Dr. Oisin Suttle:

I thank the committee for the invitation. Members should have received a short written submission from me, so I will keep my remarks brief and provide an overview of it.

CETA's investor court system is an example of investor-state dispute settlement, ISDS, a mechanism allowing foreign investors to sue host governments in international tribunals outside of national court systems. By way of introduction, it might be useful to give some context about ISDS. It is a common remedy in bilateral investment treaties, of which almost 3,000 are in existence. It is, however, highly unusual in international law in general. Most international law rights, such as those of the World Trade Organization, are enforced between states. ISDS, on the other hand, gives investors themselves the right to sue under investment treaties without recourse to their home governments in the first instance.

The rights that investors can invoke vary, depending on the treaty, but generally include non-discrimination, compensation for direct or indirect expropriation and a guarantee of fair and equitable treatment. In the past 20 years in particular, investors have regularly invoked these rights to challenge measures by host states. We are not quite sure how often they have done so because many of these things are confidential but there are over 1,000 known claims and possibly many more that remained confidential. These frequently result in eye-watering damages awards. The average ISDS award over the past ten years is over $250 million and there have been 14 known awards where damages have exceeded $1 billion so potentially huge sums are at stake.

Ireland has largely avoided ISDS until now. With the exception of the energy charter treaty, Ireland has no bilateral investment treaties, BITs. This compares with a state like Germany, which has 127 in force while the UK has 102 and France has somewhere in the high nineties. BITs and ISDS are usually advocated as tools to help countries - especially developing countries - to attract foreign investment. That Ireland has been successful in recent decades in attracting investment without the use of these treaties raises questions about whether this is something for which Ireland has an economic need. More generally, the economic evidence suggests that BITs have relatively little effect on even developing states’ ability to attract investment. Quantitative studies are inconsistent on whether there is any positive connection between BITs and investment flows while qualitative studies and things like interviews and so on suggest that for most investors, the existence of a BIT is not something they give much weight to in deciding whether to invest so the economic case for this entire legal regime is still up in the air.

By contrast, BITs impose significant costs and risks. If Ireland ratifies CETA, its investment chapter will pose a significant constraint on the State’s ability to regulate to realise important public policies, including environmental protection, public health and housing and in any sector with significant foreign capital. As Dr. Ankersmit highlighted, the scope of investments covered under this agreement is broad. Nothing is carved out. The agreement might not stop Ireland acting to pursue a particular policy but it imposes limits on what we can do and how we can do it with the threat of multibillion euro lawsuits if we get it wrong. Prominent policies or proposals that could be challenged under similar rules include the 2008 bank guarantee, proposed reforms of the housing rental market and, more generally, efforts to decarbonise the economy and power generation. These are the sort of measures we see challenged in other countries. There is evidence of investment law having a chilling effect on public policies in other states and there is good reason to believe we would see a similar effect in this country. In fact, we may already have seen this effect if we look at the recent moratorium on oil and gas exploration and the carve-out in it for existing licence holders. I do not know the rationale for that but certainly a plausible rationale might be that similar moratoriums have been challenged under the energy charter treaty by existing licence holders so there is certainly reason to worry about the impact of CETA on this State's ability to regulate in pursuit of public policy. Uncertainty about the rights conferred on investors, some of which remains under CETA, forces states to err on the side of caution in the way they regulate in this area.

The European Court of Justice, ECJ, has said a few things that are relevant to this question. In its opinion on the EU-Singapore free trade agreement, the ECJ confirmed that including ISDS in a treaty is a significant matter that it is not merely ancillary to the EU’s powers in relation to trade and foreign investment and that only member states themselves have the power to agree such a system so creating a right like this is not something the Union itself has the power to do. The ECJ has also looked at CETA in particular. Members will find more on this in the written submission but I suggest that there is not a lot in the ECJ's opinion that would allay concerns about the constraints this regime will impose on states’ regulatory autonomy or the fundamentally unequal nature of the rights this regime establishes.

I am happy to go into more detail on that during the discussion if that would be useful. A further point is that, once ratified, there is nothing Ireland can do to pull back from the investor court system under CETA. Only Canada and the EU, rather than individual member states, can terminate this agreement. Termination is not a member state power. Even if the agreement is terminated, these rights for investors will continue for a further 20 years so this is not a decision that can be revised lightly once made, which is something on which Dr. Ankersmit has already touched.

I hope this has been helpful to the committee in getting some sense of the potential risks posed to Ireland by the investor court system and in determining whether there are any real benefits on offer. I thank the committee for its time. I am very happy to answer any questions members may have.