Brussels, 02/04/2014 (Agence Europe) - The European Executive wants to provide the UN with €100,000 to set up a publicly accessible database on investor-to-state disputes (ISDS).
With a view to calming the hostility aroused by the TTIP trade negotiations with the United States, particularly on the investment plank, the Commission is putting its cards on the table. Following the launch of an EU-wide public consultation on 27 March into the controversial issue of investor/state dispute settlement, known as ISDS (see EUROPE 11048), it is planning to provide financial support for the creation of a database under the UN's new transparency rules on ISDS.
These rules, which were adopted in July 2013 by the United Nations Commission on International Trade (UNICTRAL), became operational on 1 April and apply to any dispute between an investor and the state, with 3,000 such investment agreements currently in existence throughout the world, 1,400 of which involving member states of the EU, and may also be applicable to future investment agreements. Work is still underway to improve the scope of these new rules. The database will be public and will allow access to comments and decisions on ISDS.
“The European Commission has long been a strong advocate of increasing transparency in ISDS disputes, not only in its own trade and investment agreements, but also at international level”, the European executive stresses in a press release. “Transparency is at the core of EU investment policy. The EU sees increased transparency as essential for the legitimacy and accountability of the ISDS system, [as it] enables stakeholders interested in the dispute to be aware of what is happening and to contribute to the proceedings. It also brings consistency and predictability to the wider ISDS system because it helps create a body of cases and information that can be relied on by investors, stakeholders, states and ISDS tribunals”, it adds.
In the framework of the negotiations with the US and those with Canada, ISDS has been a cause for concern to NGOs and unions, which fear that by allowing multinationals to take action against states for compensation - against public health legislation, for example - such a mechanism might discourage states from regulating on social, environmental and public health matters. They see the action taken against Australia by the global tobacco giant Philip Morris over health warnings on cigarette packets as a dangerous precedent.
More generally, the lack of transparency was identified as one of the main challenges of the current ISDS system. In response to the concerns and loopholes flagged up in the public debate, the Commission pledged to develop an innovative approach to ISDS - on the one hand, by clarifying and improving the rules on the protection of investments, so as to guarantee that the right to legislate is not threatened, and on the other, by developing a modern ISDS mechanism that can prevent risks of abuse, make the system of arbitration more transparent and prevent conflicts of interest or differences between the mediators. While ensuring more consistency and control, it will also have to be applied only in the case of breaches of the arrangements on the protection of investments, to the exclusion of any other part of the TTIP. (EH)