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Jurisdictional ‘competence’ and stopping investor-state in CETA

The translation of a German newspaper Sueddeutsche article (alarmingly) reports, “The EU Parliament has approved the special rights for corporations.”

The article continues, “While the consultation on the protection of investors is still continuing, the European Parliament voted on the issue just before Easter. Despite all the concerns, the majority of Members of the European Parliament waved a procedural regulation for investor protection rules, against the votes of the Greens and the Left.”

“Now only national governments could stop the control. Germany’s position is clear. …The Federal Government (of Germany) considers the controversial protection clauses superfluous: ‘Between the USA and the EU is not required because both partners provide adequate legal protection before national courts’, says in the Economics Ministry in Berlin. …(EU) Trade Commissioner Karel De Gucht will now turn to the European Court, because he has to fear that national parliaments could topple both agreements (the Canada-EU CETA agreement and the EU-United States TTIP agreement) if they can separately determine it. …De Gucht hopes to find out whether the federal and other provincial parliaments in the contract have a say, or whether it can enter into force when the EU parliament agrees.”

A media release from Ska Keller, a German MEP with the Green/ European Free Alliance Group, notes, “Since (the Treaty of) Lisbon, the EU has gained the competence on investment policy, and thus also on investor-state dispute settlement (ISDS) policy. This Regulation establishes rules on whether EU or Member States act as a defendant in ISDS proceedings and who pays in the case of successful investor claims.”

The media release adds, “Greens are against the inclusion of ISDS in trade agreements, as the EU is currently planning in the agreements with Singapore, Canada and the United States. …However, we were defeated in the Committee on International Trade (INTA) on our proposal that the European Court of Justice (ECJ) be assigned the function of a filter to decide on the admissibility of a claim before it can be taken up by an international arbitration tribunal. In the legally non-binding considerations of the Regulation, we were able to establish that foreign investors as a rule should not have any greater rights than domestic investors, which would indeed mean that ISDS is ruled out. This is a strong criticism of ISDS but unfortunately will not have any legal consequences.”

And in an e-mail, Marc Maes of the Brussels-based 11.11.11-Coalition of the Flemish North-South Movement further clarifies, “The subject of the vote was a draft EU Regulation (European law) that would establish the division of the legal and financial responsibilities between the Union and the Member States if a foreign investor would launch an investment arbitration case based on (future) EU investment agreements.”

For example, he says, “Who would be the defendant in such a case: the Member State in which the foreign investor had made his investment, or the the Union as the investor would invoke an EU investment agreement; or the Union because the challenged treatment was based on an EU law; or still the Member State because it had taken challenged measure etc. And if a compensation would be awarded by an international tribunal, who would than pay?”

Maes highlights, “The draft regulation proposed by the European Commission in 2012 was heavily criticised by the Member States because it presumed that the Union has exclusive competence, something that the Member States deny. …The vote in the European Parliament does not mean that the Parliament has agreed with an EU investment treaty yet or that ISDS in TTIP has become inevitable. However the Parliament has missed an opportunity to strengthen the Union position against the Member States or to condition ISDS or as the Greens had proposed: to give the European Court of Justice a role in filtering ISDS claims.”

On the question of ‘competence’, EU Trade Insights reported in February that the Committee of Permanent Representatives (made up of the head or deputy head of mission from the 28 European Union member states) said CETA is a “mixed nature” deal and therefore needs to be signed and concluded as such. The European Commission (the European Union executive body) argues that the “issue of competence” should only be addressed once the negotiations are completed. And the Council of the European Union (which represents the executive bodies of EU member states) has said it will not sign CETA if it is presented as an “EU-only” deal because under the Lisbon Treaty investment protection is considered a “shared competence” between the EU and member states.

While it may be difficult to sort through this matter, these dynamics are critical in our campaign to derail the ratification of CETA in Europe.