German judges warn proposed TTIP investor court 'illegal'

The German Magistrates’ Association (DRB) has dealt a blow to EU-US free trade negotiations, coming out against a proposed arbitration court that would allow investors and corporations to sue national governments if their policies threaten their profits.

“We see neither a legal basis nor a need for such a court,” the DRB said in a statement, adding that the assumption that foreign investors don’t already enjoy “effective judicial protection” has “no factual basis”.

The European Commission last September proposed setting up an investment tribunal court that would allow firms to challenge government decisions as part of its larger Transatlantic Trade and Investment Partnership (TTIP).

Critics warn that the new court, which is intended to replace a highly controversial investor-to-state dispute settlement (ISDS) system, will pressure governments into clawing back consumer protection rights and environmental standards in favour of corporate interest.

However, the Berlin-based DRB insisted that national courts are good enough and that efforts by the European Commission to create a new court undermines European jurisdictions.

“The new investor court would alter national court systems and deprive courts of member states of their power,” it said.

The DRB also cast doubt on the independence of the judges in the new court as well as their appointment procedures.

Proponents of the arbitration court proposal argue its establishment is necessary to both protect and attract foreign investment from potentially hostile governments or biased domestic courts.

EU trade commissioner Cecilia Malmstrom, who is heading the TTIP talks, said last year that the new court would be "subject to democratic principles and public scrutiny".

The centre-right European People's Party and the centre-left Socialists & Democrats groups in the European Parliament spearheaded the new investor court last summer and supported the Commission's proposal. Other groups, like the Greens, opposed the plan, arguing that businesses should not be allowed to file cases in private courts outside current legal systems.