The European Parliament has moved to clear the main obstacle to an EU-US trade deal by resolving that disputes should be dealt with by publicly appointed judges and not private arbitration panels of corporate lawyers.
The proposed Investor State Dispute Settlement (ISDS) mechanism in the controversial Transatlantic Trade and Investment Partnership (TTIP) has been the principal stumbling block in several tortuous rounds of talks.
Critics allege ISDS is anti-democratic because it would enable multinationals to sue states whose legislation had a negative impact on their economic activity. But supporters, including the International Bar Association, have countered that the debate around ISDS has been ‘subverted’ by ‘misconceptions and inaccurate information’.
Following talks described as ‘long and tense’ between political groups, the parliament this week voted 447-229 in favour of a new justice system to replace ISDS.
The compromise wording states that the system should be ‘subject to democratic principles and scrutiny’, in which cases are handled ‘in a transparent manner’, by ‘publicly appointed, independent professional judges’ and ‘in public hearings’. It should include ‘an appellate mechanism’, respect the jurisdiction of EU and member state courts, and ensure that private interests ‘cannot undermine public policy objectives’.
The compromise was welcomed by rapporteur Bernd Lange, a member of the Progressive Alliance of Socialists and Democrats group and chair of the parliament’s Committee on International Trade.
He said: ‘We demand a more transparent process, robust workers’ rights and protection for personal data and public services. We insist that the right of lawmakers on both sides of the Atlantic to legislate must not be undermined by private arbitration courts or other bodies. We have given clear guidance for the [European] Commission on what kind of deal we want.
‘And if, at the end of the day, the agreement is bad, we will reject it. If it’s good, we will vote in favour.’
The compromise has failed to placate the TTIP’s most trenchant critics. These include campaign group Global Justice Now, which in May this year held an anti-TTIP demonstration outside the City office of international law firm King & Spalding. Responding to this week’s developments, the group condemned the compromise as ‘ISDS-lite’, stressing that corporations will still be able sue governments.
‘It [also] remains the case that corporations will have privileged access to a more favourable legal system than the rest of society,’ the group added.
The 10th round of the EU-US trade negotiations on the TTIP is scheduled for next Monday in Brussels.
EU Trade Commissioner Cecilia Malmström welcomd the vote as establishing ’a strong and forward-looking political platform’ for the negotiations. She added: ’What today’s vote also signals is that the old system of investor-state dispute settlement should not and cannot be reproduced in TTIP. Parliament’s call today for a “new system” must be heard, and it will be. I presented to parliament far-reaching reform ideas in May. I will now press ahead to flesh these out, and transform them into legal proposals, so that these further reforms can be incorporated into Europe’s proposals for TTIP.’
Gary Campkin, director of international strategy at TheCityUK, which has lobbied hard for the TTIP, said: ’We note the resolution and the Commission’s reaction to it. The important focus remains on getting an ambitious and comprehensive conclusion to TTIP. We urge negotiators to move forward in addressing key issues in the next round that begins on 13 July.’
See also today’s Comment by Jonathan Goldsmith, ‘ISDS - a lawyer’s issue’.