Cecilia Malmström, the EU’s competition commissioner since the beginning of this year, has provided long awaited details of a plan to revamp the Investor-to-State Dispute Settlement clause of the Transatlantic Trade and Investment Partnership (TTIP) still being negotiated with the US.

The Commission’s proposal builds on substantial input from the European Parliament, which after debating the topic heatedly drew up proposals for change, as well as from member states, national parliaments and feedback from public consultations.

The dispute resolution mechanism is by far the most controversial aspect of the proposed trade deal, which has made little progress in recent months due especially to widespread disagreement over the arbitration courts it foresees.

Concretely, the EU’s new plan calls for 15 internationally qualified and independent judges – five each from the US, the EU and a third country – to be appointed publicly to a new Investment Court System. This would include a first instance and an appellate tribunal, modeled respectively on the International Court of Justice and the World Trade Organization’s appellate body.

Under the latest proposal, the EU says the ability of investors to take complaints to the tribunal would be precisely defined and limited to cases such as targeted discrimination on the base of gender, race or religion, or nationality, expropriation without compensation or denial of justice. National governments’ right to regulate would be an integral part of the process and guaranteed in the provisions of the trade and investment agreements.

The EU wants the proceedings of the court to be transparent, hearings open and comments available online. Its envisaged rules stipulate that parties with an interest in the dispute should have the chance to intervene. “Forum–shopping” should not be permitted, however, and “frivolous” claims should be dismissed summarily. Moreover, a clear distinction between international law and domestic law should be maintained and multiple and parallel proceedings avoided.

The draft will be presented as a text proposal in the ongoing trade talks as well as being used in other ongoing and future negotiations. Even with the changes, however, TTIP can be expected to remain controversial, as the reaction – split generally along Europe’s traditional political, social and environmental lines – to this week’s announcement suggests.

One social justice organization quoted in EU media called the changes “putting lipstick on a pig.” A Green party supporter said the revision showed a "deft sleight of hand.” Other commentators suggested that the revamped settlement proposal should apply to all trade agreements, including the CETA pact with Canada.

In particular, fears that US multinational companies could use private arbitration rules to challenge European food and environmental laws have overshadowed the trade agreement that supporters insist will lead to uniform standards and more transparency in international grade. Opposition to the pact is said to be especially strong in Germany, with a recent survey showing 39% opposed.

Less mistrustful, business has consistently supported existing proposals for investor-state dispute settlement within TTIP, saying such proceedings could also benefit European investors in the US and that without a watertight ISDS mechanism, some companies might not risk investing at all.

The German chemical industry association Verband der Chemischen Industrie (VCI) said last year: “European companies believe TTIP could bring noticeable impulses for the economy, in particular tariff reduction, reduction of non-tariff trade barriers, and stimulation of the overall economy.” At the same time, it said, “there can and must be no compromise to lower the protection standards.”