Upper Chamber of German Parliament Against Investment Arbitration in US/EU TTIP

In today‘s session, the Upper Chamber (Bundesrat) of the German parliament discussed the state of the current negotiations of a Transatlantic Trade and Investment Partnership (TTIP)  between the European Union and the United States. In that context, several federal states tabled a resolution, which spoke out against the use of investment arbitration in the treaty. The resolution was adopted. In its relevant part, it reads as follows:

“8. The Bundesrat is of the opinion, that investors as a matter of principle have to be directed to seek legal recourse in the national state courts. On this point, the Bundesrat views itself as being in line with the opinion of the Federal Government. The Bundesrat aks that the European Commission sets out its reasons why it believes that investors state arbitration should be part of a free trade agreement between the European Union and the United States, against the background of the existing access to justice. The Bundesrat is of the opinion that special investment protection provisions and corresponding dispute resolution mechanisms between investors and states are not required, and would create substantial risks.”

„Der Bundesrat vertritt die Auffassung, dass Investoren daher grundsätzlich auf den Rechtsweg vor nationalen staatlichen Gerichten zu verweisen sind. Der Bundesrat sieht sich mit dieser Auffassung im Einklang mit gleichgerichteten Äußerungen der Bundesregierung. Der Bundesrat bittet die Europäische Kommission, ihre Auffassung zur Notwendigkeit einer Vereinbarung von Investor-Staats-Schiedsverfahren im Rahmen eines Freihandelsabkommens zwischen der EU und den USA vor dem Hintergrund bestehender rechtsstaatlicher Rechtsschutzmöglichkeiten zu begründen. Der Bundesrat hält spezielle Investitionsschutzvorschriften und Streitbeilegungsmechanismen im Verhältnis Investor und Staat zwischen der EU und den USA für verzichtbar und mit hohen Risiken verbunden.“

Investment arbitration, in my view, is increasingly becoming a focal point of the ever-widening public debate about the US/EU free trade agreement. On the one hand, this is rather surprising, given that it is a highly legalistic and technical issue. On the other hand, at least to some journalists, it has lent itself to colourful oversimplification and stereotypes, and articles talk about in transparent proceedings carried out by a small club of secretive lawyers in luxury hotels.

Given the distrust in, and sometimes even open hostility of  some parts of the German business community to the US litigation system, is almost an ironic turn that arbitration is now deemed unnecessary, given that there is access to the state courts in the United States and the European Union. I guess the debate is far from over.

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