The European Commission's proposed Investment Court System will drastically increase the risk of claims against the EU and continue to give special privileges to foreign investors at the expense of the environment and citizens, Friends of the Earth Europe has today stated.
The Commission today formally presented its final proposal to the United States for the new system to replace the current Investor State Dispute Settlement (ISDS) mechanism, the investor rights part of trade agreements such as the EU-US Transatlantic Trade and Investment Partnership (TTIP).
Friends of the Earth Europe has reiterated its criticism of the proposed Investment Court System, saying that it prioritises the rights of foreign investors over the public interest without imposing any obligations, such as respect for environmental, social, health and safety standards. Foreign investors continue to be allowed to avoid domestic courts and sue states directly through international tribunals, now labelled as courts.
Paul de Clerck, from Friends of the Earth Europe, said:
"The Investment Court System is a one-way mechanism, only available to foreign investors. Citizens abused by the activities of mining companies, banks, food multinationals or chemical producers do not have access to the international tribunals in cases where a multinational company is responsible for human rights violations or environmental degradation.
"The European Commission claims to have introduced language to protect national governments' right to regulate. However the mechanism does not give good safeguards, with governments only permitted to take the "measures necessary" to achieve "legitimate" objectives. This again leaves it up to arbitrators to decide what is allowed and what not. By allowing investors the right to still claim large sums of compensation from governments that introduce new regulations, the risk of regulatory chill remains."
Responding to Commission claims, Friends of the Earth Europe has stated that the term investment court is misleading: the new system is not a court, but still arbitration.
Paul de Clerck, said:
"Judges sitting in the Investment Court System will not be independent. They will not be required to be functional judges but they only need to have qualifications to be a judge or be jurists of recognised competence. The same people that are playing arbitrator roles nowadays will be able to become judges in the Investment Court. They will also be paid by the day, so they will have a financial incentive to rule in favour of investors.
"There are also flaws in the proposed ethics requirements, with no cooling-off period either before or after serving on the roster, no clear definition of conflict of interests, and no explicit ban on being paid for related work while sitting as an arbitrator."