Monday

18th Mar 2019

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

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join 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.

Magazine

The changing of the guards in the EU in 2019

The four most powerful EU institutions - Commission, Parliament, Council and Central Bank will all have new leaders in the coming ten months. Here is an overview.

News in Brief

  1. Third Brexit vote this week only if DUP will support it
  2. Germany's two largest banks confirm merger talks
  3. Serbian pro-democracy protests reach 15th week
  4. 'Yellow Vest' riots leave Paris shops vandalised
  5. European woman older when having first baby
  6. Majority of Germans want Merkel to stay on
  7. Asylum applications in the EU down to 580,800 in 2018
  8. Children's climate school strikes turn global on Friday

Magazine

All about the European Parliament elections 2019

EUobserver's new magazine is meant to help readers prepare for the European Parliament elections, no matter their level of knowledge. You can download and read the entire magazine now.

Stakeholders' Highlights

  1. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  2. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  3. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  4. Nordic Council of MinistersNordic commitment to driving global gender equality
  5. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  6. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  7. Nordic Council of MinistersNordic talks on parental leave at the UN
  8. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  9. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  10. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  11. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  12. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson

Join EUobserver

Support quality EU news

Join us