European Commission proposes investment courts for investor-state disputes

The investment court system would replace the existing investor-to-state dispute settlement (ISDS) mechanism in all EU investment negotiations, including EU-US talks on the Transatlantic Trade and Investment Partnership (TTIP), and could be followed by a international investment court, the Commission said.

Governments' rights to regulate would be enshrined and guaranteed in the provisions of trade and investment agreements, the Commission said.

The EU investment court system would comprise a first instance tribunal and an appeals tribunal, with judgments made by publicly appointed judges "with high qualifications comparable to those required for the members of permanent international courts such as the International Court of Justice and the WTO appellate body", the Commission said.

A joint committee of EU and US authorities would appoint the members, a Commission official told Euractiv.

The court would not have a specific venue, and cases would be dealt in Brussels, Washington, or any EU capital, the official told Euractiv.

Precise rules would need to be defined on the cases that could be taken to the tribunal, the Commission said. These would include targeted discrimination on the base of gender, race or religion, or nationality, expropriation without compensation, or denial of justice, it said.

The system would be open and transparent, and would prevent 'forum shopping' and frivolous claims, the Commission said. A clear distinction would be maintained between international and domestic law, and multiple and parallel proceedings would be avoided.

The Commission will also begin work on setting up a permanent international version of the investment court, it said. This would eventually replace all investment dispute regulation mechanisms in EU agreements, EU Member States’ agreements with third countries and in trade and investment treaties concluded between non-EU countries, it said.

EU trade commissioner Cecilia Malmström said that EU investors are the most frequent users of the ISDS system and so "Europe must take the responsibility to reform and modernise it. We must take the global lead on the path to reform".The current ISDS system has won backing from businesses but has faced opposition from consumer and environmental groups who claim it could allow investors to challenge broader government policies - such as the ban on fracking currently in place in France.

Malmström has previously described ISDS as "not fit for purpose in the 21st century. I want the rule of law, not the rule of lawyers," she said.