Saturday

17th Apr 2021

Opinion

The seven sins of the EU investment court

  • Despite all the talk of reform from commissioner Malmstroem, the threat to democratic decision-making is as alive and dangerous as ever. (Photo: European Commission)

European trade commissioner Cecilia Malmstroem and Canadian minister for trade Chrystia Freeland have confirmed that the EU-Canada CETA agreement will include far-reaching investor privileges.

The investor-state dispute settlement (ISDS) clause in the deal is set to be based on EU proposals for an Investment Court System (ICS) that were announced last autumn following unprecedented public outcry. However, ICS is no new departure. Indeed, it is the same special rights for foreign investors come back from the dead.

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

Plans for ISDS were among the most contentious parts of the proposed TTIP deal between the EU and US. Debate has been focused on the rights that corporations will acquire to challenge democratic decisions when they consider them a threat to their profits.

This power for companies to haul governments before special tribunals for lost profits has, for instance, led to Philip Morris suing Uruguay over tobacco control measures and, more recently, TransCanada’s announcement that it will sue the US for $15 billion over President Barack Obama’s rejection of the Keystone XL oil pipeline.



Public fears around ISDS forced the commission to open a consultation in 2014. Nearly 150,000 people responded with 97% of the contributions rejecting ISDS.

Last autumn, Malmstroem made another attempt to quell the controversy with a new proposal to replace ISDS - the Investment Court System. However, a close look at the new system reveals that it is just as dangerous.

Following Monday's news that investor privileges are to be a key part of CETA, here are seven key reasons why “super-rights” for foreign investors remain a bad deal for citizens – whatever their name:


1. The commission’s investment protection proposal still offers corporations the right to sue governments over measures to protect the environment, health and workers. If TTIP and CETA go ahead as planned, tens of thousands of Canada and US-based companies operating in the EU would be newly empowered to sue.



2. Billions in taxpayer money could be paid to compensate corporations, including for missed future profits that they hypothetically could have earned. New laws in the public interest would not be shielded from such crippling compensation orders.



3. The proposed investor rights are a sure-fire way to bully decision-makers, with the potential to curtail desirable policy making to tackle issues such as climate change.

There is already evidence that proposed environmental and health protections have been abandoned, delayed or otherwise adapted to corporate wishes because of the threat of litigation. Canada and New Zealand, for instance, have delayed anti-smoking policies because of looming legal cases from Big Tobacco.



4. The commission’s proposed multilateral investment court – essentially a world supreme court exclusively available to corporations – risks perpetuating an already gravely unjust system where large companies or wealthy individuals get powerful rights while the rest of us just get responsibilities.



5. Since only investors can sue, there is an incentive for the arbitrators (relabelled “judges” in the commission proposal) to side with them as this will bring more legal cases, fees and prestige in the future. According to the Deutscher Richterbund, Germany’s largest association of judges and public prosecutors, “neither the proposed procedure for the appointment of judges of the ICS nor their position meet the international requirements for the independence of courts”.



6. There are doubts that the proposed investment protection system is compatible with EU law as it sidelines European courts and is fundamentally discriminatory, granting special rights to foreign investors only.



7. Rather than putting an end to ISDS, the ICS threatens to lock member states into it forever. It will be practically impossible for them to remove investor privileges once those are enshrined in larger trade deals such as CETA and TTIP.



At a time when all attention should be focused on crucial issues facing politicians such as impending climate catastrophe and future economic crises, there is simply no space for agreements that would make many solutions to these problems illegal.

Despite all the talk of reform from commissioner Malmstroem, the threat to democratic decision-making is as alive and dangerous as ever. Defending the public interest and democracy as we know it means dangerous investor privileges - whatever acronym guise they come in - must be scrapped.

Pia Eberhardt is a trade policy researcher and campaigner with Brussels-based lobby watchdog, Corporate Europe Observatory (CEO).

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

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.

'Ethno-nationalism' is not way forward for Bosnia-Herzegovina

In Bosnia-Herzegovina, tempted by the allure of a 'deliverable', the EU, US, and UK are supporting a political process that would enhance the power of ethno-nationalist leaders, cement ethnic partition, and quite possibly lead to violence.

Will Romania be EU's Green Deal laggard?

Of the €30bn allocated to Romania under the EU recovery fund, just four percent is slated to go to renewable energy and energy-efficiency. Despite the pressing need to decarbonise Romania's heat and power sectors, this is not an investment priority.

Column

Muslims, Ramadan, and myths facing 'European civilisation'

Happy Ramadan? The UN special rapporteur on freedom of religion or belief warned the Human Rights Council last month that institutional suspicion of Muslims and those perceived to be Muslim has escalated to "epidemic proportions" worldwide.

News in Brief

  1. EU postpones decision on labelling gas 'sustainable'
  2. MEPs call for mass surveillance ban in EU public spaces
  3. Greek and Turkish ministers trade jibes in Ankara
  4. Biden repeats opposition to Russia-Germany pipeline
  5. Navalny in danger, letter warns EU foreign ministers
  6. Lithuania keen to use Denmark's AstraZeneca vaccines
  7. Gas plants largest source of power-sector emissions
  8. Study: Higher risk of blood clots from Covid than vaccines

Column

Why Germans understand the EU best

In Germany, there is commotion about a new book in which two journalists describe meetings held during the corona crisis between federal chancellor Angela Merkel, and the 16 prime ministers of its federal constituent states.

Why Iceland isn't the gender paradise you think

Iceland's international reputation masks two blunt realities that face the country's women - the disproportionate levels of gender-based violence that they experience, and a justice system that is frequently suspicious and hostile towards victims of this violence.

Stakeholders' Highlights

  1. Nordic Council of MinistersDigitalisation can help us pick up the green pace
  2. Nordic Council of MinistersCOVID19 is a wake-up call in the fight against antibiotic resistance
  3. Nordic Council of MinistersThe Nordic Region can and should play a leading role in Europe’s digital development
  4. Nordic Council of MinistersNordic Council to host EU webinars on energy, digitalisation and antibiotic resistance
  5. UNESDAEU Code of Conduct can showcase PPPs delivering healthier more sustainable society
  6. Nordic Council of MinistersWomen benefit in the digitalised labour market

Latest News

  1. US rejects Slovenia-linked plan to break up Bosnia
  2. Ukraine urges Borrell to visit Russia front line
  3. Could US sanctions hit Russia vaccine sales to EU?
  4. Polish court pushes out critical ombudsman
  5. Political crises in Romania and Bulgaria amid third wave
  6. Von der Leyen's summer plans undisclosed, after Ukraine snub
  7. Over a million EU citizens back farm-animal cage ban
  8. Three options for West on Putin's Ukraine build-up

Join EUobserver

Support quality EU news

Join us