On Tuesday, 18th October the well-attended panel discussion debated whether the new Investment Court System (ICS), which has been proposed by the EU Commission for CETA, will solve the problems of the existing ISDS system. Nathalie Bernasconi-Osterwalder of the International Institute for Sustainable Development voiced doubts in her opening keynote address. The ICS would continue to remain a special mode of justice solely for investors' interests, as they would not have to first exhaust the regular legal process of the host country before being able to appeal to it, as it is common with other international courts (e.g. ECJ or ECHR). This would give foreign investors a right that domestic ones would not have –without any corresponding obligations in return.
Jan Krainer, Member of the Austrian Parliament, explained the concerns raised in the Austrian debate. To begin with, it’s questionable that only investments should be able to enjoy this special protectionwhile it would not be possible to sue for workers’ rights or environmental protection standards under the ICS. This would make it possible to undermine these regulatory measures, which was another concern. In addition, he didn’t see the need for the ICS in the first place, as both the EU and Canada have well-established legal systems which companies could appeal to, whereas the Courts of Arbitration would provide them with a unilateral and therefore one-sided tool to enforce their interests.
Commission: ICS may become basis for international commercial court
However, Colin Brown, who significantly contributed to the ICS on behalf of the European Commission, emphasised that this was a “completely new system”. It would for the first time establish an appellate instance and clear codes of conduct for judges, who apart from that would have the same qualifications as those of ECJ, ICC or ECHR – although critics do not regard these qualifications of judges as sufficient, since they are different in each country, which means that no uniform legal standard applies. Brown argued the ICS would create the basis for a multilateral commercial court as it could also be applied to other already existing investment agreements that are currently using the ISDS system. Luisa Santos, the representative of Business Europe, who also defended the ICS, said companies would regard the ICS as an opportunity to modernise the ISDS. However, she too saw problems, although from a different perspective: the fact that judges would be appointed by governments instead of, as before, by the parties to the dispute would involve the danger of bias. Santos also disliked the new rule that the losing party would also have to bear the legal costs of the winning party, which might deter companies, in particular small and medium-sized enterprises, to sue for their rightful legal claims.
MP: ICS brings legal standards of the 18th, not of the 21st century
Magda Stoczkiewicz, the director of Friends of the Earth Europe, presented a different argument. She mentioned that countries, for example South Africa, had already left ISDS without investments declining. Apart from that she said that it was not clear what would happen if the ECJ should declare the ICS illegitimate after the approval of CETA. In short, the risks of the ICS were big and advantages would only exist for large companies. Overall, the discussion showed that there is still a wide range of views what exactly investment protection in CETA means, which is why concerns and criticism remain. MP Krainer summarized that even though the ICS was an improvement on the ISDS system, it would still not be a good system. If ISDS would correspond to the legal standards of the 15th century, the ICS would arrive at the late 18th – however, what’s needed is a system for the 21st century.