Recommendation for a Council decision authorising the opening of negotiations for a Convention establishing a multilateral court for the settlement of investment disputes

European Commission | 13 September 2017

Recommendation for a Council decision authorising the opening of negotiations for a Convention establishing a multilateral court for the settlement of investment disputes

  1. Context of the proposal

 Reasons for and objectives of the proposal

In recent years, the inclusion of Investor-State Dispute Settlement (ISDS) in trade and investment agreements has become subject to increased public scrutiny and questioning. There are a number of problems that have been identified as stemming from ISDS, which is based on the principles of arbitration. These problems include the lack of or limited legitimacy, consistency and transparency of ISDS as well as the absence of a possibility of review.

To address these limitations, the Union’s approach since 2015 has been to institutionalise the system for the resolution of investment disputes in EU trade and investment agreements through the inclusion of the Investment Court System (ICS). However, due to its bilateral nature, the ICS cannot fully address all the aforementioned problems. Moreover, the inclusion of ICSs in Union agreements has costs in terms of administrative complexity and budgetary impact.

The multilateral investment court initiative aims at setting up a framework for the resolution of international investment disputes that is permanent, independent and legitimate ; predictable in delivering consistent case-law ; allowing for an appeal of decisions ; costeffective ; transparent and efficient proceedings and allowing for third party interventions (including for example interested environmental or labour organisations). The independence of the Court should be guaranteed through stringent requirements on ethics and impartiality, non-renewable appointments, full time employment of adjudicators and independent mechanisms for appointment.

This initiative will only deal with procedural issues. Matters such as the applicable law or standards of interpretation, including ensuring the consistency with other international obligations (for example from International Labour Organisation and UN Conventions) will be addressed in the underlying investment agreements to be applied by the Multilateral Investment Court.

This initiative seeks to align the Union’s policy in investment dispute resolution with the Union’s approach in other areas of international governance and international dispute settlement favouring ultilateral solutions. This initiative is not part of the Commission’s Regulatory Fitness and Performance (REFIT) programme.

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