Download the report here: S2b – ISDS at a dangerous crossroads
The European Commission is currently preparing a new proposal for a multilateral mechanism to settle investor-state disputes. This comes at a time, when globalisation is at a dangerous crossroads.
One path leads to stronger protection for human rights and the environment and to regained policy-space for governments to address climate change, inequality and other pressing issues of our times.
The other leads to more rights for corporations to bully decision-makers and make them pay when they regulate in the interest of the many, not just the few.
The European Commission proposal for a multilateral mechanism to settle investor-state disputes (ISDS) – publicly branded as a Multilateral Investment Court – would take us down that second path. It threatens to forever lock-in the highly controversial ISDS system that only benefits corporations.
What the European Commission is proposing is not a fair or balanced Multilateral Investment Court, but a one-sided multilateral investor-state dispute settlement mechanism, so ISDS.
The severe dangers of the European Commission proposal :
- The proposal would create a special court for corporations which would lock governments further into a legal regime where private profits trump the public interest and democracy. Once established, it would take decades to dislodge such a regime.
- Like in today’s ISDS system, such a mechanism could bypass domestic and European courts, even if they do offer justice and are reasonably available. It would reassert that foreign investors are the only actors who are exempt from the duty to exhaust local remedies – a key principle of international law.
- More meaningful steps, which governments have taken to minimise the risks of investor attacks, risk being sidelined and delegitimised.
- The proposed multilateral ISDS mechanism risks re-legitimising a flawed and dangerous regime with some limited procedural fixes.
- Like other courts, an institutionalised court for foreign investors is likely to tend to increase its power by ruling expansively on its jurisdiction and in favour of the claimants.
- The proposed multilateral ISDS mechanism is already being misused to legitimise, and distract from, a massive expansion of today’s foreign investor privileges – rather than fixing its flaws.
At a time when all attention should be focused on averting a global climate catastrophe, on tackling social and economic inequality and on empowering the many, there is no space for agreements which would give corporations power to sue governments who pursue such solutions.
THE SEATTLE TO BRUSSELS NETWORK CALLS ON
- civil society groups to engage in the debate about the proposed multilateral ISDS mechanism and unite in the fight against this new attempt to further lock-in and expand the investment protection regime and to also engage in the process for a binding UN treaty on transnational corporations and other business enterprises with respect to human rights;
- citizens to voice their opinion on the proposed multilateral ISDS mechanism by participating in the Commission’s public consultation;
- legislators in the EU to not ratify CETA and other new EU trade deals with far-reaching substantive and procedural privileges for foreign investors under the false claim that these would fix the flaws of the global investment regime; whoever is serious about reforming the investment regime would start with terminating existing treaties or re-negotiating them in a way that they no longer privilege foreign investors;
- the governments of EU member states to not grant a mandate to the Commission to negotiate a convention for a multilateral ISDS mechanism for transnational corporations and on the European Commission to not proceed with this endeavour;
- EU governments to follow the example of countries like South Africa by terminating existing investment treaties and instead improving national laws and legal systems on investment where needed;
- EU governments and the European Commission to promote binding and enforceable public international law to strengthen human rights, environmental and climate protection and the fight against tax fraud and evasion. This includes supporting the creation of a binding UN treaty on transnational corporations and other business enterprises with respect to human rights as a first step to address the grave imbalance between the highly enforceable rights for corporations and the weak international protection of human rights and the environment.