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EU-Canada trade deal passes top EU Court legal test

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EU-Canada trade deal passes top EU Court legal test

Justice - Photo Friends of the Earth Europe

(LUXEMBOURG) - The mechanism for the resolution of disputes between investors and States provided for by the free trade agreement between the EU and Canada is compatible with EU law, the EU's top Court ruled Tuesday.

ICS is a mechanism proposed for EU trade deals with Canada, Singapore and Vietnam which gives foreign investors strong rights while limiting governments' power of regulation. If implemented, corporations would be able to take governments to court for environmental, social and human rights policies and standards. On the other hand, victims of corporate crimes cannot sue corporations via these tribunals.

The outcome is in line with the Opinion provided by the Advocate General in January that the Investment Court System under CETA is fully compatible with EU law and, specifically, complies with:

(i) the principle of autonomy of EU law and the exclusive jurisdiction of the Court of Justice of the European union for the interpretation of EU law;

(ii) the principle of equal treatment and of the requirement of effectiveness of EU law; and

(iii) the Charter of Fundamental Rights, in particular of the right of access to a court and right to an independent and impartial tribunal under the Charter.

The decision by the Court means that no changes have to be made to the text of the EU-Canada agreement and Member States' ratifications can proceed. Equally, no change will be required in the ICS provisions included in the agreements with Singapore, Mexico and Vietnam. The Commission will continue to negotiate the Investment Court System in bilateral agreements with other partners.

The agreement with Canada is under provisional application since September 2017 and can only enter fully into force once ratified by all Member States and concluded by the Council. Only upon the conclusion of this process can the Investment Court System become operational. Until then, CETA will continue to be provisionally applied to the extent provided for in the Council Decision on its provisional application. CETA was approved by the European Parliament on 15 February 2017.

The Court of Justice Opinion was not welcomed by all. Environmental group Friends of the Earth Europe said it was legal, but it was not fair: "Corporate courts remain an unacceptable system that give VIP rights to big business and challenge our social, environmental and health standards," said Paul de Clerck, trade campaigner at FoE. "They are deeply unpopular with EU citizens, and we call on EU member states to reject the ratification of CETA, the EU-Canada trade deal."

The Opinion came despite the signing by more than 550,000 EU citizens of a petition calling on the EU and European governments to end corporate courts and adopt binding environmental and human rights obligations on multinational corporations at the EU and UN levels.

Under CETA, the ISDS mechanism is replaced with a new Investment Court System (ICS) that:

  • contains measures to protect foreign investments and investors;
  • makes clear that governments preserve their right to regulate and to achieve legitimate policy objectives, such as public health, safety, environment, public morals and the promotion and protection of cultural diversity.

Main features of the new Investment Court System:

- a permanent court inspired by public international courts;

- made up of a Tribunal of First Instance and an Appeal Tribunal;

- not based on temporary ad hoc tribunals;

- professional and independent adjudicators

  • appointed for long terms of office by both parties taking into account all interests at stake
  • held to the highest ethical standards through a strict code of conduct

- will work transparently by opening up hearings to the public; publishing documents submitted during cases; allowing interested parties (NGOs, trade unions, citizens' representatives) to intervene in the proceedings and make submissions.

OPINION 1/17 OF THE COURT


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