While going beyond previous attempts at reform, Transport & Environment said the Investment Court System will not be independent – swapping arbitrators under ISDS for judges who will be paid a percentage of the final settlement, most likely leading to inflated damages being awarded to investors.
Cécile Toubeau, senior better trade officer at T&E, said: “The EU cannot hide behind a name change when the flaws of the Investment Court System remain the same. Citizens will continue to unfairly shoulder private risks taken by foreign investors, while lawmakers will be deterred from regulating in the public interest.”
Investors will also be allowed to select either a national court or the Investment Court System, according to the European Commission’s proposal, thereby enabling them to choose the route that will give them the best financial outcome. Big business will not be required to exhaust all national legal remedies, as EU citizens must do before they can go to the European Court of Justice.
Today’s announcement lacked detail on a new so-called ‘right to regulate’, while there are no limits on the amount that can be awarded to investors. In 2007 the Mexican government was ordered to pay out $90.7 million (€80.7m) under the NAFTA trade deal to a US company making soft drinks ingredients for introducing a tax on beverages sweetened with corn syrup.
Recently EU trade commissioner Cecilia Malmström admitted that there was no direct relationship between ISDS and increased investment, prompting questions about the Commission’s eagerness to provide foreign investors a special court.
Cécile Toubeau concluded: “The EU needs to listen to the 145,000 citizens who told them in a public consultation that special courts for foreign investors are not an option. Like ordinary people, multinational companies should rely on the EU and US’s well-developed legal systems which have more than adequately handled foreign direct investment until now.”