Updated 3/26/2016 (and 4/27/2016): I last blogged on the TPP in 2013. Ed's been covering the TPP, mostly focused on Labor Rip Offs. But I've been focusing on the ISDS provisions. I blogged on this 10 days ago (3/16/2015) and now the Ed Show just did a segment on the Investor Sovereignty provisions of TPP. The ISDS courts have been a tool to infringe the sovereignty of our trade partners. Now we are about to get the same treatment. At that time the ISDS provisions were blatantly unfair to most potential litigants and were obviously meant as a tool to protect investors and create a world wide Banana Republic system. (See [http://holtesthoughts.blogspot.com/2013/09/move-on-fast-track-petition.html]).
- See the Leaked Documents here:
- http://www.citizen.org/leaked-trade-negotiation-documents-and-analysis
Now they are claiming some procedural reversals and that somehow the Tribunals will be paragons of transparency. but a lot of these "reforms" look like PR ploys to me so I'm more than skeptical. And there is no fundamental change proposed for the Corrupt tribunal system at all. So they look like window dressing to me. The ISDS system was why I didn't want fast track in 2013 and why I still don't want it. The Trans Pacific Partnership and other ones involving ISDS arbitration are dangerous agreements and ones handing over sovereignity to partial tribunals run by a cabal of insider lawyers working for the giant mega-companies. The changes outlined won't change that.
Ed Show, Warren andd Wikileaks on the "Investment provisions"
- Ed Show:
- http://www.msnbc.com/the-ed-show
- #TPP Investment Chapter @Wikileaks complicates #Obama’s #FastTrack push: http://bit.ly/WikileakTPP2015 #NoFastTrack #ISDS
- @SenWarren is right to warn us about the dangers of #ISDS. @wikileaks confirms: http://www.citizen.org/documents/tpp-investment-leak-2015-release.pdf … #NoFastTrack
- @WikiLeaks Reveals #TPP Proposal Allowing Corporations to Sue Nations @Democracy Now http://owl.li/KQMIQ #ISDS
- How #ISDS lets #BigPharma attack #publichealth & access to #meds: http://bit.ly/ISDSHealthAttacks … @WHO http://bit.ly/ISDSPetition
- I scooped the New York Times, but this is their article:
- http://t.co/sR935t0zV1
- isds: [https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2015/march/investor-state-dispute-settlement-isds]
- "In U.S. agreements, the investment rules enforced by ISDS provide investors in foreign countries basic protections from foreign government actions." such as:
- This article (http://www.hcourt.gov.au/assets/publications/speeches/current-justices/frenchcj/frenchcj09jul14.pdf) Notes:
- Vague formulation of major treaty provisions leaving a wide range of interpretations open to arbitrators;
- Which means that while there might be a header note that investors couldn't use treaty obligations to say, invalidate a settlement with villagers poisoned by reckless oil drilling in a place like Ecuador. In the hands of an unscrupulous tribunal and unscrupulous judges that can very well be the outcome. And while the current negotiations may prevent illegal shells there are no substantive protections against:
- loopholes which enable abuses such as nationality shopping by companies which create subsidiaries abroad specifically to take advantage of the agreements;
- If those subsidarities happen to be legal.
- • lack of transparency with varying degrees of secrecy attaching to arbitral processes depending upon the institutions or rules which are applied;
- a; it is a serious issue and
- b; I don't want to rely on assurances but to see any treaty debated on the Senate Floor and not subject to fast track!
- • a relatively small pool of arbitrators — arbitrators appointed to ISDS arbitrations are said to be mostly male (95%) and from Europe and North America;
- • role-swapping by arbitrators who appear from time to time as counsel in ISDS cases;
- ...Is that there is a massive issue (beyond risk) of arbitrators who are really company lawyers. They cannot be expected to be "unbiased" or "neutral" if they work for the companies going to court. ISDS might get good outcomes when two companies due each other. But when it's you or me fogetaboutit!
- • the high cost of ISDS arbitrations — estimated by OECD as averaging about $8 million each;
- • associated with the high cost and potentially high awards, a growing phenomenon of third party funding of claims by banks, hedge funds and insurance companies in exchange for a share of the proceeds ranging from 20% to 50%;
- • absence of effective review or appeal processes;
- • inconsistency in decisions on similar provisions
- http://www.uvic.ca/interdisciplinary/europe/assets/docs/ceta/CETAISDSNewcombe.ppt
- listing risks for ISDS from a Justice Viewpoint:
- Legitimacy: ad hoc tribunal of three arbitrators assessing state conduct
- Transparency: private and confidential proceedings
- Nationality planning: use corporate structuring to obtain treaty benefits
- Consistency of arbitral decisions regarding similar treaty provisions
- Erroneous decisions cannot be corrected
- [Lack of] Arbitrator independence and impartiality
- Conflict of Interest:
- Financial stakes
- Sources and Further readings:
- https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2015/march/investor-state-dispute-settlement-isds
- http://www.uvic.ca/interdisciplinary/europe/assets/docs/ceta/CETAISDSNewcombe.ppt
- http://www.hcourt.gov.au/assets/publications/speeches/current-justices/frenchcj/frenchcj09jul14.pdf
- Leaked Documents:
- http://www.citizen.org/leaked-trade-negotiation-documents-and-analysis
- Obama Defends TPP (Vox article)
- http://www.vox.com/2015/3/13/8208017/obama-trans-pacific-partnership
The Dangers of the ISDS, TPP Provisions
The TPP has this article (quotes taken in March 2015) on these "Neutral" courts, or Tribunals called Investor State Dispute Settlement (ISDS) "Courts";
"Freedom from discrimination: An assurance that Americans doing business abroad will face a level playing field and will not be treated less favorably than local investors or competitors from third countries." isds
Freedom From "discrimination" usually means Impunity
Freedom from discrimination usually means that American investors and foreign investors will not have to face the wrath of citizens and will have lawyers and judges who represent them.
"Protection against uncompensated expropriation of property: An assurance that the property of investors will not be seized by the government without the payment of just compensation." isds
Normally this is a good thing. But one man's "uncompensated expropriation" can be another's righting of a wrong. [as has happened with injury lawsuits such as what happened to people poisoned by Exxon's oil extraction in Ecuador]
"Protection against denial of justice: An assurance that investors will not be denied justice in criminal, civil, or administrative adjudicatory proceedings." isds
In other words, the Tribunals will be able to deny citizens justice in some cases in favor of investors. A blanket protection against "denial of justice" that excludes "ordinary courts" is not justice, but it's counterfeit.
Impunity in Financial power
"Right to transfer capital: An assurance that investors will be able to move capital relating to their investments freely, subject to safeguards to provide governments flexibility, including to respond to financial crises and to ensure the integrity and stability of the financial system." isds
A Grifter is someone who can take his/her money and run
This is what investors really want anyway. They want to be able to be grifters legally and swindle or loot one country and then take the proceeds out of the country and move on when they've finished looting the coffers.
Impartial Arbitration?
"While ISDS does not provide additional substantive rights relative to U.S. law, it does provide an additional procedural right: the right for foreigners to choose impartial arbitration rather than domestic courts when alleging that the government itself has breached its international obligations, whether by discriminating against a foreign investor, expropriating the investor’s property, or violating the investor’s customary international law rights." isds
Except that impartial arbitration means lawyers who are hand picked by the same companies asking for the arbitration. The same companies and judges are usually also company lawyers. "Impartial" is a misnomer in most of these modern arbitration. The lawyers have an interest in protecting the investors. (see below)
Over-ruling Rule of Law
The article continues:
"ISDS arbitration is needed because the potential for bias can be high in situations where a foreign investor is seeking to redress injury in a domestic court, especially against the government itself. While countries with weak legal institutions are frequent respondents in ISDS cases, American investors have also faced cases of bias or insufficient legal remedies in countries with well-developed legal institutions. Moreover, ISDS can be of particular benefit to small and medium-sized enterprises, which often lack the resources or expertise to navigate foreign legal systems and seek redress for injury at the hands of a foreign government. Indeed, SMEs and individuals have accounted for about half of all cases brought under international arbitration." isds
Bias is only high against investors when they have done something wrong. That is another reason that investors so want an ISDS. An ISDS substitutes the biases of common folks for the biases of the well connected. They want the bias to be high against those pursuing claims against them!
Banana Courts!
"There is a long history of providing neutral forums for disputes that cross borders. Within the United States, for example, the rules of civil procedure allow for federal jurisdiction in cases involving citizens of foreign countries (or even citizens of different U.S. states) to eliminate biases that may occur within state courts. Internationally, there are a wide variety of judicial or arbitration mechanisms – including State-to-State dispute settlement and forums permitting direct actions by private parties – to create neutral means for resolving differences between parties from different countries; for example, the International Court of Justice, the World Trade Organization, and the Inter-American Court of Human Rights." isds
True enough. And these "neutral" courts have frequently been an agent of colonial governments or neo-colonial company interests in the past. "Neutral forums" are experts at imposing oppression and supporting "banana Republics."
How Neutral? The Devil is in the details!
The real problem with the ISDS is that for all it's protestations that it won't affect the ability of states to regulate the environment and protect consumers. Investors wouldn't demand arbitration if it didn't give them some advantage or if they were merely concerned about some evil dictator expropriating their country. Arbitration has been and regularly is used to stiff consumers and workers currently. And regardless of efforts to claim that it can be moderated by laws saying "no you can't do that", the very constitution of the tribunals argues that there are no protections for just that problem!
The Aussies see the issues
"Arbitral tribunals set up under ISDS provisions are not courts. Nor are they required to act like courts. Yet their decisions may include awards which significantly impact on national economies and on regulatory systems within nation states. Questions have been raised about the consistency, openness and impartiality of decisions made in ISDS arbitrations." Frenchcj09jul14
And he notes the following issues:
But of course what scares me is the following:
And given history the fact that the current round of negotiators are claiming this issue is being addressed tells me;
And the point of the following points:
But it's worse than that. ISDS is an elite process:
All of which argues that the ISDS concept is corrupt from the start. And what makes it worse is that all this includes:
These features of lawsuits on environmental and health issues in the United States are already undermining the integrity of our own system. Judges regularly seal settlements. Companies settle cases, not just because they know they'll lose but because they want to suppress the information of the case from getting out to other victims. ISDS would make this a worldwide practice!
The nearly identical issues were laid out in a powerpoint, conveniently directed to investors:
ISDS Issues from a Legal Viewpoint
Which again, reflects the "industry capture" of the judging. It means essentially the same lawyers are Judge, Jury, executioner, and at least one party to the cases they try. This is the recipe for injustice. When the lawyers on each side of arbitration represent the same paying customers that isn't justice, that is corruption. And as noted above there is a real problem with:
Whatever the negotiators say will be the case!
Nationality planning is just a fancy term for country shopping:
The reason companies like arbitration is that they can use secrecy, country shopping, and legal loopholes to get decisions favorable to themselves. It's why they like these treaties! And the provisions for appeal mean that the crookedness, once put in the treaty is difficult to appeal or rectify:
And if a decision is hard to correct if erroneous. Think of what happens due to:
Protections for Trade or for Outlaw Multinational Investors?
The Trade negotiators claim to address some of this in their arguments for selling TPP to voters. They claim that the treaty addresses these objections with the following:
"Full transparency in cases. Governments must make all pleadings, briefs, transcripts, decisions, and awards in ISDS cases publicly available, as well as open ISDS hearings to the public. One key objective of these provisions is to allow governments that are party to the agreement, as well as the public at large, to carefully monitor pending proceedings and more effectively make decisions about whether to intervene." isds
If so this is the opposite of how ISDS currently operates. We want to see the treaty language!
"Public participation in cases. Tribunals have the clear authority to accept amicus curiae submissions. In U.S. cases, amicus briefs have been submitted by a variety of NGOs, including the Sierra Club, Friends of the Earth, and Center for International Environmental Law. (Documents in all investor-State cases filed against the United States are available on the State Department website.)" isds
Again, opposite of current ISDS laws and rules.
Suits brought by "commoners" = Frivolous
But the following is dangerous, because in the hands of expert lawyers working for the corporations being sued. A claim of injury becomes "frivolous" and the only claims taken seriously would be between parties with wealth.
"Mechanism for expedited review and dismissal of frivolous claims and claims outside the tribunal’s jurisdiction. This mechanism enables respondent countries, on an extremely expedited basis, to move to dismiss (1) frivolous or otherwise unmeritorious claims (akin to provisions under the Federal Rules of Civil Procedure) and (2) claims the tribunal is not empowered to resolve." isds
...And of course using standing (claims the tribunal asserts it doesn't have jurisdiction over -- meaning nobody does) to block injury claims is old hat in the US courts.
Sham Corporations
TPP does acknowledge that the ISDS already has a long history of Abuse. They propose to "fix" one of the issues that have expressed that; "sham corporations."
"Denial of benefits for sham corporations. This provision prevents the use of shell companies to access ISDS." isds
But of course we know that differentiating between sham pirate companies and perfectly legal privateers is a matter of whether they have a few documents from the appropriate courts. So this is a hollow provision.
Parallel Claims
"Restriction on parallel claims. This provision prevents a party from pursuing the same claims both in ISDS proceedings and domestic courts (i.e., restricting “forum shopping”)." isds
Which effectively means that it will be difficult for people to appeal the ISDS! Since most parallel claims are the result of people not getting satisfaction in one of the courts and so appealing.
Statute of Limitations
"Statute of limitations. A three-year statute of limitations protects respondents against old claims, which are difficult for governments to defend in part because access to documents and witnesses becomes more difficult over time." isds
And this also will be something that hurts ordinary people, as Investors know right away if they have a claim or not, but ordinary folks frequently don't even know they have a problem for 5-10 years, or can't get access to the courts in time due to obstruction by local authorities.
"Challenge of awards. Both parties to an arbitration have the option to challenge a tribunal award." isds
If parties have an option to challenge a claim that is a change from the previous operation of the ISDS. Otherwise it contradicts other statements about the law. This is another reason to not want to support Fast Track. Moreover, this doesn't help consumers, since appellate courts often are controlled even more by corporate lawyers than ordinary courts.
Even so we need to see this in writing. The following would be an improvement. It allows class actions.
"Consolidation. On request, tribunals may consolidate claims raising common questions of fact and law, which may increase efficiency, reduce litigation costs, and prevent strategic initiation of duplicative litigation." isds
But it's also not really something that should be a reform.
"Interim review of ISDS awards. Parties to the arbitration are permitted to review and comment on a draft of the tribunal’s award before it is made final." isds
Nor is this.
Favoring Creditors over Debtors
"Prudential exception. This exception provides that nothing prevents countries from taking measures to safeguard the stability of their financial systems. If such measures are challenged, this provision allows the respondent country and investor’s home country to jointly agree that the prudential exception applies and that decision is binding on the tribunal." isds
This reflects years of the IMF and World Bank using it's power to force countries to make paying foreign investors a priority over paying their own workers and their own financial security.
Limitation on Sovereignty
"Tax exception. This exception defines and limits the coverage of government tax measures under the investment provisions. In addition, this provision provides that if the respondent country and investor’s home country agree that a challenged measure is not expropriatory, that decision is binding on the tribunal." isds
Again, this is a protection for investors against citizens of the country facing a claim.
"Mechanism for treaty Parties to issue binding decisions on how to interpret treaty provisions. A binding interpretation mechanism enables TPP countries to confer after the agreement has entered into force and to issue joint decisions on questions of treaty interpretation that bind all tribunals in pending and future cases." isds
Closing the barn door after the horse leaves!
"Independent experts on environmental, health, or safety matters. In most ISDS cases, the disputing parties retain and appoint the experts. This provision provides arbitral tribunals with the power to appoint experts of their own choosing on environmental, health, and safety matters to ensure maximal objectivity in the evaluation of claims challenging such measures." isds
This contradicts assurances that the the ISDS will not hurt people suing on environmental or health issues. We all see how there are always experts who are willing to say what their bosses want to hear.
"Limitations on obligations: Clear limiting rules and definitions, including guidance on interpretation on the obligations frequently subject to litigation, to safeguard against subjective or overbroad interpretation – for example, the incorporation of U.S. Supreme Court standards on indirect expropriation and a clear tying of the “minimum standard of treatment” obligation to requirements under customary international law (i.e. the general and consistent practice of states that they follow from a sense of legal obligation)." isds
I'm not sure what this means. But I'm also not sure it's new or a reform. When people are seeking rights, we don't really want Officials defining them. These kind of tribunals are instruments of tyranny.
Conclusion
I'm still waiting to see the actual language before rendering final judgement. If what is disclosed in the Trade negotiator website is even half true, the current treaty is better than it was in some ways, two years ago. Sadly in some ways it is now worse. And since the devil is in the details and so far what I'm seeing is contradiction and sham assurances. I'm not confident that the assurances are even true or sincere.
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