December 21, 2016

Multilateral investment court would impede measures on climate change

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The European Commission has launched a consultation on a multilateral investment court (MIC). The MIC would be a successor to investor-to-state dispute settlement (ISDS).

Mankind faces an existential threat: climate change. The data is disconcerting and shows our societies are not on top of the issue. Further reforms are needed; reforms will harm vested interests. A multilateral investment court, in contrast with domestic law systems and the European human rights system, would give investors too generous possibilities to claim compensation. This would make reforms more or even too expensive, cause regulatory chill, and thus impede measures on climate change.

A multilateral investment court would bring institutional improvements. Such improvements, however, do not solve systemic issues with specialised and supranational adjudication which create a high risk on expansive interpretations of investors’ rights. Specialised courts tend to interpret expansively; the supranational level lacks effective instruments to correct expansive interpretations. Huge expansion of covered foreign direct investment will cause increased impacts.

In the light of the need to protect fundamental rights, and in the light of the risks of climate change, the EU can not accept, legitimise, facilitate or perpetuate growing impacts. The commission has to investigate which options will eliminate social and environmental impacts and reject the multilateral investment court option.

A multilateral investment court would strengthen investments vis-à-vis democracy and fundamental rights. This undermines our values and ability to respond to crises.

I updated the draft submission; see here.