The big problem with ISDS (Inter State Dispute Settlement) lawsuits is they effectively put corporate profit above national laws.
If corporate profit is affected by an environmental regulation, food standard or raise in minimum wage, they can sue – for hundreds of millions of dollars, or even billions of dollars. These court cases are held in special courts outside national law. There is no appeal. Canada has accrued 6 billion in lawsuits under NAFTA; TPP will open the door further. This is a direct transfer of public tax money to corporations. There is nothing in place to prevent corporations bankrupting a government. See the documentary below.
Stop Press: Germany has just ruled that ISDS lawsuits are illegal!
.German TV documentary “Konzerne klagen – wir zahlen”
German TV documentary on investor rights in trade agreements (investor-state dispute settlement, ISDS) – and what they mean for taxpayers, our democracy and the rule of law. With EN and ES subtitles.
Replies to letters from concerned citizens from the Canadian TPP government consultancy write, “TPP will not impair the ability of Canada or its partners to regulate and legislate in areas such as the environment, culture, safety, health and conservation. Our experience under the NAFTA demonstrates that neither our investment protection rules nor the ISDS mechanism constrain any level of government from regulating in the public interest.” Are they that uninformed, or are they deliberately disingenuous?
The investor-state dispute settlement mechanism contained in NAFTA’s chapter 11 grants investors the right to sue foreign governments without first pursuing legal action in the country’s court systems, in order to protect foreign investors from discrimination. Drafters of the 1994 treaty included the provision to protect U.S. and Canadian investors against corruption in Mexican courts. Ref Under investor-state, if a regulation gets in the way of a foreign investor’s ability to profit from its investment, the investor can sue a country for monetary damages based on both alleged lost profits and “expected future profits.” There are no monetary limits to the potential award. Ref
ISDS lawsuits would mean that when, for example, a bottled water company drains a lake dry, an attempt to protect the lake can result in multi-million dollar lawsuits for perceived loss of the bottling company’s profit. An increase in minimum wage can elicit a similar loss of profit lawsuit. TPP places a layer of government above national governments. It puts profit above human and environmental health.
By January of this year, Canada has lost or settled six claims paying a total of $170 million in damages, while Mexico has lost five cases and paid out $204 million. The U.S., meanwhile, has won 11 cases and has never lost a NAFTA investor-state case.
Pending lawsuits include:
3.5 billion sued by the private owner of the Detroit-windsor bridge, suing for not being treated equal to Canadian companies.
$ 700 million Oil tycoon T. Boone Pickens against Ontario for favouring windmills
$250 million NAFTA lawsuit by oil and gas company Lone Pine Resources against Canada over Quebec’s temporary ban on fracking for oil and gas underneath the St. Lawrence River while researching impacts to people and water in the St. Lawrence region. Ref
$130 million awarded to Abitibi-Bowater for Newfoundland’s expropriation of land and water rights from a pulp mill that the company closed in 2008 Ref
a decision by a Canadian federal court to invalidate a pharmaceutical patent on the basis that it was not sufficiently innovative or useful; provisions to promote the rapid adoption of renewable energies; the decision to block a controversial mega-quarry in Nova Scotia, an out-of-court settlement with Ethyl Corp. over a Canadian ban on import and sale of MMT, a chemical additive in gasoline; and a suit by Dow regarding Quebec government claims regarding the safety of the pesticide 2,4-D. Ref
Non-monetary effect of ISDS
In addition to the claims themselves, Canada has so far incurred $54 million dollars in legal costs defending against investor claims.
Naturally, the use of ISDS has chilled government policy-making. Governments are now even more reluctant to take any measures opposed by business. These can include raising the minimum wage and supporting more local trade as well as health and environmental supervision. Governments are forced to abandon common sense, health and safety to cow to corporation’s demands for increasing profit.
In addition to wealthy multi-national corporations saving paying tariffs, finding ways to avoid taxes through off-shore schemes, government funds pour into their pockets through these settlements. What can be expected when corporations secretly write the rules without government or public oversight?
Billions of Canadian public money, that could have been supporting health care, education and environmental repair, is being paid out in secret, without public oversight, in courts that by-pass national judicial law, courts comprised of three private-sector attorneys who take turns being judge and/or corporate advocate. Ref The wolf is guarding the chickens in these kangaroo courts.
Stuart Trew writes: “In total, Canada faces more than $5-billion worth of investor lawsuits under NAFTA. The FIPA with China, and a NAFTA-like investment chapter with Europe in the Comprehensive Economic and Trade Agreement, will only balloon the number of cases we see against government policies, including environmental and public health measures.” Ref