While the high quality of the US judicial system (and US laws) concerning foreign investors is beyond debate, we have heard concerns from some European parties that without ISDS, EU investors will not be able to enforce their TTIP rights in US courts. This argument is not particularly convincing. It makes sense only insofar as there is an underlying justification for including enforceable investment protection provisions in TTIP. Our analysis in this paper suggests that such a justification is lacking.
Even assuming, for the purposes of argument, that there were a coherent policy rationale for ensuring that TTIP provides EU investors in the US with a set of enforceable investment protections that go beyond what they would otherwise be entitled to under US law, the inclusion of ISDS in TTIP would be unnecessary. It is true that, under the US Supreme Court’s Medellin case law (which raises a number of subtleties regarding so-called ‘non-self-executing treaties’ that we do not delve into here), some US treaties may indeed be difficult or impossible for private parties to enforce in US court. However, access to US courts can be assured either by clearly indicating in TTIP that the US considers the treaty to be ‘self-executing’, or by having the US pass appropriate implementing legislation. In other words, if one believed that was a problem of domestic-court enforceability of TTIP rights in the US, the appropriate response by the EU would be to insist in its negotiations that the US pass implementing legislation securing a right to access US courts for certain TTIP violations, not to include ISDS in TTIP.
Baetans responds with this:
To state that domestic courts should ‘suffice’ for the handling of investment claims overlooks the fact that many domestic courts are not allowed – meaning that it is not within their legal scope of jurisdictional competence – to apply public international law, such as BITs, directly. Moreover, US courts that are in theory allowed to do so have a track record of nevertheless not accepting any claims of individuals based on any form of international law.9 (Indeed, the same is true in Europe.10 For example, on 13 January 2015, the Grand Chamber of the European Court of Justice held, inter alia, that the NGO Stichting Natuur en Milieu was not entitled to invoke the Aarhus Convention of 1998 on access to information, public participation, and access to justice in environmental matters, in spite of an explicit reference in the EU regulation implementing this Convention.11 Importantly, this was decided upon at the request of the European Commission, Council and Parliament – some members of which are now arguing that investment protection standards in international treaties should be enforced by domestic and EU courts. Why would private investors be allowed to rely upon international treaties before such courts, while NGOs are not?)
Hence stating that “the appropriate response by the EU would be to insist in its negotiations that the US pass implementing legislation securing a right to access US courts for certain TTIP violations”, as Poulsen, Bonnitcha and Yackee do, shows a lack of knowledge about US negotiation policy and the actual practice of domestic courts. Looking at US practice concerning domestic enforcement of individual rights under international treaties,12 it is highly unlikely that the US would ever agree to pass legislation that would make substantive treaty standards domestically enforceable. For example, the US only ratified the International Covenant on Civil and Political Rights on the condition that its standards would not be enforceable before US courts.13 In practice, if substantive protection for investors is included in TTIP, the only option of redress for violations of such standards would be through some form of international dispute settlement mechanism.
On the surface, they seem to be debating whether TTIP investment obligations could be enforceable directly in U.S. courts. In other words, perhaps a foreign investor could go to U.S. court and argue that a U.S. governmental entity had violated its international obligations.
I'm not sure this is a live issue, though. I don't think Poulsen, Bonnitcha, and Yackee are actually advocating this; rather, they are just saying that if you wanted TTIP investment obligations to be directly enforceable (which they think is unnecessary), they could, in theory, be enforced directly without ISDS, by relying on domestic law.
But it is an interesting idea to have international investment obligations incorporated into domestic law. For some countries, this might actually be a possibility. Almost certainly not in the U.S. or EU, though.
What I would want to see, rather than international investment obligations being invoked in domestic courts, is domestic law obligations that reflect, within a somewhat broad discretionary range, principles related to expropriation, due process, etc., as found in many countries' domestic laws (and also in investment obligations).