New report explains why European Commission’s ISDS model is a wolf in sheep’s clothing

7 December, 2017: A new report titled ‘A World Court For Corporations’, published by European community and environment organisations, cautions that the Multilateral Investment Court (MIC) model being proposed by the European Commission will entrench corporate power, without changing the unfair power inequality in the investor-state dispute settlement (ISDS) scheme.

ISDS is controversial, and widely opposed. The European Commission’s own public consultation on ISDS showed 97% of respondents did not support ISDS. The MIC model is the European Commission’s attempt to address this widespread dissent, through improving the system of arbitration. But despite procedural adjustments, the report’s authors say the European Commission’s MIC model does not change the rights of corporations to bypass domestic legal systems and use international tribunals to sue governments over domestic laws even if those laws are in the public interest.

The EC’s MIC model does not change the investment law framework which places corporate rights above both domestic and international human rights laws. It would still undermine the ability of governments to regulate in the public interest, further entrenching the enormous market power of global corporations.  Put simply, ‘institutionalizing ISDS on a global level will legitimize and entrench a parallel legal system designed to empower transnational corporations’ (p. 36).

The authors of the report set out an alternative solution for the EU (p. 37). Existing ISDS agreements should be cancelled and ISDS should be excluded from future trade and investment agreements. They say governments should instead prioritise the current negotiations for a legally binding United Nations treaty to regulate transnational corporations and other business enterprises.