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EC Proposes 'Investment Court System' For Trade Talks

by Ulrika Lomas, Tax-News.com, Brussels

21 September 2015


The European Commission has proposed the replacement of the investor-to-state dispute settlement mechanism (ISDS) with an Investment Court System in all ongoing and future European Union (EU) investment negotiations.

Under the plans, a first instance Tribunal and an Appeal Tribunal would be set up, and judgments would be made by publicly appointed judges. The Appeal Tribunal would operate on similar principles to the World Trade Organization's Appellate Body. The ability of investors to take a case before the Tribunal would be precisely defined and limited to cases such as targeted discrimination on the base of gender, race, religion, or nationality, expropriation without compensation, or denial of justice. Governments' right to regulate would be enshrined and guaranteed in the provisions of trade and investment agreements.

First Vice-President Frans Timmermans said: "With our proposals for a new Investment Court System, we are breaking new ground. The new Investment Court System will be composed of fully qualified judges, proceedings will be transparent, and cases will be decided on the basis of clear rules. In addition, the Court will be subject to review by a new Appeal Tribunal. With this new system, we protect the governments' right to regulate, and ensure that investment disputes will be adjudicated in full accordance with the rule of law."

The proposals build on the input received from the European Parliament, EU member states, national parliaments, and stakeholders during a public consultation on the future of the ISDS. The Commission will now discuss the amendments with the European Council and Parliament. Once the text of the proposal has been discussed, it will be presented as an EU text proposal in the EU-US Transatlantic Trade and Investment Partnership talks, and will be used in other ongoing and future negotiations.

The Commission will also begin work with other jurisdictions on the establishment of a permanent International Investment Court. The objective is that over time the Court will replace all investment dispute resolution mechanisms provided in EU agreements, EU member states' agreements with third countries, and trade and investment treaties concluded between non-EU countries.

Trade Commissioner Cecilia Malmström commented: "Today, we're delivering on our promise – to propose a new, modernized system of investment courts, subject to democratic principles and public scrutiny. What has clearly come out of the debate is that the old, traditional form of dispute resolution suffers from a fundamental lack of trust. However, EU investors are the most frequent users of the existing model, which individual EU countries have developed over time. This means that Europe must take the responsibility to reform and modernize it. We must take the global lead on the path to reform."

"We want to establish a new system built around the elements that make citizens trust domestic or international courts. I'm making this proposal public at the same time that I send it to the European Parliament and the Member States. It's very important to have an open and transparent exchange of views on this widely debated issue."

TAGS: court | investment | European Commission | law | trade treaty | investment treaty | agreements | United States | trade | European Union (EU) | Europe | Invest

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