International trade: UN expert calls for abolition of Investor-State dispute settlement arbitrations
“Trade must be made to work for human rights and development and not
against them,” the United Nations Independent Expert on the promotion of
a democratic and equitable international order, Alfred de Zayas, has
said today.
In his fourth report* to the UN General Assembly, Mr. de Zayas
focuses on the adverse human rights impacts of free trade and investment
agreements and calls for the abolition of Investor-State dispute
settlement mechanism (ISDS) that accompanies most of these agreements.
“Over the past twenty-five years bilateral international treaties and
free trade agreements with investor-state-dispute-settlement have
adversely impacted the international order and undermined fundamental
principles of the UN, State sovereignty, democracy and the rule of law.
It prompts moral vertigo in the unbiased observer,” he noted.
“Far from contributing to human rights and development, ISDS has
compromised the State’s regulatory functions and resulted in growing
inequality among States and within them,” the expert stated.
In his report, Mr. de Zayas reviews a number of ISDS cases with
adverse impacts on human rights, in particular when specific social
policies have led to lawsuits by investors for alleged breach of trade
agreements, and concludes that there is no justification to establish
this privatized system of dispute settlement. “Investors can always
bring claims before national jurisdictions with many appeal instances or
rely on diplomatic protection and inter-State dispute settlement
procedures,” he said.
The Independent Expert noted the European Commission’s recent
proposal to create an Investment Court System for the Transatlantic
Trade and Investment Partnership – TTIP. However, he warned that “it
suffers from fundamental flaws and can only be adopted if the primacy of
human rights is guaranteed, and those essential areas of State
regulation including tobacco control, labour standards and environmental
protection are carved out, i.e. excluded from the Court’s
jurisdiction.”
