The paralysing monsters hidden in our trade deals

By Attracta Uí Bhroin and Nick Meynen

Imagine you had a magic wand to ensure that the European institutions and national parliaments do what the majority of Europeans want them to do: get tougher on protecting the environment. But imagine, too, that there are sinister forces at work that can also put a set of handcuffs on any political leader to stop them standing up for the environment– handcuffs that are virtually impossible to unlock.

The magic wand is a fantasy but the handcuffs are very real: democratically elected leaders all over Europe are being bound by systems where investors can sue the EU or its Member States for introducing policy or legislation which impacts on their corporate profitability.

While typically taking the form of a so-called ‘Investor-State Dispute Settlement (ISDS) or Investment Court System (ICS), these mechanism are part of the many trade deals that the EU cuts with countries all over the globe, it can also change names and guises to conceal its ugly nature.

The sums of money in the claims made by large corporations can be vast, running into the billions. Specialised lawyers make a lot of money from this and seek opportunities to keep the cashflow coming in their direction.

Vattenfal, for example, sued Germany for its change in policy on nuclear energy after the Fukushima Daiichi disaster. Even when such claims fail, the fear of being sued creates a fear in decision makers. This phenomenon is referred to as ’regulatory chill’. Governments are fearful of taking positive and progressive action in case they are sued. Corporations on the other hand see this chill as a positive outcome. Even if they lose a case – it will have spread like a virus infecting fear and paralysis into legislatures and policy bodies.

Imagine you’re a policymaker who wants to get real on climate change. You want better labels to inform consumer choice, better emission standards, stricter eco-design etc. These are all things which potentially impact corporate profitability and so could trigger one of these ISDS-style claims against your government.

Not even protections from existing EU legislation are safe. Juliane Kokott and Christoph Sobotta, well known for their respective roles as an Advocate General in the EU Court of Justice and Referandaire, commented that:

“We are not convinced by the formal argument that there is no real conflict because arbitration only awards damages, but does not affect a Member State’s duty to implement EU law. It can hardly be denied that the practical effect of EU law will be weakened if Member States are obliged to compensate investors for implementing EU measures.”

In a nutshell: we can’t be complacent. There’s no other way to put this: all safeguards that protect the environment in the EU are currently under attack.

These systems don’t operate with the independence and transparency that we expect from normal national or EU courts, even though in some instances they are ironically called courts. The rights that you have in a normal national court are non-existent here. As these monsters multiply, so does the fear they spew out in the form of potentially multi-billion euro claims against state funds – ultimately paid by tax payers, just because our elected leaders dared to increase ambition on the social or environmental front.

The European Commission and Council have been relentless in advancing this monster in new EU trade deals. In January last year, the EU Parliament rushed to ratify the EU Canada Trade Agreement (CETA), before the EU Court of Justice (CJEU) even had a hearing to determine if it is even legally compatible with the EU treaties.

Final decisions on CETA are being progressed through your parliaments right now and some have already passed CETA. The fact that at the CJEU hearing on the legality of CETA last June the Court sat in full chamber – something it rarely does – only highlights the extraordinary public importance of the case. The opinion from the Advocate General on the case is expected in February. The Court’s opinion will probably follow some months later. Whatever the decision on the matter of the legality of the systems – the simple reality is that these systems are toxic to public interest, toxic to the environment, and are handcuffing all our public interest advocacy work.

Civil society is not standing on the side-lines witnessing this corporate coup from an armchair. A massive EU-wide coalition of civil society organisations, unions, social movements and more have come together to fight back through a new campaign: ’Rights for people, rules for corporations – Stop ISDS’. There has rarely been a petition so important for the environment as this one. Please sign and share far and wide. The power of the multinationals is growing, but so is the power of our multinational resistance movement to a corporate coup.


Attracta Uí Bhroin is a Vice President of the European Environmental Bureau (EEB)
Nick Meynen is the policy officer for environmental and economic justice at the EEB.