Concerning the controversial Free Trade Agreement between the EU and the USA (TTIP), the European Commission has once again become active. This week, it presented “new” ideas as to how disputes between investors and states might be solved in future. It is a well-known fact that the currently envisaged ISDS model has been firmly rejected by trade unions and civil society.

The dispute settlement between corporations and states is one of the most controversial chapters in the planned Free Trade Agreement between the EU and the USA. Many hitherto concluded trade agreements include mechanisms, according to which investors may sue states if they feel they have been treated unfairly. However, this is a mechanism, which seems disconcerting with regard to trade agreements between highly developed constitutional states such as the EU and the USA. If a company, which invests in an EU country or in the USA, takes the view that it has been treated unjustly, it could, without further ado, seek a ruling from national courts.

Added to this is the fact that ISDS courts are no public courts and that court hearings are taking place behind closed doors, without publicly appointed judges and with no possibility of appeal, to name just a few of the shortcomings. The result is the emergence of “libel tourism” over recent years, where multinationals with bulging war chests frequently sue developing and developed national economies, if these want to enact laws, which affect the profit interests of private entities. An untenable situation.

Besides many other critical points, which are included in TTIP, ISDS - the abbreviation for this dispute settlement mechanism - was right from the beginning a red rag for trade unions and NGOS. Together with allied European trade unions and NGOs, AK and the Austrian Trade Union Federation ÖGB organised unprecedented participation in a public consultation of the Commission on ISDS, where 95% of replies rejected ISDS.

Based on the campaign no2ISDS, AK and ÖGB, in close collaboration with European allies, also mobilised in early summer 2015 a clear vote for an end of the current ISDS system before and during the vote in the European Parliament.

The “new” model presented this week by the Liberal Swedish Trade Commissioner Cecilia Malmström introduces some changes: publicly appointed judges with high qualifications shall decide over disputes; in future, disputes shall be randomly assigned to judges; the option of an appeal against the judgment of the Court of First Instance shall also be introduced.

In future, 15 judges (5 from the EU, 5 from the USA und 5 from third countries) shall form the Investment Court. “Libel tourism” shall also be curbed; based on a set of criteria, it will be clarified who under what circumstances may bring proceedings. In addition, all proceedings shall be conducted in public; all records and documents shall be accessible online.

At least, based on the proposal of the Commission, the political debate has been rekindled again. However, to begin with the proposals have to be examined and accepted by the governments of the Member States and the European Parliament. Not to forget the USA. They too have to be convinced of the European ideas, which by all accounts will not be an easy task. Another disappointment: according to the Commission, the trade agreement with Canada (CETA), which is close to coming into force and which still includes the old legal action modalities for investors, will not be revisited, in spite of the now admitted weak points.

Further information:

Press release of the European Commission