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Plans to replace controversial private arbitration with an impartial and transparent multilateral court were discussed with Commissioner Malmström Wednesday evening.

Many MEPs endorsed the idea of the EU launching negotiations to establish a multilateral investment court (MIC), arguing that the current prevailing ‘investor-to-state dispute settlement’ (ISDS) system is opaque, lacks an appeal mechanisms and even threatens states’ rights to legislate in the public interest. By contrast, MIC would be transparent, allow for appeals and come with a strict code of conduct for judges, which would result in higher legitimacy, they said. Some members stressed that such a court should also be available to SMEs and affected third parties that usually do not have access to the justice system. Others voiced concerns about the support of EU member states and raised the question of compliance with UN conventions, the relationship with national courts and the future of bilateral investment treaties that have been adopted by the EU using ISDS.

Some of those not in favour of a multilateral investment court, said that there are already well-functioning mechanisms in place to resolve investment disputes and that the EU is “trying to reinvent the wheel”. Investors’ rights can also be protected at national level and the future of domestic courts will be put in jeopardy, members said. Some MEPs rejected the idea on the grounds that MIC was designed only to replace ISDS and only investors will benefit from it.

Trade Commissioner Cecilia Malmström said that MIC would ensure a higher degree of legitimacy, reliability and consistency at global level by employing independent judges on a permanent basis in a two-instance system, but parties should exhaust national judicial remedies first. Costs would be shared, but less developed countries might contribute less. It is still to be seen though, whether such a multilateral court would stand as a unilateral institution or be docked into another and how affected communities could contribute to court proceedings in the future. She emphasized that there was strong support from member states behind the idea, but the EU still needs to get solid backing at the international stage.

You can re-watch the debate here.


Quick facts

In a July 2015 resolution on TTIP, the Parliament requested to replace ISDS with a new mechanism. MEPs consider the new investment protection rules in CETA to be a stepping-stone to a fair international system. Both parties in the Canada agreement have committed themselves to a multilateral investment court. On 13 September, the EU Commission requested to open negotiations for a multilateral investment court. The Council now has to decide whether it wants to give it the green light and, if so, what kind of negotiating instructions it will give to the Commission.