Wednesday

28th Jul 2021

EU unveils plans for global investor court

  • EU trade commissioner Cecilia Malmstrom wants a global court to rule on disputes between businesses and governments (Photo: European Commission)

The EU’s trade chief has unveiled plans to set up a global court to decide on disputes between investors and governments in a bid to defuse one of the main controversies in the ongoing EU-US trade talks.

A "concept paper" published on Tuesday (May 5), drafted for trade commissioner Cecilia Malmstrom, stated that the EU should “pursue the creation of one permanent court,” to rule on so-called investor state dispute settlement (ISDS).

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

The EU executive is keen to make clear that investor protection rules offer no guarantees to businesses that the legal regime in which they invested will remain the same. It also wants to include an article in the transatlantic trade and investment partnership (TTIP) stating that governments are free to pursue public policy objectives without fear of being sued.

Meanwhile, it also calls on arbitration panels to be more like the traditional court system, with permanent litigators and tenured judges ruling on cases.

The EU proposal is similar to that advocated by Germany’s economy minister Sigmar Gabriel, one of the strongest critics of ISDS.

Gabriel has called for a public trade and investment court to replace the current system of private arbitration, and to enable appeals against arbitration rulings.

Speaking at a hearing with MEPs in March, Malmstrom commented that, in the future, governments should be expected to nominate “a limited list of trustworthy arbiters who would decide on all TTIP investment cases”.

A multilateral court would “be a more efficient use of resources and have more legitimacy,” she added.

In a blog post on Tuesday, Malmstrom described the ‘traditional ISDS system’ as being “not fit for purpose in the 21st century”.

“Our new approach ensures that a state can never be forced to change legislation, only to pay fair compensation in cases where the investor is deemed to have been treated unfairly,” she added.

Malmstrom will present her proposals to MEPs on the International Trade committee on Wednesday and to trade ministers the following day. If approved, they could form the basis of negotiations with the US.

ISDS has become one of the most hotly-disputed elements in the EU-US trade talks, which have now completed their ninth round. Critics of the process say that arbitrations are carried out in secret by trade lawyers, and that it allows companies to sue governments that pass social protection legislation that could harm their investments.

Campaigners frequently point to a ongoing case brought by tobacco giant Philip Morris against the Australian government over new legislation requiring plain packaging for cigarettes sold in the country.

Following rising concern about the regime, the commission opened the three-month online consultation last March and suspended discussions on ISDS with US trade officials.

In January, the commission published a 140-page report from the consultation, to which 97 percent of submissions were opposed to the inclusion of ISDS.

However, EU governments are parties to around 1,400 of the 3,000 international investment agreements that are currently in force across the world, and the commission is under pressure from the US government to include investor protection in any agreement.

EU hits vaccination target, as Delta variant now dominates

The European Union has vaccinated 70 percent of its adult population with one shot. "The EU has kept its word and delivered," said EU Commission president, Ursula von der Leyen. However, only 57 percent of adult Europeans are fully-vaccinated.

Feature

'Prison island' birthplace of EU reborn as think-tank venue

Santo Stefano is being revived through a €70m refurbishment project to turn it into a high-level European think-tank, academy and open-air museum aimed at boosting the European integration project by training 'enlightened' EU youth, scholars and politicians.

Stakeholders' Highlights

  1. Nordic Council of MinistersNineteen demands by Nordic young people to save biodiversity
  2. Nordic Council of MinistersSustainable public procurement is an effective way to achieve global goals
  3. Nordic Council of MinistersNordic Council enters into formal relations with European Parliament
  4. Nordic Council of MinistersWomen more active in violent extremist circles than first assumed
  5. Nordic Council of MinistersDigitalisation can help us pick up the green pace
  6. Nordic Council of MinistersCOVID19 is a wake-up call in the fight against antibiotic resistance

Latest News

  1. EU hits vaccination target, as Delta variant now dominates
  2. European arms 'displaced over a million people', research finds
  3. Brexit: what is the 'Lugano Convention' and does it matter?
  4. US maintains summer travel ban on EU tourists
  5. Does democracy need troublemakers?
  6. Separating migrant families at EU borders must stop
  7. Germany mulls restrictions for unvaccinated as cases soar
  8. 'Prison island' birthplace of EU reborn as think-tank venue

Join EUobserver

Support quality EU news

Join us