The Polish Government’s Standpoint on ISDS Inclusion in the Scope of TTIP

by Pawel Sikora, Kubas Kos Gałkowski

It is beyond any doubts that the ongoing procedure of negotiating Transatlantic Trade and Investment Partnership (TTIP) between the European Union (EU) and the United States of America (US) raises essential controversies among the EU member states societies. However, it is not the first time such controversies occur, as just three years ago a similar confusion has risen in the course of talks over the Anti-Counterfeiting Trade Agreement (ACTA), which has been widely criticized.

Just to remind, the Polish Government initially had approved ACTA but changed its position under the pressure from the society and non-governmental organizations. The exactly same story is now happening in relation to TTIP and, in particular, the Investor-State Dispute Settlement Mechanism (ISDS). The Polish Government has presented its official position in which it widely supports the negotiations of TTIP and the idea of the inclusion of mechanism of ISDS in the scope of the future agreement. But that does not mean it will eventually happen.

As it is known, the common argumentation raised against TTIP and ISDS is i.e. that upon signing the treaty, the “flood of US investors’ claims” against EU countries may purportedly be expected, that would be heard by international arbitration tribunals instead of domestic courts. Altogether, amongst diverse organizations this may be considered as a forecast of one-sided dispute between the investors and states. However, Poland denotes that is does not have to be so – as it was otherwise in the past. Polish Ministry of Economy argues that the Republic of Poland is a party to over sixty bilateral treaties, including a Treaty with the United States of America concerning business and economic relations signed, entered into on March 21, 1990.

For almost three decades only six claims have been filed under the Treaty by US investors. In only one of these cases investor’s claims were partially allowed (approximately one fifth of the claimed amount has been awarded to the investor). In another two cases, claims were dismissed in whole, and one is still pending. Two cases ended with non-substantive decisions. What we need to keep in mind, is that Poland for many years has been an important direction for US investors. Currently, the value of US direct and indirect investments in Poland is estimated for PLN 25 billion (c.a. USD 6,5 billion). There are over 800 entities with US equity, employing over 200,000 people. This proves that there is no direct dependency between amount of claims and decisions in favor of the investor on existence of bilateral treaties and ISDS mechanism.

The Ministry of Economy validates that the future treaty will also introduce a better balance between the foreign investor rights and the state authorities’ right to regulate. In addition, it will guarantee a higher level of protection against the unreasonable lawsuits than currently existing. The TTIP opponents remain adamant to these arguments; also so called “social resistance” still tends to be strong. Seventy five Polish NGOs have recently teamed up in their struggle against the inclusion of the ISDS mechanism into the future treaty; they consequently keep pressing the officials. We are going to witness whether Polish Government’s stands firm with its current view or surrenders to this pressure. Due to the current situation in Poland, concerning the upcoming parliamentary elections (November 25th) and its outcome, this question is of vast importance.