European Union case law suggests that investor-to-state dispute settlement (ISDS) is not compatible with the EU treaties. I will first shortly discuss a recent EU court Opinion.
To fill a human rights gap, the EU "shall" (article 6.2 TEU) accede to the European Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR). On 18 December 2014 the Court of Justice ruled that an agreement to do this is incompatible with the EU treaties (Opinion 2/13, PR). A human rights disaster, as the court did it in such a harsh way that it may now be impossible to ever accede to the ECHR.
Steve Peers: "This goes beyond setting a dividing line over which Court has jurisdiction to interpret EU law: to repeat, the CJEU's position is that if it can't have jurisdiction over [common foreign and security policy], then no other international court can either. In short, since it isn't allowed to play, it's taking the football away from everyone else. It's the judicial politics of the playground. But it could have serious consequences, leaving the victims of serious human rights violations without an effective remedy at international level. Or is the entire world meant to trust that the military forces from the continent that brought us the Holocaust and two World Wars would never, when acting under the EU's aegis, commit human rights offences?"
ISDS
Exclusive jurisdiction
The Treaties give the EU court exclusive jurisdiction over the definitive interpretation of EU law. (see for instance Opinion 2/13 paragraph 246) There would not be a problem (on this point) if ISDS tribunals only interpret and apply investment treaties. But ISDS tribunals may also interpret local laws.
The EU commission ISDS plans do not forbid ISDS tribunals interpreting EU law. This is not compatible with the Treaties as it undermines the EU court's exclusive jurisdiction over the definitive interpretation of EU law.
In Opinion 2/13 the court shows itself adamant. If a member state or a major institution of the union would ask the court an opinion on an agreement with ISDS, most probably the current ISDS plans are dead in the EU. And with a court that is adamant to protect its position, revised plans do not seem to have a better chance (see also).
European Commission
On 8 March 2011 the commission should have woken up (after Opinion 1/09 on the Community Patents Court). They didn't.
The commission
announced they will ask the court an opinion on the agreement with Singapore, which contains ISDS. After the 18 December Opinion (2/13, ECHR) they may like to not do that any more. That would be conspicuous and leave the member states a veto. Moreover, a don't-ask-the-court-game requires all the member states and major institutions to play along to support what is in essence a
corrupt system (while the public knows).
European Parliament
This month the Parliament will start working on a resolution on TTIP. The Parliament may, besides rejecting the corrupt ISDS system, steer clear of a looming disaster by adding to the resolution something like:
"Insists that the Commission ascertain that adjudicative systems in trade agreements are compatible with the Treaties."
See also Vrijschrift letter