Investment protection for foreign investment has been a key element of trade and investment deals for over 50 years. In a globalised economy, with large flows of investment across borders, it is essential that the UK’s investors continue to enjoy the maximum possible level of security when they send investment abroad. The most frequently used method to secure this investment is an investment arbitration system called ISDS or investor to state dispute settlement.
Investor to state dispute settlement, or ISDS, is a system that allows investors to initiate arbitration directly against a government should they believe that their property has been expropriated illegally (that is without sufficient compensation), or if they have been discriminated against by a country’s government in contravention of their commitments in an international treaty.
Importantly, ISDS neither allows for private firms to overturn existing laws nor prevents sovereign states from introducing new laws. Neither does it remove the right of nationalisation. At most it can lead to compensation being paid should an investor be found to have a justified case.
It is not widely known, but since 1975, the UK has negotiated 94 Bilateral Investment Treaties almost all of which contain ISDS provisions. Indeed, European states in total have in excess of 1400 agreements that include various ISDS clauses. In other words, it has become a staple part of the legal system government international investment worldwide.
What’s more, investment protection arbitration is obviously a system that works, not only do we draw a considerable amount of earning from investing abroad but Britain now gets more inward investment than the rest of the EU combined! This investment helps grow our economy and supports good paying jobs. ISDS provisions are not there to prevent Governments from legislating; they are there to prevent investors, including our own, from facing unfair Government practices which directly affect their investments. So if a government discriminates again you based on race, ethnicity gender or nationality, you have a way to achieve redress.
Contrary what you might think, given the public disquiet surrounding the issue, only two ISDS challenges have ever been brought against the UK Government and neither of them succeeded. In addition, 8 EU Member States have existing ISDS arrangement with the USA, and all of these have implemented the entire body of EU law on the environment, labour and social standards without problem. ISDS has been portrayed as an aggressive tool of business, whereas in fact it is a safeguard for companies and in particular for small companies which have ambitions to go international and has been common practice in agreements for many years.
And yet we, the Conservatives, recognise that members of the public have expressed serious concerns with the ISDS system and this is why we support ongoing efforts to reform it, making it better equipped for challenges ahead in the twenty first century, not only in TTIP but with the ultimate goal of creating a single investment regime at the multilateral level. However, this will not happen overnight, that is why we are working together with the UK Government, other European countries and the European Commission on a new system to protect investment in TTIP, called Investor Court System or ICS.
For us, ensuring that UK investment and investors abroad and jobs at home are secure is our number one priority. Provided we can ensure that UK investors are treated with the same level of protection as other investors from other countries in the US, then we will work with the Commission and the UK Government to ensure this happens.
Of course, any investment protection must be subject to certain conditions. We must not allow for frivolous claims by companies against governments. Measures such as requiring the costs of arbitration cases to be paid for by the party which loses the claim will help to ensure that these frivolous claims are less appealing. In addition, any investment protection must ensure that governments continue to be able to regulate in the interests of their citizens, provided that this is not a backdoor way of illegally discriminating against UK investors or vice versa and ensure not only transparency but also democratic accountability
The UK is an outward looking successful economy that has been sending investment around the globe for hundreds of years; in addition, UK jobs depend on foreign investment in the UK. We shouldn’t pull up the drawbridge without first seeing if we can address existing known problems, otherwise, other countries will go ahead without us and we will be forced to accept what they decide.
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