Trade: European Court of Justice confirms compatibility of Investment Court System with EU Treaties

The agreement with Canada is under provisional application since September 2017 and can only enter fully into force once ratified by all Member States and concluded by the Council. Only upon the conclusion of this process can the Investment Court System become operational. Until then, CETA will continue to be provisionally applied to the extent provided for in the Council Decision on its provisional application. CETA was approved by the European Parliament on 15 February 2017.

Replacing the out-dated ISDS system was one of the pledges made by President Juncker in his July 2014 speech in front of the European Parliament, as well as in the Political Guidelines of this Commission. It is equally one of the key elements in the Mission Letter addressed on 1 November 2014 to the EU’s Trade Commissioner Cecilia Malmström.

Background

EU Member States are parties to almost half of the total number of international investment agreements that are currently in force worldwide (roughly to 1400 out of 3000). Almost all of these agreements include a mechanism for resolving disputes between governments and foreign investors known as investor-state dispute settlement (ISDS).

Under CETA, the ISDS mechanism is replaced with a new, effective, fair and transparent Investment Court System (ICS) that:

• contains measures to protect foreign investments and investors;
• makes clear that governments preserve their right to regulate and to achieve legitimate policy objectives, such as public health, safety, environment, public morals and the promotion and protection of cultural diversity.

Main features of the new Investment Court System

– a permanent court inspired by public international courts;

– made up of a Tribunal of First Instance and an Appeal Tribunal;

– not based on temporary ad hoc tribunals;

– professional and independent adjudicators

• appointed for long terms of office by both parties taking into account all interests at stake
• held to the highest ethical standards through a strict code of conduct

– will work transparently by opening up hearings to the public; publishing documents submitted during cases; allowing interested parties (NGOs, trade unions, citizens’ representatives) to intervene in the proceedings and make submissions.

For more information

Read more on the Investment Court System

Read more on CETA