Wednesday

22nd Feb 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.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

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.

MEPs approve Canada trade deal amid protest

Amid protests in front of the European Parliament's Strasbourg building and after heated debate among MEPs, the landmark trade deal with Canada was approved with a comfortable majority.

News in Brief

  1. Romanian parliament buries controversial corruption decree
  2. Dozens drown off Libyan coast
  3. EU ministers approve anti-tax avoidance directive
  4. Poland rejects EU criticism of court changes
  5. German nationalist leader met with Putin allies in Moscow
  6. German housing market overheated, says Bundesbank
  7. France invites three EU leaders for Versailles summit in March
  8. Greece agrees on new bailout reforms

Stakeholders' Highlights

  1. Martens CentreEU and US Migration Policies Compared: Join the Debate on February 28th
  2. Swedish EnterprisesTechnology and Data Flows - Shaping the Society of Tomorrow
  3. UNICEFNearly 1.4 Million Children at Risk of Death as Famine Looms Across Africa and Yemen
  4. Malta EU 2017End of Roaming Fees: Council Reaches Agreement on Wholesale Caps
  5. Nordic Council of MinistersNordic Innovation House Opens in New York to Help Startups Access US Market
  6. Centre Maurits CoppietersMinorities and Migrations
  7. Salzburg Global SeminarThe Child in the City: Health, Parks and Play
  8. UNICEFNumber of Ukrainian Children Needing Aid Nearly Doubles to 1 Million Over the Past Year
  9. Centre Maurits CoppietersThe Situation of Refugee Women in Europe
  10. Salzburg Global SeminarToward a Shared Culture of Health: Charting the Patient-Clinician Relationship
  11. European Free AllianceAustria Should Preserve & Promote Bilingual and Multinational Carinthia
  12. Martens CentreShow Your Love for Democracy! Take Part in Our Contest: "If It's Broken, Let's Fix It"

Latest News

  1. Should Europeans spend more on defence?
  2. Dieselgate: EU disappointed with VW's treatment of customers
  3. French police raid Le Pen's party office
  4. The Armenia-Azerbaijan war: A refugee's story
  5. Greece and creditors break bailout deadlock
  6. Internal EU report exposes Libya turmoil
  7. EU commissioner condemns 'delay' in post-Dieselgate reform
  8. Sweden fights back as foreign leaders make up bad news