08 März 2015

Re-Organizing Europe’s Judicial Power through the Backdoor?

Dropping CETA’s current investment chapter and trilateralising its (re-)negotiation would provide the space for making a conscious, open, and unbiased decision in favour of an investor-state dispute-settlement mechanism in European trade and investment agreements.

European governments, businesses and civil society are engaged in a public debate on an investor-state dispute settlement (ISDS) mechanism in the Transatlantic Trade and Investment Partnership (TTIP) between the US and the EU. Recently, the Commission published the results of a massive public consultation on this matter accepting that there is indeed a need for further talks. The public, especially in countries like Germany, appears to take a strong interest in the question of how, and under which rules, Europe’s judicial power should be organised. This is actually good news in an otherwise increasingly heated political atmosphere.

Indeed, the question of who has the final say in a society in case of a conflict is one that has the power to move our political hearts. It touches upon the core of democracy. Certainly, this is not the first time dispute-settlement mechanisms in international treaties have attracted public debate. For example, the controversial reception of some rulings of the European Court of Human Rights, and the British government’s recent response, provide a telling illustration of the potential for conflict.

While ISDS is not about human rights but about the international judicial control of the exercise of sovereign powers by allowing investors to challenge governments outside domestic courts, it involves similar potential for dispute. Accordingly, whenever societies submit themselves to such mechanisms, it requires a debate about the means they want to permit to control their legislature and executive.

Despite the fact that a controversial public discourse, even opposition has been gathering momentum across Europe, the consolidated text of the Comprehensive Economic and Trade Agreement between Canada and the EU (CETA) – likely to be the EU’s model agreement for years to come – was released for ratification. Apparently, this gave the whole debate a very different twist. Instead of debating in which way we want to organise our judicial branch, the (previous) European Commission has invited the European Parliament and national parliaments across the EU to answer a different question: do we want to have the very design of the judiciary chosen for us by the Commission? CETA establishes a mechanism for reviewing governmental authority functionally similar to domestic administrative and constitutional courts. Without the public having the chance to form a thorough opinion in a broad debate on who shall be entitled to control our government by which means, the Commission made its choices. By the way of example, out of several dispute settlement options available, a system of three ad-hoc arbitrators was elected to render fundamental decisions on the balance of public and private interests. Instead of making CETA a backup mechanism in case domestic courts fail to distribute justice, it established an alternative legal avenue. Or, just to mention another instance for a deliberate choice made by the Commission, possible errors of CETA arbitral tribunals in questions of substantive law cannot be corrected in an appeals procedure.

In the light of the current public concerns and the, back then still ongoing, public consultations on the investment chapter in TTIP, presenting the parliaments in Europe with a choice of “take it or leave it” in respect of a “hidden role model” for investment protection embodied in CETA might have a particularly stale aftertaste in terms of democratic culture: Was it not the European Commission in the first place that refused to develop a European model treaty that could have been put up for public scrutiny and allowed for a much-needed debate?

While the Commission’s maneuver is part of the standard repertoire of an executive dealing with the legislator in the area of foreign relations, albeit one from the 19th century, we may ask ourselves whether we should accept the discussion being narrowed down to a choice between rejecting and approving the whole agreement. In fact, both options could prove to be too costly: Scrapping the entire agreement might deprive us of the economic opportunities that are associated with trade liberalization and standardization. Approving it would establish an ISDS mechanism whose specific design entails far-reaching choices on organizing the judicial power of the EU and its member states which necessitate having a comprehensive discussion about their consequences and possible alternatives in order to command broader legitimacy.

It can hardly be doubted that ISDS, as a concept, is one of the most effective tools to manage political risk and promote the international rule of law. It can even be viewed as making a century-old idea within public international law more effective: that everyone is entitled to a minimum standard of treatment abroad at any given time. However, while the grand idea of an international rule of law undoubtedly deserves to be supported by the EU, one may wonder whether the present CETA text does not somewhat betray its domestic counterpart. The CETA text establishes a dispute-settlement system as a fully emancipated alternative to domestic courts, instead of stretching out a safety net in the event the latter fail to distribute justice. In doing so, it partially diminishes some of the world’s most developed and refined domestic legal systems. Balancing private and public interests can then be carried out exclusively outside their jurisdictions. However, proceedings before CETA arbitration tribunals do not meet the same standards in terms of impartiality and appeals possibilities in order to correct previous erroneous decisions as those before the said domestic courts.

Whatever our personal view on that fundamental question is, finding ourselves faced with merely a choice of “accept it or forget it” would hardly be tolerable. In the present situation, if ratification of CETA is pressing in order to unlock its trade potentials and if substantial improvements of the investment chapter cannot be achieved before, it might be worth considering unbundling the CETA package. CETA would serve as a robust trade agreement without the investment chapter it now contains – perhaps an even better one. More importantly, leaving an investment chapter for later – dealt with in trilateral talks with the USA on TTIP – would give the current public debate the meaning it deserves, i.e., developing a more widely accepted answer to the question of how and under which rules Europe wants to organize its judicial power – without prejudging the outcome.


SUGGESTED CITATION  Hindelang, Steffen: Re-Organizing Europe’s Judicial Power through the Backdoor?, VerfBlog, 2015/3/08, https://verfassungsblog.de/re-organizing-europes-judicial-power-through-the-backdoor/.

Leave A Comment

WRITE A COMMENT

1. We welcome your comments but you do so as our guest. Please note that we will exercise our property rights to make sure that Verfassungsblog remains a safe and attractive place for everyone. Your comment will not appear immediately but will be moderated by us. Just as with posts, we make a choice. That means not all submitted comments will be published.

2. We expect comments to be matter-of-fact, on-topic and free of sarcasm, innuendo and ad personam arguments.

3. Racist, sexist and otherwise discriminatory comments will not be published.

4. Comments under pseudonym are allowed but a valid email address is obligatory. The use of more than one pseudonym is not allowed.




Other posts about this region:
Europa


Other posts about this region:
Europa
No Comments Join the discussion
08 März 2015

Re-Organizing Europe’s Judicial Power through the Backdoor?

Dropping CETA’s current investment chapter and trilateralising its (re-)negotiation would provide the space for making a conscious, open, and unbiased decision in favour of an investor-state dispute-settlement mechanism in European trade and investment agreements.

European governments, businesses and civil society are engaged in a public debate on an investor-state dispute settlement (ISDS) mechanism in the Transatlantic Trade and Investment Partnership (TTIP) between the US and the EU. Recently, the Commission published the results of a massive public consultation on this matter accepting that there is indeed a need for further talks. The public, especially in countries like Germany, appears to take a strong interest in the question of how, and under which rules, Europe’s judicial power should be organised. This is actually good news in an otherwise increasingly heated political atmosphere.

Indeed, the question of who has the final say in a society in case of a conflict is one that has the power to move our political hearts. It touches upon the core of democracy. Certainly, this is not the first time dispute-settlement mechanisms in international treaties have attracted public debate. For example, the controversial reception of some rulings of the European Court of Human Rights, and the British government’s recent response, provide a telling illustration of the potential for conflict.

While ISDS is not about human rights but about the international judicial control of the exercise of sovereign powers by allowing investors to challenge governments outside domestic courts, it involves similar potential for dispute. Accordingly, whenever societies submit themselves to such mechanisms, it requires a debate about the means they want to permit to control their legislature and executive.

Despite the fact that a controversial public discourse, even opposition has been gathering momentum across Europe, the consolidated text of the Comprehensive Economic and Trade Agreement between Canada and the EU (CETA) – likely to be the EU’s model agreement for years to come – was released for ratification. Apparently, this gave the whole debate a very different twist. Instead of debating in which way we want to organise our judicial branch, the (previous) European Commission has invited the European Parliament and national parliaments across the EU to answer a different question: do we want to have the very design of the judiciary chosen for us by the Commission? CETA establishes a mechanism for reviewing governmental authority functionally similar to domestic administrative and constitutional courts. Without the public having the chance to form a thorough opinion in a broad debate on who shall be entitled to control our government by which means, the Commission made its choices. By the way of example, out of several dispute settlement options available, a system of three ad-hoc arbitrators was elected to render fundamental decisions on the balance of public and private interests. Instead of making CETA a backup mechanism in case domestic courts fail to distribute justice, it established an alternative legal avenue. Or, just to mention another instance for a deliberate choice made by the Commission, possible errors of CETA arbitral tribunals in questions of substantive law cannot be corrected in an appeals procedure.

In the light of the current public concerns and the, back then still ongoing, public consultations on the investment chapter in TTIP, presenting the parliaments in Europe with a choice of “take it or leave it” in respect of a “hidden role model” for investment protection embodied in CETA might have a particularly stale aftertaste in terms of democratic culture: Was it not the European Commission in the first place that refused to develop a European model treaty that could have been put up for public scrutiny and allowed for a much-needed debate?

While the Commission’s maneuver is part of the standard repertoire of an executive dealing with the legislator in the area of foreign relations, albeit one from the 19th century, we may ask ourselves whether we should accept the discussion being narrowed down to a choice between rejecting and approving the whole agreement. In fact, both options could prove to be too costly: Scrapping the entire agreement might deprive us of the economic opportunities that are associated with trade liberalization and standardization. Approving it would establish an ISDS mechanism whose specific design entails far-reaching choices on organizing the judicial power of the EU and its member states which necessitate having a comprehensive discussion about their consequences and possible alternatives in order to command broader legitimacy.

It can hardly be doubted that ISDS, as a concept, is one of the most effective tools to manage political risk and promote the international rule of law. It can even be viewed as making a century-old idea within public international law more effective: that everyone is entitled to a minimum standard of treatment abroad at any given time. However, while the grand idea of an international rule of law undoubtedly deserves to be supported by the EU, one may wonder whether the present CETA text does not somewhat betray its domestic counterpart. The CETA text establishes a dispute-settlement system as a fully emancipated alternative to domestic courts, instead of stretching out a safety net in the event the latter fail to distribute justice. In doing so, it partially diminishes some of the world’s most developed and refined domestic legal systems. Balancing private and public interests can then be carried out exclusively outside their jurisdictions. However, proceedings before CETA arbitration tribunals do not meet the same standards in terms of impartiality and appeals possibilities in order to correct previous erroneous decisions as those before the said domestic courts.

Whatever our personal view on that fundamental question is, finding ourselves faced with merely a choice of “accept it or forget it” would hardly be tolerable. In the present situation, if ratification of CETA is pressing in order to unlock its trade potentials and if substantial improvements of the investment chapter cannot be achieved before, it might be worth considering unbundling the CETA package. CETA would serve as a robust trade agreement without the investment chapter it now contains – perhaps an even better one. More importantly, leaving an investment chapter for later – dealt with in trilateral talks with the USA on TTIP – would give the current public debate the meaning it deserves, i.e., developing a more widely accepted answer to the question of how and under which rules Europe wants to organize its judicial power – without prejudging the outcome.


SUGGESTED CITATION  Hindelang, Steffen: Re-Organizing Europe’s Judicial Power through the Backdoor?, VerfBlog, 2015/3/08, https://verfassungsblog.de/re-organizing-europes-judicial-power-through-the-backdoor/, DOI: 10.17176/20170208-154006.

2 Comments

  1. Filippo Fontanelli So 8 Mrz 2015 at 23:58 - Reply

    Dear Steffen,

    I find this analysis impeccable, and more incisive than the routine commentaries about ISDS that public discourse churns out at a worrisome rate.
    However, the EU Parliament must give consent to the CETA under Art. 218 TFEU, so it’s not too fair to suggest that the Commission can go solo (rectius: it could, but at the risk of alienating the Parliament’s consent). That the Parliament’s formal role in the negotiation is somewhat diminutive can be true, but the TFEU is to be blamed (that is, the States), not the Commission.
    Also, I am not exactly sure how your argument (i.e., that we should not consent to this 19th century executive blackmail) would apply to the thousands of BITs concluded by EU countries. Do not they all provide for ISDS? Were not those bilateral treaties with largely interchangeable arbitration clauses also a „re-organization of judicial power“ of each State involved? When did this re-organization become a constitutional problem? I guess when the EU started managing it, but again, that’s just how conferral works.
    In sum, is really the circumvention of the national judiciary a novelty? I do not think so. Hence, I view the Commission’s plan less as maneuvering and more as a way to implement a well-rehearsed mechanism that all EU states have already endorsed and embraced repeatedly, if severally.

    Thanks for sharing your thoughts on this, I’d appreciate greatly.

    Filippo

  2. Emilio De Capitani Di 10 Mrz 2015 at 16:53 - Reply

    Very interesting debate.
    However I will not underestimate the political pressure of the EP during the negotiations. The Council (and the Commission) knows very well the impact of a negative vote of the plenary (see the cases of the 2010 „SWIFT“ agreement , or „ACTA“ or the rejection of the fisheries agreement with Morocco).
    On the TTIP the pressure is growing and the issue of judicial responsibility and redress are in the front line of the Parliamentary committees. See for instance the EDRI comments on the LIBE draft amendments and notably amendment 89 dealing with the role of the Court of Justice 🙁https://www.edri.org/files/LIBE_Amendments_comments_20150203.pdf)
    All the best.
    EDC

Leave A Comment

WRITE A COMMENT

1. We welcome your comments but you do so as our guest. Please note that we will exercise our property rights to make sure that Verfassungsblog remains a safe and attractive place for everyone. Your comment will not appear immediately but will be moderated by us. Just as with posts, we make a choice. That means not all submitted comments will be published.

2. We expect comments to be matter-of-fact, on-topic and free of sarcasm, innuendo and ad personam arguments.

3. Racist, sexist and otherwise discriminatory comments will not be published.

4. Comments under pseudonym are allowed but a valid email address is obligatory. The use of more than one pseudonym is not allowed.




Other posts about this region:
Deutschland


Other posts about this region:
Deutschland
2 comments Join the discussion
Go to Top