22 October 2015

UN Special Rapporteur calls for ISDS to be abolished

ISDS violates countries’ binding human rights commitments and is in conflict with international law says UN expert

Simon McKeagney, Editor

A leading expert to the United Nations Human Rights Council has condemned the use of Investor to State Dispute Settlement (ISDS) as ‘an attack on the very essence of sovereignty and self-determination, which are founding principles of the United Nations.’

In a meeting with MEPs in the European Parliament (Oct 14), Alfred-Maurice de Zayas, Special Rapporteur to the UNHRC said that it was “inconceivable” that democratic states would “betray the trust of the constituents and give away the responsibility that they have to protect, by virtue of being democratically elected governments.”

Mr. de Zayas, noted that European countries are subject to the 10 core human rights treaties that have been signed in the last 70 years, all of which are legally binding, and by virtue of the UN charter, “necessarily take priority over other treaty obligations.”

“We’re faced here with a very amazing paradox. States that have entered into legally binding obligations pursuant to the International Covenant on Civil and Political Rights and pursuant to the International Covenant on Economic Social and Cultural Rights, have also entered into agreements, namely bilateral investment agreements, free trade agreements, ISDS agreements, that delay, hinder, circumvent, undermine, or make impossible, the implementation and fulfillment of their prior legally binding obligations under these human rights treaties.”

Mr. de Zayas, who wrote a report on impacts of ISDS arbitrations for the Office of the High Commissioner for Human Rights in September, also criticized the small pool of lawyers involved in ISDS cases, which he claimed were deliberately ignoring the international human rights treaty system in interpreting free trade agreements. “They ignore it, and get away with it. Why? Because [ISDS] is a parallel system of justice that is not subject to any kind of accountability, and there is not a possibility of appeal.”

Malmström proposal not addressing “fundamental problems”

On the new Commission proposal to create an “International Court System” to replace ISDS, de Zayas said that, “the cosmetic changes to the partiality of the system still does not solve the fundamental problems. Let’s ask the fundamental question about the elephant in the room: why are we talking about reforming ISDS, why don’t we ask an earlier question- why do we need ISDS?” 

“It still provides for a one way street- where investors and enterprises sue governments. It does not provide for the possibility of victims, for instance, to sue investors and enterprises, when fundamental human rights are being violated.”

Paradox of undermining our justice systems 

De Zayas was keen to point out that international and European treaties on fundamental rights were there “precisely to ensure the rule of law and the impartiality of our court systems” and that governments were tacitly undermining their own courts by agreeing to ISDS provisions:

“The paradox that you would actually accept the implicit denigration of your own court system by providing for a parallel system of privatized justice is tantamount to saying ‘our courts in Belgium or in Germany, or in England or in the United States, are not independent, are partial, they are not transparent, they are not accountable, and therefore we cannot allow investors [to use] domestic courts, they should be under a separate system.”

“In fact I would tend to think that we Americans and Europeans are particularly proud of the achievement of a competent, predictable, impartial system of justice.”

De Zayas also believes that there is a “simple answer” to solving the issue of the 3000 bilateral investment treaties that EU countries have signed containing ISDS. Under the doctrine of severability in international customary law, you do not throw out the entire regime, you just cut off what is deemed “contra bonos mores” or harmful to the moral welfare of society. He went on to say that “if the [ECJ] were to come down and say ISDS is not compatible with the European law, then all states would have to abandon it.” 

Threat to UN Sustainable Development Goals

Mr. de Zayas’ comments come the same time a new report by the Trade Justice Movement highlights how the EU-US trade deal could undermine the recently agreed UN Sustainable Development Goals (SDGs). The report highlights a range of areas, including ISDS, which show TTIP is not be compatible with the aims of the SDGs. From the impact on affordable medicines, to reducing governments’ policy space, to marginalizing developing countries in the multilateral trade system. Read the full report here

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