1. Negotiations
2. RCEP

RCEP: Corporations could sue governments

AFTINET | 3 May 2017

RCEP: Corporations could sue governments

Like the TPP, the RCEP could contain rights for foreign corporations to bypass national courts and sue governments in unfair international tribunals. This system is called investor-state dispute settlement (ISDS).

Undermining our democracy

ISDS is increasingly being used by global corporations to challenge health, environment and other public interest laws.

Some examples of recent cases include:

Public health: The Philip Morris tobacco company tried to claim billions of dollars in compensation for Australia’s plain packaging law.

Medicines: The Swiss pharmaceutical giant Novartis has threatened to sue Colombia after it sought to lower the price of an expensive cancer drug.

Environment: The US Lone Pine mining company is suing Canada because the Québec government introduced environmental regulation of gas mining.

Workers’ rights: The French Veolia company is suing the Egyptian government over a local government contract dispute, claiming compensation for a rise in the minimum wage.

Public services: Mexican transport company ADO threatened Portugal with a €42 million ISDS case after it cancelled plans to privatise part of Lisbon’s public transport network.

Just the threat of an ISDS case alone can cause policymakers to delay or abandon legislation. This undermines our democracy.

Not a fair legal system

​ISDS tribunals consist of investment lawyers who can continue to be practicing lawyers, with obvious conflicts of interest. Australia’s High Court Chief Justice and other legal experts have said that ISDS is not a fair legal system because it has no independent judges, no precedents and no appeals.

Safeguards won’t work

Unfair and undemocratic ISDS rules were one of the key reasons diverse civil society groups from around the world opposed the TPP.

Unfortunately, instead of recognising these legitimate community concerns and removing ISDS clauses, TPP negotiators put in place general “safeguards” for public interest laws. However, these were weak and would not have prevented corporations from bringing cases.

Public health campaigning resulted in a specific clause to exclude future tobacco regulation from ISDS cases, such as the Philip Morris case against our plain packaging law. This clear exclusion could prevent future cases on tobacco regulation, but highlights the fact that the general safeguards were ineffective. It is not clear whether a similar exclusion is being proposed in the RCEP.

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