Investor rights to be judged by highest court in Europe as part of Belgian CETA deal

The legality of one of the most controversial elements of the EU-Canada trade deal will be decided by the European Court of Justice.

It’s part of the trade-off agreed by political leaders in Belgium, after the Walloon Parliament vetoed the deal. The signing ceremony for CETA was cancelled on Thursday because the region of Wallonia voted against it.

Laurens Ankersmit, EU trade lawyer for ClientEarth said: “We are absolutely thrilled that the European Court of Justice will get the opportunity to answer this important legal question. The Investment Court System will be judged by the highest court in Europe. It is absolutely essential that this controversial mechanism is legal in the first place.

“We applaud Wallonia for standing firm in its request to get ICS checked by the European Court of Justice.”

The Walloon Parliament questioned the legality of investor rules ISDS and ICS, saying that rule of law in the EU and Canada was sufficiently strong to protect investors without the need for a separate court system.

But under a compromise deal, Belgium has said that it will refer ICS to the European Court of Justice.

In 2015, ClientEarth analysis showed that ISDS and ICS, which would effectively create a court system available only to foreign investors, is incompatible with EU law.

Wallonia called for state-to-state dispute settlement, rather than investor-state dispute settlement. It was also worried that the precautionary principle – which lets policymakers protect people and the environment from things that are suspected to cause harm – was being eroded.

Under Belgium’s federal system, the national government can’t sign the deal until all six regional parliaments approve it. The compromise will also have to get through all the regional parliaments.

ClientEarth recently launched a lawsuit against the Commission, because it refused to disclose official analysis of whether ISDS and ICS are legal. The Commission said sharing the legal reflections would undermine its negotiating position in trade agreements. This contravenes EU transparency laws. The case continues.