The Government has come out in favour of a controversial mechanism that would allow multinational companies to take legal action outside national courts in the event of a dispute with a sovereign state.

The dispute would instead be solved by an international arbitration panel.

Trade unions and non-governmental organisations have seized on the mechanism, known as an Investor-State Dispute Settlement, or ISDS, as a major bone of contention in the current and troubled transatlantic trade negotiations between the EU and the United States.

Opponents argue that ISDS give multinationals too much power to take legal action against states outside of national courts.

Common arguments suggest that the threat of legal action via private arbitration panels, which opponents say are often opaque, would allow companies to sidestep environmental or health and safety rules, and would effectively allow companies to sue governments for loss of profits.

Supporters of the arbitration panels, which have been around for decades, argue that investor rights are already protected by international law.

They say that member states themselves have signed up to, and that the arbitration panels have become much more open and transparent.

They have also been commonly included in free trade agreements since the 1950s.

According to a letter sent to the European Commission's new trade commissioner Cecilia Malmstrom by supporters of the panels, Ireland has joined 13 other countries in insisting that ISDS form a key part of the upcoming EU-US trade talks.

The letter follows an embarrassing dispute within the newly confirmed European Commission.

The incoming trade commissioner is already on record as saying she favoured the use of international arbitration panels in the newly-completed EU-Canada trade deal.

Ms Malmstrom was then publicly overruled by the incoming European Commission President Jean-Claude Juncker who said that ISDS would not form part of the current EU-US trade talks, known as the Transatlantic Trade and Investment Partnership (TTIP).

Following Mr Juncker's remarks, Ms Malmstrom publicly disavowed remarks attributed to her ahead of her parliamentary hearing that she agreed that ISDS should not be part of TTIP.

However, 14 countries have now written to the trade commissioner insisting that member states had given the European Commission a "clear" mandate to include "investor protection mechanisms in the TTIP negotiations".

The letter is signed by Minister for Jobs, Enterprise and Innovation Richard Bruton.

The EU argues that a successful trade deal with America could be worth €100 billion in jobs and investment.

However, the negotiations have attracted a growing level of criticism from trade unions and environmental groups.

In a consultation process begun by the European Commission, which negotiates international free trade deals on behalf of member states, some 150,000 respondents and organisations registered concerns about the use of ISDS in the deal.

During his speech to the European Parliament in Strasbourg on Wednesday, Mr Juncker reaffirmed his opposition to the use of ISDS in the trade talks.

However, his own trade commissioner Ms Malmstrom is understood to believe that they are included.

According to the letter sent to Ms Malmstrom, and signed by Minister Bruton, 14 member states believe the commission is legally obliged  to include the arbitration panels within the TTIP negotiations.