Yesterday, 12 November, the EU formally presented its proposed language for the Investment Chapter of the TTIP to the US. As discussed in our earlier blog piece here, the EU is suggesting an "Investment Court System" to resolve disputes between investors and states under the TTIP.
The 12 November text is very similar to that seen in the previous draft, with a number of small changes. These changes include (but are not limited to):
- Amendment of the Investment Court procedure to make it more accessible to small and medium sized entities (including using teleconferencing for hearings and limiting the costs that such entities should bear for legal assistance and representation when making unsuccessful claims)
- Additional requirements of independence and impartiality for Investment Court Tribunal members to bar them from acting as party-appointed experts or witnesses
- Retaining a presumption that the loser will pay the costs of the winning party, but allowing discretion to the Tribunal if apportioning costs is appropriate in the circumstances of the case
- Importantly (and as pointed out in our earlier blog piece) new articles 30(5) and (6) make clear that any final award issued by the TTIP Investment Court will count as a “final award” for the purposes of the ICSID and New York Convention
Negotiations on the Investment Chapter have been on hold during the EU's period of consultation. Now that formal proposals have been made, the EU and the US are expected to resume negotiations on the subject of investment protection and resolution of investment disputes.
The US has generally been a defender of investment treaty arbitration and has been explicit on the reasons why it is suitable in the TPP. Meanwhile, comments made by U.S. Trade Representative Michael Froman suggest that the US views an Investment Court system, particularly one including an appeal mechanism, with some circumspection. Nevertheless, the US will acknowledge that the EU's proposals are the result of an open and in-depth consultation process by the Commission. There will also be other significant questions to resolve in terms of the drafting of specific investment protections, and finding the proper balance with the State's right to regulate. The strength of feeling in the EU against investment treaty arbitration and the US's wish to get TTIP signed before the current administration is over may mean there is more flexibility from the US than might otherwise be anticipated, although it would be a significant development if the U.S. ultimately deviated from its model BIT.
The future of these proposals, therefore, remains to be seen.