Brussels, 02/06/2015 (Agence Europe) - On Tuesday 2 June, France sent its proposals to the European Commission on recasting the mechanisms for investor-state dispute settlement (ISDS) as part of the future free trade agreements between the EU and third countries.
The 15-page document particularly flags up the ambition of keeping the right of states to rule in the public interest, and of creating a permanent international public court to settle investment disputes (the first stage of which would be European).
A summary of the French proposals, presented by French Secretary of State for Trade Matthias Fekl on Monday 1 June, says that “the position of the states has experienced a slow but sure erosion over recent years - to the advantage of investor rights. An investor can't expect a simple change of law that makes his profits vary, even strongly, to be reason enough to attack a state”.
The notion of expropriation must “be clearly delimited” and “the company must be alone in suffering special or abnormal damage”; the states must “retain control on the interpretation of the treaties” and be able to eliminate ambiguities alone, according to the French proposals. Furthermore, financial sanctions for up to half the damages for which the investors demand compensation could be planned against abusive complaints.
France also proposes creating a permanent public court to take action for all future EU treaties and to be a forerunner to a permanent multilateral court. “This court will re-examine the sentences proposed by the arbitration courts, whichever they be, for all the future EU treaties”, the summary of the French proposals states.
In addition, as regards ethics, France proposes regulating the judgment activities by a double “quarantine period” (five years before and five years after) to prevent any conflict of interest between these duties and those of the lawyer, Fekl states.
Faced with the hostility roused by the inclusion of the ISDS mechanism in the free trade negotiations between the EU and US (TTIP), European Commissioner for Trade Cecilia Malmström has suggested reforming the mechanism. The reform would involve creating a permanent international court to settle investment disputes and setting up an appeal mechanism. The Commission is due to put together a formal proposal on this by the autumn (see EUROPE 11310).
In its amended TTIP recommendations draft adopted on 28 May, the European Parliament's international trade committee does not support excluding the ISDS mechanism, provided it be reformed (see EUROPE 11324). The European Parliament will give its opinion in plenary on 10 June. (Emmanuel Hagry)