In a letter to the European Parliament, Vrijschrift suggests the Parliament ask the Court of Justice whether investor-to-state dispute settlement (ISDS) is compatible with the EU treaties. Vrijschrift points out ISDS in the trade agreement with Singapore would expose our privacy to interference, expose the EU to damages awards, compromise the independence of our data protection authorities, and compromise the effectiveness of the Court of Justice of the EU. ISDS places investment tribunals above democracies.
Tuesday, December 8. 2015
Will the European Parliament ask court whether ISDS is legal?
The European Commission has asked the court an opinion on the draft EU-Singapore trade agreement. The question is limited to competence: is the EU competent to conclude the agreement on its own, or do national parliaments have a veto?
The EU member states and Parliament can submit written observations. On 14 December the European Parliament legal affairs committee will decide on a written observation. The deadline for written observations is 8 January 2016. An other option for Parliament and states is a separate request for an opinion under TFEU 218 (11); the 8 January deadline does not apply to this option.
Vrijschrift suggests in the letter that through a written submission or a separate referral the Parliament broaden the question to the court to include compatibility of the trade agreement’s standard for data transfers and its enforcement mechanisms with the EU Treaties and Charter.
Note that the agreement with Singapore would set an ominous precedent; the commission plans to include ISDS in a trade agreement with the US as well. US companies would be interested in undermining our privacy. ISDS could serve them, as it contains perverse incentives and unfair procedural advantages for the US. The commission's latest reform proposal for ISDS wouldn't help.
You may like to contact your MP or MEP; there is so much at stake. See also ClientEarth's blog and study on legality of ISDS.
Letter to the legal affairs committee, pdf or below
Safe Harbour invalidation and EU-Singapore FTA; CJEU Opinion
Dear Members of the JURI committee,
The CJEU has invalidated the Safe Harbour agreement with the US; this raises the question whether the draft EU-Singapore free trade agreement is compatible with the EU Treaties and Charter of fundamental rights. This question is important as incompatibility would expose our privacy to interference and the EU to damages awards; would compromise the independence of our authorities and the effectiveness of the CJEU. The upcoming CJEU Opinion offers an opportunity to scrutinise the agreement.
Singapore reportedly has a high level of surveillance. [1] Using the legal remedies the Court prescribes in its Safe Harbour judgment citizens can challenge data transfers to Singapore, claiming Singapore’s domestic law and its international commitments do not ensure a level of protection essentially equivalent to that guaranteed within the European Union.
If competent authorities suspend data transfers to Singapore, Singapore could, after conclusion of the trade agreement, initiate arbitration against the EU and Singaporean investors could start investor-to-state dispute settlement (ISDS) cases. [2] There is a risk that arbitration tribunals would find suspension of data transfers in violation of the agreement. First, the trade agreement would leave ground to argue that the EU applied a higher standard on data transfers than agreed. [3] Second, the general exception does not provide an effective safeguard for domestic policies. [4] In only two of 45 WTO cases states successfully invoked a similar Gatt article XX or GATS article XIV general exception. [5]
ISDS tribunals can award damages including expected profits and interests; this would put pressure on the authorities competent to suspend data transfers and compromise their independence. [6] Lack of impartiality of the ISDS mechanism provided by the trade agreement would increase the EU’s exposure and further compromise the independence of our authorities. [7] Replacing the trade agreement’s investment chapter with the European Commission’s 12 November proposal would not solve the issues. [8]
The agreement would also undermine the Court’s effectiveness. After termination of the agreement the investment chapter would continue to be effective for a further period of twenty years. [9] If the Court would invalidate parts of the investment chapter of the agreement, for instance because the Court finds it compromises the independence of our data protection authorities, the negative effects on the EU would continue for twenty years.
The European Commission has asked the Court whether the EU has exclusive competence to conclude the trade agreement. We suggest that through a written submission or a separate referral the Parliament broaden the question to the Court to include compatibility of the trade agreement’s standard for data transfers and its enforcement mechanisms with the EU Treaties and Charter. [10]
Yours sincerely,
on behalf of Stichting Vrijschrift,
Ante Wessels
1 "[B]y U.S. standards, Singapore’s privacy laws are virtually nonexistent" http://foreignpolicy.com/2014/07/29/the-social-laboratory/ ; Singapore is not a party to the International Covenant on Civil and Political Rights
2 Complainants could for instance invoke EUSFTA Chapter 9 article 9.4.2 (c) "manifestly arbitrary conduct"; article 9.6 in conjunction with Annex 9-A "the impact of a measure or series of measures is so severe in light of its purpose that it appears manifestly excessive", or not "legitimate" http://trade.ec.europa.eu/doclib/press/index.cfm?id=961
3 EUSFTA Chapter 8 article 8.54 "appropriate safeguards" versus CJEU Safe Harbour paragraph 74 "essentially equivalent to that guaranteed within the European Union"; furthermore tribunals could read EUSFTA article 8.54 in the light of article 8.57(4) "international standards of data protection", a low standard
http://trade.ec.europa.eu/doclib/press/index.cfm?id=961 and http://curia.europa.eu/juris/celex.jsf?celex=62014CJ0362&lang1=en&type=TXT&ancre=
4 Chapter 8 article 8.62(e)(ii) with chapeau, based on GATT article XX and GATS article XIV; complainants could for instance claim that the measure is (a) an arbitrary discrimination against the other Party where like conditions prevail, as (some) EU member states and third states have a high level of surveillance as well; (b) an unjustifiable discrimination against the other Party where like conditions prevail, as data localisation would favour EU companies; (c) inconsistent with the provisions of this Chapter, referring to articles 8.54 "appropriate safeguards" and 8.57(4) "international standards of data protection"
5 See, generally, Public Citizen https://www.citizen.org/documents/general-exception.pdf
6 See, generally, Steve Peers on case law on the independence of data protection authorities http://eulawanalysis.blogspot.co.uk/2014/04/the-cjeu-confirms-independence-of-data.html
7 On EUSFTA’s ISDS section, see Van Harten http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2613544 and FFII https://blog.ffii.org/seven-things-you-should-know-about-eu-singapore-isds/
8 See Section 2 article 3.2 (c) and Section 2 article 5 in conjunction with Annex I, point 3, http://trade.ec.europa.eu/doclib/docs/2015/november/tradoc_153955.pdf; see generally Van Harten http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2692122 and FFII https://blog.ffii.org/eu-commission-isds-proposal-a-threat-to-democracy-and-civil-rights/
9 EUSFTA, Chapter 9, article 9.9, url at footnote 2; it is unclear whether this would be the case under the EU commission’s 12 November proposal
10 On compatibility of ISDS with the Treaties see also: http://www.clientearth.org/health-environment/health-environment-publications/legality-of-investor-state-dispute-settlement-under-eu-law-3020 ; also note EUSFTA article 9.4 (5) is an umbrella clause; the arbitrators would be able to rule over contracts under national law, this entails interpretation of national and EU law if relevant; the latter is not compatible with the EU Treaties
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