Last night, the European Parliament gave the European Commission license to propose that an alternative version of the controversial investor-state dispute system (ISDS) is included in the Transatlantic Trade and Investment Partnership (TTIP) currently being negotiated with the US.
The ISDS is a legal framework that allows foreign investors – defined as people and organisations that own property or stock and bonds – to challenge EU member States that introduce legislation likely to impact on profits.
The alternative proposal – one of many recommendations approved by MEPs last night by 447 votes to 229 - would replace the ISDS’ panel of non-elected lawyers with non-elected but independent judges. It would also call for all hearings to be public.
Advocates argue that some form of legal pathway is needed to ensure the equitable treatment of companies from outside the content, thereby encouraging continued foreign investment.
Legal threat
But critics – like consumer interests NGO Health Action International (HAI) - say existing laws are sufficient and suggest both ISDS and the alternative will allow US firms to sue EU governments to block laws that may reduce profits.
According to HAI “ISDS or something similar would enable American pharmaceutical companies to directly sue member state governments in private trade tribunals if they feel that a government’s actions to improve access to safe and affordable medicines would diminish future returns on their investments.”
This was reiterated by HAI policy advisor Tessel Mellema who said: “Slapping a new name on ISDS won’t change the harmful impact that it could have on access to medicines in the European Union.
She added that: “Further rights for investors are not needed because well-developed legal systems already exist on both side of the Atlantic.”
The tenth round of TTIP negotiations is due to begin next week.
If a consensus is reached it would still need to be backed by the European Parliament, which may be a challenge according to author of the proposed amendments, MEP Bernd Lange from the Progressive Alliance of Socialists and Democrats.
He told EurActiv in May that: "The proposal is a step in the right direction but it still does not go far enough to restore public confidence on the issue. We need reassurance that a standing court is a clear commitment and not merely part of a plan for the future.
"The Commission must take this into account, as well as the other demands we have outlined, if we are to support the agreement in the European Parliament."