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  • Company/Organisation: IRISH CONGRESS TRADE UNIONS
  • Location: Ireland
  • Activity: The Irish Congress of Trade Unions is the national representative body for workers an their unions on the island of Ireland, representing and campaigning on behalf of some 800,000 people. The ICTU seeks to achieve a just society - one which recognises the rights of all workers and citizens to enjoy the prosperity and fulfilment which leads to a good quality of life. Quality of life embraces not just material well-being, but freedom of choice to engage in the arts, culture and all aspects of civic life. This vision applies in the context of Ireland, Europe and the wider world and challenges the existing economic order. Congress Mission Congress will strive to achieve economic development, social cohesion and justice by upholding the values of solidarity, fairness and equality. The primary instrument for the achievement of this mission is the organisation of workers in unions. Congress also constructs and advocates for a platform of policies capable of delivering our vision of a just society. We engage with Government, employers, civil society organisations, voluntary groups and international bodies to promote its attainment. We will support unions in their efforts to secure a fairer distribution of the wealth their members create.
  • Profile: Trade union/organisation representing EU trade unions
  • Transparency register: Yes
  • Prior investment in the US: No


A. Substantive investment protection provisions

Explanation of the issue

The scope of the agreement responds to a key question: What type of investments and investors should be protected? Our response is that investment protection should apply to those investments and to investors that have made an investment in accordance with the laws of the country where they have invested.

Approach in most investment agreements

Many international investment agreements have broad provisions defining “investor” and “investment”.

In most cases, the definition of “investment” is intentionally broad, as investment is generally a complex operation that may involve a wide range of assets, such as land, buildings, machinery, equipment, intellectual property rights, contracts, licences, shares, bonds, and various financial instruments. At the same time, most bilateral investment agreements refer to “investments made in accordance with applicable law”. This reference has worked well and has allowed ISDS tribunals to refuse to grant investment protection to investors who have not respected the law of the host state when making the investment (for example, by structuring the investment in such a way as to circumvent clear prohibitions in the law of the host state, or by procuring an investment fraudulently or through bribery).

In many investment agreements, the definition of “investor” simply refers to natural and juridical persons of the other Party to the agreement, without further refinement. This has allowed in some cases so–called “shell” or “mailbox” companies, owned or controlled by nationals or companies not intended to be protected by the agreement and having no real business activities in the country concerned, to make use of an investment agreement to launch claims before an ISDS tribunal.

The EU's objectives and approach

The EU wants to avoid abuse. This is achieved primarily by improving the definition of “investor”, thus eliminating so –called “shell” or “mailbox” companies owned by nationals of third countries from the scope: in order to qualify as a legitimate investor of a Party, a juridical person must have substantial business activities in the territory of that Party.

At the same time, the EU wants to rely on past treaty practice with a proven track record. The reference to “investments made in accordance with the applicable law” is one such example. Another is the clarification that protection is only granted in situations where investors have already committed substantial resources in the host state - and not when they are simply at the stage where they are planning to do so.

Link to reference text

Taking into account the above explanation and the text provided in annex as a reference, what is your opinion of the objectives and approach taken in relation to the scope of the substantive investment protection provisions in TTIP?

The Irish Congress Trade Unions (ICTU) supports the position of the European Trade Union Confederation (ETUC) and we would like to make the following points in respect of Ireland. There is no justification for including additional investor protection provisions or the system for ISDS arbitration in TTIP. The Commission's own figures show that in 2012, the foreign direct investment from the US in Europe was 1.5 trillion euros, while Europe's in the US was 1.6 trillion euros. If over 3 trillion euros have been invested without ISDS, there is clearly no problem to solve here. There is no evidence that investors have ever lacked appropriate legal protection through the legal system in the EU or Ireland. Indeed there is no bilateral investment treaty between the US and Ireland and yet US investors are a significant presence in Ireland, clearly demonstrating that investors seem to be satisfied with the rule of law here. It is unlikely that the exclusion of an investment protection chapter in TTIP would significantly impede the conclusion of an agreement; particularly as trade and investment relations between Europe and North America traditionally do not involve investment protection agreements. In addition, countries such as Australia have shown that a country can credibly exclude investment protection in a trade agreement with one country (e.g. US-Australia FTA) and still include it in an agreement with another country (e.g. Korea-Australia FTA). There is no plausible argument why the EU could not follow a similar path. ISDS provisions bypass existing judicial remedies in favour of secret and unaccountable dispute settlement mechanisms and as such may be contrary to the Constitution of Ireland. Under the Constitution, the State is answerable before the courts for wrongs committed against companies for breach of their constitutional or legal rights. The Constitution also sets out the manner in which laws must be made (Article 15.2.1) and that Justice must be administered 'in courts established by law by Judges appointed in the manner provided by this Constitution' (Article 34) The Constitution may only be altered following a referendum, provision for which is made in Article 46. Although the negotiation of the TTIP agreement is being undertaken by the EU the agreement is separate from the EU Treaties (TFEU). Further arguments can be made that ISDS violate the exclusive jurisdiction of the European Court of Justice, and as such are unlikely to be compatible with EU Treaties. ISDS is an unfair one-way mechanism that is not fair to states, since only investors can initiate claims on their own terms; states are limited to making counter-claims, likewise there are no matching rights or mechanisms for citizens, workers or communities harmed or abused by investors‘ projects and products. Citizens, trade unions and States cannot launch claims under ISDS arbitration – only companies. Under the enhanced investment protections proposed, companies will be able to bring claims for damages against the host country even when they have no contract with the State. In addition, investors are permitted to bypass domestic courts and take their claims direct to ISDS breaching the traditional requirement that local remedies must be exhausted before having recourse to international forums. There is, of course, nothing to prevent domestic companies reinventing themselves as ‘foreign’ investors simply in order to take advantage of ISDS privileges and sue their own government. The ICTU therefore argues that the inclusion of investor protection provisions in TTIP is fundamentally misguided, wrong and inequitable. The solution is to drop the enhanced investor protections and the system of ISDS from TTIP completely, and to allow national legal systems to do their job relying on existing property right so companies.

Explanation of the issue

Under the standards of non-discriminatory treatment of investors, a state Party to the agreement commits itself to treat foreign investors from the other Party in the same way in which it treats its own investors (national treatment), as well in the same way in which it treats investors from other countries (most-favoured nation treatment). This ensures a level playing field between foreign investors and local investors or investors from other countries. For instance, if a certain chemical substance were to be proven to be toxic to health, and the state took a decision that it should be prohibited, the state should not impose this prohibition only on foreign companies, while allowing domestic ones to continue to produce and sell that substance.

Non-discrimination obligations may apply after the foreign investor has made the investment in accordance with the applicable law (post-establishment), but they may also apply to the conditions of access of that investor to the market of the host country (pre-establishment).  

Approach in most existing investment agreements

The standards of national treatment and most-favoured nation (MFN) treatment are considered to be key provisions of investment agreements and therefore they have been consistently included in such agreements, although with some variation in substance.

Regarding national treatment, many investment agreements do not allow states to discriminate between a domestic and a foreign investor once the latter is already established in a Party’s territory. Other agreements, however, allow such discrimination to take place in a limited number of sectors.

Regarding MFN, most investment agreements do not clarify whether foreign investors are entitled to take advantage of procedural or substantive provisions contained in other past or future agreements concluded by the host country. Thus, investors may be able to claim that they are entitled to benefit from any provision of another agreement that they consider to be more favourable, which may even permit the application of an entirely new standard of protection that was not found in the original agreement. In practice, this is commonly referred to as "importation of standards".

The EU’s objectives and approach

The EU considers that, as a matter of principle, established investors should not be discriminated against after they have established in the territory of the host country, while at the same recognises that in certain rare cases and in some very specific sectors, discrimination against already established investors may need to be envisaged. The situation is different with regard to the right of establishment, where the Parties may choose whether or not to open certain markets or sectors, as they see fit.

On the "importation of standards" issue, the EU seeks to clarify that MFN does not allow procedural or substantive provisions to be imported from other agreements.

The EU also includes exceptions allowing the Parties to take measures relating to the protection of health, the environment, consumers, etc. Additional carve-outs would apply to the audio-visual sector and the granting of subsidies. These are typically included in EU FTAs and also apply to the non-discrimination obligations relating to investment. Such exceptions allow differences in treatment between investors and investments where necessary to achieve public policy objectives.

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Taking into account the above explanations and the text provided in annex as a reference, what is your opinion of the EU approach to non –discrimination in relation to the TTIP? Please explain.

The Irish Congress Trade Unions fully supports the submission made by the ETUC and we wish to stress the following points in the context of Ireland. The fact that there may be trade impacts from a regulatory decision does not mean that it should be considered a ‘discrimination’. From the point of view of workers and trade unions, it is unacceptable if an investor can claim ‘discriminatory effect’ (or disparate impact or disproportionate disadvantage or asymmetric impact, or other such terms) because the working conditions are more protective in a given EU Member State than in the investor’s country of origin - thereby allegedly placing the investor at a competitive disadvantage. The fact that there is a cost to comply with the regulation, for example a licencing or health and safety precaution in the EU, which may , because of the specific manufacturing practices or circumstances fall more heavily on foreign producers, should not give rise to claims of ‘discrimination’. The definition of discrimination/non-discrimination will be key, providing an exception in TTIP in respect of equality, employment, health safety and welfare, labour rights, social protection and other work related rights may help to resolve some of the issues in the context of discrimination and ‘ indirect expropriation’ claims. However the wording will be crucial because if the wording protects the Right of the State to Regulate but still allows investors to raise these areas as part of their claim for compensation then the exception would have very little practical effect. Congress believes that there should be clear and certain protection for Member States to protect public services from liberalisation. Members States should not be under any threat that interpretations of non-discrimination or indirect expropriation in TTIP may limit for example the ability of local, or national, authorities to use public money to achieve social and environmental outcomes through their supply chain and employment practices or to provide services directly. It absolutely essential that TTIP is clear , that the practice of trade union rights, the right to organise, collective bargaining, collective agreements and collective action by trade unions and their members is not considered a bar on trade, a ‘discrimination’ or otherwise being capable of being raised under ‘investor protections’. Congress also argues that provision should be made in TTIP to allow Member States to defend what may be discriminatory measures when these measures are adopted to achieve specific legitimate policy goals and provided that the measures do not constitute a disguised restriction on trade.

Explanation of the issue

The obligation to grant foreign investors fair and equitable treatment (FET) is one of the key investment protection standards. It ensures that investors and investments are protected against treatment by the host country which, even if not expropriatory or discriminatory, is still unacceptable because it is arbitrary, unfair, abusive, etc. 

Approach in most investment agreements

The FET standard is present in most international investment agreements. However, in many cases the standard is not defined, and it is usually not limited or clarified. Inevitably, this has given arbitral tribunals significant room for interpretation, and the interpretations adopted by arbitral tribunals have varied from very narrow to very broad, leading to much controversy about the precise meaning of the standard. This lack of clarity has fueled a large number of ISDS claims by investors, some of which have raised concern with regard to the states' right to regulate. In particular, in some cases, the standard has been understood to encompass the protection of the legitimate expectations of investors in a very broad way, including the expectation of a stable general legislative framework.

Certain investment agreements have narrowed down the content of the FET standard by linking it to concepts that are considered to be part of customary international law, such as the minimum standard of treatment that countries must respect in relation to the treatment accorded to foreigners. However, this has also resulted in a wide range of differing arbitral tribunal decisions on what is or is not covered by customary international law, and has not brought the desired greater clarity to the definition of the standard. An issue sometimes linked to the FET standard is the respect by the host country of its legal obligations towards the foreign investors and their investments (sometimes referred to as an "umbrella clause"), e.g. when the host country has entered into a contract with the foreign investor. Investment agreements may have specific provisions to this effect, which have sometimes been interpreted broadly as implying that every breach of e.g. a contractual obligation could constitute a breach of the investment agreement.

EU objectives and approach

The main objective of the EU is to clarify the standard, in particular by incorporating key lessons learned from case-law. This would eliminate uncertainty for both states and investors.

Under this approach, a state could be held responsible for a breach of the fair and equitable treatment obligation only for breaches of a limited set of basic rights, namely: the denial of justice; the disregard of the fundamental principles of due process; manifest arbitrariness; targeted discrimination based on gender, race or religious belief; and abusive treatment, such as coercion, duress or harassment. This list may be extended only where the Parties (the EU and the US) specifically agree to add such elements to the content of the standard, for instance where there is evidence that new elements of the standard have emerged from international law.

The “legitimate expectations” of the investor may be taken into account in the interpretation of the standard. However, this is possible only where clear, specific representations have been made by a Party to the agreement in order to convince the investor to make or maintain the investment and upon which the investor relied, and that were subsequently not respected by that Party. The intention is to make it clear that an investor cannot legitimately expect that the general regulatory and legal regime will not change. Thus the EU intends to ensure that the standard is not understood to be a “stabilisation obligation”, in other words a guarantee that the legislation of the host state will not change in a way that might negatively affect investors. In line with the general objective of clarifying the content of the standard, the EU shall also strive, where necessary, to provide protection to foreign investors in situations in which the host state uses its sovereign powers to avoid contractual obligations towards foreign investors or their investments, without however covering ordinary contractual breaches like the non-payment of an invoice.

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Taking into account the above explanation and the text provided in annex as a reference, what is your opinion of the approach to fair and equitable treatment of investors and their investments in relation to the TTIP?

The ICTU supports the submission made by the ETUC and we wish to raise the following, additional concern. ‘Fair and equitable’ has become a catch-all clause under which investors have dramatically expanded the reach of investor protections. The ‘fair and equitable treatment' standard has been repeatedly interpreted under ISDS to mean that an investor must be compensated for any government action that undermines an investor’s expectations with regard to profit. The amount of loss may be an imputed loss as well as a real loss. Attempts by the US in its recent free trade agreements to limit ISDS arbitrators’ continuing imposition of new obligations on States using the ‘fair and equitable’ standard has proved ineffective, particularly as ISDS arbitrators have discretion and the regime provides no outside appeal to rectify such conduct. Under TTIP proposals additional ways for investors to challenge regulations are also anticipated, for example in the explanation text the EU Commission proposes that a state could also be held responsible for claims from investors on grounds of religious belief. The recent ruling (30th June 2014) of the US Supreme Court in Burwell v Hobby-Lobby, highlights the potentially far reaching implications of including this type of protection for corporations. It is reasonably foreseeable that this enhanced protection for investors will open the way for corporations to object on religious grounds to all manner of citizen and in particular worker rights, raising the possibility that discrimination and practices contrary to the EU Charter of Fundamental Rights and ILO Conventions, might be cloaked as religious practice to both escape legal sanction or claim compensation for compliance. Arguments to include ‘religious protection’ or ‘fair and equitable’ to justify claims for compensation for companies should hold no sway, rather the opposite. TTIP should require uniform compliance with the law of the State ensuring respect for equality between men and women and the EU Charter of Fundamental Rights in addition TTIP should include a robust mechanism of sanctions under the Treaty for companies for any such breaches by companies of the rights of workers and citizens.

Explanation of the issue

The right to property is a human right, enshrined in the European Convention of Human Rights, in the European Charter of Fundamental Rights as well as in the legal tradition of EU Member States. This right is crucial to investors and investments. Indeed, the greatest risk that investors may incur in a foreign country is the risk of having their investment expropriated without compensation. This is why the guarantees against expropriation are placed at the core of any international investment agreement.

Direct expropriations, which entail the outright seizure of a property right, do not occur often nowadays and usually do not generate controversy in arbitral practice. However, arbitral tribunals are confronted with a much more difficult task when it comes to assessing whether a regulatory measure of a state, which does not entail the direct transfer of the property right, might be considered equivalent to expropriation (indirect expropriation).

Approach in most investment agreements

In investment agreements, expropriations are permitted if they are for a public purpose, non-discriminatory, resulting from the due process of law and are accompanied by prompt and effective compensation. This applies to both direct expropriation (such as nationalisation) and indirect expropriation (a measure having an effect equivalent to expropriation).

Indirect expropriation has been a source of concern in certain cases where regulatory measures taken for legitimate purposes have been subject to investor claims for compensation, on the grounds that such measures were equivalent to expropriation because of their significant negative impact on investment. Most investment agreements do not provide details or guidance in this respect, which has inevitably left arbitral tribunals with significant room for interpretation.

The EU's objectives and approach

The objective of the EU is to clarify the provisions on expropriation and to provide interpretative guidance with regard to indirect expropriation in order to avoid claims against legitimate public policy measures.  The EU wants to make it clear that non-discriminatory measures taken for legitimate public purposes, such as to protect health or the environment, cannot be considered equivalent to an expropriation, unless they are manifestly excessive in light of their purpose. The EU also wants to clarify that the simple fact that a measure has an impact on the economic value of the investment does not justify a claim that an indirect expropriation has occurred.

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Taking into account the above explanation and the text provided in annex as a reference, what is your opinion of the approach to dealing with expropriation in relation to the TTIP? Please explain.

The ICTU supports the position of the ETUC and we wish to raise the following. It is difficult to make recommendations on the provisions on expropriation without seeming to legitimise something that trade unions strongly believe should not be included in TTIP. ‘Indirect expropriation’ as a concept is particularly open to abuse. ‘Direct expropriations’, which entail the outright seizure of a property right by the State are unlikely to be main the source of claims, companies are far more likely to raise claims for compensation in respect of a regulatory measure of a state, which does not entail the direct transfer of the property right, but might be considered by the arbitrators as equivalent to expropriation (indirect expropriation). This provision could threaten almost any means by which governments might seek to defend their citizens or protect labour rights or public services. The current proposals are to 'make it clear that non-discriminatory measures taken for legitimate public purposes, such as to protect health or the environment, cannot be considered equivalent to an expropriation, unless they are manifestly excessive in light of their purpose' . This does not provide meaningful protection for States. Companies are free to make a claim against the State for 'indirect expropriation' on the basis that the regulatory measure, is having an impact on the economic value of their investment. For example, the government of Egypt is being sued for compensation under investor protections for increasing the minimum wage. In addition the inclusion of 'manifestly excessive' will provide companies with an additional avenue of argumentation. ‘Manifestly excessive’ means that companies can argue that a regulation, such as the entitlement of employees to paid parental leave, places a burden on them while the less excessive option they will argue, to meet the objective of the Regulation, would be for the State to meet the costs out of public funds, leaving once again the general public, to pick up the tab. This line of argumentation was shown to be very successful in the US Supreme Court in Burwell v. Hobby Lobby decided 30th June 2014. Moreover, in States where investor protections such as those proposed under TTIP exist, companies are launching pre-emptive claims that aim to stop or significantly delay the enactment of Regulations, significantly interfering with the democratic process. For example, investor protection provisions were invoked against Slovakia when it sought to bring health insurance back into the public sector and against Australia for legislating for plain cigarette packaging. These provisions will make it virtually impossible for any privatised public services to be taken back into public service provision.

Explanation of the issue

In democratic societies, the right to regulate of states is subject to principles and rules contained in both domestic legislation and in international law. For instance, in the European Convention on Human Rights, the Contracting States commit themselves to guarantee a number of civil and political rights. In the EU, the Constitutions of the Member States, as well as EU law, ensure that the actions of the state cannot go against fundamental rights of the citizens. Hence, public regulation must be based on a legitimate purpose and be necessary in a democratic society.

Investment agreements reflect this perspective. Nevertheless, wherever such agreements contain provisions that appear to be very broad or ambiguous, there is always a risk that the arbitral tribunals interpret them in a manner which may be perceived as a threat to the state's right to regulate. In the end, the decisions of arbitral tribunals are only as good as the provisions that they have to interpret and apply.

 Approach in most investment agreements

Most agreements that are focused on investment protection are silent about how public policy issues, such as public health, environmental protection, consumer protection or prudential regulation, might interact with investment. Consequently, the relationship between the protection of investments and the right to regulate in such areas, as envisaged by the contracting Parties to such agreements is not clear and this creates uncertainty.

In more recent agreements, however, this concern is increasingly addressed through, on the one hand, clarification of the key investment protection provisions that have proved to be controversial in the past and, on the other hand, carefully drafted exceptions to certain commitments. In complex agreements such as free trade agreements with provisions on investment, or regional integration agreements, the inclusion of such safeguards is the usual practice.

The EU's objectives and approach

The objective of the EU is to achieve a solid balance between the protection of investors and the Parties' right to regulate.

First of all, the EU wants to make sure that the Parties' right to regulate is confirmed as a basic underlying principle. This is important, as arbitral tribunals will have to take this principle into account when assessing any dispute settlement case.

Secondly, the EU will introduce clear and innovative provisions with regard to investment protection standards that have raised concern in the past (for instance, the standard of fair and equitable treatment is defined based on a closed list of basic rights; the annex on expropriation clarifies that non-discriminatory measures for legitimate public policy objectives do not constitute indirect expropriation). These improvements will ensure that investment protection standards cannot be interpreted by arbitral tribunals in a way that is detrimental to the right to regulate.

Third, the EU will ensure that all the necessary safeguards and exceptions are in place. For instance, foreign investors should be able to establish in the EU only under the terms and conditions defined by the EU. A list of horizontal exceptions will apply to non-discrimination obligations, in relation to measures such as those taken in the field of environmental protection, consumer protection or health (see question 2 for details). Additional carve-outs would apply to the audiovisual sector and the granting of subsidies. Decisions on competition matters will not be subject to investor-to-state dispute settlement (ISDS). Furthermore, in line with other EU agreements, nothing in the agreement would prevent a Party from taking measures for prudential reasons, including measures for the protection of depositors or measures to ensure the integrity and stability of its financial system. In addition, EU agreements contain general exceptions applying in situations of crisis, such as in circumstances of serious difficulties for the operation of the exchange rate policy or monetary policy, balance of payments or external financial difficulties, or threat thereof.

In terms of the procedural aspects relating to ISDS, the objective of the EU is to build a system capable of adapting to the states' right to regulate. Wherever greater clarity and precision proves necessary in order to protect the right to regulate, the Parties will have the possibility to adopt interpretations of the investment protection provisions which will be binding on arbitral tribunals.  This will allow the Parties to oversee how the agreement is interpreted in practice and, where necessary, to influence the interpretation.

The procedural improvements proposed by the EU will also make it clear that an arbitral tribunal will not be able to order the repeal of a measure, but only compensation for the investor.

Furthermore, frivolous claims will be prevented and investors who bring claims unsuccessfully will pay the costs of the government concerned (see question 9).

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Taking into account the above explanation and the text provided in annex as a reference, what is your opinion with regard to the way the right to regulate is dealt with in the EU's approach to TTIP?

The ICTU fully supports the position of the ETUC and we want to raise the following additional points in respect of Ireland. The EU Commission consultation document on TTIP is based on a false premise, namely that there is a need to balance the "right to regulate" with the "right to investment protection." There is no balance to be achieved, because the former must clearly take precedence in a democratic, sovereign state. The proposals outlined in the Consultation document are of grave concern to Congress, particularly as there seems to be no intention to exempt, from the threat of a claim of compensation under indirect expropriation, public interest objectives such as fundamental labour rights, protection of safety, health and welfare of workers, rights of employees and social legislation from the scope of this chapter. TTIP needs to recognise that sufficient and appropriate investment protection is already provided for investors under the laws of the State. Instituting a parallel system to guarantee additional protection for investor companies is a fundamental attack on sovereignty - and on democracy. In democratic societies, uniform application of the law is a foundation principle and rather than undermine this principle, TTIP should instead require international investment to comply with domestic regulations even if the regulation has negative impacts on private business activities. Under TTIP as it is currently constructed, States maintain the right to regulate” but this right will be severely constrained, it will be subsumed under the overall priority of reducing barriers and curtailed by the threat of big payments to be made out of public money to transnational corporations . The inclusion of additional investor protections does not automatically prevent the EU or a Member State from adopting laws in the future, nor will it necessarily mean that States have to pay compensation to investors whenever doing so. However, the results of ISDS proceedings are unpredictable. Some arbitration tribunals have taken a restrictive approach to governments’ regulatory freedom; others have deemed government regulation not to violate investment law. These uncertainties result in considerable risks for democratic government and the rule of law exacerbated by the fact that ISDS proceedings take place in private. It is reasonably foreseeable the chilling effect this will have, especially on smaller States such as Ireland, being able to adopt any regulation. For example, Ireland was the first to introduce regulation to ban smoking in workplaces and public buildings, under the enhanced investor protections envisioned under TTIP it is likely that a claim for compensation would have been initiated against Ireland on foot of this regulation. Public services must be explicitly excluded from the scope of TTIP. In particular the ICTU supports the call made by Public Service International (PSI) , namely that TTIP should adopt a ‘positive list’ in respect of the liberalisation commitments, this will mean that only services that are expressly specified in the agreement can be liberalised, rather than the proposed ‘negative list’ approach, which means that all public services are potentially included except those that have been specifically excluded.

B. Investor-to-State dispute settlement (ISDS)

Explanation of the issue

In most ISDS cases, no or little information is made available to the public, hearings are not open and third parties are not allowed to intervene in the proceedings. This makes it difficult for the public to know the basic facts and to evaluate the claims being brought by either side.

This lack of openness has given rise to concern and confusion with regard to the causes and potential outcomes of ISDS disputes. Transparency is essential to ensure the legitimacy and accountability of the system. It enables stakeholders interested in a dispute to be informed and contribute to the proceedings. It fosters accountability in arbitrators, as their decisions are open to scrutiny. It contributes to consistency and predictability as it helps create a body of cases and information that can be relied on by investors, stakeholders, states and ISDS tribunals.

Approach in most existing investment agreements

Under the rules that apply in most existing agreements, both the responding state and the investor need to agree to permit the publication of submissions. If either the investor or the responding state does not agree to publication, documents cannot be made public. As a result, most ISDS cases take place behind closed doors and no or a limited number of documents are made available to the public.

The EU’s objectives and approach 

The EU's aim is to ensure transparency and openness in the ISDS system under TTIP. The EU will include provisions to guarantee that hearings are open and that all documents are available to the public. In ISDS cases brought under TTIP, all documents will be publicly available (subject only to the protection of confidential information and business secrets) and hearings will be open to the public. Interested parties from civil society will be able to file submissions to make their views and arguments known to the ISDS tribunal. 

The EU took a leading role in establishing new United Nations rules on transparency[1] in ISDS. The objective of transparency will be achieved by incorporating these rules into TTIP.

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Taking into account the above explanation and the text provided in annex as a reference, please provide your views on whether this approach contributes to the objective of the EU to increase transparency and openness in the ISDS system for TTIP. Please indicate any additional suggestions you may have.

Congress' view is that the ISDS system undermines national sovereignty and democracy and the EU Commission proposals to make ISDS more transparent do not render it legitimate. No compelling argument has been made to explain why TTIP needs to include private arbitration at all. In circumstances where ISDS has been included in other trade agreements, it is on the basis that courts may be biased or lack independence", but in TTIP there is no identification of which EU Member States courts cannot be relied upon or why that would be so. It is also arguable that ISDS violate the exclusive jurisdiction of the Court of Justice of the European Union CJEU and as such are not compatible with EU Treaties. Where they have been established, ISDS processes are conducted in secret, are not based on existing case law and have no right of appeal significantly undermining governments’ ability to defend their actions. ISDS is unacceptable and possibly unconstitutional as ISDS allows the State, Ireland to be sued, and the tax payer incur substantial liabilities by an ad hoc, off shore tribunal composed of unaccountable lawyers making decisions in private. Under the Irish Constitution, the State, is answerable before the Courts, the Constitution provides that justice can only be administered 'in courts established by law by Judges appointed in the manner provided by this Constitution' (Article 34) Although the negotiation of TTIP is being undertaken by the EU the agreement itself is not an ‘EU Treaty’ so ISDS process cannot avail of the EU exemption from findings of unconstitutionality. ISDS is not required to take into account ILO Conventions that a Member State has entered into or the EU Charter of Fundamental Rights or the European Convention on Human Rights other Human Rights Instruments in their determinations

Explanation of the issue

Investors who consider that they have grounds to complain about action taken by the authorities (e.g. discrimination or lack of compensation after expropriation) often have different options. They may be able to go to domestic courts and seek redress there. They or any related companies may be able to go to other international tribunals under other international investment treaties.

It is often the case that protection offered in investment agreements cannot be invoked before domestic courts and the applicable legal rules are different. For example, discrimination in favour of local companies is not prohibited under US law but is prohibited in investment agreements. There are also concerns that, in some cases domestic courts may favour the local government over the foreign investor e.g. when assessing a claim for compensation for expropriation or may deny due process rights such as the effective possibility to appeal. Governments may have immunity from being sued. In addition, the remedies are often different. In some cases government measures can be reversed by domestic courts, for example if they are illegal or unconstitutional. ISDS tribunals cannot order governments to reverse measures.

These different possibilities raise important and complex issues. It is important to make sure that a government does not pay more than the correct compensation. It is also important to ensure consistency between rulings.

Approach in most existing investment agreements

Existing investment agreements generally do not regulate or address the relationship with domestic courts or other ISDS tribunals. Some agreements require that the investor choses between domestic courts and ISDS tribunals. This is often referred to as "fork in the road" clause.

The EU’s objectives and approach

As a matter of principle, the EU’s approach favours domestic courts. The EU aims to provide incentives for investors to pursue claims in domestic courts or to seek amicable solutions – such as mediation. The EU will suggest different instruments to do this. One is to prolong the relevant time limits if an investor goes to domestic courts or mediation on the same matter, so as not to discourage an investor from pursuing these avenues.  Another important element is to make sure that investors cannot bring claims on the same matter at the same time in front of an ISDS tribunal and domestic courts. The EU will also ensure that companies affiliated with the investor cannot bring claims in front of an ISDS tribunal and domestic courts on the same matter and at the same time. If there are other relevant or related cases, ISDS tribunals must take these into account. This is done to avoid any risk that the investor is over-compensated and helps to ensure consistency by excluding the possibility for parallel claims.

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Taking into account the above explanation and the text provided in annex as a reference, please provide your views on the effectiveness of this approach for balancing access to ISDS with possible recourse to domestic courts and for avoiding conflicts between domestic remedies and ISDS in relation to the TTIP. Please indicate any further steps that can be taken. Please provide comments on the usefulness of mediation as a means to settle disputes.

The Irish Congress Trade Unions fully supports the submission of the ETUC and we would like to highlight the following: Integrating ISDS into domestic court system is highly problematic and does not allay our concerns about this this being an undemocratic mechanism. Under the proposals, investors can still choose ISDS to launch challenges that have no basis in domestic law. There is no requirement that domestic remedies be first extinguished prior to filing a claim. Examples of this include the investor-state suit related to Germany’s decision to phase out nuclear power. Conflicts between the ISDS and EU Court of Justice can be anticipated, for example where an EU member state introduces regulation on foot of an EU Directive the State could potentially be exposed on the one hand to Investor claims for loss of profits under ISDS and on the other to infringement proceedings being initiated by the EU Commission for non-compliance with the Directive. It is also unclear in these circumstances is it the EU or the Member State that pays out under ISDS? It is also the case that Regulations and government actions that have withstood challenge by investors in domestic courts can be re-litigated before ISDS tribunals. This is now occurring with an investor-state attack on Australian’s cigarette plain packaging rules, which the Australian Supreme Court validated after a series of challenges in Australia’s court system. Our view is that state to state and US to EU dispute resolution (rather than investor to state or investor to EU dispute resolution) is the appropriate mechanism for resolving legitimate trade-related disputes. The ICTU concludes that rather than create such legal and financial uncertainties TTIP should rely on the effective and robust judicial systems and the existing property rights of investors provided on both sides of the Atlantic. These have proved sufficient in the past to resolve any claim of unfair treatment by States.

Explanation of the issue

There is concern that arbitrators on ISDS tribunals do not always act in an independent and impartial manner. Because the individuals in question may not only act as arbitrators, but also as lawyers for companies or governments, concerns have been expressed as to potential bias or conflicts of interest.

Some have also expressed concerns about the qualifications of arbitrators and that they may not have the necessary qualifications on matters of public interest or on matters that require a balancing between investment protection and e.g. environment, health or consumer protection.

Approach in existing investment agreements

  Most existing investment agreements do not address the issue of the conduct or behaviour of arbitrators. International rules on arbitration address the issue by allowing the responding government or the investor to challenge the choice of arbitrator because of concerns of suitability.

Most agreements allow the investor and the responding state to select arbitrators but do not establish rules on the qualifications or a list of approved, qualified arbitrators to draw from.

  The EU’s objective and approach

The EU aims to establish clear rules to ensure that arbitrators are independent and act ethically. The EU will introduce specific requirements in the TTIP on the ethical conduct of arbitrators, including a code of conduct. This code of conduct will be binding on arbitrators in ISDS tribunals set up under TTIP.  The code of conduct also establishes procedures to identify and deal with any conflicts of interest.  Failure to abide by these ethical rules will result in the removal of the arbitrator from the tribunal. For example, if a responding state considers that the arbitrator chosen by the investor does not have the necessary qualifications or that he has a conflict of interest, the responding state can challenge the appointment. If the arbitrator is in breach of the Code of Conduct, he/she will be removed from the tribunal. In case the ISDS tribunal has already rendered its award and a breach of the code of conduct is found, the responding state or the investor can request a reversal of that ISDS finding.

In the text provided as reference (the draft EU-Canada Agreement), the Parties (i.e. the EU and Canada) have agreed for the first time in an investment agreement to include rules on the conduct of arbitrators, and have included the possibility to improve them further if necessary. In the context of TTIP these would be directly included in the agreement.

As regards the qualifications of ISDS arbitrators, the EU aims to set down detailed requirements for the arbitrators who act in ISDS tribunals under TTIP. They must be independent and impartial, with expertise in international law and international investment law and, if possible, experience in international trade law and international dispute resolution. Among those best qualified and who have undertaken such tasks will be retired judges, who generally have experience in ruling on issues that touch upon both trade and investment and on societal and public policy issues. The EU also aims to set up a roster, i.e. a list of qualified individuals from which the Chairperson for the ISDS tribunal is drawn, if the investor or the responding state cannot otherwise agree to a Chairperson. The purpose of such a roster is to ensure that the EU and the US have agreed to and vetted the arbitrators to ensure their abilities and independence.  In this way the responding state chooses one arbitrator and has vetted the third arbitrator.

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Taking into account the above explanation and the text provided in annex as a reference, please provide your views on these procedures and in particular on the Code of Conduct and the requirements for the qualifications for arbitrators in relation to the TTIP agreement. Do they improve the existing system and can further improvements be envisaged?

The ICTU supports the position of the ETUC and we would like to raise the concern that ISDS tribunals are usually decided by a tribunal of three for-profit arbitrators. Unlike judges, arbitrators do not have a flat salary, but are paid per case, earning daily fees. Unlike national courts there is no system of judicial review nor is there any appeal. ISDS Arbitrators are free to represent the companies in the sector and act as ISDS Arbitrators. The proposed Code does not address fundamental Constitutional difficulties associated with ISDS.

Explanation of the issue

As in all legal systems, cases are brought that have little or no chance of succeeding (so-called “frivolous claims”). Despite eventually being rejected by the tribunals, such cases take up time and money for the responding state. There have been concerns that protracted and frequent litigation in ISDS could have an effect on the policy choices made by states. This is why it is important to ensure that there are mechanisms in place to weed out frivolous disputes as early as possible.

Another issue is the cost of ISDS proceedings. In many ISDS cases, even if the responding state is successful in defending its measures in front of the ISDS tribunal, it may have to pay substantial amounts to cover its own defence.

Approach in most existing investment agreements:

Under existing investment agreements, there are generally no rules dealing with frivolous claims. Some arbitration rules however do have provisions on frivolous claims. As a result, there is a risk that frivolous or clearly unfounded claims are allowed to proceed. Even though the investor would lose such claims, the long proceedings and the implied questions surrounding policy can be problematic.

The issue of who bears the cost is also not addressed in most existing investment agreements. Some international arbitration rules have provisions that address the issue of costs in very general terms. In practice, ISDS tribunals have often decided that the investor and responding state pay their own legal costs, regardless of who wins or loses.

The EU’s objectives and approach

The EU will introduce several instruments in TTIP to quickly dismiss frivolous claims.

ISDS tribunals will be required to dismiss claims that are obviously without legal merit or legally unfounded. For example, this would be cases where the investor is not established in the US or the EU, or cases where the ISDS tribunal can quickly establish that there is in fact no discrimination between domestic and foreign investors. This provides an early and effective filtering mechanism for frivolous claims thereby avoiding a lengthy litigation process.

To further discourage unfounded claims, the EU is proposing that the losing party should bear all costs of the proceedings. So if investors take a chance at bringing certain claims and fail, they have to pay the full financial costs of this attempt.

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Taking into account the above explanation and the text provided in annex as a reference, please provide your views on these mechanisms for the avoidance of frivolous or unfounded claims and the removal of incentives in relation to the TTIP agreement. Please also indicate any other means to limit frivolous or unfounded claims.

The ICTU supports the position of the ETUC and we would like to highlight that ISDS has already escaped its original justification, which was to protect investors from arbitrary unjust actions of governments in the context of unreliable judicial systems. Evidence of the growth in use of ISDS is available by examining the number of claims brought forward under ISDS. The number of claims under ISDS has grown exponentially, fewer than 50 were litigated from the 50 year period from the 1950s until 2000 but since then there are 514 known cases as of the end of 2012. ISDS is a one-sided system where only the investors can bring claims, this creates a structural vulnerability as it will be difficult for Arbitrators to take a decision not to consider the case on the basis that – in the view of the arbitrator – without hearing any arguments it is frivolous or unfounded. It is more likely that the arbitrators will require States to mount the argument that the case is frivolous or unfounded. It will still be expensive and time consuming for governments to mount arguments that the claim should not be considered under ISDS as it is 'frivolous' or unfounded. It is worth pointing out that in some instances investors have launched proceedings despite previous unfavourable court rulings against them.

Explanation of the issue

Recently, concerns have been expressed in relation to several ISDS claims brought by investors under existing investment agreements, relating to measures taken by states affecting the financial sector, notably those taken in times of crisis in order to protect consumers or to maintain the stability and integrity of the financial system.

To address these concerns, some investment agreements have introduced mechanisms which grant the regulators of the Parties to the agreement the possibility to intervene (through a so-called “filter” to ISDS) in particular ISDS cases that involve measures ostensibly taken for prudential reasons. The mechanism enables the Parties to decide whether a measure is indeed taken for prudential reasons, and thus if the impact on the investor concerned is justified. On this basis, the Parties may therefore agree that a claim should not proceed.

Approach in most existing investment agreements

The majority of existing investment agreements privilege the original intention of such agreements, which was to avoid the politicisation of disputes, and therefore do not contain provisions or mechanisms which allow the Parties the possibility to intervene under particular circumstances in ISDS cases.

The EU’s objectives and approach

The EU like many other states considers it important to protect the right to regulate in the financial sector and, more broadly, the overriding need to maintain the overall stability and integrity of the financial system, while also recognizing the speed needed for government action in case of financial crisis.

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Some investment agreements include filter mechanisms whereby the Parties to the agreement (here the EU and the US) may intervene in ISDS cases where an investor seeks to challenge measures adopted pursuant to prudential rules for financial stability. In such cases the Parties may decide jointly that a claim should not proceed any further. Taking into account the above explanation and the text provided in annex as a reference, what are your views on the use and scope of such filter mechanisms in the TTIP agreement?

The ICTU supports the submission made by the ETUC.

Explanation of the Issue

When countries negotiate an agreement, they have a common understanding of what they want the agreement to mean. However, there is a risk that any tribunal, including ISDS tribunals interprets the agreement in a different way, upsetting the balance that the countries in question had achieved in negotiations – for example, between investment protection and the right to regulate. This is the case if the agreement leaves room for interpretation. It is therefore necessary to have mechanisms which will allow the Parties (the EU and the US) to clarify their intentions on how the agreement should be interpreted.

Approach in existing investment agreements

Most existing investment agreements do not permit the countries who signed the agreement in question to take part in proceedings nor to give directions to the ISDS tribunal on issues of interpretation.

The EU’s objectives and approach 

The EU will make it possible for the non-disputing Party (i.e. the EU or the US) to intervene in ISDS proceedings between an investor and the other Party. This means that in each case, the Parties can explain to the arbitrators and to the Appellate Body how they would want the relevant provisions to be interpreted.  Where both Parties agree on the interpretation, such interpretation is a very powerful statement, which ISDS tribunals would have to respect.

The EU would also provide for the Parties (i.e. the EU and the US) to adopt binding interpretations on issues of law, so as to correct or avoid interpretations by tribunals which might be considered to be against the common intentions of the EU and the US. Given the EU’s intention to give clarity and precision to the investment protection obligations of the agreement, the scope for undesirable interpretations by ISDS tribunals is very limited. However, this provision is an additional safety-valve for the Parties.

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Taking into account the above explanation and the text provided in annex as a reference, please provide your views on this approach to ensure uniformity and predictability in the interpretation of the agreement to correct the balance? Are these elements desirable, and if so, do you consider them to be sufficient?

The ICTU supports the position of the ETUC and EU and agrees with the Commission that there is a benefit to the parties to include binding definitions on specific points. In this regard we have recommended that TTIP should have binding provisions to ensure  ensure that the core conventions of the International Labour Organisation are adopted and enforced by all parties -including the freedom for workers to organise a union, collectively bargain with employers and strike when necessary making it clear that employment and labour rights such as collective bargaining and collective action cannot be considers as a bar to trade.  ensure that EU Directives and equality as between men and women is respected by all parties and capable of being enforced by sanctions under TTIP  not undermine the role of the state in nurturing innovation, economic development and technological transformation  not constrain national and local choices about the provision of public services, notably healthcare, education and environmental protection  maintain the right of governments to make choices about procurement that alleviate joblessness, promote environmental responsibility, or address social injustices  align with international agreements to protect the environment, including commitments to slow catastrophic climate change  not be used to set a permanent ceiling on workers’ rights, environmental protections, or any other public interest measure—instead it must set up mechanisms that will support ever-improving norms that will help raise standards of living for all.

Explanation of the issue

In existing investment agreements, the decision by an ISDS tribunal is final. There is no possibility for the responding state, for example, to appeal to a higher instance to challenge the level of compensation or other aspects of the ISDS decision except on very limited procedural grounds. There are concerns that this can lead to different or even contradictory interpretations of the provisions of international investment agreements. There have been calls by stakeholders for a mechanism to allow for appeal to increase legitimacy of the system and to ensure uniformity of interpretation.


Approach in most existing investment agreements

No existing international investment agreements provide for an appeal on legal issues. International arbitration rules allow for annulment of ISDS rulings under certain very restrictive conditions relating to procedural issues. 

The EU’s objectives and approach 

The EU aims to establish an appellate mechanism in TTIP so as to allow for review of ISDS rulings. It will help ensure consistency in the interpretation of TTIP and provide both the government and the investor with the opportunity to appeal against awards and to correct errors. This legal review is an additional check on the work of the arbitrators who have examined the case in the first place.

In agreements under negotiation by the EU, the possibility of creating an appellate mechanism in the future is envisaged. However, in TTIP the EU intends to go further and create a bilateral appellate mechanism immediately through the agreement.

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Question 12. Taking into account the above explanation and the text provided in annex as a reference, please provide your views on the creation of an appellate mechanism in TTIP as a means to ensure uniformity and predictability in the interpretation of the agreement.

The ICTU supports the submission of the ETUC and we would like to make the following observation. The EU Commission proposal provides very sketchy information on the nature, role, function and powers of the proposed ‘Appellate Body will be. The proposals seem to simply provide for ‘a standing Appellate Body’ to hear appeals on issues of law covered in the ISDS Tribunal’s decision or award and legal interpretations developed by the Tribunal. Therefore there is inadequate information to make an assessment. It is unclear if the Appellate Body is an existing (or new) Court of Law or is it envisioned that it too will be established as another layer of private arbitration. There seem to be some serious omissions such as the approach contains no provisions on obligations of investors to respect or promote human rights, labour rights and environmental standards. Nor is there provision for a claim, counter claim or appeal to be launched by citizens and workers. Indeed if this was to be provided serious questions arise about affordability as ISDS is notoriously, prohibitively expensive and out of the reach of citizens and workers.

C. General assessment

General assessment
  • What is your overall assessment of the proposed approach on substantive standards of protection and ISDS as a basis for investment negotiations between the EU and US?
  • Do you see other ways for the EU to improve the investment system?
  • Are there any other issues related to the topics covered by the questionnaire that you would like to address?

The ICTU supports the position of the ETUC and we would like to stress the following: Workers and their unions are united in supporting a trade deal between the EU and US but only if it promotes workers’ rights, generates quality jobs, upholds public services and procurement, democratic decision making and international conventions. It is worth pointing out here, that the precautionary principle is enshrined in the EU treaties (Art 191 TFEU). This principle means that as long as scientific evaluation does not allow determining the risk with sufficient certainty, a product remains strictly regulated or even forbidden. EU Member States should not be under a threat of claims for non-discrimination in terms of pre-establishment, establishment or other investor protections when they apply this principle. Finally the ICTU notes that any company that feels for whatever reason that it needs better protection than the EU and US courts are able to offer they are at liberty to take out insurance to provide it, for example from the World Bank. ISDS is a classic attempt to socialise risk while privatising profit.