I first learned something about ISDS from John Oliver a year or so ago, but it didn't sink in. His story was about tobacco companies suing countries (Australia and Uruguay) to prevent them from requiring unmarked packaging on cigarettes.
But I heard about it again yesterday and now I think it has stuck with me. It stands for Investor to State Dispute Settlement, and it basically allows a multinational company to get what it wants from any country without using the court system. Say a country wants to increase its minimum wage or prevent environmental destruction; well, too bad. Corporate interests have threatened to sue for as much as half of some national budgets and — poof! — those proposed laws are tossed out.
ISDS decisions are made by arbitrators who aren't elected or subject to conflict-of-interest rules. And remember, only companies can bring suit. Countries can't sue companies.
Oh, and get this: the damages paid to companies aren't just for investments already made. They're also for loss of potential future profits. If a country refuses to pay, the companies can file to seize the country's assets elsewhere in the world.
BuzzFeed News has done a lengthy investigation of ISDS:
[it] is so powerful that nations often must heed its rulings as if they came from their own supreme courts, with no meaningful way to appeal. ...it operates unconstrained by precedent or any significant public oversight, often keeping its proceedings and sometimes even its decisions secret. ...the people who decide its cases are largely elite Western corporate attorneys who have a vested interest in expanding the court’s authority because they profit from it directly, arguing cases one day and then sitting in judgment another....Why does it exist at all? It started out in the 1950s, as colonial rule was ending, as a way to make sure companies would be compensated if their assets were nationalized (think Venezuela), but
And imagine that the penalties this court has imposed have been so crushing — and its decisions so unpredictable — that some nations dare not risk a trial, responding to the mere threat of a lawsuit by offering vast concessions, such as rolling back their own laws or even wiping away the punishments of convicted criminals.
This system is already in place, operating behind closed doors in office buildings and conference rooms in cities around the world. Known as investor-state dispute settlement, or ISDS, it is written into a vast network of treaties that govern international trade and investment, including NAFTA and the Trans-Pacific Partnership, which Congress must soon decide whether to ratify.
over the last two decades, ISDS has morphed from a rarely used last resort, designed for egregious cases of state theft or blatant discrimination, into a powerful tool that corporations brandish ever more frequently, often against broad public policies that they claim crimp profits.The number of cases is secret (!) but out of the 700 publicly known cases over 50 years, 10 percent happened in the last year. It's a growth area for lawyers, of course, who come up with novel ways to sue:
A few of their ideas: Sue Libya for failing to protect an oil facility during a civil war. Sue Spain for reducing solar energy incentives as a severe recession forced the government to make budget cuts. Sue India for allowing a generic drug company to make a cheaper version of a cancer drug.One case described in detail by BuzzFeed is that of Indonesia and Newcrest Mining. The right to mine gold was sold to Newcrest under the dictator Suharto, but the more recent government and Indonesia's people didn't want their virgin forests strip-mined. Too bad, Indonesia, you can't say no! Now the area where Newcrest has been mining for years is cyanide-contaminated.
The poorer the country, the better, so far. The companies and their lawyers extort governments when they're in the most extreme situations, too. Many of the cases never go to arbitration because the governments settle or discard the laws they had planned.
ISDS hasn't had much of an effect in the U.S. yet, but it's part of the Trans Pacific Partnership treaty, of course, so when you hear news that TPP will limit passage of environmental laws, this is what they're talking about. And even under our current treaties (NAFTA especially), there are cases in the works for huge amounts of money, including a suit by TransCanada against the U.S. for blocking the Keystone XL pipeline.
There are efforts underway by several countries to get out of their treaties or renegotiate their ISDS provisions. But the first step is for people to even know ISDS exists.
Just posted: the BuzzFeed reporter, Chris Hamby, interviewed Senator Elizabeth Warren on ISDS.