Investor-State Dispute Settlement

Can we live with so-called Investor-State Dispute Settlements (ISDS)? These are the semi-secret tribunals set up over the years to iron out disputes in free trade agreements. The EU is prepared to do without them, according Karel de Gucht, in the proposed Transatlantic Trade and Investment Partnership. But it’s the US that is insisting on them.

There is probably a reason for such tribunals in investor protection agreements in countries where the rule of law is not as developed as in the US or the EU. German companies have apparently used them extensively in China. However, their role is less clear in this agreement. Most such disputes are arbitrated through the ICSD, a unit of the World Bank in Washington.

Surely it should be possible to use the usual law system? German companies (and a Swedish one) are suing the Federal Government for closing nuclear power stations through the federal courts in Germany. It should be possible for other companies to do the same. EU wide actions could be brought into the remit of the European Court of Justice.

The establishment of a mediation organisation with a role to look for solutions, rather than enforcing one side’s interest, should also be considered. They need, however, to take views from all interested parties, because many of the decisions will not just affect the companies and states involved, but could be of relevance to others.

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