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Can private investors be above our EU and national judicial systems? Can they be placed on an equal footing with member states and protected by arbitrators who may be subject to conflicts of interest? It is because we respond “no” to these questions that we reject the creation of separate, secretive dispute settlement mechanisms in trade agreements, known as the Investor-State Dispute Settlement (ISDS) system. It seems that the European Commission is listening to our concerns and is exploring alternatives, including reforming ISDS. My question is then: is it enough to simply revise it, or is there something fundamentally wrong in having a parallel system beside our judicial courts?

ISDS is a proposed element of the EU-US trade agreement currently under negotiation – the Transatlantic Trade and Investment Partnership (TTIP). This trade deal more than any other has sparked debate and invited criticism from politicians, civil society and citizens alike. Social Platform’s position is clear: we reject the inclusion of ISDS in TTIP. For us, ISDS is a one-sided system that prioritises the rights of foreign investors over governments, citizens and domestic companies. We are not alone in calling for the rejection of ISDS; the European Commission received nearly 150,000 responses to its public consultation on ISDS, of which the majority expressed negative views.

Last Thursday [19 March] European Commissioner Cecilia Malmström, responsible for Trade, spoke at a meeting of the European Parliament’s International Trade (INTA) committee, and voiced her support for the creation of a permanent investment court to replace the ISDS mechanism.

However, she explained that the creation of such a court – which critics have described as politically unrealistic – would take time and negotiations on TTIP could not wait for this one element to be established. Instead, the Commission is proposing a reform of ISDS that could address our primary concerns. For example, ISDS could include a reference to the right of states to regulate, to prevent instances of the past which have seen states being forced to change national legislation to avoid having to make huge pay-outs to private investors following rulings by arbitrators. The Commission also proposes setting up a list of arbitrators who need to be qualified and/or be judges in their home countries to fight widespread conflict of interest. These proposals aim at aligning ISDS with our traditional court systems.

Social Platform believes that simply revising ISDS is not enough. This is why we call on the European Commission not to include ISDS in TTIP. We argue that in the case of the EU and the US, sufficiently strong legal mechanisms are already in place to reassure foreign investors. We will continue to work on this issue in our Task Force on Access to Services, alongside our calls to exclude social, health and education services from the scope of TTIP.

Let’s engage!

Pierre Baussand, Director