The European Commission has finalised its new and reformed approach on investment protection and investment dispute resolution for the Transatlantic Trade and Investment Partnership (TTIP). This follows another round of extensive consultations with the Council and the European Parliament. The proposal for the Investment Court System has been formally transmitted to the United States and has been made public.
The final text includes all the key elements of the Commission’s proposal of 16 September, which aims at safeguarding the right to regulate and create a court-like system with an appeal mechanism based on clearly defined rules, with qualified judges and transparent proceedings. The proposal also includes additional improvements on access to the new system by small and medium sized companies.
The new system would replace the existing investor-to-state dispute settlement (ISDS) mechanism in TTIP and in all ongoing and future EU trade and investment negotiations.
“Today marks the end of a long internal process in the EU to develop a modern approach on investment protection and dispute resolution for TTIP and beyond,” said Trade Commissioner Cecilia Malmström. “This is the result of far-reaching consultations and debates with Member States, the European Parliament, stakeholders and citizens. This approach will allow the EU to take a global role on the path of reform, to create an international court based on public trust.”
Since the publication of the Commission’s initial proposal, the text was circulated extensively for consultation to ensure broad endorsement of its main innovative elements, notably amongst co-legislators: EU Member States and the European Parliament.
These elements refer in particular to the strengthening of the right to regulate through a new article, the establishment of a new system for resolving disputes – ‘the Investment Court System’ –, and the creation of an appeal mechanism to correct errors and ensure consistency.
One of the changes made to the 16 September proposal is an additional improvement for small and medium-sized enterprises that would benefit from faster proceedings and would enjoy privileged treatment in comparison with large multinational companies.