Thursday

17th Aug 2017

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 and get 40% off for an annual subscription. Sale ends soon.

  1. €90 per year. Use discount code EUOBS40%
  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.

EU cautious with German diesel plan

The European Commission welcomed the German carmakers' pledge to update software in diesel cars, but is waiting for details on how emissions will be reduced.

News in Brief

  1. Mixed Irish reactions to post-Brexit border proposal
  2. European Union returns to 2 percent growth
  3. Russian power most feared in Europe
  4. Ireland continues to refuse €13 billion in back taxes from Apple
  5. UK unemployment lowest since 1975
  6. Europe facing 'explosive cocktail' in its backyard, report warns
  7. Danish police to investigate misuse of EU fishing rules
  8. German constitutional court questions ECB's €2tn spending

Stakeholders' Highlights

  1. European Healthy Lifestyle AllianceDoes Genetics Explain Why So Few of Us Have an Ideal Cardiovascular Health?
  2. EU2017EEFuture-Themed Digital Painting Competition Welcomes Artists - Deadline 31 Aug
  3. ACCABusinesses Must Grip Ethics and Trust in the Digital Age
  4. European Jewish CongressEJC Welcomes European Court of Justice's Decision to Keep Hamas on Terror List
  5. UNICEFReport: Children on the Move From Africa Do Not First Aim to Go to Europe
  6. Centre Maurits CoppietersWe Need Democratic and Transparent Free Trade Agreements Says MEP Jordi Solé
  7. Counter BalanceOut for Summer, Ep. 2: EIB Promoting Development in Egypt - At What Cost?
  8. EU2017EELocal Leaders Push for Local and Regional Targets to Address Climate Change
  9. European Healthy Lifestyle AllianceMore Women Than Men Have Died From Heart Disease in Past 30 Years
  10. European Jewish CongressJean-Marie Le Pen Faces Trial for Oven Comments About Jewish Singer
  11. ACCAAnnounces Belt & Road Research at Shanghai Conference
  12. ECPAFood Waste in the Field Can Double Without Crop Protection. #WithOrWithout #Pesticides