Key flaws in the European Commission’s proposals for foreign investor protection in TTIP

By Gus Van Harten (2015)

In November 2015, the European Commission released a proposed text on foreign investor protection in the EU-US Transatlantic Trade and Investment Partnership (TTIP). The EC’s proposal has various flaws arising from concerns about the foreign investor protection system but also detailed aspects of the proposed text. The flaws cast doubt on the EC’s claims, in particular, that it has reformed investor-state dispute settlement (ISDS) and that it has safeguarded the right to regulate. They also return us to weaknesses in the EC’s proposals for foreign investor protection in agreements like the TTIP.

Legality of investor-state dispute settlement (ISDS) under EU law

By Client Earth (2015)

ISDS mechanisms would set up an arbitration system outside of, but binding on, the EU judicial system. It would, in effect, be a system that would enable foreign investors to sideline the EU courts and resort to claims that are not available to domestic investors.

EU law, and settled case-law of the European Court of Justice (ECJ), suggest that such a system of external judicial control may be incompatible with the EU legal order because it would undermine the autonomy of the EU legal order and the powers of the EU courts in particular and negatively affect the completion of the internal market, and more specifically the EU competition rules.

Investment provisions in trade and investment treaties: the need for reform

By Gus Van Harten, Matthew C. Porterfield, Kevin P. Gallagher (2014)

This short policy brief highlights three core concerns about the investment provisions in contemporary treaties that have received significant scrutiny in scholarly and policy circles. These provisions go well beyond conventional notions of “free trade” and tend to:
• Grant foreign investors greater rights than host country governments and citizens;
• Use procedures that give special access to foreign corporations; and
• Lack an independent impact on levels of investment in the economies of treaty signatories.