In a major blow to the Transatlantic Trade and Investment Partnership (TTIP) negotiations currently taking place between the European Union (EU) and America, the German Magistrates Association (DRB) has said that special courts allowing firms to sue countries “had no legal basis”.
A key plank of the deal proposed by the EU is the creation of a new Investment Court System (ICS) designed to protect investors. There, investors and businesses will be able to challenge government policies they believe will negatively affect their investments, Deutsche Welle has reported.
But judges from the DRB have slammed the proposal, saying: “The DRB sees neither a legal basis nor a need for such a court.” In a statement issued last week it added that the assumption foreign investors don’t already have “effective judicial protection” has no “factual basis.”
The judges also foresee problems with the proposed model, warning that the definition of an investor’s assets is so broad, it will effectively hand the court jurisdiction to rule on almost any policy matter on a government’s agenda.
Furthermore, they say the ICS represents a threat to the sovereignty of Europe’s current legal systems, adding that they have little faith in the EU’s ability to manage it.
“The German Magistrates Association has serious doubts whether the European Union has the competence to institute an investment court,” the statement read. “An ICS would not only limit the legislative powers of the Union and the Member States; it would also alter the established court system within the Member States and the European Union.”
The statement is being lauded as a major setback in the TTIP negotiations by the deal’s opponents, as it was designed to be a compromise alternative to the current current investor-state dispute settlement (ISDS) currently used for trade deals between countries, which was favoured by America but opposed by the EU. The judge’s statement effectively turns the compromise into a deal that no-one wants.
“The EU offices must be in turmoil now,” said Nick Dearden of UK-based campaign group Global Justice Now. “They were really nervous about ever getting through an agreement that had ISDS in it, because every time they’ve done consultations on it people have overwhelmingly said they don’t like it. So they put this on the table.”
“[The judges’ statement] is obviously more interesting than when some campaigner says something, because they’re actually going to have to administer this thing,” he added. “For us it’s probably the most significant statement that any group has made so far on that part of the agreement.
“Is it really right that a foreign investor would have access to a whole legal process that an ordinary European citizen wouldn’t have access to?”
However, the The German Justice Ministry has defended the ICS proposal, saying “An investment court may well be necessary, because the US investor protection allowed by TTIP may not be enforceable in national courts.”