An Empire of Capital? Transatlantic Investment Protection as the Institutionalization of Unjustified Privilege

von Mattias Kumm
I. The Case against ISDS in CETA and TTIP: Hysteria or Genuine Concern?

Among those familiar with the field of investment arbitration, the strong political reaction against the investor state dispute settlement provisions (ISDS) included in the Comprehensive Economic and Trade Agreement between the EU and Canada (CETA) and originally planned to be included in Transatlantic Trade and Investment Partnership between the EU and the US (TTIP) comes as a surprise. After all, European states have concluded more than 1400 BITs in the past. A general indictment of the investment arbitration practices as biased in favor of investors, they claim, is misguided and lacks plausible evidence. It is misguided because in terms of tribunal composition states and investors have an equal role to play in the constitution of the tribunal. Furthermore the substantive norms of this agreement, like other agreements, articulate basic investor related requirements of justice: They require nondiscrimination, fair treatment or prohibiting expropriation without compensation or ensuring the possibility to repatriate investments and the like. As far as arbitration outcomes are concerned there is also no evidence of bias. Individual award decisions that hold in favor of investors on contestable grounds may exist, but there is no dispute settlement procedure that will not occasionally produce results that will leave many unconvinced, as public lawyers familiar with the adjudication of rights cases by domestic or international courts will attest. More importantly, as a statistical matter more than half of the cases brought to arbitration are effectively decided in favor of the state. Finally, to the extent there are residual concerns relating to past practices, they can be addressed. The CETA and potentially the TTIP too would include progressive provisions on transparency and participation, for example ...

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