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EU Court to judge controversial investment rules in Canada trade deal

Belgium has delivered on its promise to ask the European Court of Justice (ECJ) to rule on whether controversial investment tribunals set up by the EU-Canada trade deal CETA contradict EU law. This morning, all seven levels of government in Belgium agreed to file the request, and finalised the text.

These special tribunals allow foreign investors to sue governments over decisions that affect their investment, including policy brought in the public interest like phasing out nuclear power or tougher environmental regulations. Investors can go to investment tribunals instead of national courts, which might breach EU law, as it gives important powers to domestic courts.

ClientEarth trade lawyer Laurens Ankersmit said: “CETA’s Investment Court System is finally on its way to Luxembourg and it is now up to the European Court of Justice to decide if it is compatible with EU law.

International investment rules must not undermine the powers of our own courts and tribunals. Because EU rules protect those powers, there are serious doubts whether the system in CETA can survive the scrutiny of the ECJ. If the ECJ proves us right, it would be a huge victory for the rule of law and for judges across Europe.”

In October 2016, the Belgium region of Wallonia temporarily blocked the signing of CETA over concerns about investor-state dispute settlement, among other issues with the deal.

In a compromise deal, the Belgian federal government committed to request an opinion from the ECJ on the legality of these rules, which was confirmed this morning.

The request was spurred on by an ECJ opinion in May that found trade deals between the EU and other countries must be approved by all member states.

The Court made it clear that investor-state dispute settlement affects the powers of domestic courts, but the opinion could not answer whether the system was legal under EU law because it was outside the scope of the case. Belgium’s request will now clarify this legal issue.

ClientEarth analysis shows investment rules in trade deals might breach EU law as they affect the powers of the courts throughout the European Union.

It is expected that the filing will be formally submitted to the European Court within days.

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