Currently there is a lack of trust
not only from public in ISDS1,
but also critique comes from the schollars2,
as well as the European Parliament3
and the EU Commission4,
seem to make it illadvised, at least for the EU, which is arguably in a more
difficult position than states with regard to ISDS, to continue setting up
traditional ISDS mechanisms. The problem involves that ISDS sometimes brings
lack of democracy, as well as the economic outcomes of disputes are couple of
the problematic aspects in the EU. “The difficulties to democratically legitimise
decisions within the compound multilevel structure of the EU are well known5”
and “the EU has long been criticised for prioritising the liberalist economic perspective6”.
Thus where EU agreements establish ISDS, “which result in less transparency and
an economic bias, this weakens the EU’s legitimacy in areas where it is already
That is why the Commission declared its will more notably than the EU Member
States to boost transparency and independence of investment arbitration, by
making it contingent to rigid rules, safeguarding domestic made choices, and
bring it closer to the national judiciary which will be discussed later.
1 The Commissions proposal, supra note
2 B. Choudhury, Recapturing Public Power: Is Investment
Arbitration s Engagement with the Public Interest Contributing to the
Democratic Deficit?, 41 Van JTL 2008.
3 Supra note 51, European Parliament
Report on the Future of European Investment Policy Investor- State Dispute
Settlement (ISDS) Provisions in the EU s International Investment Agreements.
4 The Commission s proposal, supra
5 A. Follesdal and S. Hix, “Why There is a Democratic Deficit in the EU:
A Response to Majone and Moravcsik ,
40 (3) Journal of Common Market Studies, 533-562.
6 G. Davies, Democracy and Legitimacy in the Shadow of Purposive Compe tence ,
21 European Law Journal 2015, at 2.
7 Supra note 65, at p.224.