ISDS: we won’t be fooled by a rebranding
Yesterday, Brussels was full of rumours that the European Commission had finally found a way to respond to the massive backlash generated by its proposal for a special court for US investors: a simple rebranding should do the trick.
Currently known as Investor-State Dispute Settlement, or ISDS, this mechanism establishes special rights for foreign investors in trade deals. With ISDS, foreign corporations that believe they have been treated wrongly can sue governments for monetary compensation in special tribunals in which rulings are made by privately appointed arbitrators, in complete secrecy. While an ISDS ruling cannot directly force a government to change a law or a regulation, it has had a proven ‘regulatory chill’ effect in some of the countries in which it currently exists, the threat of possible litigation preventing national authorities from introducing measures, for example plain cigarette packaging.
ISDS tribunals have long been included in agreements negotiated by EU member states, including the UK, but as investment policy became a competence of the EU in 2009 it is now up to the European Commission to decide whether this model should be transposed into EU trade deals. Sadly it decided to do so, first in agreements with Canada and Singapore which have been recently concluded but not yet ratified, as well as in a trade deal with the US which is currently being negotiated: the infamous TTIP, or the Transatlantic Trade and Investment Partnership.
