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Legacy: De Gucht negotiated two rigged ISDS chapters

Vrijschrift | Monday, November 3. 2014


Investor-to-state dispute settlement (ISDS) gives foreign investors (multinationals) the right to challenge decisions of states before international arbitration tribunals — the investors do not have to use local courts.

On 15 September Vrijschrift informed the European Parliament international trade committee that investor-to-state arbitration (ISDS) in the draft trade agreement with Canada is rigged to the advantage of the US.

Today Vrijschrift informed the committee the same is true for the draft trade agreement with Singapore. See below or the pdf.

Two ISDS chapters in draft trade agreements are rigged to the advantage of the US. Incomprehensible in itself and a dangerous model for a trade and investment agreement with the US. Former trade commissioner De Gucht left us a mess.

The trade committee will discuss the draft EU-Singapore agreement Wednesday 5 November in its 15.00 – 18.30 session (point 17). (Video)

ISDS in EU-Singapore FTA is rigged to the advantage of the US

Dear Members of the INTA committee,

On 15 September we informed you that the investor-to-state arbitration mechanism (ISDS) in the draft EU-Canada trade agreement (CETA) does not observe the separation of powers - the foundation of our democracy. In fact, in the CETA draft ISDS is rigged to the advantage of the United States.

We would now like to inform you that the same is true for the draft EU-Singapore trade agreement (EUSFTA). This is incomprehensible in itself and a dangerous model for a trade agreement with the US.

In practice the US appoints the president of the World Bank. This president

 is ex officio chairman of the International Centre for Settlement of Investment Disputes (ICSID) Administrative Council,
 proposes the ICSID secretary-general,
 appoints all three the arbitrators in annulment cases under ICSID rules (the only possible appeal).

The secretary-general of ICSID

 appoints the third arbitrator if the parties can not agree on the third one,
 will decide on conflicts of interest. (ICSID, articles 5, 10, 38, 52 and EUSFTA articles 9.21.2, 9.21.7, 9.21.10, 9.30.2 and 9.32.7)

The investors will be able to choose the ICSID forum. The president of the World Bank and the secretary-general of ICSID play a role in appointing arbitrators - the ISDS system does not observe the separation of powers. Moreover, these officials have a link with the US, this gives the US an unfair advantage (the US never lost an IDSD case).

This is just one example of the fundamental flaws in the ISDS system. For more see the Statement of Concern published by over 110 scholars (Scholars, 2014) and Vrijschrift (2014).

To protect our democracy it is imperative that the EU-Singapore trade agreement does not contain ISDS.

Yours sincerely,
on behalf of Stichting Vrijschrift,

Ante Wessels

Attached: print version

ICSID, Convention on the settlement of investment disputes between states and nationals of other states,

Scholars, 2014, Statement of Concern about Planned Provisions on Investment Protection and Investor-State Dispute Settlement (ISDS) in the Transatlantic Trade and Investment Partnership (TTIP),

Vrijschrift, 2014, Shortcomings in Dutch government study on investor-state arbitration,

 source: Vrijschrift