Tomorrow the Dutch parliament will discuss the new Dutch model text for bilateral investment treaties. These treaties are controversial as they contain investor-to-state dispute settlement, or ISDS.
In a letter to the chairman of the trade committee (BuHaOS), Vrijschrift writes that the model text consolidates fundamental defects and gives the United States a major influence on the dispute settlement mechanism. Vrijschrift also notes that under the text investment arbitrators can assess compliance with the WTO TRIPS treaty, and thus interpret this treaty, while the WTO has its own dispute resolution mechanism. In addition, the government has not made use of a safeguard for personal data in investment treaties established by the European Commission.
Dear Mr. De Roon,
We are writing to express our concerns about the new model text for bilateral investment treaties. The model text consolidates fundamental defects and gives the United States a major influence.
The protection of foreign investors in current investment treaties has spiraled out of control by supranational rights for multinationals to sue states, the lack of institutional safeguards for independence, and the lack of democratic influence on the development of the rights in question. The new model text consolidates these fundamental defects.
Then minister Ploumen declared publicly that ISDS (investor-to-state dispute settlement, the dispute settlement mechanism) is dead and buried. However, the new text shows that ISDS is alive and kicking.
The most notable change gives the United States an even greater influence on the most commonly used arbitration platform. The President of the World Bank has always been an American citizen. This president is ex officio chairman of the Administrative Council of the International Center for Settlement of Investment Disputes (ICSID), appoints all three arbitrators in annulment cases (the only ICSID appeal) and nominates the Secretary General of ICSID. According to the model text, this Secretary General will also appoint all three arbitrators at first instance. This strengthens the American influence. American companies and the climate change denier in the White House can be satisfied.
The model text also gives the Netherlands an even greater influence on the Permanent Court of Arbitration (PCA) (which is not a court). The Dutch Minister of Foreign Affairs is the president of the PCA Council. A senior Dutch diplomat has always been Secretary General of the PCA. This Secretary General will, according to the model text, appoint all three arbitrators in PCA arbitration cases. This strengthens the Dutch influence. However, this will not protect the Netherlands, because investors can choose the arbitration platform. The Netherlands and third countries do well not to accept the text.
In our contribution to the consultation we also noted that under the model text investment arbitrators can assess compliance with the WTO TRIPS treaty, and thus interpret this treaty, while the WTO has its own dispute resolution mechanism. This is undesirable. In addition, the government has not made use of a safeguard for personal data in investment treaties established by the European Commission. We also note that the text does not comply with the SER advice.
The model text consolidates fundamental defects. Given the state of democracy, civil rights and the environment in the world, we consider it necessary and urgent to strengthen democracy and the ability to respond to crises. The model text is an irresponsible step in the wrong direction.
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Footnotes omitted; the letter is based on Vrijschrift’s (English language) submission to the Dutch consultation on its new model bilateral investment treaty.
