Top German Judges Slam EU Plans To Create Global Court To Enforce Corporate Sovereignty

from the let's-just-make-up-the-laws-as-we-go-along dept

A few weeks ago, we wrote how many — even the US Trade Representative, Robert Lighthizer — seem to think it’s time for corporate sovereignty, also called “investor-state dispute settlement” (ISDS), to go. For some reason the European Commission disagrees. As Techdirt readers may recall, after receiving a bloody nose in a public consultation about corporate sovereignty, the Commission announced to great fanfare that it was “replacing” ISDS with something called the Investment Court System (ICS). In fact, this amounted to little more than putting lipstick on the ISDS pig, since ICS suffered from the same fundamental flaw: it gave companies unique rights to sue countries in a supra-national court. The EU is still plugging away at the ICS idea, and it now wants to go further by creating a truly global corporate sovereignty system enforced by a new Multilateral Investment Court (pdf), an initiative formally launched a couple of months ago:

the [EU’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 [EU] 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; cost-effective; transparent and efficient proceedings and allowing for third party interventions (including for example interested environmental or labour organisations).

When the ICS was first proposed, the German Association of Judges, which Wikipedia describes as “the largest professional organization of judges and public prosecutors in Germany”, ripped it to shreds. The same august body has just meted out similar treatment to the Multilateral Investment Court, and has asked the German government “to deny the European Commission the required mandate to negotiate the establishment of a Multinational Investment Court (MIC).”

The document, originally in German, and available in an unofficial translation by EuroMinds Linguistics (pdf), contains a devastating analysis of the MIC and its flaws. For example, it points out that international investment protection law is characterized by a “lack of substantive law principles”. That is, there are no global investment laws that the MIC could apply when deciding cases. The MIC would effectively be making it up as it went along. The German Association of Judges points out why the situation would be even worse for the MIC than for the ICS or ISDS tribunals:

Because of [the arbitration courts’] position, they can override decisions of national administrations and courts in favour of an investor. This exercise of power, exercised by an arbitral tribunal, has thus far been limited to the enforcement of individual arbitral awards. However, it would be considerably strengthened if the arbitral tribunals were upgraded to an MIC with permanent jurisdiction, which would operate under an international convention. Together with the investment protection agreements, as part of European law, the MIC Convention will be recognised by international law and can thus bind national courts. This will make the MIC a standard-setting organization.

In other words, the MIC would be able to create what amount to global laws, without any democratic input or scrutiny. The document also explains — as many have before — why special investor courts are unnecessary:

The protection of individual goods, including those of investors, is the daily work of the judges of all judicial courts and instances. In principle, these rights can also be claimed by foreign investors.

the best investor protection is a functioning, uncorrupted administration and jurisdiction and a democratic legislative process. It is the task of every investor to determine this; they can avoid investments in countries that do not fulfil these standards. If they, nonetheless, take the risk, no special protection is necessary.

Obvious really.

Recognizing that the German government and European Commission will probably try to go ahead with the MIC initiative anyway, the German Association of Judges makes a number of sensible suggestions for improving the idea, and limiting the possible damage. However, the real solution would be for the EU to join other, wiser nations and abolish the system completely.

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Comments on “Top German Judges Slam EU Plans To Create Global Court To Enforce Corporate Sovereignty”

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ECA (profile) says:

lets see what the NET says..

Role: Promotes the general interest of the EU by proposing and enforcing legislation as well as by implementing policies and the EU budget

The European Commission is the EU’s politically independent executive arm. It is alone responsible for drawing up proposals for new European legislation, and it implements the decisions of the European Parliament and the Council of the EU.

a GROUP that is supposed to represent the Nations in the EU, AS An autonomous Entity that can Change/Add LAWS to the Whole of the EU…
A Bunch of politicians ABOVE THE STATE. Above EACH of the EU nations..

Anyone see a problem with this?? I DO..

Anonymous Coward says:

Re: lets see what the NET says..

The problem is actually that the statements they are making about themself is horseshit.

During the latest EP election sir luxembourg tax advantage master Juncker clearly recognized that the commission can never be politically independent and much of what they do has a political tone as well as national.

Much of the commission is a heavy bureaucracy. And it is the bureaucrats running much of the show, barring the decission-making. The commissioners are an abomination and could frankly be removed without trouble and their responsibilities left for the european parliament if it wasn’t for the obsessive compulsive power hunger of the ministers from the countries (They are the idiots insisting on the commission to keep their enemies, the european parliament at bay. The entity is chosen by the european council and is as such political friends of the national heads of states…

Be aware that the entity cannot change/add laws on their own. It has to go through the parliament and the council of ministers which dilutes their powers immensely.

Anonymous Coward says:

Re: lets see what the NET says..

Yeah, I’m also absolutely for the sacking of Juncker and his gang. They don’t have a democratic mandate. Same for unelected member states having a say in the legislative process. Parliament is all that should be necessary. Case in point: In the trilogue process between parliament, commission and member states, the latter just recently pushed for the censorious DNS blockades.

David says:

For some reason?

[Many] seem to think it’s time for corporate sovereignty, also called "investor-state dispute settlement" (ISDS), to go. For some reason the European Commission disagrees.

Uh, you are aware who and what the European Commission is? It is an appointed (rather than elected) committee of experts, quite often recruited from lobbyists. They are a fundamentally non-democratic construction, and their proposals need to get the blessing of the European parliament. They are, however, the ones drafting legislation, and sometimes it takes years of sending the drafts back to them with "nope, try again" before they temper radically corporate favorism.

So why would the European Commission of all bodies think an institution run by experts/lobbyists and above national and European law undesirable? It opens a wet dream career path upwards the power ladder for them.

Anonymous Coward says:

the most helpful outcome would be to disband totally the European Commission! it is nothing but an organisation funded by businesses, particularly the Entertainment Industries and does absolutely nothing except try to increase the scope, the control and the protection of what companies and businesses can do and what the public cannot do unless court battles are instigated! anything that is proposed that is to the benefit of the people is immediately stopped by the Commission and then the exact opposite put into place instead! if it doesn’t get what it wants, first time, it keeps chipping away, just like the entertainment industries do, until it gets what it wants, which is everything possible to ensure there are no protections or benefits for the public and easy access to take the public to court. having vast resources and judges who are members of the industries, any judgement comes on the industries side and with no money to fight them, the members of the public end up bankrupt and in jail! not bad for an organisation that is supposed to have the public’s interests in the forefront!

Anonymous Coward says:

What could go wrong?

Here is one example of an investor-state conflict.
Even though this is a very old case, it gives a range of the multiple problems that can come up with foreign investments.

How big is the risk of having an industry being nationalized nowadays, and how much would a foreign corporation stand to lose in the worst-case scenario?
The investments can only be as stable as the political situation – that part would be logical.

There are so many variables, it seems like a tough subject to understand.

Anonymous Coward says:

And people wonder why Britain voted to leave the EU? Or why there is a rise in anti-globalisation and nationalism?
Because when ‘leaders’ dream up stupid ‘solutions’ like this that lets a company in Country A sue Country B for some oddball reason, the citizens of Country B are going to be angry. And I say that as a citizen of a country that has been on the receiving end of an ISDS complaint.

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