Wall St Journal – Did Juncker Oppose Investor Tribunals in the U.S.-EU Trade Deal ? / Lori Wallach

[This reporter clearly has NO clue how ISDS works. An interesting question is WHO pitched this counter spin story… Probably worthwhile for some folks in Brussels to educate him on how ISDS works –  as if there is a question about whether a domestic court ruling would trump a final ISDS order…]

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Insight and analysis from The Wall Street Journal and Dow Jones team in Brussels

Did Juncker Oppose Investor Tribunals in the U.S.-EU Trade Deal?

Did Jean-Claude Juncker just come out against including “investor-state dispute settlement” in the trade deal now under negotiation between the U.S. and the European Union? That issue – the creation of a system for foreign investors to challenge what they believe is unfair treatment by the host government of their investment – has become one of the most controversial points in the negotiations.

The European Parliament on Tuesday approved the former Luxembourgish prime minister and consummate European insider to become the next president of the European Commission, the EU executive body. Mr. Juncker published a document outlining the priorities of his presidency on the morning of the vote.

Among them: “Jobs, Growth and Investment” – some things never change. Completing the U.S.-EU trade deal is also on the list, with this intriguing line: “Nor will I accept that the jurisdiction of courts in the EU Member States is limited by special regimes for investor disputes.”

That sounds like opposition, but the reality is considerably fuzzier.

A little background here. Investor-state dispute settlement offers foreign investors from one country legal protections from mistreatment by the government of the other. Typically, ISDS allows a foreign-owned company to bring complaints against its host government before a tribunal.

Both the EU and the U.S. want to include ISDS in the agreement, but an uproar from non-profit groups prompted the EU to launch a public consultation on the topic, which closed this week. Environmental groups and others fear that investors could use ISDS to block governments from tightening environment and health regulations, on the grounds that such rules could diminish the value of an investment. They want ISDS erased from the deal.

The EU says it wants to draft ISDS provisions that prevent frivolous claims and leave no doubt that governments on both sides of the Atlantic can regulate in the public interest. Both the U.S. and the EU want the ISDS provisions negotiated in the deal to serve as a template for ISDS negotiated elsewhere.

The line in Mr. Juncker’s list of priorities applies to one issue: could the finding of an ISDS tribunal overrule the ruling of a domestic court? The European Commission in its public consultation notice says it wants to minimize the possibility of that occurring by forbidding companies from raising the same claim in an ISDS tribunal and a domestic court at the same time.

“As a matter of principle, the EU’s approach favours domestic courts. The EU aims to provide incentives for investors to pursue claims in domestic courts or to seek amicable solutions – such as mediation,” the commission says.

But the document doesn’t say who wins when a tribunal and domestic court are in open conflict. For example, suppose the German government orders a European chemical company and a U.S. company to pay for the clean-up of toxic waste at a factory site they jointly own — but orders the U.S. company to pay the majority of the costs. The U.S. company says the costs should be evenly divided and appeals to an ISDS tribunal, which sides with the U.S. company.

Then a German court upholds the German government’s decision.

Mr. Juncker’s position appears to be that the German court would have the final say. A spokeswoman for Mr. Juncker declined to elaborate.



Lori Wallach