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22 October 2014
Juncker speech: new Commission President outlines opposition to investor privileges but passes the buck
Incoming Commission President Jean Claude-Juncker added a further twist to the on-going saga as to whether or not ISDS will be removed from the EU-US trade deal. In a broad ranging speech to the European Parliament in Strasbourg today, Juncker clarified his earlier statements on his stance on the controversial mechanism:
'I took note of the intense debates around investor-state dispute settlement (ISDS) in the Transatlantic Trade and Investment Partnership (TTIP) negotiations. Let me once again state my position clearly, that I had set out on 15 July in front of this House and that you will find in my Political Guidelines: My Commission will not accept that the jurisdiction of courts in the EU Member States be limited by special regimes for investor-to-state disputes. The rule of law and the principle of equality before the law must also apply in this context.
The negotiating mandate foresees a number of conditions that have to be respected by such a regime as well as an assessment of its relationship with domestic courts. There is thus no obligation in this regard: the mandate leaves it open and serves as a guide.
I had thought my commitment on this point was very clear but I am happy to clarify and reiterate it here today as a number of you have asked me do so: In the agreement that my Commission will eventually submit to this House for approval there will be nothing that limits for the parties the access to national courts or that will allow secret courts to have the final say in disputes between investors and States.
I have asked Frans Timmermans, in his role as First Vice-President in charge of the Rule of Law and the Charter of Fundamental Rights, to advise me on the matter. There will be no investor-to-state dispute clause in TTIP if Frans does not agree with it too.
I am confident that – with your support – we can negotiate an ambitious trade agreement with the U.S. along these lines, with full respect of European interests and the rule of law.'
Timmermans holds the cards
The revealing aspect of his speech was the absence of any mention of the new Trade Commissioner Cecilia Malmström. Whether that indicates that she is still at odds with Juncker over removing ISDS, as earlier rumours suggest, remains to be seen. That didn’t stop journalists connecting the dots.
Instead, Dutch politician and new First Vice-President of the Commission, Frans Timmermans (AKA Juncker’s right hand man) has been crowned the decision-maker on the matter. As a former Labour politician, the S&D group in the European Parliament, who have expressed their opposition to ISDS, may hold some sway. And with Timmermans' portfolio including "better regulation", perhaps he could be moved to reject it.
Either way, Juncker has managed to pass the time-bomb, and so removed himself from the political storm. But he's also left enough space to ensure ISDS has an easy-passing, if it should go the other way. For instance, when he says 'my Commission will not accept that the jurisdiction of courts in the EU Member States be limited by special regimes for investor-to-state disputes' the issue is not that national courts will be limited by ISDS, but that multinational companies will be granted extra-privileges in the form of a private arbitration system, which others cannot access.
Secondly, in his line:'or that will allow secret courts to have the final say in disputes between investors and States' if the emphasis on the word secret, then it may pass, as the ISDS mechanism setup in CETA is based on the new UNCITRAL transparency rules which render ISDS arbitrations public as regards composition of panels and rulings. TTIP's ISDS is likely to follow the same example, thus the 'secret' nature of the private courts becomes obsolete.
And so, despite Juncker's obvious reservations, his passing of the buck may leave ISDS with enough space to squeeze through in the end. All heads now turn to Timmermans...