BRUSSELS (AFP) - The EU's top trade official on Thursday said fraught talks over the most controversial aspect of a massive free trade treaty with the United States would resume later this year.

There has been deep concern in the EU over the Transatlantic Trade and Investment Partnership (TTIP), with much of the focus on an investment arbitration tribunal which Washington sees as a key element in any final accord.

"We hope we can reopen this by the fall when we have a good European proposal," EU Trade Commissioner Cecilia Malmstroem said before meeting with European trade ministers to discuss the issue.

If achieved, TTIP could create the world's biggest free-trade pact and has been billed by President Barack Obama and European Union leaders as critical to boosting economic growth and jobs for all.

Tied to it is the so-called Investor-State Dispute Settlement (ISDS) mechanism which effectively allows companies to bypass national courts if they feel their investments are under threat.

Talks on ISDS were frozen last year after activists in Germany and Austria mounted a furious opposition campaign that threatened to torpedo the free trade deal outright.

Ms Malmstroem on Wednesday unveiled plans to radically revamp ISDS, eventually turning the mechanism into a proper international tribunal with its own staff and resources.

The Commissioner said the proposed changes would eventually make the arbitration tribunals more like traditional courts.

Talks on the TTIP have dragged on for two years and been shrouded in controversy, with opponents charging it will unravel regulations on health and the environment, giving US companies free rein in Europe.