Members' Research Service By / February 10, 2015


Written by Jan Baeverstroem The progress made on comprehensive free trade agreements (FTAs) between the EU and Canada and the…

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Written by Jan Baeverstroem

The progress made on comprehensive free trade agreements (FTAs) between the EU and Canada and the United States – in both cases including provisions for ISDS – has intensified discussion on the mechanism in the EU. A number of doubts exist with respect to the impartiality of arbitrators, while the relative broad interpretation given to the provision has been considered to have substantially reduced states’ freedom to regulate, creating an imbalance between the investor’s right to protection and the host state’ sovereign right to regulate its market. The EU supports ISDS arbitration in general, while recognising the need for its reform. Indeed a consensus seems to be emerging on systemic problems found in this increasingly used system. That has led the European Commission to propose some innovative provisions in the framework of negotiations on EU trade and investment agreements, but without calling into question the ISDS system itself. (from Investor-State Dispute Settlement (ISDS) – State of play and prospects for reform / Marta Latek & Laura Puccio, Jan. 2015)

Overview on TTIP-ISDS (By Craig James Willy, by dpaInsight EU)

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The European Commission’s report on the ISDS consultation, 13 January 2015
EC’s factsheet on ISDS
Question and Answers on the results of the public consultation

Investment Protection and Investor-to-State Dispute Settlement in EU agreements – Fact sheet / DG Trade factsheet, 10 p., 26 November 2013 Clarifying and improving investment protection rules — Improving how the dispute settlement system operates.

ISDS could still be taken out of EU-US trade deal , 04 February 2015
European Commission First Vice President Frans Timmermans has said that controversial Investor-State Dispute Settlement provisions could be taken out of a planned EU-US free trade agreement

European Parliament

Advancing development through trade – Texts adopted – Tuesday, 16 April 2013 P7_TA(2013)0119

TTIP: regulatory aspects and investor to state dispute settlement and arbitration , JURI Hearing, 27 Jan 2015
presentations by Alberto Alemanno, Jean Monnet Professor of EU Law and Risk Regulation, HEC Paris — Freya Baetens, Associate Professor of Law, Leiden University (1) — Fernando Perreau de Pinninck, Acting Director, DG Trade, European Commission — James Zhan, Director – Division on Investment and Enterprise, United Nations Conference on Trade and Development (UNCTAD) — Erik Jonnaert, Secretary-General of European Automobile Manufacturers Association (ACEA)

Answer to a written question – Results of the public consultation on ISDS in connection with the EU/USA agreement, and their wider application to other EU investment agreements – E-003863/2014

“As regards the European Court of Justice (ECJ), the Commission is not aware that specific issues related to Investor-state dispute settlement that you mention has as such been considered in cases before the ECJ. However the ECJ has in its opinion 1/91 considered the inclusion of dispute settlement mechanisms in EU trade agreements, including a system of courts for hearing disputes, and did not identify any incompatibility with EC law”

Free trade agreement between the European Union and Singapore / Question for written answer to the Commission , Franck Proust (PPE) , 15 October 2014 E-007993-14

Investor-State Dispute Settlement (ISDS) – State of play and prospects for reform / Marta Latek & Laura Puccio, Jan. 2015

Negotiations on the EU-Canada comprehensive economic and trade agreement (CETA) concluded in-depth analysis / European Parliament Policy Department External Policies, 2014

Investor-state dispute settlement (ISDS) provisions in the EU’s international investment agreements / European Parliament Policy Department External Policies, 2014
Electronic Library Electronic access only Vol. 1 Workshop
Electronic Library Electronic access only Vol. 2 Studies

Congressional Research Service

U.S. International Investment Agreements: Issues for Congress / Shayerah Ilias Akhtar & Martin A. Weiss, Specialists in International Trade and Finance, April 29, 2013

Dispute Settlement in the U.S.-South Korea Free Trade Agreement (KORUS FTA) / Jeanne J. Grimmett, Legislative Attorney, March 21, 2012

Dispute Settlement Under the U.S.-Peru Trade Promotion Agreement: An Overview / by Jeanne J. Grimmett, CRS Report RL34108, August 12, 2011

The U.S.-Australia Free Trade Agreement: Provisions and Implications , by William H. Cooper, CRS Report RL32375, 2005
During the negotiations, Australia argued that including investor-state provisions were unnecessary because U.S. and Australian legal traditions regarding investment were very similar, and U.S. investors, they argued, would receive fair treatment in Australian courts. The final agreement does, however, contain a provision that will allow for the establishment of an investor-state dispute mechanism, if changed circumstances warrant it

Foreign Investor Protection Under NAFTA Chapter 11 / by Robert Meltz, CRS Report RL31638, September 29, 2003
Chapter 11 of the North American Free Trade Agreement (NAFTA) affords various protections to investors of one signatory nation having investments in the territory of another. Such foreign-investor protections exist in the large majority of modern bilateral investment treaties, but NAFTA is different.

Think Tanks

A frewsh start for TTIP / Sebastian Dullien, Adriana Garcia, and Josef Janning, European Council on Foreign Relations (ECFR) Policy Brief, Feb. 2015
Includes TTIP Potential Benefit Index & Winners and Losers

The EU, ISDS and a Failed Consultation / by Fredrik Erixon , European Centre for International Political Economy (ECIPE), 27th January 2015
That reaction is indicative of the state of the debate over TTIP and investor-state dispute settlement, because the report had little, if anything, to offer on substance. Nor did it provide direction for realistic alternatives to reshape the traditional content of a Bilateral Investment Treaty (BIT).

TTIP-Investorenschutz verfassungswidrig” / Erich Möchel, Netzpolitik, Datenschutz – und Spaß am Gerät., 20. 1. 2015
Der Wiener Rechtsprofessor Erich Schweighofer hält die geplante massive Abtretung staatlicher Hoheitsrechte an private Gremien im Fall von TTIP für verfassungswidrig.
Das umstrittene Freihandelsabkommen TTIP steht diese Woche im Fokus des EU-Parlaments. Am Dienstag fanden in zwei Ausschüssen Aussprachen zum Thema statt, am Mittwoch diskutiert der federführende Handelsauschuss (INTA) über den Zwischenstand, zwei weitere Auschüsse folgen am Donnerstag. Für alle sechs Auschüsse gilt dabei freilich, dass der tatsächliche Verhandlungsstand den Parlamentariern nicht bekannt ist.

Investment protection and ISDS in the TTIP: the discussion continues with another public consultation around the corner / Matthew Weiniger, Herbert Smith Freehills – Arbitration notes, 14 Jan 2015
Whilst the consultation received an extremely high proportion of pre-populated responses organised by NGOs (which generally opposed the inclusion of ISDS), it also solicited responses from a broad cross-section of stakeholders which has allowed the Commission to identify a number of key points areas (or “core issues”) to develop.
The protection of the right to regulate — The supervision and functioning of arbitral tribunals — The relationship between ISDS arbitration and domestic remedies — Review of ISDS decisions for legal correctness through an appellate mechanism

“ISDS” in the TTIP : the devil is in the details / Elvire Fabry | senior research fellow at Notre Europe – Jacques Delors Institute, Giorgio Garbasso | former research assistant at Notre Europe – Jacques Delors Institute, Notre Europe, 16 jan 2015
This policy paper then scrutinises the various arguments given in the debate. On the one hand, the business world advocates instruments like ISDS to attract FDI, as they guarantee a safe, predictable legal frame¬work and depoliticised dispute settlement. On the other hand, detractors believe that ISDS is an illegitimate or pointless instrument in the framework of the TTIP and consider that it would undermine the ability of sovereign nations to legislate. Lastly, the negotiators are seeking to accommodate the dif¬ferent positions while bearing in mind the geostrategic advantages of including an ISDS mechanism in the TTIP.

Modalities for investment protection and Investor-State Dispute Settlement (ISDS) in TTIP from a trade union perspective / Markus Krajewski, Friedrich-Alexander-Universität Erlangen-Nürnberg, Friedrich-Ebert-Stiftung | EU Office Brussels, 2014
The study begins with a general assessment of the system of investment protection and ISDS in international agreements (II.). This is necessary even though the EU consultation document did not specifically invite answers to the general question as to whether such a system was desirable. However, any attempt at a thorough analysis of the pertinent issues would be incomplete without discussing this general question first. The study will go on to address specifically the necessity of investment protection in a EU-US agreement (III.)

The Impact of Investor-State-Dispute Settlement (ISDS) in the Transatlantic Trade and Investment Partnership / for the Ministerie van Buitenlandse Zaken by Christian Tietje, University Halle, Germany, June 2014

Proportionality, General Principles of Law, and Investor-State Arbitration: A Response to Jose Alvarez / Alec Stone Sweet, Yale University – Yale Law School and Yale Political Science, Giacinto Della Cananea University of Rome II – Department of Economics and Law, May 9, 2014, Yale Law School, Public Law Research Paper No. 507
The paper is organized in three parts. First, it provides an overview of the process through which the general principle of proportionality, which judges operationalize as a multi-stage series of tests, has diffused globally.

ISDS and TTIP – A miracle cure for a systemic challenge ? / Pardo, Romain, EPC 2014
“The European Commission decided to carry out a public consultation, which closed on 13 July, on the possible inclusion of investor-to-state dispute settlement (ISDS) provisions in the Transatlantic Trade and Investment Partnership (TTIP). This decision came in a context of polarised public debate around this procedural mechanism which enables investors to bring a case against a country that hosts their investments”

Why does TTIP need an Investor-State Dispute Settlements? / European Centre for International Political Economy (ECIPE), 2014
This paper covers the debate “Citizen’s Controversy” on the topic of TTIP and Dispute Settlements. Participants Jacques Bourgeois, Senior Associate at WilmerHale, and Fredrik Erixon, Director of the European Centre for International Political Economy (ECIPE). The debate was moderated by Pierre Defraigne, Executive Director, Madariaga – College of Europe Foundation.

Transatlantic trade deal: a tipping point? / Saunders, Joss
Two key legal principles are involved: who has the authority to make legislation; and who has the authority to resolve disputes. A third concern is that free trade agreements may restrict access to medicines by imposing stricter levels of patent protection than have been agreed in the World Trade Organisation Agreement on Trade-Related Aspects of Intellectual Property Rights

Modalities for investment protection and Investor-State Dispute Settlement (ISDS) in TTIP from a trade union perspective / Markus Krajewski, Friedrich-Alexander-Universität Erlangen-Nürnberg & Friedrich-Ebert-Stiftung, 2014

The case for an EU-China investment treaty / German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE) (Die aktuelle Kolumne, 10.06.2014
“The envisaged EU-wide international investment treaty (IIA) with China should replace the current legal patchwork consisting of 26 different bilateral investment treaties that individual EU member states have negotiated with China during the past three decades. Both parties place a lot of hopes in the treaty’s effects on foreign investment flows, in particular as it should not only provide legal protection for existing investments but should also open up new markets for foreign investors. However, the hopes for higher investment flows as a result of an EU-China IIA may not be realised.”

Statement of Concern about Planned Provisions on Investment Protection and Investor-State Dispute Settlement (ISDS) in the Transatlantic Trade and Investment Partnership (TTIP) /Muchlinski, Peter; Muir Watt, Horatia; Van Harten, Gus; Schepel, Harm, University of Kent, July 2014
“A group of 121 academic experts has spoken out against planned provisions on investor-state arbitration in the Transatlantic Trade and Investment Partnership. The provisions are modeled on the investor-state arbitration provisions in the Canada-E.U. Comprehensive Economic and Trade Agreement (CETA)”.

Mining for Profits in International Tribunals : lessons for the Trans Pacific Partnership / Anderson, Sarah; Pérez Rocha, Manuel, Institute for Policy Studies, 2013
“This report explains the institutional framework that allows global firms to extract enormous profits in international arbitration tribunals. It then documents the increased use of these rights by transnational corporations involved in the oil, mining, and gas industries, particularly in Latin America.”
Spanish version: Extrayendo Ganancias En Tribunales Internacionales : Lecciones para el Tratado Transpacífico

Civil Society

TTIP – Is free trade coming to the North Atlantic? / Dennis Novy is an Associate Professor of Economics at the University of Warwick, and a research affiliate at the Centre for Economic Policy Research (CEPR) and the Centre for Economic Performance (CEP) at the London School of Economics (LSE) for Policy Review

Investor-State Dispute Settlement: the TTIP Achilles heel?
Summary by Monique Goyens on December 18, 2014The first panel started with Rupert Schlegelmilch, Director, DG TRADE, European Commission;Magda Stoczkiewicz, Director, Friends of the Earth Europe; Monique Goyens, Director General,The European Consumer Organisation and Valentin Wedl, Head of Department for EU and International Affairs, AK EUROPA.
In the second panel James Zhan,Director of the Investment and Enterprise Division, UNCTAD; Celeste Drake, Trade & Globalization Policy Specialist at the AFL-CIO, The American Federation of Labor-Congress of Industrial Organizations and Jan Kleinheisterkamp, Associate Law Professorat London School of Economics gave presentations on the context, feautures and problems of ISDS

The consumer view on TTIP / Monique Goyens, BEUC, January 16 2015

ISDS model is Australia, not Canada / EurActiv’s Editor-in-Chief, Daniela Vincenti.’s interview with Professor Gus Van Harten, : 16/12/2014

Trading away Democracy : How CETA’s Investor Protection Rules threaten the Public Good in Canada and the EU / Pia Eberhardt, Blair Redlin, Cecile Toubeau , Transnational Institute, 18 November 2014
The Investor-state dispute settlement mechanism in the far-reaching economic integration agreement between Canada and the European Union prevents governments from acting in the public interest.

Transatlantic Trade and Investment Partnership must include insurance markets / Steve Simchak, Business Insurance, October 12, 2014
Since Europe would like the T-TIP to replace the existing investor protections, a weak investment section of the T-TIP could leave U.S. investors vulnerable and with fewer protections than they have now. Even if it does not override existing agreements, an agreement that leads to weaker protections than the current standard raises questions about the utility of negotiating such an agreement at all. Insurers on both sides of the Atlantic agree and have voiced their concerns about the current path of negotiation

Stellungnahme zur Investor-Staat-Streitbeilegungsmechanismus (ISDS-Mechanismus) des geplanten TTIP-Abkommens
Bundesverband mittelständische Wirtschaft (BVMW) e. V., 2014

Investitionsschutz und ISDS im TTIP / Deutsche Industrie- und Handelskammertag, 2014
Investitionsschutz ist wichtig – aber nicht um jeden Preis! Das betonte der DIHK im Zusammenhang mit einer EU-Konsultation zu den Modalitäten des Investitionsschutzes und der Investor-Staat-Streitbeilegung (ISDS) im Abkommen über eine Transatlantische Handels- und Investitionspartnerschaft (TTIP)

Position Paper: The “I” in TTIP : Why the Transatlantic Trade and Investment Partnership Needs an Investment Chapter / BDI – Federation of German Industries, September 2014

Investor-state dispute settlement under TTIP – a risk for environmental regulation? / By Christiane Gerstetter and Nils Meyer-Ohlendorf, Ecologic Institute, Berlin, 31 December 2013
Case law on investment norms and its implication for environmental regulation — Phrasing rules on investment protection differently – a solution? — ISDS under TTIP – a contested instrument

»Das TTIP untergräbt demokratische Entscheidungsprozesse«: Offener Brief verschiedener NGOs und Gewerkschaften gegen Konzern-Klagerechte im Transatlantischen Freihandelsabkommen, , 16.12.2013 (engl. Originalfassung)


Investor-State Dispute Settlement Under the Transatlantic Trade and Investment Partnership: Have the Negotiations Run Aground? / Doak Bishop, ICSID Review Volume 30, Issue 1 Pp. 1-9
The focus of my presentation today will be the negotiation between the EU and the USA of the Transatlantic Trade and Investment Partnership (TTIP), and specifically the arbitration provision. But first, let me put the issue into context.

The European Union and investor-state arbitration : a work in progress / Gabriele Mazzini, American Review of International Arbitration, Vol. 24 (2013) pp. 611-

Determining international responsibility under the new extra-EU investment agreements : what foreign investors in the EU should know / Freya Baetens, Gerard Kreijen, Andrea Varga, Vanderbilt Journal, Vol. 47 pp. 1203-

Where should Europe’s investment path lead? : reflections on August Reinisch, “Quo vadis Europe / Julie A. Maupin, Santa Clara Journal of International Law, Vol. 12 (2013) pp. 183-

The place of human rights in investor-state arbitration / Susan L. Karamanian , Lewis & Clark Law Review, Vol. 17 (2013) pp. 423-

Financial responsibility in European international investment policy / Jan Kleinheisterkamp, International & Comparative Law Quarterly, I.C.L.Q. 2014, 63(2), 449-476
Considers the effect which future investment treaties involving the EU might have on existing EU safeguards governing financial responsibility towards foreign investors

Determining International Responsibility Under the New Extra-EU Investment Agreements: What Foreign Investors in the EU Should Know / Baetens, Freya; Kreijen, Gerard; Varga, Andrea. Vanderbilt Journal of Transnational Law. Nov2014, Vol. 47 Issue 5, p1203-1260. 58p
The EU’s newly acquired competence over foreign investment poses largely unprecedented legal challenges: the Union’s unique structure and functioning are bound to raise questions about the traditional format of international investor-State arbitration.

European hypocrisy: TTIP and ISDS / European Journal of International Law, 2014, 25(4), 963-967
Defends the EU-US negotiations for a Transatlantic Trade and Investment Partnership (TTIP), and refutes some of the criticisms. Examines the Investor State Dispute Settlement (ISDS) provisions, compares those in EU Member States’ bilateral investment treaties, and recommends some changes.

The involvement of the EU in investor-state dispute settlement: a question of responsibilities/ Angelos Dimopoulos, C.M.L. Rev. 2014, 51(6), 1671-1720. [Common Market Law Review]
Discusses to what extent the EU can take part in resolving disputes between Member States and their foreign direct investors, examining Regulation 912/2014 (Financial Responsibility Regulation), EU international investment agreements and bilateral investment treaties

The Status of Investor-State Arbitration: Resolving Investment Disputes under the Transpacific Partnership Agreement / Trakman, Leon E..Author Affiliation:U New South Wales.Source:Journal of World Trade, February 2014, v. 48, iss. 1, pp. 1-30.Publication Date:February 2014.Abstract:Intense debate is currently brewing over the multistate negotiation of the Transpacific Partnership Agreement (TPPA). The TPPA is likely to be the second largest trade and investment agreement after the European Union, with trillions of investment dollars at stake.

TTIP of the iceberg / Alex Newman, Legal Week 2014, 16(5), 14-17.
Considers the implications for the legal profession of the Transatlantic Trade and Investment Partnership deal, the proposed free-trade agreement between the EU and US. Comments on the ongoing negotiations. Looks at the kind of advice law firms may be able to offer, referring to key firms already involved. Discusses the significance of investor-state dispute settlements and the likelihood of disputes arising. Suggests that work for lawyers will see an upturn once implementation has occurred

Investor-state arbitration in EU international investment agreements with third states / Markus Burgstaller, Legal Issues of Economic Integration, 2012, 39(2), 207-221
Outlines the European Commission Communication of July 7, 2010 indicating the EU’s commitment to including investor-state arbitration clauses in EU international investment agreements with third countries, and discusses the potential problems arising from: (1) the EU not being a member of the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States 1965 (ICSID Convention); and (2) European Court of Justice case law asserting the primacy of the EU legal order over international dispute settlement mechanisms. Considers how these issues might be addressed

The Present and Future of EU International Investment Treaties / Angelos Dimopoulos, Mavluda Sattorova, (2012) 39 Legal Issues of Economic Integration, Issue 2, pp. 153-155

Investor-State Arbitration in EU International Investment Agreements with Third States, Markus Burgstaller , (2012) 39 Legal Issues of Economic Integration, Issue 2, pp. 207-221
Both the European Commission and the European Parliament are committed to include investor-state arbitration clauses in EU international investment agreements (IIAs) with third states. However, the EU is not and is unlikely to become a Contracting Party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention).

The Compatibility of Future EU Investment Agreements with EU Law / Angelos Dimopoulos, (2012) 39 Legal Issues of Economic Integration, Issue 4, pp. 447-471
Compatibility with EU law presents a key challenge for the success of EU investment policy. When EU institutions conclude EU IIAs, they should consider the limitations imposed by primary EU law and the impact of EU IIAs on the legality and validity of secondary Union law.

Circumventing Primacy of EU Law and the CJEU’s Judicial Monopoly by Resorting to Dispute Resolution Mechanisms Provided for in Inter-se Treaties? The Case of Intra-EU Investment Arbitration / Steffen Hindelang, (2012) 39 Legal Issues of Economic Integration, Issue 2, pp. 179-206
Currently, we can observe an increasing number of so-called investor-state arbitrations on the basis of bilateral investment treaties (BITs) concluded between Member States.

Return to the Local Remedies Rule in European BITs? Power (Inequalities), Dispute Settlement, and Change in Investment Treaty Law / Mavluda Sattorova, (2012) 39 Legal Issues of Economic Integration, Issue 2, pp. 223-247
This article will examine the evolving attitudes to the exhaustion of local remedies requirement and its waiver in investment treaty instruments through the prism of inequalities of power between different states and the role of international law in entrenching such inequalities.

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