An investment protection agreement is an agreement under international law between two (or several) countries which assures investors from one of the parties (the home state) that they will enjoy a certain degree of protection in the other state (the host state).

For example, it deals with the protection of property and protection against expropriation, the free transfer of capital and profits and protection against discrimination.

In previous investment protection agreements, the agreed level of protection could either be enforced by the investor’s home state in a state-to-state dispute-settlement procedure, or by the investor himself in an investor-to-state dispute-settlement procedure (ISDS). CETA modernises the dispute-settlement process, introducing a publicly legitimated investment tribunal.

Older investment agreements only provided for state-to-state dispute-settlement procedures. In a legal dispute on the application of the investment protection agreement, therefore, the investor’s home state had itself to launch the state-to-state dispute-settlement procedure against the host state.

Investor-to-state dispute-settlement procedures were introduced in the 1980s in order to de-politicise investment disputes. The investor himself is permitted to appeal to an arbitration tribunal, where he can have the lawfulness of state measures examined on the basis of the investment protection agreement.

Unlike the previous tribunals, the investment tribunal agreed in CETA is a publicly legitimated court which can be approached by an investor claiming that the investment protection rules in CETA have been violated. This new approach taken by Canada and the EU responds to criticism made in the context of the public consultations on investment protection and ISDS in TTIP. The EU had first proposed the investment tribunal – not least at the initiative of former Economic Affairs Minister Gabriel – for TTIP. In addition to CETA, the investment tribunal to settle investment disputes has also been agreed in the EU’s free trade agreement with Viet Nam.