The Committee on Social Affairs, Health and Sustainable Development has examined the report prepared by the Committee on Legal Affairs and Human Rights. It has a number of reservations with regard to the merits of the proposed Investment Court System (ICS), which is meant to gradually replace the Investor–State dispute settlement (ISDS) clauses in the “new generation” of trade agreements involving European countries and eventually also in the “older” trade and investment treaties. In the view of the Social Affairs Committee, the proposed ICS does not remove many of the central problems inherent in the ISDS system.
The committee considers that the main danger of the Investor–State arbitration systems in both ISDS and ICS is that investor rights “to make a profit” tend to prevail over public policies protecting human rights, in particular social rights such as workers’ rights, and protection of public health and the environment. Unlike the proposed investment protection provisions in the “new generation” trade agreements which have the enforcement mechanism through the proposed ICS, States’ policies to protect the public interest have no equivalent mechanism and could be trumped by the proposed ICS, the successor of ISDS.
The committee considers both ISDS clauses and a permanent, multilateral ICS as unnecessary in developed countries such as the United States, Canada and member States of the European Union as foreign investors are already protected by existing public and contract law. It therefore puts forward a series of amendments intended to reflect its conclusions in the draft resolution presented by the Committee on Legal Affairs and Human Rights.
At the end of paragraph 3, add the following sentence:
“However, foreign investors in the European Union are already protected in three ways – by the European Court of Human Rights, European law and domestic law.”
At the end of paragraph 4, add the following sentence:
“However, the European Court of Human Rights and European law also protect foreign investors in Europe and no cases have occurred where these, alongside domestic contract and public law, have allowed discriminatory practices against inward investors.”
At the end of paragraph 5.1, add the following sentence:
“, but the primary investor in the vast majority of these cases has been the European Union in smaller third countries that do not have the triple-lock investor protection of the European Court of Human Rights, European law and domestic contract and public law;”
At the end of paragraph 5.2, add the following sentence:
“the parties do not normally have the right of appeal, the tribunals can be inconsistent in their verdicts and may not respect the doctrine of precedent;”
At the end of paragraph 5.3, add the following sentence:
“. There is a number of competing arbitration systems that have not had the benefit of transparent iterative evolution like the delivery of justice in public law in mature democracies;”
At the end of paragraph 5.4, add the following sentence:
“. However, international trade between the European Union, Canada and the United States is well established with existing protections;”
After the first sentence in paragraph 6.1, insert the following sentence:
“However, foreign investors in Europe are already protected – by the triple-lock system of the European Court of Human Rights, European law and domestic law. The proposed ICS”
At the end of paragraph 6.1, add the following sentence:
“Once implemented, such arrangements would persist for twenty years without being open to change or improvement by the European Parliament or member States, irrespective of whether judgments and financial penalties were in conflict with the imperatives of public health, environmental sustainability and rights at work;”
At the end of paragraph 7, add the following sentence:
“However, the Assembly considers that, in developed countries such as the United States, Canada and member States of the European Union, ISDS clauses and a permanent, multilateral ICS are unnecessary to protect foreign investors.”
In paragraph 8, at the end of the third sentence, add the words:
“which should be limited to a reasonable time frame”.
Reformulate paragraph 9 to read as follows:
“The Assembly therefore calls on the European Union not to pursue, in their ongoing and future negotiations of international investment agreements with developed countries, including the Transatlantic Trade and Investment Partnership (TTIP), the establishment of an ICS to gradually replace traditional ISDS mechanisms. It regrets the inclusion of the ICS in the recently signed Comprehensive Economic and Trade Agreement (CETA) with Canada. CETA and TTIP must only be agreed if they are in line with human rights and the rule of law, and should in particular:”
At the beginning of paragraph 9.1, insert the following words:
“ensure that legal proceedings around investment continue to”
In paragraph 9.2, replace the words “such human rights as the” with the words:
“human rights, including social rights,”
Reformulate paragraph 10.1 to read as follows:
“in the creation of an ICS, ensure that the above human rights and rule of law considerations are fully taken into account and that the final judgments of the existing system of public and commercial law consistent with European Court of Human Rights and European law are promptly and fully implemented at the national level;”
Reformulate paragraph 10.5. to read as follows:
“review whether any existing ISDS clauses in international investment agreements that they have entered into are eligible for change and if so, assess their appropriateness and bring them into line with the best practices foreseen for the future ICS.”