Skip to content

German judges oppose Investment Court System in trade agreements

The largest association of judges in Germany (Deutscher Richterbund, DRB) has spoken against the establishment of an investment court system (ICS), stating that “neither is there a legal basis nor the necessity” for it.

Basically, the DRB says:

  • The assumption that the courts in European Union member states are not sufficient to provide adequate legal protection for foreign investors is fully unfounded. They highlight, “Special courts for only certain groups are the wrong way.”

  • They have significant doubts regarding the competence of the EU to establish an international investment court, since it would severely interfere with the Member states’ judicial and legislative systems and of the European Union itself.

  • They believe the European Commission’s proposal neither ensures financial independence nor does it provide clarity about the selection procedure.

Their full commentary in English can be read here.

The Council of Canadians rejects both the investor-state dispute settlement (ISDS) provision and the proposed investment court system for the Canada-European Union Comprehensive Economic and Trade Agreement (CETA).

In response to the mounting criticisms of ISDS, the European Commission announced a plan to ‘reform’ this provision by establishing a new investment court system for the European Union-United States Transatlantic Trade and Investment Partnership (TTIP). But Council of Canadians chairperson Maude Barlow says, “This reform still fails to require foreign investors – like everyone else, including domestic investors – to go to a country’s domestic courts before seeking an international remedy. The proposed investment court system still gives a special status to foreign corporations by allowing them to challenge the laws that apply to everyone else through a special system outside established court systems.”

She has also written, “Even to call the new arbitrators ‘judges’ is a misnomer, as these tribunals will not be taking into account environmental protection, human rights or other non-corporate considerations that a regular judge usually has to balance. What’s more, the arbitrators of this new court system can moonlight as lawyers with the very same corporations that are launching these cases. This is a lucrative business that could cloud an arbitrator’s judgment.”

In short, investor state rules – whether ISDS or ICS – give special rights to corporations, but not basic protections to states, their populations or the land and water.

Our allies including War on Want, Transport & Environment, and Friends of the Earth Europe have also rejected the proposed ‘reform’. Global Justice Now has highlighted that 97 per cent of respondents in a consultation rejected investor-state provisions in any form. French MEP Yannick Jadot says, “It is necessary that Member States hear that European citizens do not just want a change at the margin of the arbitration, but removal of the provision.” And MEP Ska Keller says, “[This] would be little more than a PR stunt, ignoring the core of the problem. The proposal changes nothing about the fact that investors get an extra-judicial system that will only deal with their rights, not their obligations.”

Steve Verheul, Canada’s chief CETA negotiator, has commented that the ICS proposal has “some appeal” but also that, “The U.S. [which has rejected the ICS reform] has its own model of how investment disputes should operate… We don’t want our investors to be in a different situation to other investors inside the EU market. We have no interest in being put at a disadvantage.” While they are expressing caution, it is possible that the Trudeau government may accept the ICS provision in CETA as a way to get the deal passed in the European Parliament (given it’s very unlikely to pass otherwise).

In Jan. 2016, the Globe and Mail editorial board endorsed the ICS ‘reform’ for CETA.

To read Barlow’s critique of ICS, please see her Huffington Post commentary published on Feb. 2 here.

TPP infogrphic