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NEWS: Europe bit by investor-state provision

The Guardian UK reports, “Having tasted blood (with NAFTA), Canadian investors are likely to demand an investor-state mechanism in the EU-Canada (CETA) negotiations.”

The widely-read newspaper tells this interesting story. “The blueprint of the German bilateral investment treaty (BIT), which set the template for most European BITs, (was cast in 1957). …BITs are typically concluded between a developed and a developing country with the intention that investments from the former will be protected by guarantees of protection and non-discrimination in the latter. BITs are an anomaly in public international law because they grant private investors the right to bring claims before an international arbitration tribunal. Thus, investors can rely on…privately hired arbitral tribunals, rather than government appointed judges. These treaty rights are often more favourable to investors than those found in national law.”

“For years, European and North American governments saw no need for treaties to protect investment flows between developed nations. …This dynamic was perhaps accidentally disturbed by the conclusion of chapter 11 of the North American Free Trade Agreement (NAFTA), which saw the creation of a tripartite investment treaty between Canada, Mexico and the US in 1994. The idea was to provide north American businesses with the investor-state arbitration mechanism to challenge Mexico, the developing country in the party. Although north American investors did sue Mexico under NAFTA Chapter 11, the vast majority of NAFTA claims involve US investors suing the Canadian government and vice versa.”

“Although at least 81 governments have faced investment treaty arbitration in over 400 claims, western European countries have so far avoided such actions – as there are few investors from the developing world that have the means or occasion to challenge government measures in private arbitration proceedings. European BITs are almost always concluded with lesser developed countries.”

“(But this has changed with) the conclusion of the energy charter treaty (with the European Union and fifty-one other countries as signatories, Canada having only observer status) to promote and protect investments in the new democracies of eastern Europe and central Asia… Like NAFTA, (the energy charter) also permits, perhaps inadvertently, western European investors…to bring claims against other European governments such as the German, French and British. The recent claim by (the Swedish energy company) Vattenfall (against Germany’s nuclear phase-out) warns of another crack in European cohesion as European investors start using investor-state arbitration in treaties governed by public international law, which will prevail over national and European Union law.”

Council of Canadians trade campaigner Stuart Trew (in Brussels now for a conference on investor-state issues) has written, “Canada is seeking an investor-to-state dispute system in CETA, much like the one in NAFTA, which would grant firms the right to sue governments in the event a policy or regulation impacts negatively on corporate profits. In December 2010, the Council of Canadians joined the Canadian Centre for Policy Alternatives, Canadian Union of Public Employees, Canadian Labour Congress and National Union of Public and General Employees in writing a letter to all members of the European Parliament, urging them to reject an investor-state provision in CETA. In February, the Seattle To Brussels network asked Europeans to endorse a call for a just EU investment policy. But by September, the European Commission had won the right to bypass the EU Parliament by negotiating an EU-wide investment protection pact with Canada without first having the mandate approved by elected representatives. This step clears a hurdle in the Canada-EU Comprehensive Economic and Trade Agreement negotiations, since now the two sides can finalize a controversial investor-to-state dispute settlement process that will largely mirror the one in NAFTA.”

The Guardian UK article is at