365 / 464
351
TTIP AND ISDS: NOT IRRECONCILABLE ACRONYMS
“indirect expropriation” and what it constitutes have been clarified with the aim to
protect legitimate public policy measures.
34
The EU approach also includes provisions
to guard against frivolous claims and abuse of process.
35
There are also serious potential costs associated with the risk of investors’ claims.
One study estimates that the average cost of investment arbitration is $ 8 million
per party.
36
The reality is that this issue is not commonly addressed in the majority
of BITs. It has been the usual practice that the losing investor does not have to
pay the costs of ISDS proceedings to the prevailing respondent- state. However,
some tribunals have already ordered claimants to pay respondent’s costs in various
amounts.
37
As a solution, the EU introduced in CETA the principle “the loser pays”
when the losing party should bear all costs of the proceedings.
38
The secondary
benefit of this principle is discouraging investors’ frivolous claims.
This briefly describes how the new EU approach introduced several steps to
suppress fears of a continued rise of investor-state arbitration and regulatory chill.
The likely impact on European regulatory space should be neither marginalized
nor exaggerated.
39
As a whole, the above mentioned upgrades show that the most
serious shortcomings of investment treaties have been addressed and the long sought
additional safeguards provided.
34
See CETA, Art. X.11 Expropriation and Annex X.11: Expropriation.
35
See CETA, Art. X.20 Claims manifestly without legal merit and art. X.30 Claims unfounded as a
Matter of Law.
36
Gavin Thompson, Investor-state dispute settlement (ISDS) and the Transatlantic Trade and Investment
Partnership (TTIP) – Commons Library Standard Note, Library of the House of Commons, SN/
EP/6777, p. 4.
37
Despite this, a new trend emerges as some tribunals already ordered to pay respondent’s costs in
various amount:
Chemtura Corporation v. Government of Canada
, UNCITRAL (2 August 2010);
ADC
Affiliate Limited and ADC & ADMC Management Limited v. The Republic of Hungary
, ICSID Case
No. ARB/03/16 (2 October 2006);
Plama Consortium Limited v. Republic of Bulgaria
, ICSID Case
No. ARB/03/24 (27 August 2008).
38
See CETA, Art. X.36, par. 5 Award.
39
The study conducted by
Tietje
and
Baetens
and prepared for the Ministry of Foreign Affairs of the
Netherlands reached a similar conclusion when it stated: „There is no conclusive empirical evidence
for “regulatory chill” due to the existence of an investment treaty providing for ISDS. Moreover, the
260+ ISDS cases which have been concluded worldwide demonstrate that most procedures concern
individual administrative treatment of investors. Legislative acts are subject to ISDS procedures
only in exceptional cases, and these claims are hardly, if ever, successful. International investment
law recognizes both individual economic interests of investors and public interests of the host state.
Arbitral tribunals have underlined the importance of “policy space” in several cases. This, however, does
not mean that there is no room for improvement of the system. Christian Tietje, Freya Baetens, The
Impact of Investor-State-Dispute Settlement (ISDS) in the Transatlantic and Investment Partnership,
MINBUZA-2014.78850 (24 June 2014), p. 127.