Australia wants exemption from ISDS provisions in TPP

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Many heads of state tend to rush to sign international agreements, which often have ISDS provisions, either to improve their nation’s reputation or to advance their own domestic agendas. The number of those agreements has increased dramatically in recent years. Many of these agreements potentially allow firms to “treaty-shop” by incorporating their firms in nations that have ISDS provisions that they’d like to use.


How does this work? Suppose a U.S.-based company invests abroad — say, in Venezuela — and subsequently wants to sue the host country for failing to protect its investment. If the country were Venezuela, for instance, U.S. firms suffered substantial losses when former President Hugo Chavez nationalized foreign firms, in particular energy companies. Traditionally, an aggrieved firm would have legal recourse only if its home country had an agreement with an ISDS provision with Venezuela (or whatever the host country might have been). If not — and the U.S. does not have such an agreement with Venezuela — the firm’s options would be limited.


However, ISDS provisions are embedded in a wide variety of international agreements — bilateral investment treaties and preferential trade agreements, for example — and across a broad swath of countries. And a multinational firm has the option of incorporating abroad. If a firm wanted to sue a country through an ISDS provision, it could simply use an existing subsidiary or set one up in a country that does have such a provision with the offending country — even after the offense. For example, after Australia introduced legislation requiring cigarettes to be sold in plain packaging, with only the brand name and a health warning, Philip Morris used its Hong Kong subsidiary to sue Australia, because of a stronger ISDS provision in the Australia-Hong Kong bilateral investment treaty.


Researchers have started examining this trend (here and here). And world leaders have belatedly started to catch on. In the TPP negotiations, Australia has requested exemption from ISDS provisions, in part as a reaction to the tobacco case. More and more countries are exiting or renegotiating agreements that have ISDS provisions.


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Wonder how American tobacco companies can sue countries for antismoking campaigns? - The Washington Post

 

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Wonder why Ozland wants an exemption as opposed to an outright elimination of the ISDS clause......


In a remote tropical forest in Indonesia’s Spice Islands, villagers planned their last stand.

A foreign gold-mining company was preparing to gouge out a massive pit from the mountain that had sustained these farmers and fishermen for generations. To protect their way of life, the villagers planned to hike to the summit and refuse to leave.

Newcrest Mining had won the right to explore this mineral-rich area during the 30-year rule of Suharto, Indonesia’s military dictator.

But when mass protests swept Suharto from power, the new parliament outlawed the environmentally devastating open-pit mining method in certain areas like this one, where it could endanger the water supply.

Newcrest, however, was proceeding as if the new law didn’t apply — because, effectively, it didn’t. The Australian company had found a way to trap Indonesia in the deals of the deposed dictator and, in the process, reap huge profits.

The weapon that Newcrest and other powerful foreign mining companies wielded was a threat. A highly specialized legal threat: They warned they might haul Indonesia before a sort of private global super court. Though most people have never heard of it, this justice system has the power to make entire nations fork over hundreds of millions or even billions of dollars to companies that say their business was unfairly hampered.

Known as investor-state dispute settlement, or ISDS, this legal system is written into a vast network of treaties that set the rules for international trade and investment. It is as striking for its power as for its secrecy, with its proceedings — and in many cases its decisions — kept from public view. Of all the ways in which ISDS is used, the most deeply hidden are the threats, uttered in private meetings or ominous letters, that invoke those courts. The threats are so powerful they often eliminate the need to actually bring a lawsuit. Just the knowledge that it could happen is enough.

An 18-month BuzzFeed News investigation into ISDS for the first time casts a bright light on the use of these threats. Based on reporting from Asia, Africa, Central America, and the US; interviews with more than 200 people; and inspection of tens of thousands of pages of documents, many of which have never before been made public, the series has already exposed how executives accused or convicted of crimes have turned to ISDS to help them get off the hook.

Today’s story reveals how corporations have turned the threat of ISDS legal action into a fearsome weapon, one that all but forces some of the countries where these corporations operate to give in to their demands.

Only companies can bring suit. A country can only defend itself; it cannot sue a company. Arbitrators who decide the cases are often drawn from the ranks of the same highly paid corporate lawyers who argue ISDS cases.

These arbitrators https://www.buzzfeed.com/chrishamby/the-billion-dollar-ultimatum?bftwnews&utm_term=.myBVwZV86#.dwBL04LgY