The third claim related to investor state that the European Commission addresses is the following:
Claim: Investor-state dispute settlement undermines public choices (e.g. Vattenfall challenging the German moratorium on nuclear power, Philip Morris challenging Australia’s plain packaging regime for cigarettes)
The Commission then distinguishes the remedies under trade rules and investment rules:
"Should Australia lose the [plain packaging] case at the WTO it would indeed be under an obligation to change its legislation. This could not happen as a result of the investor state dispute settlement. Whatever the outcome of the Philip Morris investor state dispute settlement case, we can be sure that Australia will remain free to maintain its legislation. Same goes for Vattenfall case and Germany's ban on nuclear energy."
To me, the Commission's answer seems technically true, while not giving the full picture. It is true that at the WTO, there is a formal obligation to change legislation. At the same time, a losing country does not actually have to change its legislation. Instead, it could simply accept the withdrawal of concessions in response, or perhaps negotiate some compensation. We have seen this on several occasions.
As for how investor state works, it is true that Australia and Germany can maintain their measures. However, they might have to pay millions or billions of dollars/euros as compensation (I'm not sure what the amounts claimed in those cases are). Which system interferes more with "public choices"? That's a hard question to answer. But certainly they both get in the way a little bit. One obvious suggestion is to tweak the rules so that they get in the way a little bit less.
