Wednesday

26th Jul 2017

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).

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 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.

Stakeholders' Highlights

  1. EU2017EELocal Leaders Push for Local and Regional Targets to Address Climate Change
  2. European Healthy Lifestyle AllianceMore Women Than Men Have Died From Heart Disease in Past 30 Years
  3. European Jewish CongressJean-Marie Le Pen Faces Trial for Oven Comments About Jewish Singer
  4. ACCAAnnounces Belt & Road Research at Shanghai Conference
  5. ECPAFood waste in the field can double without crop protection. #WithOrWithout #pesticides
  6. EU2017EEEstonia Allocates €1 Million to Alleviate Migratory Pressure From Libya in Italy
  7. Dialogue PlatformFethullah Gulen's Message on the Anniversary of the Coup Attempt in Turkey
  8. Martens CentreWeeding out Fake News: An Approach to Social Media Regulation
  9. European Jewish CongressEJC Concerned by Normalisation of Antisemitic Tropes in Hungary
  10. Counter BalanceOut for Summer Episode 1: How the EIB Sweeps a Development Fiasco Under the Rug
  11. CESICESI to Participate in Sectoral Social Dialogue Committee on Postal Services
  12. ILGA-EuropeMalta Keeps on Rocking: Marriage Equality on Its Way

Latest News

  1. EU and Turkey fail to defuse tensions
  2. European law will apply 'for years' in the UK, says EU judge
  3. US votes to sanction EU firms in Russia project
  4. Journalists on trial highlight Turkey crackdown
  5. EU to give research tips on dual food quality
  6. Polish president's veto leaves uncertainties over next move
  7. EU Commission unmoved by Polish president's veto
  8. UK presses the Brexit pause button