The Multilateral Investment Court locking in ISDS

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Friends of the Earth Europe | 27 November 2017

The Multilateral Investment Court locking in ISDS

Ten reasons why the EU’s proposal for a Multilateral Investment Court doesn’t fix a fundamentally flawed system

The European Commission is planning to establish a so-called Multilateral Investment Court (MIC), a new international court where corporations can sue governments for laws and regulations that harm their profits. The court is supposed to replace the controversial investor-state dispute settlement (ISDS) mechanism, but we have identified 10 key problems with the new proposal, in which corporations still enjoy unjustified privileges at the expense of people, the environment and our democracy.

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  • The Multilateral Investment Court locking in ISDS1-December-2017 | Pierre DIDIER

    1.Foreign direct investment is incommensurably higher in countries that fully respect the rule of law. In the others, only a form of ISDS can afford some guarantees and secure the investments these countries eagerly need. More investment guarantees attracts more investment. De facto discrimination against an investor is not insurable.
    2.Modern investment treaties (like relevant CETA clauses) explicitly safeguard parties’ sovereign right to legislate for the protection of human, environment, consumers, social and cultural rights etc. No arbitration panel could ignore or overstep such clear limit to their adjudication competences.
    3.Adopting a form of ISDS does not prevent recipient states to streghten their judicial process to fight investors (national or foreigners) misconduct;
    4.No obligation to respect human, social, environmental etc. rights: false in the new ISDS agreements/clauses - see above-; no restriction to access: false: see the considerable access restrictions (e.g. no possible claim for missing of expected benefit, need for real economic activity in the host country etc. etc.) in CETA and Investment Court proposal.
    5.No respect for domestic courts: is an investor de facto expropriated from his business by an obligation to hand over his intellectual property rights in China, by the abrupt and discriminative cutting of electricity or oil in Russia, by an abrupt and discriminative prohibition to operate in some African countries etc., whenever hurting local interests, able to rely with due process on local courts? Are the Hungarian courts going to protect an investor in culture/education as Soros against the manoeuvres of Orban? Would Bulgarian courts certainly protect a foreign investor against a public discrimination inspired by local competitors?
    6.Same arbitrators: arbitrators are, by definition, corrupt? Better choose arbitrators with no knowledge of investment law?
    7. Regulatory chill: current ISDS formulas (see above) target only de facto or legal expropriation chill, yet with considerable limits;
    8.Locking in ISDS: ISDS exist since decades. A small country like Belgium has "old" ISDS clauses in eighty agreements with third countries. Spectacular abuses of such clauses have existed- most turned down by arbitrators. But current EU proposals considerably discipline possible abuses;
    9. Undermining reform: a non partisan and informed reading of EU proposals leads to conlude that they are the most possible equilibrated and fair solution;
    10. Is there anyone on earth thinking that the EUCJ - in light of its 2/15 Opinion- might crush the new ISDS formula?

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