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The two members of the European Commission’s TTIP advisory group will take a very serious look at the proposal on investor protection but have restated their shared belief that while an arbitration process is adequate for settling private contract disputes, it should never rule on the validity of laws – especially in countries where the rule of law is long standing.
Investor-state dispute settlement (ISDS) clauses allow businesses to bypass national court systems and sue governments directly, in special arbitration panels, typically over legislation designed to deliver public benefits. Such panels are deeply flawed. The claimant – business – has a 50 per cent say in who presides over them, and the panels’ decisions are not bound by legal precedent. Currently, 93% of the EU economy is not subject to ISDS clauses in bilateral investment agreements with the US.
Jos Dings, T&E Director and member of the EU’s TTIP advisory group, commented: “Commissioner De Gucht claims he wants to improve existing bad ISDS provisions. The reality is that 19 member states representing 93% of the EU economy do not have any ISDS provision with the US. Mr De Gucht is ready to jeopardise 93% of the EU economy to supposedly make things better for the other 7%. That does not just look like a bad deal – it is one. We should not have arbitration on legislation.”
Pieter de Pous, EEB EU Policy Director and member of the EU’s TTIP advisory group, commented: “Being at the mercy of pro-business arbitration panels would strongly discourage governments to legislate in the public interest. At a time when the EU institutions are struggling with their own democratic legitimacy, it may not be the wisest of ideas to give oversight away to a body even further removed from citizens.”