informe de amigos de la tierra sobre el tratado de libre comercio (pdf)

8/10/2019 Informe de Amigos de la Tierra sobre el Tratado de Libre Comercio (PDF)

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The hidden cost of EU trade deals: Investor-state dispute settlement cases taken against EU member states 1

InVeStOr-sTaTe dIsPuTe sEtTlEmEnTcAsEs tAkEn aGaInSt Eu mEmBeR sTaTeS

ThE hIdDeN cOsT

oF Eu tRaDe dEaLs:

4tH DeCeMbEr, 2014


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2 The hidden cost of EU trade deals: Investor-state dispute settlement cases taken against EU member states 3The hidden cost of EU trade deals: Investor-state dispute settlement cases taken against EU member states

Investor-state dispute settlement (ISDS) isnothing new, but the recent and ongoing tradenegotiations between the EU and US (TTIP) andthe EU and Canada (CETA), have given rise tomounting public criticism of the mechanism.Investor-state arbitration provides foreigninvestors with a privileged mechanism (thatdomestic investors or other parts of society cannotuse). Foreign investors can circumvent domestic

from host governments in secret business friendlyinternational tribunals, if they deem their

are affected by the introduction of regulatoryand/or policy changes in the host state. These

arbitrators who issue their decisions behind closed

have a commercial interest in keeping the systemalive and they often work for the same companies

Claims for compensation can and do amount tobillions of euro. However, ISDS cases themselves,as well as the awards, and other outcomedocuments for these cases are not fully disclosedto the public even when cases may relate to publicinterests, such as the environment.

Friends of the Earth Europe compiled availabledata on ISDS cases taken against EU memberstates since 1994, and for which documentationis available in the public domain. Considering theenormous lack of transparency around investor-state arbitration, this research exercise can onlyprovide an insight into the overall scale of thephenomenon. However, it highlights the irrefutableattack on recent EU accession countries and

the environment, as well as the cost this systemhas already had on EU taxpayers and Europeandemocracy.

KeY FiNdInGs127 known ISDS cases have been brought against 20 EU

member states since 1994.

Details of the compensation sought by foreign investors waspublicly available for only 62 out of the 127 cases (48%). Thecompensation sought for in these 62 cases amounts to almost!30 billion1.

The total amount awarded to foreign investors inclusive ofknown interest, arbitration fees, and other expenses and fees,as well as the only known settlement payment made by an EUmember state was publicly available for 14 out of the 127

cases (11%) and amounts to !3.5 billion.2

The largest known amount to be awarded by a tribunal againstan EU member state was !553 million3 in the CeskoslovenskaObchodni Banka vs. Slovak Republiccase (1997).

76% of known cases (97 out of the 127) were takenagainst new member states that acceded to the EU between2004 and 2007.

26 ISDS claims have targeted the Czech Republic (20% of thetotal), making it the EU member state with the most cases

Almost 60% of cases (75 out of the 127) concernenvironmentally relevant sectors.

The total number of known closed cases for which outcomes

are publicly available (63 out of the 127 cases) show full orpartial success for investors in 44% (28 out of 63 cases) ofcases with 15 cases in favour of the investors and 13 casesresulting in settlements.

While settlements tend to have a positive connotation,

because both parties come to an agreement that puts an endto the dispute, without one winning over the other, these canstill be very costly to the taxpayer. For instance, the largestknown amount to have been paid out by an EU member staterelates to a settlement (Eureko vs Poland, August 2005). As a

result of the settlement agreement reached with Eureko overan insurance enterprise, over !2 billion was paid by Poland.4

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2 The hidden cost of EU trade deals: Investor-state dispute settlement cases taken against EU member states

businesses can sue Governments in secret corporate courts if new lawsthatprotect people or the environment get in the way of their profits


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The hidden cost of EU trade deals: Investor-state dispute settlement cases taken against EU member states 7

-pute settlement cases against EU member states since 1994. It usesdata available in the public domain. It attempts to provide a compre-hensive overview of all known cases for which the relevant documen-tation is accessible. However, subject to agreement b y both parties,

the dispute may be a matter of public interest.11Due to the limitedtransparency obligations around arbitration proceedings,12the casesgathered here might not encompass all cases of investor-state dis-putes taken against EU member states. Not all cases are publishedand even fewer are fully documented. Even when cases are publiclyknown, many details of the amounts awarded are not fully disclosed.

Where possible, case information was sourced using databases fromthe International Centre for Settlement for Investment Dispute

(ICSID)13

, the United Nations Commission on International TradeLaw (UNCITRAL)14, or the United Nations Conference on Trade a ndDevelopment (UNCTAD)15. Other cases were sourced using arbitra-tion tribunal websites such as; the International Court of Arbitration(ICC)16, The Stockholm Chamber of Commerce (SCC)17and the Perma-nent Court of Arbitration (PCA)18. In addition, case award documents

were sourced from the Energy Charter Treaty website19, the Invest-ment Treaty Arbitration website20with supplementary information

individual cases. Where information was not accessible through theabove-mentioned sources, information was collected from relevantinvestment arbitration news service reports (such as IA Reporter)21and other relevant journal articles.22

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16 The hidden cost of EU trade deals: Investor-st ate dispute settlement cases taken against EU member states 17The hidden cost of EU trade deals: Investor-state dispute settlement cases taken against EU member states

member states only reveals the tip of the private arbitration ice-berg. Yet, contrary to the arguments put forward by the EuropeanCommission, it clearly shows the unacceptable costs that taxpayersand society bear when foreign investors are being g ranted privilegedtreatment.

-tails about the differences in case outcomes, which clearly show thatno matter who wins the case, legal and arbitration fees that stateshave to bear for their defense, costs large amounts of public funds

which cannot be invested for society. Likewise, while settlements areusually presented as a positive step towards resolution, they often

case where Poland paid over 2 billion euro -and force dangerous policychanges for the protection of citizens and the environment.86

In March 2014, in response to the growing public concern and c riti-cism of investor-state disputes87, the European Commission launcheda public consultation on the inclusion of ISDS in the EU-US trade deal(TTIP). The consultation questionnaire was based on the draft invest-ment chapter of the EU-Canada ag reement. An extraordinary 149thousand people replied, of which at least 131 thousand said no toISDS. In S eptember 2014, despite unprecedented scrutiny and publicengagement, the European Commission concluded the EU-Canadatrade deal including special privileges for foreign investors. This deal

-tative report on the public consultation on ISDS in TTIP, clearly con-

veying the Commissions disregard for widespread public disapprovalon the mechanism.

Decision makers at national and EU level have repeatedly attemptedto dampen the rising concerns that including ISDS in the EU-Canada(CETA) and the EU-US (TTIP) trade deals will dramatically increasethe number of lawsuits launched by foreign investors, by referring tothe existing investment treaties that EU member states have alreadysigned on to. This fails to acknowledge that the ma in reason why mostEuropean countries have not been sued through ISDS is that theyhave not consented to investor-state arbitration with other high cap-ital-exporting countries. This will change dramatically if the EU-Can-ada and the EU-US deals go ahead with investor-state dispute settle-ment included. This also fails to acknowledge that the nine EasternEuropean countries that have signed BITs with the US (prior to theiraccession to the EU) have been targeted through the mechanism.

Including investor-state arbitration in the EU-Canada (CETA) and theEU-US (TTIP) trade deal negotiations expands the scope of privatearbitrators power to an unprecedented scale. It questions the respon-sibility of governments locking their ability to regulate for the publicinterest in the future vis--vis their citizens, the very taxpayers who

will have to foot the bill for the risks taken by private investors.

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aNd tHe EuRoPeAnCoMmIsSiOn tO sToPtHe nEgOtIaTiOnS oFtHe Eu-Us tRaDe dEaL.

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-versions made using the European Commission Currency ConversionTool88

Czech Republic Nurses Salary (net): $890 (!675.36) per month (approx.!8,104.32 annually)89

The Czech Republic has already paid out some !460,370,618 incompensation to foreign investors. This equates to:

The average salary of 56,805 nurses over a one-year period in theCzech Republic, or;

Poland Nurses Salary(net): $ 1,051 (!797.54) per month approx. !9,570

annually90

Poland has already paid out !2,201,530,937in c ompensation toforeign investors, this equates to;

The average salary for 230,045 nurses over a one year period inPoland or;

Romania Nurses Salary (net): $ 523 (!396.87) per month approx.!4,762.44 per year.91

Romania has already paid out!183,311,336 in compensation toforeign investors, this equates to:

The average salary of 38,491 nurses over a one year period in Ro-mania or;

The Slovak Republic Nurses Salary (net): $659 (!ppp 500) per month approx. !6,000

annually92.

The Slovak Republic has already paid out !578,348,827 in compen-sation to foreign investors, this equates to

The average salary for 96,391 nurses over a one year period in the

Slovak Republic or;

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20 The hidden cost of EU trade deals: Investor-state dispute settlement cases taken against EU member states

informe de amigos de la tierra sobre el tratado de libre comercio (pdf)

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