The European Commission is going ahead with proposals to create an Investment Court System to resolve disputes between investors and EU member states.

It would replace the existing investor-to-state dispute settlement mechanism (ISDS).

The ISDS instrument of public international law grants an investor the right to use dispute settlement proceedings against a foreign government.

Provisions for ISDS are contained in a number of bilateral treaties.

However, according to trade commissioner Cecilia Malmström, “the old traditional form” of dispute resolution suffers from a “fundamental lack of trust”.

She said EU investors were the most frequent users of the existing model.

The Commission’s current initiative has already been debated in the European Parliament and EU member state government representations in Brussels.  

However, the US Chamber of Commerce in Washington has voiced its opposition to the proposals.

Marjorie Chorlins, the chamber’s vice-president for European affairs, said the US business community could not endorse the EU proposal “in any way”.

The EU position, she said, was “not grounded in fact”.

Her concerns are based on the plan’s implications for the Transatlantic Trade and Investment Partnership (TTIP), the proposed free trade agreement between the EU and the US.

“If the EU still regards the TTIP as a serious objective, today’s proposal is deeply flawed,” Chorlins said.

But Emma McClarkin, British member of the European Parliament, dismissed “scaremongering” over the trade talks.

The Conservative MEP for the East Midlands criticised “negativity” on the proposed Investment Court System, as well as “the old-fashioned protectionist lobby”.

Commission vice-president Frans Timmermans said the court proposal would bring in a system with three qualified judges and transparent proceedings.

Its decisions, he said, would be subject to review by a new appeal tribunal.

Next steps will be further revision in Brussels, most likely before the year end. 

They are to be followed by a “final” proposal from the Commission.