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Part 2. CETA, ICS proposal and the new “judges”

Justice and economic interest: an antagonistic relationship

“Justice is the cardinal virtue of the social institutions, as well as that of systems of thought is thruth. A theory which is incorrect must be moved on or modified, despite its elegance and clarity. In the same way, unfair law and institution must be reformed or abolished, despite the fact that they are effective and well-thought-out. Social well-being can’t take precedence over the inviolable worth of each person. For this reason the loss of freedom can’t be justified by benefits enjoyed by other people”. John Rawl is the greatest anglosaxon political philosopher of the second half of XX century, in his huge study entitled A theory of justice, published in 1971, he deals with an issue strictly related to liberal-democratic thought: the attention must be focused on the individual, who has inviolabile rights, therefore he must not be subject to decisions taken by a General Will, which embodies the Word of the Power, whatever it may be.

Da Vinci Vitruve, Luc Viatour (Via Wikimedia, PD-Old-100)

The question: Is it fair a commercial agreement that poses a little threat to my political rights, even though it is ratified by National Parliaments? Do the new courts guarantee our rights as citizens of European Union? Are the avarage taxpayer and the investors, who convey huge economic interest, put on the same footing? There is no definitive and right answer. On the one hand we don’t want to be basest conspirancy nuts, on the other we don’t want to heed the siren’s call being too naïve and enthusiastic.

Let’s have a look on CETA

CETA is the free trade agreement between European Union and Canada, it has been approved by the European Parliament in the plenary session on 15 February; to be approved by the national parliamentary vote of the Members State of the European Union, the agreement has already entered into force (provisionarly) as regard its essential parts. CETA guarantees the suppression of nearly all customs duties, the opening of the market in services and the opportunity for the companies on both side of the Atlantic to access to procurements without the old restrictions. Therefore a European company can takes part to a contract notice in Canada and viceversa.

145 PGI prodocts (protected geographical indication), among which also our Parma ham, have been already recognised by the nation of Justin Trudeau.

The agreement includes an Investiment Court System, ICS, which as been intended by the European Union as a traditional court. Public uproar and the opposition of Wallonia had the desired effects on, drawing the attention of the Commisioner for Trade Cecilia Malmstrӧm: “The old ISDS died”. Fair and unbiased judgments are guaranteed to citizens and conflict of interests will be minimised. The court will take action only if situations of discrimination occur, a covered investiment is exproprieted or nationalized, a license is not issued to a foreign company, but law-making power owned by the Member States will not be restricted”. A more detailed description is required. How will be structured the new court? Are there significant changes or they are only a window dressing?

The judges of the Investiment Court System (ICS)

In the ISDS there are no rules to which refer in order to avoid a role-reversal between the lawyer and the judge: the arbitrator of a case can even be the counsel of a private company in another trial. It is quite clear that these role-reversals threaten fairness, trancparency and impartiality of the sentences given by the court. For this reason CETA provides for 15 permanent judges, they will serve a 5 to 10-years term in office, Canada, European Union and Third countries will appoint in equal parts the judges. Canadian and European representatives will compose a “council”, they can be either former national judges, either “jourists of recognised competence”; moreover the essential preconditions are having experience in international investiments and in International trade.

The EU has committed itself to make nominations exclusively approved by the Member State and to appoint person with qualifications required for appointment to the Court of Justice of the European Union. In order to prevent conflicts of interest, to the judges will be forbidden to be also lawyers in ISDS. The long-term goal is the composition of a court made up of full-time judges. Once again, the greatest obstacle is the status of the ICS arbitrators: they are lawyer or at least retired judges, but they are not professional judges. The treaty includes two provision aimed at guarantee their independence: each case shall be hear in divisions composed by three judges determined by lot from the primary group of fiftheen, in order to limit the risk of collusion between the parts. If clear conflicts of interest occur it will be possible to end the term. Wallonia obteined the pledge of a new “code of conduct”, according to which: judges who ignore the rules will be sanctioned, before the appointment they must make public their previous and current employments, “specific profession and assignements are interdicted in a certain time course, before the end of the term”.

The appointed person will receive a retainer fee of €2000 per month, in addition to a daily fee of $3000, they will be paid by the unsuccessful party. It is quite obvious that this “remuneration system” takes the risk to stimulate judges in granting as much as possible appeals, and in make the trials last longer…

A court of Appeal. Yes, however…

Finally CETA has introduced a second instance jurisdiction, i.e. an appeal. In the old ISDS-centered system there was a significative arbitrariness of the judgements, in proportion to legal uncertainty of the Governaments in taking decisions. The Establishment of a new appeal aims at the introduction of binding precedents for the judges, therefore the agreements won’t be subject to the interest of each party. The role of Court of Appeal, however, will be confined to the interpretation of the law, it can’t admiss new evidences, hearings of a new witnesses or experts. Moreover, the jurisprudence will be binding exclusively on the cases related to CETA. The establishment of ISDS courts can be introduced also in other clauses of investment agreements between the States, therefore these courts are not binding to the case law which has since arisen under CETA.

In other words: the ISDS arbitrations are still in power. In addition, ICS is a one-way jurisdiction, since companies can attack the the Governaments, but never viceversa. ICS is extremely expansive, as many international arbitrations, therefore it will be used mostly by multinationals and it will be subject to speculative moves, such us them already occured in the context of ISDS. (See part 1 of the article).

During the next episode we will conclude our travel within CETA. We will try to understand who is actually protected by the new courts, and how is guaranteed this protection.


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