The usually well-informed, pro-trade newspaper The Economist recently published an editorial that has been used by anti-globalization voices as a victorious proof that also “market friendly” voices question ISDS. This is not an accurate reading of the editorial, which, as the sub-heading states, argues that investment protection “is not the horror critics claim, but could be improved”. This is a relatively moderate – and arguably uncontroversial – approach that should not be understood as an attack on investment protection.
That being said, the text echoes many of the common misconceptions thrown around in the debate surrounding ISDS. The newspaper claims that the clauses defining the scope of ISDS are “insufficiently precise”. By claiming this, the Economist fails to make the crucial distinction between substance and procedure. The substantive protections can very well be said to be imprecise in some cases, which has indeed been done repeatedly and also led to more recent agreements including more detailed regulations of the scope of substantive protection. ISDS is, however, a whole other matter and only concerns the procedural tools to enforce the substantive clauses.
Furthermore, the newspaper criticises the confidential ISDS proceedings. This is indeed something that can be questioned in an investment dispute context. But the simple fact is that TTIP is likely to include the most transparent ISDS proceedings in history (as we discuss in Swedish here ) through the application of the UNICTRAL Rules on Transparency in Treaty-based Investor-State Arbitration.
Very few court systems in Europe, if any, can demonstrate the same level of transparency as the UNCITRAL Rules on Transparency, adopted in 2013 and in force as of 1 April this year. UN member states spent three years drafting these rules. They spent another year drafting a convention on the same topic, to expand the scope of the Rules on Transparency. Yet, in the public debate, it is as if none of these events ever took place.
The Economist also makes the populist mistake of using a few controversial cases as benchmarks for an entire procedural regime. But the very fact that a controversial case is brought does not mean that the procedural system as such is defect: neither in international law nor in domestic courts.
When national courts render decisions we do not approve of, perhaps in favor of parties we do not approve of, we do not say “Close the court!”.
We may say “change the law!”, or “that was a poorly drafted agreement”. We may even say that “the court got it wrong”, “the judge didn’t understand the case”. But we do not say that the court should be closed every time we disagree with one of its decisions. That would be an unacceptable principle in any system governed by the rule of law.
The real focus of discussion should be the substantive commitments by states. Once these commitments have been made, most sensible commentators find it reasonable that there should be a way to hold states accountable for them.
More than anything, the fact that even a normally moderate voice succumbs, at least in some aspects, to over-simplified rhetoric is a worrying sign that the entire discussion about ISDS has been tilted in a worrisome direction.