FFII condemns investor-to-state arbitration in trade talks with US

Brussels, 14 June 2013 — The Foundation for a Free Information Infrastructure (FFII) condemns the inclusion of investor-to-state dispute settlement in the mandate for trade talks with the United States. Investor-to-state dispute settlement gives multinationals the possibility to sue states for special tribunals if changes in law may lead to lower profits than expected. This threatens democracy, the public interest and copyright and patent law reform, according to the FFII.

Today the EU Council is expected to grant the Commission a mandate to open trade negotiations with the United States.

During the discussions on the Anti-Counterfeiting Trade Agreement (ACTA), civil society groups warned that ACTA would make it impossible to reform dysfunctional aspects of copyright and patent law. A trade agreement with the US containing investor-to-state dispute settlement would have the same effect. One of ACTA’s most harmful aspects may return in an EU – US trade agreement.

Multinationals will be able to use billion euro claims to stop law changes in order to protect old or even harmful business models. After Germany decided to shut down older nuclear reactors Swedish energy group Vattenfall claimed 3.7 billion euro from Germany using investor-to-state dispute settlement. U.S. based pharma corporation Eli Lilly uses investor-to-state dispute settlement to challenge Canada’s patent law.

Multinationals will not have to use the well-functioning European court system to sue states. The special tribunals for multinationals will be placed above the high courts of the EU and the US. This is a fundamental design flaw, according to the FFII.

FFII analyst Ante Wessels: “Special interest tribunals above the European Court of Justice will distort the trias politica, the very foundation of our democracy. Naive politicians created a euro with design flaws, will equally naive European politicians hand over our democracies to multinationals? This is the most important question in the trade negotiations.”

Background information

The latest leaked draft mandate includes investor-to-state dispute settlement:

blogs.ft.com/brusselsblog/2013/06/france-films-foreign-trade-the-leaked-mandate/ and

See also Inside U.S. Trade – 06/07/2013: “In the June 5 meeting, other member states expressed reservations about the May 29 draft mandate, but it does not appear that they will oppose the entire mandate based on their positions, according to these sources. For example, Germany at the meeting this week said it is still not convinced that investment protection needs to be part of the trade agreement and that an investor-state dispute settlement mechanism is not needed in an agreement between two developed trading partners. However, sources said Germany seems willing to move past this reservation.”


Friends of the Earth Europe, the European Consumers’ Organisation (BEUC) and Eurogroup for Animals, 2013, Warning sounded ahead of EU-US trade negotiations

IP out of TAFTA – Civil Society Declaration signed by over 45 organisations

Kelsey and Wallach, 2012, “Investor-State” Disputes in Trade Pacts Threaten Fundamental Principles of National Judicial Systems,

Democracy Center, 2013, Unfair, Unsustainable, and Under the Radar – How Corporations use Global Investment Rules to Undermine A Sustainable Future,

Henning Grosse Ruse – Khan, 2012, Investor–State Arbitration to Challenge Host State Compliance with International IP Treaties?

Corporate Europe Observatory, 2012, Profiting from injustice – How law firms, arbitrators and financiers are fuelling an investment arbitration boom,

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