European Trade Union Committee for Education

The European Commission published its reform proposals on Investor-to-State Dispute Settlement (ISDS) in a concept paper on 5 May 2015. While the Commission's proposal envisions an international investment court with tenured judges in the long run, in the meantime it wants to include ISDS provisions in TTIP (Transatlantic Trade and Investment Partnership), CETA (Comprehensive Economic and Trade Agreement with Canada) and other agreements.

In the case of TTIP, the ISDS mechanism should be improved to include an appellate mechanism based on the World Trade Organisation's Appellate Body. However, in the case of other recently concluded investment agreements such as CETA and the EU Singapore agreement no reforms are suggested. Trade Commissioner Malmström presented and discussed these proposals with the European Parliament's International Trade Committee (INTA) and the Foreign Affairs Councils. In the European Parliament Malmström pronounced: "My intention is to set a deep reform of the system in motion. And create a system for investment protection and arbitration that is suited for the future. These are not cosmetic changes but rather the most significant overhaul of investment arbitration in decades. They are a serious response to a widespread, justified scepticism about what has gone before".

Gus Van Harten, an associate professor at Osgoode Hall Law School in Toronto, Canada, and an expert on ISDS, published his analysis of the Commission's proposals and is highly critical. Van Harten writes: "There are positive aspects of this further reform agenda in the first three of these areas, but for the most part they take the same path of earlier pseudo reforms that leave ISDS and its flaws fundamentally intact."

ETUCE European Director, Martin Rømer stated: "The European Commission's reform proposals on ISDS do not solve the fundamental flaws entailed in ISDS and should not be included in neither TTIP nor CETA. The recent Bilcon case from Canada demonstrates that ISDS seriously affects domestic regulations and decisions of sovereign states in addition to claiming huge compensations. In this case the majority of the arbitration panel consisting of three arbitrators concluded that the minimum standard had been violated followed by an environmental review panel that rejected the Bilcon investment on the grounds that it was against "core community values". As a result the arbitration panel ruled that this criterion was not within the mandate of the review panel under Canadian law and thereby ruling in favour of Bilcon."