Financial responsibility in ISDS cases

Since the treaty of Lisbon, the European Commission has the authority to conclude investment treaties on behalf of the European Union and thus on behalf of the member states. In investment treaties, a so-called investor-to-state dispute settlement mechanism, or ISDS are often included. This mechanism is surrounded by questions and controversy. The idea is that such a clause should give investors from both sides the possibility to seek compensation if they believe that the terms of the treaty have been broken or they have been treated unfairly by a state. Critics of ISDS fear that such a mechanism could restrict the room to regulate for governments, because they fear damage claims. On top of that, they rightly point to the lack of transparency of ISDS procedures. Before Lisbon, investment treaties were signed by member states and so any potential ISDS cases were handled nationally. But now that these treaties are being handled by the EU, a case can also be filed on the basis of European law or treaties. So we need new rules for dealing with these cases and, most importantly, to deal with any possible financial implications. Today, the international trade committee of the European Parliament votes on a new framework, to clarify the responsibilities between the EU and its member states. Later this week, the entire Parliament will vote on this. The most important parts of this framework will outline when the EU will act as a respondent in a case, when member states will do so and who should carry any possible financial costs resulting from a case. If the case is filed on the basis of EU law or regulation, it is only logical that the EU acts as respondent, if it is concerned with national law, the member state will do so. The complete technical aspects of this framework can be found in the text as it was adopted by the Parliament, here. So this document is purely the legal financial framework to decide the relationship between the EU and the member states. In no way does it affect the content of the controversial ISDS mechanism or whether companies can or cannot make use of it. As a political signal, the text does contain a paragraph stressing that ISDS should not affect a government's right to regulate, a view that ALDE shares. The broader discussion about ISDS is not being held in relation to this file. Lately, the discussion around ISDS has been focused around the treaty being negotiated between the EU and the US,  TTIP. But ISDS is nothing new, there are around 1400 bilateral investment treaties between European member states and third countries. The question is if we can improve these, and if so, how. In response to questions from the European Parliament and society, the Commission has begun an online public consultation about inserting ISDS into the Transatlantic Trade and Investment Partnership and what it should look like. The document that we vote about today is important to clarify the different responsibilities of member states and the EU and to make sure that any possible costs resulting from an ISDS case are rightly distributed. Even for those against ISDS in the broader sense, that must be a priority.