As I mentioned a few weeks ago, several German NGOs have filed a complaint in German court alleging that CETA is unconstitutional. The full complaint is here. It's in German, but luckily we have a German intern named Max Wirth at Cato right now, so I asked him to translate a small part of it. Naturally, I focused on one of the ISDS arguments. Max would like me to emphasize that he is not a lawyer, and this is an informal translation. Any German readers out there, please feel free to weigh in!
(4) Unequal Access to the “Investment Court”
The principle of rule of law (Art. 3 Abs. 1 GG)[1] is furthermore violated in another way; namely in view of equal access to the investment court. According to paragraph 8.23 section 1 in CETA[2], solely “an investor of a Party on its own behalf” or “an investor of a Party, on behalf of a locally established enterprise which it owns or controls directly or indirectly” is eligible to invoke the investment court. According to 8.1, however, an “investor” counts only as “a natural person or an enterprise of a Party, other than a branch or a representative office, that seeks to make, is making or has made an investment in the territory of the other Party”. As the majority of the cases will expectedly deal with private individuals, the restriction on the “territory of the other party” is therefore essential. From the perspective of Germany, this implies (as long as it is about investment disputes within Germany) that exclusively they[3] can be sued at the investment court by Canadian investors, while this possibility is not available for German citizens – even if they would be regarded as investors by CETA standards in this matter. For Canadian investors, CETA offers with regards to Germany henceforth the already mentioned choice between national court and investment court, while the German citizen is limited to the national court. This instance can be denoted as investment-judicial citizen discrimination,
Compare zum Ganzen Schiffbauer, Investitionsschutz und Grundgesetz, KSzW 2016,
- 145 (151 f.).[4]
The universal rule of equality demands, however, to treat every human being equal in front of the law. If a group of persons[5] is treated differently than another group of persons, even if there is no difference of type between the two groups, which would justify the unequal treatment, then 3 Abs. 1
GG[6] is violated,
- Rspr., etwa BVerfGE 110, 142, Rn. 63.[7]
Based on these measures, the unequal access to the investment court transgresses against the principle of the rule of law with respect to. Art. 3 Abs. 1 GG, because it results in unfair treatment for German citizens. This can be assessed directly via the nationality or citizenship, or be based on the fact that the access to the investment court is unequally regulated. The effect is the same either way.
There is also no factual reason why such an unequal treatment of German and Canadian investors exists.
BVerfG, Beschluss der 1. Kammer des Ersten Senats vom 11. Januar 2016 – 1 BvR 1687/14, Rn. 10.[8]
A review standard based on such principles (based on Art. 3 Abs. 1 GG) is also advisable for the discrimination of citizens, which comes along with CETA, because the differentiation due to citizenship is close to the discrimination based on homeland or origin and therefore requires a strict assessment of the proportionality,
Langenfeld, in: Maunz/Dürig, GG (74. EL Dezember 2015), Art. 3 Abs. 3, Rn. 58; vgl. zu solch strengeren verfassungsrechtlichen Anforderungen auch BVerfGE 130, 240, Rn. 46.[9]
The goal of the chapter on investment protection in CETA is on the one hand an improved environment for investments for the own citizens on the territory of the other party and on the other hand to foster the own economy with an attractive investment environment (compare the preamble of CETA). This includes also to treat investors favorably and to offer them legal protection as effective as possible.
The investment court is in principle suitable to accomplish this goal. With respect to the high level of legal protection in Canada and the member states of the European Union, it is however questionable if such a parallel justice is necessary at all. It is certainly not necessary whatsoever to limit the access to the investment court based on nationality or citizenship; as thereby neither the investment environment in Canada nor in the European Union gets positively influenced. There is no factual reason for the discrimination of national citizens. Even if such a reason would be possible to construct, the comparison of interest would, with respect to the discrimination of citizens, always be decided against the investment courts, based on the relatedness to Art. 3 Abs. 3 GG, because the occurring disadvantages for Germans investing in Germany would not withstand an assessment of proportionality.
[1] Article 3 in the German Constitution
[2] Section 8.23 states: If a dispute has not been resolved through consultations, a claim may be submitted under this Section by: (a) an invest or of a Party on its own behalf; or (b) an investor of a Party, on behalf of a locally established enterprise which it owns or controls directly or indirectly
[3] “They” = Germany
[4] Reference to legal interpretation of investment and constitutional issues
[5] Refers to legal persons
[6] German Constitution article 3
[7] Ruling of the Supreme Court
[8] Reference to Supreme Court ruling
[9] Reference to legal interpretation of the German constitution
