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An EU multilateral investment court must be fair and inclusive

A multilateral investment court must respect domestic courts, be inclusive, and protect responsible investment only. That is the response of ClientEarth to a consultation on plans for a multilateral court by the EU Commission.

A multilateral investment court would deal with investor-state disputes internationally. It may replace the controversial investor-state dispute settlement (ISDS) mechanisms that are currently included in EU trade agreements.

Given the difficulties and problems associated with ISDS, ClientEarth has questioned whether a multilateral court is even necessary.

ClientEarth trade lawyer Laurens Ankersmit said: “There is no point in establishing an investment court if the fundamental flaws that exist in investment arbitration are not addressed. This court is only viable if it is respectful of domestic courts, it is fair by giving citizens and the state rights against investors, and if it doesn’t allow any attacks on environmental decision-making.”

The Commission announced that it would begin developing plans for a multilateral investment court late last year.

In our response to the consultation, ClientEarth has questioned the necessity of ISDS and a potential new investment court. We recommend the Commission should consider further whether there is a real need for investor-state dispute settlement mechanisms at EU level, which we believe can be dealt with by the member states.

If the Commission does decide to go ahead with a multilateral investment court, we have identified four key areas to aid the EU in their plans.

We hope the Commission will adopt our recommendations, so that any potential multilateral court will make the ISDS system environmentally sound and democratically accountable. These are:

1. The role of domestic courts:

Make investment law more respectful to domestic courts and institutions. A multilateral investment court should only hear claims if all domestic remedies have been exhausted.

2. A fair multilateral court:

Ensure that the multilateral investment court is inclusive, that it hears claims not just from investors, but by states, affected third parties and local communities too.

3. Protection of responsible investment:

Limit the multilateral court so that it is only available to responsible investors. Only investors that comply with international and domestic laws should be allowed to bring a claim – a ‘clean hands clause’.

4. Independence of adjudicators:

Select and appoint members of the multilateral court in full accordance with the Magna Carta of Judges. There must be an accountable and transparent process with proper involvement of the European Parliament at EU level.

ClientEarth will be fighting for these recommendations as the plans develop in the coming months.

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James Clear

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