. It must also be aware that the evidence to show that ISDS delivers a public benefit commensurate with the potentially huge public subsidy it provides, mostly to large corporations and very wealthy individuals, is sparse at best,” he noted in a 15-page analysis of the proposal.
EPP MEP Christofer Fjellner is critical of those challenging ISDS.
“ISDS has existed since the 1960s, but since then, only about 650 cases have been brought forward. The critics make it seem as if most of these cases end up being quite profitable for the investor. As if an investor simply by filing a claim gets the right to million euros or dollars in compensation. Wow, if that was the case, I’m sure we would have seen more than just 650 cases! But in fact, only 31 per cent of the investors (have won cases) against the state. Bummer for the anti-ISDSers,” he wrote in his challenge.
Malmström conceded she did not present a legal text but just a base for discussion to reform ISDS. “The key challenge for the EU’s reformed investment policy is the need to ensure that the goal for protecting and encouraging investment does not affect the ability of the EU and its member states to continue to pursue policy objectives. A major part of that challenge is to make sure that any system for dispute settlement is fair and independent,” the Commissioner said.