The Investment Court System- for common good or corporate greed?

The Transatlantic Trade and Investment Partnership has been an issue of great contention which is characterised by a deep underlying ideological clash. Here, Amy Dickens questions whether the new Investment Court System benefits the general public, or whether it is in the corporate interests.

Staunch Greenpeace protesters once again took to the streets of Brussels in February in an attempt to disrupt EU-U.S. Transatlantic Trade and Investment Partnership (TTIP) negotiations. Growing public backlash against the deal’s Investor-State Dispute Settlement (ISDS) mechanism has forced both sides into further negotiations, with the European Commission presenting their revised proposal, the Investment Court System (ICS), at these latest talks. But what would the ICS really achieve; does this proposition represent a genuine attempt to safeguard our hard-won human and environmental protections or is it a masquerade, concealing a system that will consolidate the power of corporations at the expense of the everyday citizen? The answer is set to have weighty consequences for us all.

TTIP ranks among the most significant trade agreements of our time yet, until recently, it rarely made headlines and negotiations took place behind closed doors. The pact is intended to remove regulatory differences between the EU and the U.S., opening up trade and investment and generating economic growth. The anticipated rewards are great- the European Commission predicts a €120 billion boost to the EU economy, several million new jobs and an increase of €500 disposable income for the average European household.

Despite these potential gains, TTIP begun to attract widespread criticism; one online petition opposing the agreement has accumulated over 3.2 million signatures and counting.

Greensefa / Creative Commons License

Greensefa / Creative Commons License

The greatest sticking point has been the inclusion of the Investor-State Dispute Settlement (ISDS), a mechanism that would allow US companies to sue the government of any EU country for loss of expected profits where national laws impede their investment. Dominated by corporate lawyers and operating in secret, some fear these courts would serve to protect, or worse, reinforce the interests of greedy corporations seeking profit at any cost.

Surprisingly, the ISDS is included in thousands of international agreements. Critics cite numerous cases where the system has been exploited to sue well-meaning governments who endeavour to protect their citizen’s rights; notoriously, tobacco company Philip Morris sued the Australian government a vast sum for introducing plain cigarette packets with graphic health warnings, claiming loss of intellectual property. If the TTIP system were similarly corruptible, it would elevate powerful multinational corporations beyond the jurisdiction of EU courts and their governing legislation, allowing them to evade punishment for even the most serious environmental and human rights violations.

After consultation with the general public on the topic revealed 97% of participants opposed including the ISDS in TTIP, the European Commission was forced to return to the drawing board. Further deliberations have yielded the Investment Court System (ICS), an alternative mechanism that the Commission claims will ensure transparency, accountability, and the right of governments to regulate.

The proposal sees the creation of a new Investment Tribunal of fifteen judges, alongside an Appeals Tribunal to review their verdicts. Each case would be heard by three judges, one U.S. national, one EU national and a third country national acting as Chairman, and allocated at random to ensure impartiality. There are many more promising signs- novel provisions include more stringent criteria governing the type of case that can be heard, and the inclusion of a non-stabilisation clause, which would protect governments’ right to regulate public policy. On the face of it, the ICS promises real change, appearing to curb investors’ influence over proceedings and defend the jurisdiction of national governments.

Despite this, many remain skeptical, suspecting the proposal is nothing more than a deceitful ploy intended to subdue public outrage while maintaining a strong corporate hold over TTIP proceedings. A coalition of NGOs, led by critical non-profit The Corporate Europe Observatory, have branded the new mechanism “the zombie ISDS”, arguing it is virtually identical, if not more dangerous, than the original.

BÜNDNIS 90 / DIE GRÜNEN Sachsen-Anhalt / Creative Commons License

BÜNDNIS 90 / DIE GRÜNEN Sachsen-Anhalt / Creative Commons License

The fair and equitable treatment clause, which guarantees to protect investors’ “legitimate expectations”, is of particular concern. If interpreted expansively, this provision would allow corporations to legally assert their ‘right’ to a stable regulatory environment, enabling them to block regulatory changes. Additionally, the new mechanism would allow investors to influence policy-making by bullying politicians and decision-makers, whose governments could face crippling costs in their attempts to defend public interest. Besides, the coalition claims, the system is inherently pro-investor- lining their own pockets provides an incentive for arbitrators to favour companies in a bid to maximise their own business.

Deliberations are not over, with policy-makers yet to agree on a finalized text for the dispute settlement mechanism. Whatever the outcome, it could have serious and far-reaching consequences. Beyond the obvious threat the ICS poses to the EU’s social and environmental safeguards if accepted, the public’s increasing fearfulness of these repercussions could become an influencing factor in the impending Brexit referendum. Only time will tell whether decision-makers are willing to gamble our rights away.



The views expressed in this article are those of the author and do not necessarily represent the views of Development in Action.


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