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Answering guides for EU ISDS consultation
The European Digital Rights initiative (EDRi) has published an
answering guide for the European Commission's consultation on
investor-to-state dispute settlement (ISDS), probably the most
controversial element of proposed EU trade agreements. The
consultation ends the 6th of July.
ISDS gives foreign investors, usually multinationals, the right
to circumvent domestic courts and challenge decisions of states
for international investment tribunals if decisions may lead to
lower profits than expected. The cases are decided by for-profit
arbitrators, they would be able to overturn decisions of supreme
and human rights courts. For an introduction see Nobel laureate
Joseph Stiglitz or Vrijschrift.
EDRi's answering guide points out procedural and substantive
issues with ISDS. The guide has a focus on human rights and the
negative effects ISDS has on our ability to reform copyright and
patent law. If you do not have a lot of time you may like to
focus on questions 5, 7, 8 and 13.
AK Europa (the Brussels office of the Austrian Federal Chamber
of Labour), ÖGB Europabüro (the Brussels office of the Austrian
Trade Union Federation), and Friends of the Earth Europe have
set up an online tool, which features a template response, and
allows for individual contributions to the consultation in a few
Corporate Europe Observatory published "Still not loving ISDS:
10 reasons to oppose investors' super-rights in EU trade deals".
Seattle to Brussels Network: Campaigners slam Commission’s mock
consultation on investor rights in EU-US trade deal
Trade Justice Movement: TJM says no to ISDS
11.11.11: Traité transatlantique : répondons tous à la
The FFII put on line its draft submission to the consultation
"ISDS: A rigged system, avoid lock-in". The draft conclusion
This note concludes that investor-to-state dispute settlement
lacks conventional institutional safeguards for independence and
has characteristics of a rigged system. The appointment of
arbitrators is not neutral and gives the US an unfair advantage.
The US never lost an ISDS case, we can not expect European
companies to win major ISDS cases against the US, all the more
as the US is not shy to exert pressure on arbitrators. We can
expect that US companies will win ISDS cases against the EU and
member states. This leads to four considerations.
First, ISDS arbitrators will be able to review all decisions of
governments, legislators and courts, including the European
Court of Human Rights, and they can award unlimited damages. The
European Commission aims to add ISDS to trade agreements from
which it is near impossible to withdraw. Given that ISDS lacks
conventional institutional safeguards for independence, does not
observe the separation of powers, has characteristics of a
rigged system and gives the US an unfair advantage, the transfer
vast powers to arbitrators without possibility of withdrawal
would be imprudent. At the very least, to protect its future,
the EU has to avoid a lock-in, should not deviate from standing
European practice of stand-alone investment agreements. The EU
should not add ISDS to trade agreements.
Second, the EU aims to create a global standard. Presently a
minority of foreign investments is covered by ISDS, after ISDS
agreements between the major capital exporting countries a large
majority of global foreign investments would be covered by ISDS.
Wide coverage of global foreign investments and impossibility to
withdraw would create a near global lock-in. Given that the
commission's reforms fail on many counts, a near global lock-in
would give arbitrators unprecedented and unchecked powers. This
would burden democracies, local companies, tax payers, human
rights and the rule of law.
Third, quintessentially, states need a margin of appreciation.
States which are constantly battered by threats and legal
challenges can not function properly, can not take decisive
action. The US protect themselves through a system rigged to
their advantage. It is an existential threat to the EU not to be
able to take decisive action, especially since the US can.
Raison d'état necessitates to avoid this situation.
Fourth, foundationally, an essential aspect of liberalism is
constitutional liberalism - the separation of powers, the
creation of strong institutions. Sovereign decisional power
accompanied by strong institutions can provide fairness. ISDS
undermines the institutions. ISDS undermines the EU's vital
interests and values, it has to be rejected. In doing so, the EU
would give direction to the debate and create room to strengthen