ISDS Tribunals are like the Supreme Court

balancedISDS is an arbitration procedure – similar to procedures used every day by businesses, governments, and private citizens across the globe – that allows for an impartial, law-based approach to resolve conflicts and has been important to encouraging development, rule of law, and good governance around the world. ISDS does not undermine U.S. sovereignty, change U.S. law, nor grant any new substantive rights to multinational companies.–Jeffrey Zients, Director of the National Economic Council.

States have enacted many laws with a sinister purpose:

  • Blue laws
  • Jim Crow laws
  • Voter ID laws
  • Religious Freedom laws

Blue laws imposed the religious beliefs of some on all, Jim Crow laws made African-Americans second-class citizens, Voter ID laws seek to disenfranchise potential voters, Religious Freedom laws seek to legalize discrimination based on sexual orientation. Doubtless there are many more examples.

The final arbiter of State Law is the Supreme Court. Nine Justices appointed for life judge our laws. The Justices deliberate in secret. There is no appeal from decisions of the Supreme Court.

The Justices decide cases by interpreting the Constitution. The Constitution is often vague on issues before the Court. Cases are often brought which challenge the Court to split hairs. People may reasonably feel that the Court often reaches unfair decisions. Yet the authors of the Constitution agreed on the Court, and over our entire history we have found no better answer.

International Trade involves similar disputes. Nations may contrive in various ways to protect what they see as their national interest. ISDS tribunals resolve trade disputes based on international law. The arbiters are appointed, they deliberate in secret, their decisions are final. Like Justices of the Supreme Court, ISDS tribunals may make decisions which seem unfair. Yet it is difficult to imagine a better system for resolving disputes.

© William Hungerford – April 2015

https://www.whitehouse.gov/blog/2015/02/26/investor-state-dispute-settlement-isds-questions-and-answers

http://www.aflcio.org/Issues/Trade/What-Is-ISDS

http://www.citizen.org/investorcases

 

 

 

 

 

 

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About whungerford

* Contributor at NewNY23rd.com where we discuss the politics, economics, and events of the New New York 23rd Congressional District (Allegany, Cattaraugus, Chautauqua, Chemung, (Eastern) Ontario, Schuyler, Seneca, Steuben,Tioga, Tompkins, and Yates Counties) Please visit and comment on whatever strikes your fancy.
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20 Responses to ISDS Tribunals are like the Supreme Court

  1. josephurban says:

    Like the Supreme Court, the issue will be decided not on the law, but based on WHO is put on the court. Who appoints? There is no such thing as an impartial international board, any more than the Supreme Court is impartial.

    • whungerford says:

      In the dispute between Phillip Morris Asia and Australia over cigarette packaging, “the tribunal hearing the case is composed of three arbitrators. Australia appointed Professor Don McRae of the University of Ottawa as an arbitrator. Philip Morris Asia appointed Professor Gabrielle Kaufmann-Kohler as an arbitrator. The Secretary-General of the Permanent Court of Arbitration appointed Professor Dr Karl-Heinz Böckstiegel as the presiding arbitrator.” I have no idea if this is a fair minded tribunal unbiased by conflict of interest, but I can think of no better way for resolving such disputes.

  2. Deb Meeker says:

    Suggesting the ISDS tribunal system as outlined in the Transpacific Trade Partnership Agreement is “similar to procedures used every day by businesses, governments, and private citizens across the globe .” – is similar to saying “government budgets should be run like a family’s budget”. Both statements are misleading and incomplete.

    Here’s why:
    http://ourfuture.org/20140915/corporate-courts-a-big-red-flag-on-trade-agreements

    http://crooksandliars.com:8080/2015/03/now-we-know-why-huge-tpp-trade-deal-kept

    • solodm says:

      Perhaps a better way to arbitrate for trade agreements would be one whereby the citizens of the countries involved were at minimum safeguarded from huge lawsuits by multinational corporations – who would without blinking an eye, sue those who have no resources with which to battle back.

    • whungerford says:

      Some limit to the amount of awards seems reasonable. Here is one view supporting that idea:

      Whatever the result of the annulment proceedings, the Oxy award demonstrates the great power of investment treaty arbitration tribunals. It is unsurprising that tribunals routinely allocate responsibility between governments and foreign corporations for failed investment projects. But observers should now realize that with this authority comes the power to impose damages of over a billion dollars to rectify wrongful acts. This power is nothing short of the ability to radically alter the wealth of shareholders and workers of investor companies, as well as the well-being of citizens and residents of host states. Fundamental issues about ICSID, such as its role in increasing foreign investment and its compatibility with democratic accountability, can no longer be reserved for polite academic discussions. After the Oxy award, these issues must also be confronted in rigorous policy debates.

      http://kluwerarbitrationblog.com/blog/2012/12/19/icsids-largest-award-in-history-an-overview-of-occidental-petroleum-corporation-v-the-republic-of-ecuador/

    • whungerford says:

      I don’t agree that “ISDS tribunal system as outlined in the Transpacific Trade Partnership Agreement … is similar to saying “government budgets should be run like a family’s budget”.The former statement may well be true–arbitration is widely used to settle disputes–while the later is clearly false because the Federal Government is unlike a family.

  3. Deb meeker says:

    I’ll see your Oxy Award, and raise you two realities.

    “It’s important to note that around 41 percent of Dominicans live below the poverty line, and the richest (overwhelmingly white) 10 percent of the population owns most of the land and enjoys around 40 percent of the national income. In their notice of intent to sue the Dominican Republic, the developers hoping to expand the luxury resort emphasize that they have “developed a deep love and affection for the country’s people and their culture.” But if these cases move forward and the investors win, it’s the Dominican taxpayers that would pay the millions of dollars in compensation. Even if the Dominican Republic were to win these cases, taxpayers could be forced to pay for a share of tribunal costs, which average $8 million per case.”
    http://www.sierraclub.org/compass/2014/09/new-cases-show-risks-corporate-empowerment-trade-deals

    “To benefit from the ‘foreign’ investor privileges, big business and its corporate lawyers are engaged in what they euphemistically call “corporate structuring for investor protection”. Canadian company Lone Pine, for example, has routed its investments in Canada via a mailbox company in the US tax haven Delaware. That enables Lone Pine to sue its own government over a fracking moratorium in Quebec – on the basis of the greater private property rights in NAFTA, which are only available to ‘US’ and ‘Mexican’ companies.
    Likewise, Spanish conglomerate Abengoa is using a Luxembourg-registered subsidiary to sue Spain over subsidy cuts in the solar energy sector – under the Energy Charter Treaty’s ‘foreign’ investor rights. The many Spanish cooperatives and ordinary people who also invested in renewables and lost out when the government cut the subsidies, however, have little recourse (See chapter 4 in our report Profiting from Crisis).”
    http://corporateeurope.org/international-trade/2014/04/still-not-loving-isds-10-reasons-oppose-investors-super-rights-eu-trade

  4. josephurban says:

    I fear that what we are seeing in these “free trade” agreements is the battle between regular people represented by governments (elected by and somewhat responsive to people) and multinational corporate interests (responsible to the very small group of wealthy investors). The battle is over international trade and who will regulate it. Who has the resources ? Who will have the law on their side? Those of us old enough remember how NAFTA and other trade agreements were sold to the American people. Mexico, China, Vietnam, etc would be required BY LAW to raise their standards for working conditions, environmental protection, etc. Did that happen? Or was there a race to the bottom in terms of wages and working conditions? Do we really believe that any international treaties and agreements will be what they seem?

    • whungerford says:

      Doubtless TPP involves a struggle between competing interests foreign and domestic. Even drug companies are part of our economy and are owned not only by wealthy investors but by our mutual funds and our pension funds. I see no reason to assume that our Govenment is acting 100% against the public interest in negotiating TPP.

      • Deb Meeker says:

        I absolutely do not think our government is acting purposefully against public interest, but there is no doubt in my mind at least – that multinational corporations are.

  5. Pingback: Rep. Reed: “America’s Law has to be Primary”, but… | New NY 23rd

  6. philebersole says:

    There are some fairly important differences between the ISDS tribunals and the U.S. Supreme Court.

    In American law and under the Constitution, everybody is entitled to protection of the law, including access to the courts.
    Under the ISDS system, only foreign corporations will have the standing to complain about unfair treatment by governments. Labor unions, consumer advocates, environmentalists, the general public will have no such standing.

    I would be open to a proposed international treaty under which public interest groups could appeal to a tribunal when companies and nations gain unfair trade advantages by paying sweatshop wages, endangering public health and polluting the environment.

    Instead the ISDS has a mechanism for punishing the United States and other countries when their efforts to protect workers, public health and the environment deprive corporations of expected profits.

    Supreme Court justices are appointed by the President, who is elected by the people, with the advice and consent of the Senate, whose members are elected by the people, after public hearings. There is no such accountability in appointment of the ISDS members.

    Under the American court system, there is no way in which one of the parties to the lawsuit gets to appoint one of the judges. But this is how the ISDS system works—a right, to repeat, that is granted only to foreign investors, not to citizens as such.

    Finally, when the U.S. Supreme Court errs, as when it decided that African-Americans were not people, that corporations are people and that Washington has no authority to levy an income tax, it is possible for we the people to correct the error through legislation or Constitutional amendment.

    • whungerford says:

      “Under the ISDS system, only foreign corporations will have the standing to complain about unfair treatment by governments.” However, foreign corporations are the injured parties. Just as with US law, one needs standing to sue.

      “ISDS has a mechanism for punishing the United States and other countries when their efforts to protect workers, public health and the environment deprive corporations of expected profits.” However, some means of enforcing the treaty is necessary.

      “Supreme Court justices are appointed by the President, who is elected by the people, with the advice and consent of the Senate, whose members are elected by the people, after public hearings.” True in theory, but it works less well in practice when decisions of the Court too often reflect partisan politics rather than “blind justice.”

      “Under the American court system, there is no way in which one of the parties to the lawsuit gets to appoint one of the judges. But this is how the ISDS system works—a right, to repeat, that is granted only to foreign investors, not to citizens as such.” Yes, but there are safeguards to guarantee unbiased arbiters.

      http://www.uncitral.org/pdf/english/texts/arbitration/arb-rules-2013/UNCITRAL-Arbitration-Rules-2013-e.pdf

      “Finally, when the U.S. Supreme Court errs, as when it decided that African-Americans were not people, that corporations are people and that Washington has no authority to levy an income tax, it is possible for we the people to correct the error through legislation or Constitutional amendment.” Similarly, if a trade agreement proves unwise, the Federal Government could renegotiate it or repudiate it.

    • philebersole says:

      When foreigners or foreign corporations are in the United States, they should obey American laws.

      When Americans or American corporations are in a foreign countries, they should obey those countries’ laws.

      If a corporation’s owners or executives find a country’s laws unreasonable, they cab ask that country’s legislators to change them, or they can leave that country.

      It is not as if large international corporations are powerless before the might of workers, consumers and citizens.

      I don’t see any problem that requires giving special standing to foreign investors to challenge a country’s laws.

      Of course if there is an agreement to give special protection to foreign investors, it requires a means of enforcement. I question the need for such an agreement in the first place.

      The TPP and similar trade agreements seem to me to be aggressive moves on the part of foreign corporations to protect themselves against future labor, health and environmental laws, and (I would add) to lock in the corporate agenda concerning drug patents, genetically-modified food crops, copyright and other issues.

      It is true that we the American people sometimes make bad decisions, and that American judges sometimes make bad decisions. That does not mean that better decisions will be made by a rotating panel of corporate lawyers whose decisions cannot be appealed or overturned.

      Renegotiating an agreement that has been signed by 11 other nations would be very difficult. Repudiating an agreement once signed would be dishonorable, might subject the United States to trade penalties and in any case would damage the ability of Americans to negotiate agreements in the future.

      • whungerford says:

        Trade agreements are reciprocal–US businesses seek entry to foreign markets while foreign businesses seek access to US markets. An agreement that facilitates this ought to benefit all parties to it. If a countries laws treat foreign and domestic businesses equally, there should be no basis for a challenge to that countries laws.

  7. josephurban says:

    In my opinion these trade agreements are part of a longstanding battle. Who will control the world’s resources and markets. You only have two choices.
    Either governments (elected and non-elected) will regulate the markets in their own nations and control the development of resources OR multinational corporations and extremely wealthy individuals (never elected) will bypass national laws and govern through international trade agreements.
    Maybe this is too simplistic analysis. But I think not. In the old days we sent in the CIA to overthrow governments for US corporate interests (Latin America, Iran). Today this is accomplished by legal means. It is given an aura of legality which hides the underlying corruption of the process. I am not saying all trade agreements are bad, but look at the ones we have passed.
    Have wages, employment standards, living standards and environmental standards been significantly raised in Mexico, China, Vietnam, the Philippines, etc.? This was promised when the trade agreements were SOLD to the US citizens. So that the US worker could compete on an “even playing field”. Why will future trade agreements be any different.
    It is a race to the bottom in terms of wage, environmental protection, workers rights to organize, etc.
    Rant over.

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