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30th Apr 2017

EU governments paid €3.5bn in investor claims

  • Malmstrom - no decision until 2015 on whether investor clauses will remain in TTIP (Photo: eu2013.lt)

EU governments have been forced to pay out more than €3.5 billion in compensation to firms under controversial investor protection rules according to new research published on Thursday (4 December).

The survey, by the NGO Friends of the Earth Europe, has identified at least 127 individual cases which were brought against governments since 1994 in claims totalling more than €30 billion.

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But the campaign group says difficulties in acquiring information about "investor-state dispute settlement" (ISDS) cases, which is not publicly available, indicate that the total is likely to be far higher.

Of the 127 cases, the NGO found out the level of compensation sought in just 62 examples. The precise sum paid out is only known for 14 of them.

The status of ISDS clauses in a possible trade deal between the EU and the US, known as TTIP, has become one of the most hotly disputed issues in the talks.

The mechanism allows companies to take legal action against governments on the grounds of unfair treatment or discrimination in favour of domestic firms, or if new legislation is deemed discriminatory and compromises their business.

Critics say that corporate lawsuits, or even the threat of them, could prevent governments from passing legislation in fields such as health and safety and environmental and social protection.

The research indicates that around 60 percent of the claims related to environmental regulation, and that countries in Central and Eastern Europe, most of whom joined the EU in either 2004 and 2007, were most frequently targeted.

One well-known case is an ongoing dispute between tobacco giant Philip Morris and the Australian government over the latter’s rules requiring plain packaging for cigarettes – effectively a ban on advertising.

However, the question of whether ISDS would prevent governments from being able to take aspects of privatised healthcare back under public control also remains controversial, particularly in the UK.

In 2008 the Slovak government was ordered to pay €25 million in compensation when it sought to re-nationalise the country's health insurance scheme, a case which could strengthen the arguments of campaigners.

The European Commission, which has so far been keen to include ISDS in a deal, temporarily parked the issue by opening a public consultation on ISDS at the start of the year.

In November, six months after the consultation closed, new trade commissioner Cecilia Malmstrom, told MEPs that the commission is still evaluating its findings.

It has promised to present a factual report on the consultation before the end of 2014, but has indicated that no political decision on the future of ISDS will be taken before spring 2015.

Trade officials hope to conclude a draft deal with the Americans in late 2015.

The research is another reminder of the uniquely high level of public interest in the EU-US trade talks.

Also on Thursday, a petition urging the EU's executive arm to halt the talks reached 1 million signatures, the threshold needed to force the commission to make an official response.

In a bid to assuage public concerns that the talks are surrounded by secrecy, the EU executive has also promised to increase the number of documents related to the talks that it will make available to the European Parliament and the public.

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