The Multilateral Investment Court: A Stumbling Block for Comprehensive and Sustainable Investment Law Reform

Abstract

For the last years, reforming the international investment law regime has been a key priority of the trade agenda of the European Commission. Two important decisions in March 2018 can either be seen as a stepping stone or stumbling block in this regard. On 20 March 2018, the Council authorised negotiations for a treaty establishing a multilateral investment court (MIC). This proposal was yet the latest step in a series of activities aimed at replacing the traditional arbitration system of dispute settlement in investment treaties (Investor-State Dispute Settlement, ISDS) with a treaty-based MIC. The latest development concerns the multilateralization of the Investment Court System leading to a MIC. After lobbying for this approach in various intergovernmental fora, the Commission developed a more concrete proposal over the course of 2016 and the first half of 2017. Last year, the ISDS debate moved into the auspices of UNCITRAL Working Group III. Neither the negotiation mandate nor the UNCITRAL mandate touch upon substantive investment standards or refer to the current debates and negotiations on business and human rights. The negotiations will therefore not address any substantive elements of investment treaties. In all likelihood, they will also not address procedural issues such as counterclaims, participation rights of affected stakeholders, presumption of responsibility or burden of proof. The second important decision was taken two weeks earlier by the Court of Justice of the European Union (CJEU) on 6 March 2018. In its ruling in the case C-284/16 Achmea, the CJEU clarified that investment agreements between EU Member States (so-called intra-EU BITs) that have an ISDS clause violate EU law. It is not quite clear whether the CJEU would also transfer its view to other agreements such as CETA or the planned treaty for a MIC. However, the ruling indicates that any investment agreement providing for dispute settlement procedures in which EU law can be applied or interpreted and which does not ensure a review of this interpretation by the CJEU is in breach of EU law.