Some Reflections on the Potential Impact of TTIP on Access to Justice

By Dr. Anil Yilmaz Vastardis

On 16-17 May 2016, I participated in a multi-disciplinary workshop on ‘Law, neoliberalism and social protest: lessons from TTIP’ at the University of Brighton. This workshop was co- organized by myself and Prof Marie-Bénédicte Dembour, and it was followed by a public debate on TTIP as part of the Brighton Fringe Festival. The workshop benefited from the participation of Prof Diamond Ashiagbor, Dr Lucy Finchett-Maddock, Paul Gilbert, John Hilary, Prof Sheldon Leader, Sam Lowe, Prof David Schneiderman, Dr Gabriel Siles-Brugge, Prof M. Sornarajah, Dr Neil Stammers and Ntina Tzouvala.

TTIP is a comprehensive trade and investment partnership currently being negotiated by the US and the EU. The negotiations are led by the EU Commission on behalf of the EU and the USTR on behalf of the US Government. Agreements like TTIP aim at increased integration of markets, by removing tariff and non-tariff barriers to trade, as well as by providing guarantees for the protection of foreign investment. This of course is a means to an end, i.e. it is predicted that integration will lead to growth of the economy and the creation of jobs which will then lead to increased welfare.

If TTIP is predicted to have such positive effects on society, why all the controversy? Critics of TTIP have a number of concerns. A common worry is that the negotiators are not taking fundamental rights of the public seriously.  Among the major criticisms are: (1) the harmonization of standards through a ‘race to the bottom’; (2) lack of appropriate levels of transparency and inclusiveness of all stakeholders in the drafting process; (3) limitation of the regulatory space of states to take measures in the public interest via the investor protection rules that give investors rights (applied by investment tribunals outside the domestic legal system), but no obligations. The participants of the workshop discussed critically the process of negotiation and drafting of the TTIP, and certain controversial aspects of its proposed content.

Before going into my own presentation at the workshop, I would like to highlight some discussion points that I found most interesting. Among the questions addressed in the workshop was the reason for the increased level of controversy and public attention raised by TTIP, compared to the thousands of investment and trade deals previously signed by the EU and US. John Hilary and Sam Lowe’s experiences campaigning against TTIP provided useful insights to this question. My take on the discussions on this point is that EU citizens view TTIP as a direct threat to their wellbeing and interests – due to worries that hormone treated beef and genetically modified foods will pour into the EU from the US.  A second reason mentioned to explain the lack of reaction to previous similar agreements signed by the EU or member states was the fact that previous agreements did not threaten EU publics in a similar way. Those agreements were between the EU or member states and capital importing states. So the EU was primarily the recipient of benefits from those agreements, while the limiting effect of those agreements were experienced by developing states.

This point led the participants to discuss whether the clash of interests in trade and investment regulation are no longer confined to a global north/global south divide, but can be better described as a clash between the interests of big business and the rest of the members of society. Professor Sornarajah pointed out that TTIP is important because it shows how the north south division is losing its importance. He said that TTIP is the proof that the arguments in the north south debate are now applicable to the rich and the poor everywhere around the globe.

The participants also discussed whether one should view international law with a critical eye, particularly in the area of economic regulation. Schneiderman argued that drafters of investor protection rules found in investment treaties or mega-regionals such as TTIP create an illusion of universalism when they promote American or European standards of protection as customary international law.

TTIP, Investor State Dispute Settlement (ISDS) and Access to Justice

My presentation at the workshop was on the notorious ‘ISDS’, which seems likely to make its way into TTIP, that is, if the latter ever comes into being. Investor-state disputes can be resolved in various fora. ISDS is an acronym commonly used to refer to international investment arbitration (‘IIA’). When read as a generic phrase ISDS, as a minimum, encompasses national court proceedings, conciliation, mediation, negotiation, and arbitration. In the last few decades, IIA has become one of the popular methods to resolve foreign investment disputes. Historically, the use of arbitration to resolve foreign investment disputes was favoured particularly in order to prevent discrimination against foreign investors and avoid violation of their due process rights by abusive governments with weak judiciaries. As such, IIA is perceived as facilitating access to justice for foreign investors at the international level. However, IIA has been the subject of increasing criticism by various actors, including states, civil society and scholars (although it is perceived as a satisfactory system by its practitioners). Critics of the system particularly refer to lack of transparency and inclusiveness of the procedure, question impartiality of arbitrators (conflicts of interest, vested financial interest in outcome where only investors can initiate the proceedings etc.), high costs of arbitrators and legal representation, lack of an appeals process and inconsistent decisions on issues involving public interest.

In order to respond to the critics, the EU Commission proposed a so called ‘Investment Court System’ (ICS), for TTIP, which would remedy the defects of IIA. Cecilia M (EU Commissioner) presents the proposal as revolutionary: ‘the EU is committed to leading the way globally’ in reforming the IIA system. In fact, the proposal does promise some improvements to the system. However, like other critics, including the German Magistrates’ Association, I fail to see the utility of even an improved version of IIA or an investment Court System in TTIP, which is to be signed between the two supposedly most developed legal systems in the world.

But for me, there is a more worrying aspect to the adoption of IIA or ICS in TTIP, one that would signify a big leap away from ensuring access to justice for all. Distrusting local judiciaries for resolving investment disputes in the EU and the US, where there is no convincing reason to do so, entrenches further the prioritization of commercial interests over the interests of the society.

In the EU, access to effective judicial protection is guaranteed, regardless of the nationality of the parties, in the ECHR and the EU Charter of Fundamental Rights. In the US due process rights are guaranteed by the US Constitution. In both jurisdictions, the rights guaranteed in those core documents are enforced by strong national judiciaries, and in the EU at the regional level also through the ECtHR and the CJEU. The right to a fair trial and access to remedy are among the few human rights that actually benefit individuals as well as corporations. Yet, access to justice in these jurisdictions is not without any flaws. There is, however, no evidence to suggest that the EU and the US fail to grant effective judicial protection to investors. The flaws in access to justice primarily affect low-income and vulnerable groups in these jurisdictions, and these “groups most in need of legal assistance have the least access to political leverage that could secure it.” The UN estimates that up to four billion people globally live outside fair and functioning justice systems. On the other hand, investors who frequently use IIA have far more political leverage to secure their interests.

Outsourcing foreign investment disputes to specialized tribunals or courts outside the domestic systems creates a justice bubble for the powerful actors who have the capacity to affect change in host states. If investors had recourse to national courts for judicial protection, they would have a vested interest in seeing those courts operate fairly in all circumstances – not only when the political wind is blowing in their favour in the host state, but also when it does not.

Rejecting the outsourcing of the settlement of investment disputes in TTIP would signify an important paradigm shift in approaching access to justice. Instead of creating a private channel for access to justice in the EU and the US for a privileged group of investors, efforts and resources should be dedicated to developing effective local judicial protection mechanisms that serve justice to all members of the society from foreign investors to low-income and vulnerable groups.


Disclaimer: The views expressed herein are the author(s) alone.