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Sugarcoated EU-US investor-state dispute mechanism fails to convince

Press Release

Wednesday 6 May 2015

Nessa Childers, MEP for Dublin, reacted with scepticism to this week’s new proposals from the European Commission on the inclusion of a mechanism to settle disputes between states and investors in an EU-US trade deal currently under negotiation.

Investor-state dispute settlement clauses in trade deals allow companies to seek compensation from countries if they deem that government actions, including legislation, have harmed their profits or expectations of profits under the terms of international trade agreements.

Speaking from Brussels this afternoon, where the reviewed proposals were presented by Trade Commissioner Malmström in the European Parliament, Ms. Childers said:

“The Commission was forced to backtrack on the issue of investor-state dispute settlement (ISDS) mechanisms in the face of civil society’s opposition to these schemes, but the reviewed proposals brought to the table are sugar-coating a very unpalatable offer.

“Commissioner Malmström wants ISDS to survive in the text of the Transatlantic Trade and Investment Partnership so she is offering us a permanent appellate panel with a better choice of arbitrators and perhaps the requirement that companies take only one avenue – litigation or arbitration – instead of both.

“This may sound like an improvement but still doesn’t explain why we want a pricey, private, parallel legal forum that foreign companies alone can threaten governments with, holding them ransom to lengthy, expensive cases every time they legislate in the public interest.

“Big tobacco’s bigwig litigants in Ireland are a case in point. Do we really want to open up another legal front for these people to stall public health policy with?

“These obsolete schemes were created in the ‘60s as an insurance for investors to operate in what they saw as banana republics and have no place in the transatlantic jurisdictions. The vibrancy of our trade links is in itself proof that we don’t need them.

“So, big foreign investors want their own arbitration court just for themselves.

“Will Commissioner Malmstöm also propose a consumers court where these alone can sue companies? And maybe also a taxpayers court where taxpayers alone can sue them for ruinous public-private partnerships or firesale privatisations?”