January 29, 2017

New ISDS consultation seems surreal

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The European Commission has launched a consultation on an investor-to-state dispute settlement (ISDS) variant: a multilateral investment court. 1 In an email the commission confirms the consultation has a narrow scope. The commission does not want feedback on the system as a whole. This way the system’s social and environmental impacts may go unmentioned in the consultation results.

This is irresponsible, as the system as a whole will strengthen investments vis-à-vis democracy and fundamental rights This undermines our values and ability to respond to crises, including climate change.

Mankind faces its biggest challenge ever: climate change. For the commission it’s business as usual. Give multinationals their own court and keep the social and environmental impacts out of sight.

That’s surreal, not?

I asked the commission two questions about the consultation; below the commission’s answer, with inline comments. See also Multilateral investment court assessment obscures social and environmental impacts.

European Commission:

“Thank you for your e-mail and for you interest in the public consultation on a multilateral reform of investment dispute resolution that the European Commission recently launched.

In your e-mail you refer to certain alleged impacts of the baseline scenario and mention that the Commission has not taken those into account when drafting the Inception Impact Assessment.” (emphasis added)

Note “alleged impacts”. The court will also operate on the existing, very open investment treaties. The commission is well aware of the shortcomings of these treaties. It filed amicus briefs in various ISDS cases arguing against damages awards and it ordered Romania to not pay ISDS damages.

“We would like to clarify that the process that the Inception Impact Assessment seeks to trigger (i.e., a multilateral reform of the investment dispute settlement system) relates to very specific aspects of international investment (i.e., the procedures dealing with the resolution of disputes).”

Taking the initiative for a court creates responsibility for the impacts the court will have. You can’t wash your hands in innocence.

“It does not deal with the substantive provisions of investment agreements. The multilateral investment court will not create new substantive obligations, nor create investment dispute settlement. Rather it will replace existing systems. As a consequence, other possible aspects and consequences arguably arising from international investment such as those that you refer to do not fall within the scope of this specific process.” (emphasis added)

No changes to the substantive provisions should set off the alarm bells, as the court will also operate on the existing, very open investment treaties. 2 Replacing existing dispute settlement systems creates responsibility, strengthens the legitimacy of existing, very open investment treaties and facilitates their continued existence.

“The questionnaire and public consultation designed by the Commission are therefore aimed at consulting stakeholders on how to improve, through various multilateral options, the dispute settlement aspects of international investment.”

A too limited approach in the light of what is needed: elimination of social and environmental impacts.

“You may have seen from the splash box on the relevant website that, in addition to the questionnaire, the Commission welcomes feedback from stakeholders directly related to the Inception Impact Assessment, in which case, stakeholders may provide open comments. They may also upload a position paper. Therefore, if you have not already done so, we would welcome your comments and views on the issue, both directly to the IIA and under the questionnaire.”

The less known process allows open comments (Inception Impact Assessment, Directorate General: Trade; date: 01/08/2016, click open). The consultation will report: no social or environmental impacts.

“Regarding your second question, it follows from the above that there is no reason to contemplate withdrawing the consultation given the specified scope of this exercise.

If you think it would be helpful, we are happy to schedule a meeting in order to clarify any remaining matters.

Yours sincerely,

European Commission

DG TRADE”

The “specified scope of this exercise” obscures social and environmental impacts which will continue and grow.

Citizens will have to step in, again. See FFII submission.

Footnotes:

1 investor-to-state – check, dispute settlement – check, outside of domestic courts – check

2 Proposed future EU treaties provide a similar level of legal protection and leave adjudicators a wide discretion as well.