bilaterals.org | Investor-state dispute settlement in Europe
In the last few months, criticism of TTIP’s proposed investor-state
dispute settlement (ISDS) provision has become so mainstream that even
The Economist
is questioning whether it’s such a good idea. More to the point, some
of the biggest players this side of the Atlantic have also come out
against it, largely it would seem, mirroring public sentiment; French officials
now claim that TTIP is a no-go if ISDS is kept in, while Germany has
spoken out against its inclusion in TTIP, and has gone so far as to
backtrack on agreements already made, saying that they want ISDS scrapped from CETA, the EU-Canada free trade agreement (which, until recently, nobody outside of Canada seemed to care about).
The perception of the threat that ISDS poses is connected to the
different health, food and environmental standards in Europe and the US.
ISDS allows investors to sue host state governments for unfair or
discriminatory treatment, and critics argue that investors will use
arbitration (or even the threat of it) to force Europe to lower its
regulatory standards based on treaty provisions. As proof of the
potential for investors to employ ISDS to attack regulatory standards,
critics frequently cite the cases of tobacco company Philip Morris v.
Australia, in which the tobacco company is suing over the country’s
decision to require plain packaging of cigarettes, and Swedish energy company Vattenfall suing Germany over Merkel’s nuclear phase-out.
