I propose to take Questions Nos. 8 and 9 together.
As the Deputy will be aware the full coming into force of the EU-Canada Comprehensive Economic and Trade Agreement (CETA) once ratified across all Member States, will see the implementation of the Investment Chapter of the Agreement including the resolution of disputes between investors and states, should they arise.
All international trade agreements have dispute resolution arrangements. Where such agreements cover (i) trade in both goods and services and (ii) investment rules and protections, then there must be a dispute resolution mechanism that covers investments. The EU’s new approach to investment protection is the Investment Court System (ICS) which is contained in CETA and replaces the old Investor-State Dispute Settlement or ISDS mechanism.
ISDS, which has been in existence since the 1950s, enables overseas investors to resolve disputes with the government of the country where their investment is made through binding international arbitration. ISDS has, however, proved controversial in recent times and is now regarded as outdated by the European Commission. In this regard, the Irish Government considered the European Commission was right to seek to address the concerns raised by NGOs and others regarding ISDS in seeking to develop a new replacement mechanism – the Investment Court System (ICS) – to address concerns on transparency, legitimacy and public interest.
ICS addressees the concerns around the old ISDS system through:
- Greater transparency – hearings will be open and comments available on-line, and a right to intervene for parties with an interest in the dispute will be provided;
- Safeguards to prevent forum-shopping;
- Provisions for the swift dismissal of frivolous claims should they arise;
- The maintenance of a clear distinction between international law and domestic law;
- The avoidance of multiple and parallel proceedings in the ICS and national courts, and;
- The establishment of a permanent list of arbitrators.
The reforms to investment protection mean the ICS will involve:
- a public Investment Court System composed of a first instance Tribunal and an Appeal Tribunal;
- the establishment of a permanent list of arbitrators with qualifications comparable to those required for the members of permanent international courts, from which members will be selected to hear individual cases; and
- precise limitations on the ability of investors to take a case before the Tribunal.
CETA introduces a precise and specific standard of "fair and equitable treatment" of investors and investment. Therefore, an investor may only have recourse to the Investment Court System (ICS) in very specific limited grounds such as in the case of the denial of justice, or a fundamental breach of due process, or through targeted discrimination for example on the grounds of race, religious belief or gender. None of these measures give the Government any concern that Ireland would be subject to ICS proceedings. Moreover, it is important to note that under the ICS a State can never be forced to change its legislation, only to pay fair compensation in cases where the investor is deemed to have been treated unfairly under the specific grounds detailed. An investor cannot be given compensation just because they have lost profits or suffered economic loss or costs.
As one of the first “new generation” EU Free Trade Agreements, CETA contains a dedicated chapter on Trade and the Environment. The Agreement has some of the strongest commitments ever included in a trade deal to promote labour rights, environmental protection and sustainable development. CETA integrates the EU's and Canada's commitments to apply international rules on workers' rights, environmental protection and climate action. These obligations are binding, with the same legal value as any other provision.
CETA also reaffirms the EU and Canada’s right to regulate to achieve legitimate policy objectives, such as the protection of public health, the environment or consumer protection.
Under CETA, Canadian firms are placed on an equal footing with their EU competitors, including in relation to access to mining and prospecting investment. This means that Canadian companies must comply with all EU and national legislation in the EU countries where they operate (in the same way as EU companies), and they must not be subject to discriminatory rules.
As part of the finalising of the Agreement, the EU and Canada also agreed a legally binding Joint Interpretative Instrument (JII) that was added to CETA to provide further assurances in relation to public services, labour rights, environmental protection and investment. CETA does not affect EU rules on food safety or the environment. Neither does it restrict the EU or Canada from passing new laws in areas of public interest such as the environment, and health and safety. Importantly, in CETA both sides also agree that more trade and investment should not be at the expense of environmental protection and labour rights. On the contrary, the EU and Canada are committed to ensuring that CETA helps ensure that economic growth, social development, and environmental protection go hand in hand.
CETA does not restrict either the EU or Canada from passing new laws in areas of public interest such as the environment, and health and safety. Nor does CETA affect the Government’s scope for developing new laws in response to the needs and priorities of Irish citizens. CETA includes commitments towards the sustainable management of forests, fisheries and aquaculture. It also includes commitments to cooperate on trade-related environmental issues of common interest such as climate change where the implementation of the Paris Agreement will be an important shared responsibility for the European Union and its Member States and Canada.