Up until last week, the “Investor-State Dispute Settlement System”
(ISDS) being proposed in the so-called “TTIP” negotiations between the
EU and US was a strategic disaster on the part of the negotiating
partners, the European Union, in particular.
Historically, ISDS was developed as a way of ensuring that,
institutionally and legally, weak countries could offer a degree of
legal certainty for international investors. However, over time, the
independent tribunals that rule on disputes have engaged in a level of
“judicial” activism that is scarcely believable – blocking legitimate
decisions by democratic governments and even demanding costs from states
after they have won cases against frivolous claims.
In a recent press release about the EU/US negotiations, the Commission
explained that ISDS is necessary to protect investors because the
foreign “government might seize the company’s property without
compensating it. Or it might give local businesses an unfair advantage,
or stop foreign companies from using the justice system when things go
wrong”. What we don’t know is whether US investors need to be protected
from Europe’s judiciaries and governments or vice versa.
It appears unlikely that the US court system is going to collapse in the
near future, so the basic reason for ISDS disappears as far as the EU is
concerned (the reverse is also true, obviously). On the other hand, US
companies are notoriously litigious, so it is very likely that EU
governments will almost inevitably suffer far more litigation as a
result of ISDS being included in TTIP – and as well as coercive lobbying
whereby companies would threaten litigation if certain legislation is
proposed or approved.
The last thing the European Commission needs now is for the ISDS issue
to become a major issue in the European Parliament elections. In its
so-called “civil society” meetings (which consist overwhelming, of
industry representatives) Commission representatives have been unable to
produce a single argument in favour of ISDS and have tried instead to
explain that the dangers are being or will be avoided. In other words,
it is clear, even to the Commission, that it is a proposal that brings
costs but no benefits.
The Commission has therefore taken the strategic decision to take the
heat out of the issue until after the European Parliament elections. It
has stated that it will hold a “consultation” at an unspecified time,
covering unspecified topics with regard to ISDS, even though the
Commission itself remains completely convinced that the policy is a good
TTIP: European Ombudsman warns European Institutions to learn from ACTA
(Contribution by Joe McNamee – EDRi)