Big Issue North | 27 December 2019
Why don’t we just… wake up to the threat of ISDS?
By Stephen Pennells
I mean neither the International Sheep Dog Society, nor misogynistic murderous thugs betraying Islam but Investor State Dispute Settlement (ISDS), the system of corporation-favouring courts that aims to take back control from democracies and their legal systems.
Whether wanting Brexit, Bremain or just Brepeace, most want fairness, transparency and control over the way their world goes round. Individuals may feel they have little sway over their employer’s actions, the councils spending their money or how businesses conduct themselves. But they can look for another job, lobby councillors or boycott.
Not so however with ISDS. Commercial ISDS adjudications trump (pun intended) democratically established laws and controls. They can be invoked by plaintiffs whenever they feel profit has been or might be threatened by regulation. ISDS courts of three corporate lawyers from a small cadre sit in private, working on commission. The plaintiff appoints one, the defending authority another and the pair elect a chum to join them.
Back in the (colonial) day corporations invested in countries knowing their assets were safe, supported by imperial might. Canals, ports and infrastructure were built; extractive industries extracted; land exploited; business dictated. All was fine and dandy.
Come the winds of change after the Second World War, new nations wanted control of their assets. To keep confidence, bilateral trade agreements were and continue to be established to maintain confidence. However without gunboats to guarantee compliance, treaties incorporating international tribunals were established.
Their roots go back to the French building the Suez Canal. There were squabbles mixing politics, legality and not a little racism. Ultimately shares were sold to Britain, leading to the 1956 Suez debacle.
Corporate aspirations have grown in complexity. Correspondingly, states often seek to regulate employment, environmental, health and tax issues. Although mining concessions and fossil fuel projects are still major features, investment now isn’t just holes in the ground.
Corporations can sue and be awarded both damages and costs; states can’t. This one-sided impunity allows businesses to bully governments, which may not have sophisticated legal support. Joe Stiglitz, economics Nobel Laureate, characterises ISDS as “litigation terrorism”. Threatened with big bills, governments feel “why bother?”
Corporations cannot use these international systems to sue their own governments, so multinationals set up and develop subsidiaries or sibling companies, which can take up their cause from another jurisdiction, as did tobacco firm Philip Morris, restructuring from Switzerland to Hong Kong to take advantage of a Hong Kong-Australian bilateral trade treaty and sue the Australian government over its smoking control measures. Local small businesses are disadvantaged.
Further examples of skulduggery include Britain’s Biwater suing Tanzania for ending a failed water privatisation and Anglia Water (as part of an EU consortium) similarly proceeding against Argentina. Again from Hong Kong, Philip Morris also challenged a Uruguayan anti-smoking campaign. In Canada Lone Pine harassed Quebec for banning fracking. Sweden’s Vattenfall claimed £1.45 billion from German authorities for stopping development of coal facilities. What price the UK’s fracking moratorium?
This seems distant, but the US is pushing us for a bilateral treaty post Brexit. Whatever is disclaimed, the recently revealed Trump Trade Files show the US’s thrust to separate UK and EU’s standards, exclude climate change and include ISDS, instead of the EU’s more transparent ISDS-lite Multilateral Investment Court.
In peeling us off from EU standards the US is facilitating international corporate control and coercion that will enthral poorer nations. This is wrong. Why don’t we just wake up to the threat of ISDS?
Stephen Pennells is a member of Global Justice Manchester, Greater Manchester Trade Action Network, and a campaigner on economic justice issues