Exposed: Big business lobbies in secret for new legal privileges in the EU

Analysing dozens of consultation contributions and documents obtained through freedom of information requests, the report reveals how banks like German Commerzbank, lobby groups like the Association of Large French Companies and corporate lawyers are lobbying for a new legal regime that would enable industry to bypass national courts when settling disputes with EU member states. Big business' key demand is a new EU court for corporations, as well as substantive rights, which could ultimately put governments off regulating in the public interest.

The lobby campaign commenced after the 2018 "Achmea ruling" by the Court of Justice of the EU, which put an end to dozens of bilateral investment treaties (BITs) that EU member states had signed with each other. These treaties allowed investors to sue member states before tribunals of three private lawyers when state decisions hampered their investments. The court held that this dispute settlement (known as investor-state dispute settlement or ISDS) was illegal, as it side-lined EU courts.

The ruling sent shock waves through the business community, given the risk it posed to the sizeable profits they had been making out of ISDS as well as the power it had given them to 'chill' regulations they disliked. But corporate lobbyists quickly started lobbying the European Commission to create a new parallel justice system, similar to the old intra-EU BITs, but compatible with EU law. A European Commission proposal is expected for late autumn 2021.

Pia Eberhardt, researcher at Corporate Europe Observatory said: "Big business already enjoys ample rights in the EU and privileged access to policymakers. But corporations are insatiable and now want a parallel EU justice system exclusively accessible to them. The financial risks such a system would create for EU governments could put them off regulating to protect workers, consumers, and the environment. Giving new legal privileges to big business is not compatible with the Green Deal, the EU's flagship policy, nor ambitions to correct unfair and unsustainable aspects of globalisation. This corporate takeover of EU law must be stopped."

ENDS

You can find the report "Conquering EU Courts. Big business lobbies in secret for new legal privileges in the EU" here.

A 2-page executive summary is available here.

Notes to the editor

•     Big business' key demand is a new system for settling intra-EU investor-state disputes that enables industry to avoid EU member states' national courts. Various options are being proposed, including a new EU investment court that would only be accessible to corporations. Making clear their reliance on financial pressure tactics to scare governments into submission, corporations argue that only "the risk of judicial proceedings is an incentive for state parties to... engage in dialogue with investors", as German industry lobby groups put it in a June 2019 letter to the Commission.

  •      Industry wants to change EU law so that it mirrors the substantive investor protections and wildly speculative damage calculation methods which are common in international investment law. Provisions such as fair and equitable treatment should be "codified, specified and further developed" in new EU legislation, according to Commerzbank and Deutsches Akieninstitut. This would risk driving up costs for public interest regulations in the EU, making it easier for business to secure large amounts of compensation paid out by the public purse.

  •      A European Commission non-paper from September 2020 outlines worrying options for both the substantive investor rights and the new system for settling intra-EU investor-state disputes, including the creation of a specialised investment court at EU level. The Commission also seems keen to establish new privileges for business to intervene even more and even earlier in policy processes.

  •      The introduction of new investment law standards and an EU-wide system to enforce them could ultimately discourage and prevent governments from regulating in the public interest when their proposals are opposed by powerful economic actors. And this is exactly what big business wants. As EuroChambres, the Association of European Chambers of Commerce, made clear: "Companies are not against measures that protect common interests that matter to society at large, however they cannot be detrimental to businesses' investments."

  •      Trade unions, consumer and environmental organisations vehemently oppose new special rights for foreign investors. They argue that any rule of law deficits in the EU should be addressed in a way that improves the experience of all citizens, rather than by creating additional legal privileges for a small number of already highly powerful and protected economic actors. They have also criticised the contrast between the Commission's approach to civil society concerns and those of corporations. As the Austrian Chamber of Labour remarked: "While the Commission has long ignored workers' requests to create minimum social standards for the EU... complaints about the lack of protection for investors, on the other hand, have immediately prompted the Commission to run a consultation on the issue."