On 1 March 2018, the Council of the EU adopted negotiating directives for a multilateral investment court empowered to hear disputes over investments between investors and states.   The EU’s intention is to address the shortages of the existing ad-hoc mechanism for arbitrating investment disputes known as Investor-State Dispute Settlement (ISDS). The existing system has been criticized for lack of legitimacy, consistency and transparency. A modern and transparent Investment Court System (ICS), is by comparison based on the features of a permanent public domestic or international court providing transparent and efficient proceedings as well as a mechanism for appeals. The European Commission claims that only a permanent international institution and fully qualified judges, free of any conflicts of interest or interest in the outcome of cases appointed by states can sufficiently guarantee impartiality and predictability.   In order to reform the ISDS system, the Commission launched an intensive debate and consultation process, involving the European Parliament, EU governments and civil society, which led to the 2015 Commission’s proposal to include in all EU trade and investment negotiations a permanent institution for resolving investment disputes. Provisions referring to the Investment Court System may be already found in EU’s recently concluded free trade agreements (e.g. Comprehensive Economic Trade Agreement concluded with Canada).  However, bilateral nature of EU’s free trade agreements makes effect of the EU’s reform initiatives limited. Provisions referring to the ICS apply only to the parties to each agreement and do not cover investment agreements concluded by EU member states. Therefore, the Commission has been working on the multilateral investment court project to solve the shortcomings of ISDS at a global level. Multilateral Investment Court, a truly international body, would replace existing bilateral mechanisms and uphold multilateral rules-based system. The Commission believes that the multilateral investment court should be for investment dispute settlement what the World Trade Organisation is for trade dispute settlement. 

 EU Trade Commissioner Cecilia Malmström said: 

”This is a very welcome decision. In the EU’s bilateral trade talks, we have already moved away from the old ISDS model towards the modern and transparent investment court system. Looking ahead to the long term, the multilateral level will be highly important for managing the growing number of bilateral investment agreements. I am delighted that EU Member States in the Council have now given their unanimous backing to this initiative.”