Henvendelse fra Greenpeace Norden m.fl. vedr. Transatlantic Trade and Investment Partnership”, investor-stat tvistbilæggelse (ISDS)
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Henvendelse fra Greenpeace Norden.doc
https://www.ft.dk/samling/20131/kommissionsforslag/KOM(2013)0136/bilag/6/1364070.pdf
Ang. ”Transatlantic Trade and Investment Partnership”, investor-stat tvistbilæggelse (ISDS) Til Folketingets Europaudvalg fra Greenpeace Norden, Det Økologiske Råd, ATTAC-Danmark, NOAH, Afrika Kontakt og Corporate Europe Observatory Vi har bemærket, at udvalget på sit møde den 2. maj skal behandle de igangværende forhandlinger med USA om en handels- og investeringsaftale, og vil i den forbindelse henlede opmærksomheden på den nu og da stormfulde debat om investeringsbestemmelserne, særligt hvad angår det såkaldte investor-stat tvistbilæggelsessystem (ISDS), der giver private virksomheder ret til at føre klagesager ved internationale voldgiftspaneler, såfremt de mener, at afkastet fra deres investeringer formindskes af ny national lovgivning eller regulering. I den kommende tid må det forventes at være et af de afgørende emner i debatten om hele aftalen. Kritikken er tiltagende fra mange sider, og Kommissionen besluttede i januar at indstille forhandlingerne på dette punkt, og i stedet iværksætte en offentlig høring om et konkret forslag til udformning af et sådant tvistbilæggelsessystem. Høringen er nu sat i værk og vil fortsætte indtil juni, hvorefter diskussionen må forventes at blive taget op i Rådets arbejdsgruppe for handelspolitik. I den forbindelse vil også Danmark få mulighed for at give sin holdning til kende. Derfor vil vi benytte anledningen til at understrege vigtigheden af en kritisk dansk holdning, og til at knytte et par bemærkninger til den igangværende høring og det forslag, Kommissionen har fremlagt i den anledning. 1. Vigtigheden af en kritisk dansk holdning I de forgangne år har sager ført gennem ISDS-ordninger under andre investeringsaftaler vis,t at de kan underminere demokratiske beslutninger på centrale områder. Det gælder f.eks. miljøregulering (Ethyl Corporation mod Canada, Vattenfall mod Tyskland), løn- og arbejdsforhold (Veolia mod Egypten), sundhedspolitik (Philip Morris mod Australien), naturressourceforvaltning og miljø (Lone Pine mod Canada samt Chevron mod Ecuador). Listen over voldgiftssager af denne type, som træder ind og reelt eller potentielt tilsidesætter politiske beslutninger, er jævnt stigende, ligesom også det samlede antal ISDS-sager på globalt plan. Der er altså tale om et fænomen af stigende betydning, så politisk opmærksomhed omkring denne sag er afgørende, særligt i den kommende tid. Efter vores opfattelse er der slet og ret ikke behov for et ISDS mellem EU og USA. Retssystemerne på begge sider er troværdige og gennemskuelige, og der er ikke noget belæg for at hævde, at f.eks. investorer fra USA har behov for særrettigheder i f.t. dansk lovgivning og danske domstole. Derimod kan prisen for at indføre en ISDS-ordning blive betragtelig. I den senere tid har flere EU-medlemslande meldt meget kritiske holdninger ud, herunder Tyskland, Frankrig og Holland. Derimod har den danske regering hidtil ikke haft nævneværdige forbehold, bortset fra, at det tages for givet, at sager som ovenstående netop ikke kan gentages i sager mod Danmark, d.v.s. sager som f.eks. underminerer regler indført for at sikre folkesundhed, miljø, forbrugerrettigheder eller lignende. Europaudvalget 2013 KOM (2013) 0136 Bilag 6 Offentligt Men det kan netop ikke tages for givet. Grundlæggende findes der kun én garanti mod ubehagelige overraskelser, og det er slet ikke at indføre en ISDS-ordning i relationerne til USA. 2. Kommissionens forslag Dette bekræftes vi i, når vi læser det nye forslag, som Kommissionens har fremsat i forbindelse med høringsprocessen. Se i den forbindelse vedhæftede analyser. Fra Kommissionens side hævdes det, at forslaget er formuleret på en måde så sager af samme karakter – sager som er af særlig offentlig interesse som skitseret ovenfor – helt vil blive undgået. Men en nøje læsning af teksten bekræfter ikke denne udlægning. F.eks. er der indsat en såkaldt ”forpligtende fortolkning” som anneks til bestemmelsen om ”indirekte ekspropriation”, der er en bestemmelse, som gør det muligt at anlægge sag, hvis en ny regel eller lov må føre til nedjustering af en virksomheds forventede fremtidig indtjening. Men dels kan et panel vælge stort set at se bort fra en forpligtende fortolkning (ifølge erfaringer fra NAFTA-aftalen), dels dækker fortolkningen kun en del af de sager om indirekte ekspropriation, som vedrører sager af særligt offentlig interesse. Derudover er bestemmelsen om ”rimelig og ligeværdig behandling” stadig formuleret på en måde, så der vil være plads til de fleste af de kontroversielle sager, der verden over har skabt røre omkring ISDS, og som i øvrigt har ført til, at mange lande er i færd med at afvikle investeringsaftaler med ISDS (f.eks. Sydafrika, Indonesien, Ecuador). Se i øvrigt vedhæftede analyser for en nøjere vurdering. EU og Danmark vil løbe en betragtelig risiko ved at støtte et ISDS-system. Et almindeligt argument i Udenrigsministeriet er, at man ikke hér forventer, at Danmark vil blive mål for sagsanlæg ved internationale voldgiftspaneler. Men det er set ved en række tidligere lejligheder, at den slags forudsigelser er blevet gjort til skamme. Som da Canada i 1994 tiltrådte NAFTA-aftalen med USA. Forudsigelsen var, at klagesager overvejende ville ramme Mexico. Sådan er det ikke gået. De fleste sager foregår mellem Canada og USA, og føres typisk af store, ressourcestærke virksomheder. Vi vil derfor appellere til Europaudvalget om at kigge nøje på denne sag, og i sidste ende bidrage til, at en fremtidig aftale med USA ikke indeholder ISDS. Med venlig hilsen Kenneth Haar, Corporate Europe Observatory Jan Søndergaard, Greenpeace Norden Mads Kjærgaard Lange, NOAH Christian Ege Jørgensen, Det Økologiske Råd Ida Grubb, ATTAC-Danmark Mads Barbesgaard, Afrika Kontakt
Bilag 2.pdf
https://www.ft.dk/samling/20131/kommissionsforslag/KOM(2013)0136/bilag/6/1364072.pdf
Corporate Europe Observatory, Still not loving ISDS: 10 reasons to oppose investors’super- rights in EU trade deals, 16 April 2014 http://corporateeurope.org/international-trade/2014/04/still-not-loving-isds-10-reasons- oppose-investors-super-rights-eu-trade Annex 2: Reality check of the Commission’s plans for ‘reform’ of “investor-state dispute settlement” When European Trade Commissioner Karel de Gucht launched the public consultation on the investor rights in the proposed EU-US trade deal (TTIP), he said: “I fully agree with the many critics who claim that investor-to-state-dispute settlement (ISDS) up until now has resulted in some very worrying examples of litigation against the state.” The problem, according to de Gucht, lies in some problematic features of existing investment agreements – which the Commission claims to “re-do” to build a “legally water-tight system”. This Annex looks into the Commission plans to “re-do” the investor-state dispute settlement process (ISDS) through which EU and US companies could directly sue governments for alleged violations of TTIP’s “substantive” investor rights (analysed in Annex 1). The Commission promises to “improve” the mechanism “to ensure a transparent, accountable and well-functioning ISDS system that reflects the public interest and policy objectives,” (section B in the Commission's consultation document). PR-speak: what the Commission claims in its consultation document Reality check: what the Commission really does – and what it means in practice The EU will introduce a “binding code of conduct” for arbitrators in investor- state dispute tribunals to ensure that they are independent and act ethically. If an arbitrator violates this code “he/she will be removed from the tribunal,” (from question 8 in the consultation document). This responds to concerns about conflicts of interest among the 3- lawyer panels which decide investor-state claims. Unlike judges, they have no flat salary but earn more the more claims they rule on – a strong incentive to side with the only one side which can bring claims (the investors). Existing rules and codes have sometimes led to the disqualification of arbitrators (see here for a recent case & an overview of existing rules). But they have not prevented a small club of arbitrators from ruling on the majority of disputes, allowing for more business in the future with investor-friendly interpretations of the law. It is unlikely that the EU’s code of conduct will ban this global elite club of ‘entrepreneurial arbitrators’ (as Singapore’s attorney general called them). A 20 February leaked version of the Commission’s proposal from the EU-Singapore talks does not even define what a “conflict of interest” is. The EU wants to set up a list (roster) of qualified arbitrators, from which the chairperson of an ISDS tribunal will be picked if the parties cannot otherwise agree on one. This would “ensure” the “abilities and independence” of these arbitrators whom the EU and the US vetted and agreed to, (from question 8). A similar roster already exists at the tribunal most often used for investor-state claims, the International Centre for Settlement of Investment Disputes (ICSID). According to this analysis by the International Institute for Sustainable Development (IISD, p.22), it “has not helped mitigate concerns of impartiality and independence of arbitrators”. Like the ICSID roster, the one proposed by the EU will only be a “backup” for the third arbitrator – not an “exclusive roster for all the arbitrators fulfilling strict conditions of experience, independence and impartiality”. So, concerns about arbitrator bias will not really be addressed by the roster. The EU’s aim is “to ensure transparency and openness” in In most investor-state disputes, little or no information is released to the public. But opacity has become the achilles heel of the Europaudvalget 2013 KOM (2013) 0136 Bilag 6 Offentligt PR-speak: what the Commission claims in its consultation document Reality check: what the Commission really does – and what it means in practice investor-state disputes. It will guarantee that hearings are open and that “all documents” are available to the public – “subject only to the protection of confidential information and business secrets,” (from question 6). system’s legitimacy, which is why the veil of secrecy in ISDS proceedings is gradually being lifted around the world. The US and Canada in fact started this process over a decade ago. So, the EU is swimming with the tide. Still, exceptions for the “protection of confidential information and business secrets” could severely hamper access to information. Under the UNCITRAL transparency rules referred to by the EU, tribunals can also limit public access to hearings for “logistical reasons” and withhold information that “would jeopardize the integrity of the arbitral process”, giving them wide discretion for non-transparency. The EU will introduce “an early and effective filtering mechanism” to “quickly dismiss frivolous claims” as well as unfounded ones. This avoids lengthy and costly legal proceedings and reduces the risk of abuse of the system, (from questions 5 & 9). The egregious investor challenges of sound policies by corporations such as Philip Morris, Lone Pine, and Vattenfall, for example, would not be dismissed under such a mechanism. They are alleged real violations of the sweeping investor rights granted in investment treaties (see annex 1). Claims are only considered frivolous when there is a complete lack of legal merit. Under existing rules, states can already ask tribunals to swiftly dismiss frivolous claims, but not a single such case is known. A tribunal deciding an investor-state dispute “will not be able to order the repeal of a measure”, but only compensation for the investor, (from question 5). This can result in a serious raid on public budgets. The highest known compensation to date, US$2.3 billion, was awarded against Ecuador. In 2003, the Czech Republic had to compensate a media corporation with US$ 354 million – the equivalent of the country’s entire health budget. The mere threat of a multi-million-dollar lawsuit may also be enough for governments to repeal the disputed measure ‘voluntarily’ (see reason 2). The EU “aims to establish an appellate mechanism in TTIP so as to allow for review of ISDS rulings”. This would help ensure consistency of interpretation and serve as a “check” on the work of arbitrators, (from question 12). Unlike in proper court systems, decisions by investor-state arbitration panels are non-reviewable (except for annulment proceedings which address a narrow range of procedural errors and are heard by another arbitration tribunal). An appeal mechanism could contribute to more coherent decisions and rein in arbitrator adventurism, but as things currently stand, this is a long way from becoming reality: in the draft EU-Canada deal, for example, there are only vague suggestions that a future joint committee may consult on “whether, and if so, under what conditions, an appellate mechanism could be created”. In TTIP, the EU states it wants to directly create such a mechanism, but according to reports from EU-US negotiation rounds on file with CEO, the US is “reluctant”. The US has referred to the possibility of an appeal mechanism in its treaties for many years – but this has led to nothing. The EU’s approach “favours domestic courts”. The Commission aims to “provide incentives for investors to pursue claims in domestic courts or to seek amicable solutions – such as mediation”. “Different instruments” will be suggested “so as to not discourage an investor from pursing these avenues,” (from question 7). The Commission does not discourage investors from mediation and claims in local courts. But it does not give an incentive either. The recourse to mediation is entirely voluntary (“the disputing parties may at any time agree to have recourse to arbitration”). There is neither a requirement for mediation nor a duty of foreign investors to exhaust local remedies before bringing an ISDS claim. This is what one would expect if the EU really “favoured” domestic courts and amicable solutions. By not demanding the exhaustion of local remedies, the EU grants foreign investors greater rights than anyone else – and risks undermining the validity of its own legal system. All in all, the Commission does little to “re-do” the investor-state dispute settlement process. Contrary to what it claims in its consultation notice, its approach is not “very different” from the process foreseen in existing investment agreements. Nearly all of its proposals are already out there in the world of international investment law and have not made any real difference (the trend towards transparency, codes of conduct for arbitrators, the ICSID roster of arbitrators, protection from frivolous claims, mediation...). Others might never materialise (as with the appellate mechanism). As was pointed out by a previous analysis of the Seattle to Brussels Network, the investor-state arbitration system that the Commission wants to establish “is far inferior to the domestic legal system of the EU and North America” from a public interest and a rule of law viewpoint. It will “forever surrender […] the judgement over what policies are right or wrong” to a small club of for- profit lawyers, who are unconstrained by fear of appeal and have a strong incentive to rule in favour of the one side which can bring claims: the investors. This bias is a systemic flaw that the Commission does not deal with – and that arguably cannot be tackled without abandoning the privatised system of investor-state arbitration.
Bilag 1.pdf
https://www.ft.dk/samling/20131/kommissionsforslag/KOM(2013)0136/bilag/6/1364071.pdf
Corporate Europe Observatory, Still not loving ISDS: 10 reasons to oppose investors’ super-rights in EU trade deals, 16 April 2014 http://corporateeurope.org/international-trade/2014/04/still-not-loving-isds-10-reasons- oppose-investors-super-rights-eu-trade Annex 1: Reality check of the Commission’s plans for ‘reform’ of “substantive” investor rights When European Trade Commissioner Karel de Gucht launched the public consultation on the investor rights in the proposed EU-US trade deal (TTIP), he said: “I fully agree with the many critics who claim that investor-to-state-dispute settlement (ISDS) up until now has resulted in some very worrying examples of litigation against the state.” The problem, according to de Gucht, lies in some problematic features of existing investment agreements – which the Commission claims to “re-do” to build a “legally water-tight system”. This Annex looks into the Commission plans to re-do the so called “substantive” investor rights (Annex 2 is on their proposals to reform the dispute settlement system). The Commission claims that it will introduce “clear and innovative provisions” with regards to some of the traditionally vaguely formulated investor rights so that they “cannot be interpreted by arbitral tribunals in a way that is detrimental to the right to regulate”. Because, it argues, “in the end, the decisions of arbitral tribunals are only as good as the provisions that they have to interpret and apply,” (question 5 in the Commission's consultation document). PR-speak: what the Commission claims in its consultation document Reality check: what the Commission really does – and what it means in practice The EU wants to make sure that states’right to regulate is “confirmed as the basic underlying principle” of the EU-US agreement so that arbitrators “have to take this principle into account” when assessing an investor-state dispute. The Commission quotes a section of the preamble of the EU-Canada agreement (seen as a template for TTIP) that indeed recognises the parties’ right “to take measures to achieve legitimate public policy objectives”, (from question 5 in the consultation document). It is impossible to check the claim with just an excerpt of the preamble. According to a Canadian summary of it, the ‘right to regulate’ is specified (“in a manner consistent with the Agreement”). According to this analysis from the International Institute for Sustainable Development (IISD, p.2), this detail puts the investor rights above the right to regulate – the exact opposite of what the Commission claims. During a public debate in March, a high-ranking Commission official admitted that the formulation on the right to regulate will “not make any difference” in investor-state disputes. The EU sees no problem with the “intentionally broad” definition of “investment” in investment treaties covering “a wide range of assets, such as land, buildings, machinery, equipment, intellectual property rights, contracts, licenses, shares, bonds, and various financial instruments,” (from question 1). The definition of “investment” is key because it determines what is covered by the chapter. A broad – and open-ended – definition such as the Commission’s not only covers actual enterprises in the host state, but a vast universe ranging from holiday homes to sovereign debt, exposing states to unpredictable legal risks. The EU wants to avoid abuse by improving the definition of “investor” to eliminate so called “shell” or “mailbox” companies from the scope of the agreement: “to qualify as a legitimate investor of a Party, a juridical person must have substantial business activities in the territory of that Party,” (from question 1). The definition of “investor” is key because it determines who is covered by the agreement. The EU seems to have understood that a broad definition can lead to abuse of the treaty via “treaty shopping”, allowing, for example, a US firm to sue the US via a Dutch mailbox company. But unfortunately, it fails to define the term “substantial business activity”. Thousands of investors will be covered by the chapter. Europaudvalget 2013 KOM (2013) 0136 Bilag 6 Offentligt PR-speak: what the Commission claims in its consultation document Reality check: what the Commission really does – and what it means in practice National treatment: Investors “should not be discriminated against” except in “rare cases” and “specific sectors” where discrimination “may need to be envisaged”. The aim is to ensure “a level playing field between foreign investors and local investors,” (from question 2). The EU’s investor rights do not create a “level playing field”, but VIP treatment for foreign investors: they get greater private property rights than everyone else and access to a parallel legal system that is exclusively available to them – not local businesses or ordinary people. Most-favoured nation treatment (MFN): A provision to ensure “a level playing field” between different foreign investors. EU member states and the US would have to treat investors from the other party “no less favourably” than investors from any other state. But the Commission “seeks to clarify” that investors will not be able to “import” more favourable rights from other agreements signed by the US or EU member states, (from question 2). In reality the provision has indeed been interpreted like a “magic wand” that allows investors to ‘import’ rights from other treaties signed by the host state (as a lawyer defending states against investors has recenty put it). Under the EU’s current MFN wording, this cherry- picking would be possible, self-cancelling all of the supposed ‘clarifications’ of investor rights and multiplying the risks of successful investor-state attacks against public policy. In meetings with NGOs, the Commission admitted that it only recently became aware of the problem. Fair and equitable treatment (FET): Investors shall be treated in a “fair and equitable” manner. The EU wants to clarify the standard so that it only covers “breaches of a limited set of basic rights” (denial of justice; disregard of fundamental principles of due process; manifest arbitrariness; targeted discrimination; abusive treatment), (from question 3). The standard has become the catch-all guarantee most relied on by investors when suing states. In 74% of the cases won by US investors, tribunals found an FET violation. And investors frame their claims precisely around the same “basic rights” listed by the Commission. Philip Morris, for example, argues that Australia’s anti- tobacco law was arbitrary because the claimed health benefits are “contradicted by facts” and other policies to reduce smoking without a negative effect on Philip Morris were available. Canadian mining firm Lone Pine also argues that the revocation of its “right to mine for oil and gas” in Quebec was “arbitrary” and without “due process”. It seems the EU's ‘clarifications’ do not offer much protection. Protecting investors’ legitimate expectations: The Commission explicitly states that tribunals which apply the fair and equitable treatment standard may take into account whether a state made a “specific representation” to an investor that “created a legitimate expectation” upon which the investor relied when making or maintaining an investment, (from question 3). The protection of an investor’s “legitimate expectation” has been interpreted by tribunals as a right to a stable regulatory environment – binding governments to not change regulation. In the Quebec case where strong community resistance halted a fracking project, Lone Pine, for example, argues that the “revocation” of its gas exploration permits violated its “legitimate expectation of a stable business and legal environment”. The EU does not define the type of “specific representation” by a state which could create such legitimate expectations. Would a prime minister’s twinkling of an eye be enough? Expropriations (direct and indirect ones) of investors are permitted only if they are for a public purpose, non-discriminatory, follow due process and are compensated. The EU wants to clarify the provision to “avoid claims against legitimate public policy measures”. It wants to make clear that “non-discriminatory measures taken for legitimate public purposes, such as to protect health or the environment, cannot be considered equivalent to an expropriation, unless they are From a certain, investor-friendly view, almost any law or regulatory measure can be considered an ‘indirect expropriation’ when it has the effect of lowering profits. Several tribunals have interpreted legitimate public policies that way and have ordered states to pay compensation. Would the EU’s ‘carve-out’ for public welfare measures prevent this? Not necessarily. The state would have to prove that a measure “was designed and applied to protect public welfare objectives” (and as in the Philip Morris case, investors would challenge this). In PR-speak: what the Commission claims in its consultation document Reality check: what the Commission really does – and what it means in practice manifestly excessive,” (from question 4). “rare circumstances” it could then still be considered an expropriation. Academics (p. 28) have argued that amidst “significant debate and uncertainty” about the meaning of such clauses, there is “the possibility that an arbitral tribunal might interpret [...] an EU-US investment chapter expansively [i.e. in a pro-investor way] despite the addition [...] of cautionary footnotes and annexed clarifications”. Also, the current text on MFN (see above) would allow investors to refer to expropriation clauses in other treaties without public policy exceptions, rendering the EU’s carve-out pretty meaningless. When greater clarity is needed to protect the right to regulate, the EU and the US will be able to “adopt interpretations of the investment protection provisions which will be binding on arbitral tribunals.” This will allow them to monitor how the law that they created is interpreted and influence the interpretation, (from questions 5 & 11). Following a wave of investor claims under the North American Free Trade Agreement NAFTA, the US, Canada and Mexico have already issued such joint clarifications of vaguely formulated investor rights. In practice, however, arbitrators have proven that they are willing to ignore these ‘binding’ interpretations (see here for examples relating to fair and equitable treatment). The EU will ensure that “all the necessary safeguards and exceptions are in place” to protect the right to regulate – for example, with regards to environmental and consumer protection, health and the stabilisation of financial markets. EU agreements also contain “general exceptions applying in situations of crisis”. This suggests that certain types of regulatory measures might be exempt from the obligations in the treaty, (from question 5). A closer look at the relevant provisions shows that this provides false comfort. Measures to ensure financial stability, for example, “shall not be more burdensome than necessary to achieve their aim”. “Safeguard measures that are strictly necessary” may be taken “in exceptional circumstances of serious difficulties for the operation of monetary and exchange rate policy”. For policies to tackle “serious balance-of-payments or external financial difficulties”, the EU even states that they should “avoid unnecessary damage to the commercial, economic and financial interests of the other Party”. It will be up to a tribunal of unaccountable for- profit lawyers to determine which policy was “strictly necessary” and which caused “unnecessary” costs for the other party. An easy hurdle to pass for investors. Umbrella clause: The EU also wants to protect investors when the host country avoids “contractual obligations” towards them, (from question 3). While there is no exemplary treaty text in the consultation on this issue, there is a similar clause in the leaked EU-Canada investment chapter from November 2013 (Article X on page 14). This would bring all obligations a state assumed with regards to an investment under the TTIP ‘umbrella’ (like a contract with one investor), multiplying the risk of costly lawsuits. In a 2011 resolution, the European Parliament had asked the Commission for a study on the impacts of the inclusion of an umbrella-clause in future European investment agreements. There is no such study yet. ‘Survival’ (or better: ‘zombie’) clause: An issue that is not mentioned in the Commission’s document, but that deserves some attention. The EU discretely forgot to mention that the EU-US trade deal would allow investors to sue states for decades – even if they cancelled the treaty in the future. The leaked EU-Canada agreement (article X.18) says that, for investments already made, the treaty “shall continue to be effective for a further period of 20 years” from the moment it is terminated. The corporate super rights would live on like a zombie – even if the agreement was dead. All in all, the Commission’s plans to “re-do” the “substantive” investor rights do not do the job of building a “legally water-tight system” that “cannot be interpreted by arbitral tribunals in a way that is detrimental to the right to regulate”. On the contrary, many of the proposed provisions seem to have the exact opposite effect (which was also the conclusion of analyses of previously leaked negotiation texts from the Commission by the International Institute for Sustainable Development (IISD) and the Seattle to Brussels Network). Under the EU’s reforms, the investor rights will remain what a lawyer defending states in investor- state lawsuits recently called: “weapons of legal destruction”.