Thursday

24th May 2018

EU defends TTIP investor court after German backlash

  • The EU commission says ICS would give greater protection and transparency (Photo: cosilium.europa.eu)

The EU Commission has defended a proposed court that would allow big firms to sue EU governments for perceived profit losses.

German magistrates criticised the idea earlier this month, declaring the so-called investor court system (ICS) unlawful.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

The commission said the German magistrates had misunderstood ICS.

"It [the ICS] does not rule on member state law or EU law, and hence the ICS in no way alters the established court system within the EU and the member states," a commission spokesperson told this website.

ICS 'not needed'

Proposed last September by the EU executive, the investor court forms a part of the EU-US free trade talks known as the Transatlantic Trade and Investment Partnership (TTIP).

The permanent court is meant to replace investor-state dispute settlement (ISDS), a system of arbitration contained in numerous trade treaties as the chosen method of solving disputes.

ISDS has seen big firms like energy giant Vattenfall demand Germany give it €4.7 billion in a case filed in 2012 after Germany announced a nuclear energy phaseout following the Fukushima disaster.

Just under 700 ISDS claims have been filed since 1995. A record 70 were filed last year alone.

The commission spokesperson said the German criticism came as a surprise.

“Germany has around 130 such treaties,” he pointed out. EU member states collectively have around 1,300 similar treaties.

The German Association of Magistrates, a Berlin-based judicial umbrella organisation, said there was “neither a legal basis nor a need for such a court" because domestic courts were good enough to settle disputes.

The Americans have also criticised the commission's proposal and want to keep the existing ISDS intact.

'Higher protection'

The EU executive maintains its court would different from ISDS because it would be transparent and give protection to EU investors abroad. 

In turn, foreign investors in the EU would receive the same treatment.

"Given that EU law and member state law provides for a higher level of protection, an investor would use domestic law and would therefore be unlikely to need to go to the ICS system," said the spokesperson.

But the commission's defence is unlikely to halt the criticism.

A mistake

German Green MEP Ska Keller said the judges in Germany had delivered a severe blow to the commission's plan.

She said the proposal would remain skewed disproportionately towards the interests of investors and outside the democratic systems already in place.

"It is now clear that it was a mistake by the European Commission to simply dismiss similar criticism from the Greens and others about this system," she said in an email.

Nine EU states have treaties involving ISDS clauses with the US.

Should the investor court or ISDS appear in the concluded TTIP pact, then all 28 EU states could be potential targets in investment disputes.

"Of the 51,495 US-owned subsidiaries currently operating in the EU, more than 47,000 would be newly empowered to launch attacks on European policies in international tribunals,"War on Want, a London-based anti-poverty charity, said in a report published Wednesday.

Negotiations on the investment chapter are due to resume in the next round of TTIP talks in Brussels on 22 February.

TTIP: US yet to approve EU investor court plan

The United States “understands” why the European Union wants to include an investor court system in the TTIP agreement, but has not yet given an opinion on the EU's proposal itself.

Analysis

EU has no 'magic bullet' against US Iran sanctions

EU leaders in Sofia will discuss how they can protect the bloc's economic interests against US threats to sanction companies doing business in Iran. But their options are limited.

Opinion

EU budget must not fortify Europe at expense of peace

Given the European Commission new budget's heavy focus on migration, border management and security, many are asking whether the proposal will fortify Europe at the expense of its peace commitments.

News in Brief

  1. Gazprom accepts EU conditions on gas supplies
  2. Facebook tells MEPs: non-users are not profiled
  3. Commission proposes ending France deficit procedure
  4. UK households hit with Brexit income loss
  5. Report: EU faces 10% cut in steel exports to US
  6. Australia wants more access to EU agricultural market
  7. CV of Italian PM candidate under scrutiny
  8. Puigdemont Spain extradition rejected by German court

Stakeholders' Highlights

  1. Nordic Council of MinistersOECD Report: Gender Equality Boosts GDP Growth in Nordic Region
  2. Centre Maurits Coppieters“Peace and reconciliation is a process that takes decades” Dr. Anthony Soares on #Brexit and Northern Ireland
  3. Mission of China to the EUMEPs Positive on China’s New Measures of Opening Up
  4. Macedonian Human Rights MovementOld White Men are Destroying Macedonia by Romanticizing Greece
  5. Counter BalanceControversial EIB-Backed Project Under Fire at European Parliament
  6. Nordic Council of MinistersIncome Inequality Increasing in Nordic Countries
  7. European Jewish CongressEU Leaders to Cease Contact with Mahmoud Abbas Until He Apologizes for Antisemitic Comments
  8. International Partnership for Human RightsAnnual Report celebrates organization’s tenth anniversary
  9. Nordic Council of MinistersNordic Cooperation Needed on Green Exports and Funding
  10. Mission of China to the EUPremier Li Confirms China Will Continue to Open Up
  11. European Jewish CongressCalls on Brussels University to Revoke Decision to Honour Ken Loach
  12. Sustainable Energy Week 2018"Lead the Clean Energy Transition"- Register and Join Us in Brussels from 5 to 7 May

Latest News

  1. Visegrad Four 'nothing to hide' on rule of law issue
  2. GDPR does not (yet) give right to global oblivion
  3. Privacy Shield less relevant given GDPR, says data chief
  4. Unknown academic to lead Italy into EU clash
  5. 'Killer robot' projects eligible for EU defence fund
  6. Funding for European values needs radical changes
  7. Feeble EU format deflates Zuckerberg 'hearing'
  8. Are EU data watchdogs staffed for GDPR?