Tuesday

12th Nov 2019

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

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

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.

Israeli labelling ruling lets consumers make choice

Beyond the Israel-specific dimension of this decision, the EU court places ethics back at the heart of European consumer choices and reminds us that our daily, mundane purchases may have considerable and unforeseen geopolitical implications, particularly as regards occupied territories.

Cleaning up both the EU and Western Balkans

There has been little substantial analysis, since the Macron veto, of why so much money and effort in the Balkans has failed to result in the political and economic transformation needed to prepare candidates for full membership.

EU 'all bark and no bite' on disinformation

The list of suspects orchestrating foreign influence campaigns is growing. The likes of China, Iran, India, Saudi Arabia are also tapping into Russia's disinfo playbook.

Column

The last convulsions of the old world order

If European countries want a strong role in this new order, they must redefine sovereignty and update it. This means that only if Europeans are prepared to pool power, they can help lay the foundations for new international institutions.

News in Brief

  1. Three new commissioner-designates pass legal scrutiny
  2. ECJ: EU countries must label Israeli settlement products
  3. Belgian asylum centre set on fire
  4. Xi Jingping in Athens promises new investment
  5. Farage's Brexit Party will not stand in Tory-held seats
  6. British founder of Syrian 'White Helmets' found dead
  7. Eight member states ask for EU aviation tax
  8. EU allocates €55m humanitarian aid to Sudan

'A game of roulette' - life as a journalist now in Turkey

Turkey has more journalists behind bars than any other country in the world. The authorities seem to equate journalism with terrorism: everyone has the right to express themselves, but, in their eyes, legitimate journalism is a threat to security.

Stakeholders' Highlights

  1. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  2. Nordic Council of MinistersBrussels welcomes Nordic culture
  3. UNESDAUNESDA appoints Nicholas Hodac as Director General
  4. UNESDASoft drinks industry co-signs Circular Plastics Alliance Declaration
  5. FEANIEngineers Europe Advisory Group: Building the engineers of the future
  6. Nordic Council of MinistersNew programme studies infectious diseases and antibiotic resistance
  7. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  8. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  9. Nordic Council of MinistersNo evidence that social media are harmful to young people
  10. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  11. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  12. Nordic Council of MinistersEducation gets refugees into work

Latest News

  1. Pro-Israeli group scores own goal on EU retail labels
  2. New commissioners clear 'conflict of interests' hurdle
  3. Israeli labelling ruling lets consumers make choice
  4. What does Macron really want on Western Balkans?
  5. Far-right Vox celebrates, as Spain left without majority
  6. EU 'climate bank' won't rule out carbon capture
  7. New hearings for the von der Leyen commission This WEEK
  8. Bosnia wants explanation for Macron's 'time-bomb' remark

Stakeholders' Highlights

  1. Counter BalanceSign the petition to help reform the EU’s Bank
  2. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  3. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  4. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  5. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  6. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  7. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  8. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  9. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  10. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  11. Nordic Council of MinistersNordic commitment to driving global gender equality
  12. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan

Join EUobserver

Support quality EU news

Join us