This short report provides references showing how the text of CETA would empower ‘investors’ to use the World Bank’s “notorious ISDS” to sue the European government over the COVID-19 measures we took to protect human health.
By Barry Finnegan [barry.finnegan@griffith.ie], June 4th, 2020.
- CETA allows for the use of the old World Bank “notorious ISDS” system called the ICSID
- Law firms are gearing up for what they call the “Coming Wave of COVID-19 Arbitration”
- The text of CETA explicitly allows for cases to be taken at the World Bank’s unreformed ICSID
- Will the Irish Green Party take a stand and commit to voting ‘No’ on CETA in the next Dáil?
- Global civil society is calling on governments to avoid these attacks on our health
- Economics and human rights experts are calling for a moratorium on all ISDS cases
- Mounting research demonstrates how corporations intend to use the ISDS of the likes of CETA
Law firms are right now advising corporations on potential ISDS claims in what one firm calls, “the Coming Wave of COVID-19 Arbitration”. See for example how the law firms Shoosmiths, Alston & Bird and ReedSmith are encouraging their clients to take ISDS cases relating to the Covid-19 measures implemented by governments.
Law firm, Shoosmiths, for example, is saying to its clients:
“If you have reason to believe that your host State has breached its obligations under the BIT [the Bilateral Investment Treaty, such as CETA, with its ISDS], then you may be entitled to seek redress. You can bring an arbitration claim against the State and pursue it through an appropriate forum, e.g. the International Centre for the Settlement of Investment Disputes (“ICSID”)”.[1]
At the same time, economics and human rights experts from around the world are calling for a moratorium on all ISDS cases and approvals during the COVID-19 pandemic.
Where will the Irish Green Party stand on the ISDS and CETA at this crucial juncture for our health and our democracy?
The ‘Investor Court System’ (ICS) proposal from the European Commission and legally approved by the EU’s Court of Justice is an aspirational component of the CETA. The terms ‘court system’ and ‘investor court system’ do not appear anywhere in the text of the CETA, and the agreement still explicitly allows for use of the old World Bank ISDS system.
Download the 1,454 pages of the CETA trade and investment protection agreement.
Despite the fact that the ex-President of the European Commission, Jean-Claude Juncker, said that the Investment Court System (ICS) is “an innovative approach that became the template for all EU investment negotiations, replacing the old investor-state dispute system, the notorious ISDS,”[2] and despite the fact that in April 2019, the Court of Justice of the European Union delivered their legal Opinion, that “the mechanism for the resolution of disputes between investors and States provided for by the free trade agreement between the EU and Canada (CETA) is compatible with EU law”,[3] there is no mention of an ICS in the text of CETA, and the agreement still explicitly allows for use of the old unreformed World Bank ISDS system called the ICSID (International Centre for Settlement of Investment Disputes).
The ‘Investment’ chapter of CETA, CHAPTER EIGHT, begins on page 76; its ‘SECTION F’, the ‘Resolution of investment disputes between investors and states’ begins on page 106. It is important to remember that despite the desire of European Parliamentarians to ‘reform’ the ISDS of CETA and other EU investment protection deals,[4] the text clearly states in ARTICLE 8.23, paragraph 2, under ‘Submission of a claim to the Tribunal’ that:
“A claim may be submitted under the following rules:
(a) the ICSID Convention and Rules of Procedure for Arbitration Proceedings;
(b) the ICSID Additional Facility Rules if the conditions for proceedings pursuant to paragraph (a) do not apply;
(c) the UNCITRAL Arbitration Rules; or
(d) any other rules on agreement of the disputing parties”.
So while section (d) above allows for the establishment of a new system, for example the Commission’s currently non-existent ICS which was approved by the European Court of Justice, sections (a) and (b) allow for the use of what the ex-President of the European Commission, Jean-Claude Juncker [see above], has called, “the notorious ISDS”, namely, the International Centre for Settlement of Investment Disputes (the ISCID), which is based in Washington DC, and is part of, and funded by, the World Bank Group.[5]
Further Reading:
- Corporate Europe Observatory: ‘Cashing in on the pandemic: how lawyers are preparing to sue states over COVID-19 response measures’
- Transnational Institute: ‘Pandemic Profiteers: How Foreign Investors Could Make Billions From Crisis Measures’
- Global Civil Society Letter To Governments on ISDS and COVID-19: ‘Sign the open letter to governments on ISDS and COVID-19’
[1] Shoosmiths (2020) ‘Overseas Investment: COVID-19 – What kind of State are you in?’ Available here
[2] European Commission (2019) ‘Trade: European Court of Justice confirms compatibility of Investment Court System with EU Treaties’ in Press release, 30 April, Brussels. Available here
[3] Court of Justice of the European Union (2019) ‘PRESS RELEASE No 52/19, Luxembourg, 30 April, Opinion 1/17. Available here
[4] European Parliament resolution (2015) ‘Containing the European Parliament’s recommendations to the European Commission on the negotiations for the Transatlantic Trade and Investment Partnership (TTIP) (2014/2228(INI)), 8 July. Available here. See paragraph 2 (d) (xv) as to how the Parliament requires a total overall of the ISDS system in future EU investment protection agreements: “to ensure that foreign investors are treated in a non-discriminatory fashion, while benefiting from no greater rights than domestic investors, and to replace the ISDS system with a new system for resolving disputes between investors and states which is subject to democratic principles and scrutiny, where potential cases are treated in a transparent manner by publicly appointed, independent professional judges in public hearings and which includes an appellate mechanism, where consistency of judicial decisions is ensured, the jurisdiction of courts of the EU and of the Member States is respected, and where private interests cannot undermine public policy objectives”
[5] ISCID (2020). ‘ICSID and the World Bank Group’. Available here. And see: ICSID ‘Administrative Council’. Available here