The European Parliament today called for foreign investors to be allowed to sue the EU and member states in special new courts. This controversial proposal came as part of a non-binding set of recommendations to the European Commission on the Transatlantic Trade and Investment Partnership (TTIP), currently being negotiated with the US. The new investor courts would replace the old investor tribunals employed as part of the investor-state dispute settlement (ISDS) system, but would function largely in the same way.

Adopting an amendment proposed by the Socialists and Democrats (S&D) group, the European Parliament called on the European Commission to set up new ISDS courts featuring "publicly appointed, independent professional judges," instead of corporate lawyers, as at present, and holding public hearings with an appeal mechanism. The S&D says this is "the end of ISDS in EU trade deals."

In putting forward this compromise amendment, however, the left-wing group has implicitly acquiesced in the idea of granting foreign investors special rights not enjoyed by domestic companies—the key issue that lies at the heart of ISDS. Moreover, the new investor courts are just as one-sided as the current ISDS tribunals: although companies will be able sue the EU and member states for billions, with the public footing the bill, there is no mechanism for the EU to sue companies. The best the public can ever hope for is not to lose.

The rationale for ISDS is that it is needed to encourage investment, although as the trade expert Dr Gabriel Siles-Brügge points out: "there is very little evidence that the inclusion of ISDS boosts investment between OECD states with developed legal systems." Indeed, investment between the EU and the US is already extremely high, even in the absence of ISDS. In 2013, total investment from the US to the EU was €1.65 trillion. Investment the other way was even bigger—€1.69 trillion—giving a total transatlantic investment of more than €3.3 trillion.

The proposed ISDS 2.0 is very close to some of the ideas proposed a couple of months ago in a concept paper presented by Cecilia Malmström, the EU Commissioner responsible for trade and thus TTIP. Although its inclusion in the European Parliament's recommendations is a definite win for Malmström, the wording is extremely vague, and it is not clear how it will change things in practice.

For example, as Greenpeace pointed out in a press release criticising what it called the "Euro-fudge on private TTIP courts," a senior US official has already rejected the idea of creating new investor courts out of hand, so the European Parliament's recommendation on ISDS may amount to little more than political window-dressing.