Opinion of the Advocate General of the European Court diametrically opposed to widely-supported criticism of international investment arbitration

Om 29 January, the Advocate General of the European Court of Justice presented a preliminary opinion on the compatibility of the ICS arbitration mechanism – a derivative of the highly controversial ISDS – in CETA, the EU trade agreement with Canada. According to the Advocate General,  such an international investment dispute resolution would not contradict European law. The final opinion of the European Court is still to follow.

ISDS / ICS is under heavy pressure in public opinion. A petition launched on January 22nd against the mechanisms – and for stricter rules of conduct and liability for multinationals – gathered more than a quarter of a million signatures in a few days. The subject is also politically sensitive: yesterday , the Dutch House of Representatives organised a roundtable discussion on Dutch investment policy during which experts were critically questioned about the usefulness and necessity of ISDS.

No VIP rights for multinationals: human rights and environment first!

The Attorney General apparently has no problem with the fact that the legitimacy of government policy in the EU member states can be decided by three arbitrators, whose independence is by no means guaranteed. The German and European federations of judges are diametrically opposed to the Advocate General when it comes to the compatibility of ISDS / ICS with EU law.

Roeline Knottnerus, researcher for SOMO and TNI, says:

“The Advocate General ignores the sound criticism from scientists, lawyers and civil society organisations of the fact that claims for millions by companies can make governments wary of introducing social measures or stricter environmental and climate policies. We advise the Court not to take this opinion.”

Sign the petition Stop ISDS! (opens in new window)

According to Marieke van Doorn, coordinator of Handel Anders! (Trade Otherwise!):

“Recent scandals such as the Volkswagen emissions scandal and tax deals with multinationals such as Starbucks and Google show how big companies abuse their power to evade environmental regulations and avoid taxes. Providing the ICS with additional political leverage to put policymakers under pressure by ICS does not reinforce citizens’ confidence in politics.”

The European Court of Justice is not obliged to follow a provisional decision by the Advocate General, as was shown in last year’s Achmea judgement. Contrary to the opinion of the Advocate General, the European Court then stated that an arbitration arrangement between investors and states as included in the investment agreement between the Netherlands and Slovakia was incompatible with EU law. Following the Achmea judgement, the EU removed the arbitration mechanism from all intra-EU investment agreements.