Following a round of in-depth consultation with the Council and the European Parliament, the European Commission has finalised its new approach to investment protection and investment dispute resolution in the context of the Transatlantic Trade and Investment Partnership (TTIP). The proposal has thus now been formally transmitted to the United States and, as part of the Commission’s ongoing transparency drive, has also been made publically available.
The aim of the proposal is to find a suitable replacement for the existing investor-to-state dispute settlement mechanism in both TTIP and all ongoing and future EU trade and investment negotiations. The final text includes all of the key points of the Commission’s September proposal, which aimed at “safeguarding the right to regulate and create a court-like system with an appeal mechanism based on clearly defined rules, with qualified judges and transparent proceedings.”
Moreover, the proposal includes additional measures on access to the system by small and medium sized companies, whereby they would benefit from faster proceedings and advantageous treatment in comparison with larger, multinational companies.
Since the publication of the Commission’s initial proposal, the text has been widely circulated for consultation with the EU Member States and the Parliament, with the aim of ensuring broad endorsement of the new elements, in particular the strengthening of the right to regulate through a new article, the establishment of a new system for resolving disputes – the Investment Court System – and the creation of an appeal mechanism aiming to allow for increased consistency and the rectification of mistakes.
Reactions to the proposal from civil society on both sides of the pond can be best described as mixed, with some organisations claiming that the proposed new system will not satisfactorily address the question of large corporations influencing legislative matters. Nevertheless, the Commission has been quick off the mark in supporting its proposal, with Trade Commissioner Cecilia Malmström stating:
“This approach will allow the EU to take a global role on the path of reform, to create an international court based on public trust.”
In any case, it is important to bear in mind that at this stage it is merely a proposal, which will have to be negotiated and approved by both parties. Negotiations on this aspect of the TTIP can now resume, following a hiatus of nearly 18 months to allow the EU to prepare its position. It will therefore be interesting to see how the US will respond to the proposal and whether the EU, or indeed the US, will allow themselves to be influenced by the increasingly loud voice of civil society actors on both continents.