Matthias Machnig, State Secretary in the Federal Ministry for Economic Affairs and Energy, welcomes the proposal for a new, modern investment protection system in the context of made today by the European Commission. "This is a breakthrough. The proposal lays the foundations for a modern and transparent investment protection system that is totally different from current arbitration proceedings. We are proud of the fact that we have - together with our French partners - insisted on advancing this debate. The new draft Investment Chapter takes account of the large majority of our suggestions. Apart from new procedural rules that provide for transparency, legitimacy and the rule of law, it is particularly important that the parliaments' right to regulate will be unaffected. The proposal guarantees that private investors cannot undermine necessary parliamentary decisions in the public interest via special rights."
The proposal by the European Commission contains procedural and substantive reforms of the existing investor-to-state dispute settlement (ISDS) mechanism.
- Investment Court: The European Commission proposes that claims submitted by investors shall in future be decided by an Investment Court consisting of publicly appointed Judges.
- Selection of Judges: Unlike in the past, the Judges shall no longer be appointed by the parties to a dispute. In the future, the parties to an agreement shall appoint the Judges; in the case of TTIP, this would be the EU, the EU Member States and the United States. The total of 15 Judges shall publicly hear cases in divisions consisting of 3 Judges. The divisions shall be composed in accordance with an objective procedure without involvement of the investor who has submitted the claim.
- Transparent proceedings: In the future, written submissions shall be published, and hearings shall be open.
- A genuine Appeal Tribunal: In addition, the proposal provides for a genuine appeal mechanism.
- Right to regulate: Furthermore, the Commission proposal also provides for a binding rule according to which laws and other state measures that are necessary in the public interest must not be undermined with reference to investment protection provisions. This also applies to state measures in the field of support for culture.
The Commission proposal is also to form the basis for other investment protection agreements. Besides this, it is to be the first step towards an International Trade Court.
The proposal will now be thoroughly examined and discussed by all EU Member States and in the European Parliament. In the light of these discussions, the Commission intends to resume the negotiations on investment protection with the United States, which have been suspended since mid-2014, on the basis of the coordinated proposal.