When the EU took over the responsibility for investment issues with the Lisbon Treaty in 2010, there was already a dense web of investment protection treaties in place in Europe. Since the 1960s, EU Member States have negotiated some 1,400 of these agreements, the main objectives being to make it safe for European companies to invest abroad and to attract more investment to Europe.
So, the basic idea behind these agreements is sound. However, these agreements have come under increasing criticism. Over the past months, I have met with TTIP critics and supporters and discussed this trade deal with various organisations and trade unions as well as representatives of Member States and the European Parliament. I have heard many concerns about dispute settlement between investors and states (ISDS) and the rules included in many of the existing agreements. To a large extent, I share these concerns, especially when it comes to the sometimes unclear definitions that leave too much room for interpretation and possible abuse, and the lack of transparency. I therefore made it one of my priorities to thoroughly modernise the traditional form of ISDS.
I now find that we are on a good reform track. The approach outlined in a concept paper that I have sent to the European Parliament and to the Council (read it here) brings solutions to various concerns and represents a break with practises of the past. I look forward to discussing the new approach this week, with the INTA Committee of the European Parliament this Wednesday and with Ministers of EU Member States at our Council meeting on Thursday.
The basis for the new approach lies in the reforms that the European Commission launched already some time ago, when it started to negotiate more balanced investment chapters with a number of our trading partners. For example, our agreement with Canada, for which negotiations have already been concluded, contains a set of modern provisions which rebalance the rights of the state and the investor in favour of the state, and its right to regulate in the public interest.
My assessment of the traditional ISDS system has been clear - it is not fit for purpose in the 21st century. I want the rule of law, not the rule of lawyers. I want to ensure fair treatment for EU investors abroad, but not at the expense of governments' right to regulate. Our new approach ensures that a state can never be forced to change legislation, only to pay fair compensation in cases where the investor is deemed to have been treated unfairly (suffered discrimination or expropriation, for example).
Our new approach also makes arbitral tribunals operate more like traditional courts, with a clear code of conduct for arbitrators. It furthermore guarantees access to an appeal system. And, as a medium term goal, it sets out to work towards the establishment of a permanent multilateral investment court.
These and other changes outlined in our concept paper are intended to be an integral part of the EU’s investment protection, for TTIP and for all future EU investment agreements.
We need a robust and serious reform of investment dispute resolution, because it's an important part of global investment policy. Europe is the biggest investor and recipient of foreign investments in the world. It only makes sense that we lead the way to reform, and set out our vision for better rules on a global scale.