Haley Sweetland Edwards

This short and to the point book should be required reading for every parliamentarian involved in ratifying a bilateral investment treaty. It very convincingly highlights the issues introduced by a little-known clause of international trade treaties, Investor-State Dispute Settlement (ISDS), a supranational "arbitration" mechanism that allows a corporation to file a complaint against a country if a change in legislation "unfairly" undermines past investments.

The fundamental flaws of this mechanism are succinctly described, as is evidence of the growing number of cases in which it is abused for the maximization of corporate profits, often at the expense of developing countries. An urgent, important read, about a topic that mainstream media never talks about and few politicians even seem to be aware of. Do your country (and the world) a favour and send a copy of this book to your elected representatives next time a treaty is being negotiated.… (mere)

Making a contract dispute into an international treaty dispute for fun and profit

Investor-state dispute settlements (ISDS) are a clause routinely inserted into bilateral investment treaties and free trade agreements worldwide. They allow foreign companies to sue host countries, and risk nothing but their arbitration costs. Countries are not allowed to sue the companies and there is no appeal provision. Doesn’t matter what the country’s constitution or judicial system might say. This supra-national court system has been made the highest court in the world, and hardly anyone even knows about it. What is terribly wrong is that companies get to sue not just for contract damages, but for all the profits they were ever anticipating. Who would ever agree to such a treaty? Everyone.

The country Canada had to pay millions to an American company that expected to make huge profits forever from a toxic chemical that Canada banned. Canada paid and unbanned it, to prevent further financial damage. Health issues for Canadians would have to wait. Philip Morris is suing Uruguay for legislating against cigarettes. Little Uruguay is on the hook for billions.

Not only do long term contracts put foreign firms above sovereign law, but even short term contracts that are not renewed can cause governments to cough up millions. All the company has to say is that it expected the contracts to be renewed. Because they weren’t, the company lost profits going forward.

It costs governments an average $4.5 million to defend each case, and there are hundreds every year, mostly in developing countries that can’t afford either the cost or the legal talent. If the country is sued, it looks bad on the country. If it loses, it’s bad for the taxpayers. If it wins, it still costs. ISDS restrains countries from passing beneficial legislation or making needed changes. These treaties usurp sovereign rights in favor of foreign corporations.

But all is not lost for domestic corporations either. This whole ISDS situation reminds me of an American legal tool called SLAPP (see my review of [[ASIN:1554589290 Blocking Public Participation: The Use of Strategic Litigation to Silence Political Expression]]) . If strikers or protestors prevent (for example) trucks from entering a plant or rolling down a street, the company can sue say, a Greenpeace or a local neighborhood association for lost future profits. Nothing can stop a march like a billion dollar lawsuit.

It is way past time for the pendulum to start its return trip. Haley Sweetland Edwards says it is starting to, as more countries renounce their treaties, and even lawyers are beginning to say this is just not right. Edwards has provided a valuable service explaining just precisely why activists are rightly upset by all the so-called free trade deals mindlessly signing away taxpayer access to justice. Shadow Courts just should not be.

David Wineberg… (mere)