The Transatlantic Trade and Investment Partnership: Dispute Settlement Mechanism

The European Union and the United States are negotiating the Transatlantic Trade and Investment Partnership (TTIP). Included in TTIP is the Investor State Dispute Settlement (ISDS) mechanism, which has caused significant public opposition, especially in Europe, to the trade deal. The fear among the opponents of ISDS is that investor protection will undermine the ability of the state to regulate public policy in the public interest. Specifically, the opponents fear that ISDS will reduce health and safety regulations, environmental protection, climate change policies, and even financial regulation to the lowest common (transatlantic) denominator. This article assesses whether ISDS can be sufficiently reformed to alleviate most of the public concerns, or whether it should be crossed out from the TTIP negotiation mandate. The article concludes that ISDS is so widely used in treaties signed by the European Union and its Member States, and by the United States, that it is unlikely that it will be crossed out from the final TTIP deal. However, significant improvements are needed to the ISDS mechanism and the arbitration process because without these additional safeguards for states and citizens it is unlikely that the European Parliament and the European Union Member States will approve TTIP.