ISDS: The New Supreme Court

Trade deals like the TPP, T-TIP, and TISA are solidifying a new legal structure called Investor-State Dispute Settlement (ISDS), which allows multinational corporations to nullify national laws and overrule their supreme courts, including ours here in the United States

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Story Transcript

THOMAS HEDGES, PRODUCER, TRNN: Right now in Washington there’s an effort on Capitol Hill to ram the Trans-Pacific Partnership agreement, or TPP, through Congress. The Senate’s already approved something called fast-track for the presidency, which gives the President the authority to shape and secure agreements without having to consult Congress before they’re voted on.

SEN. ELIZABETH WARREN (D-MA): By the time you, the American public, can read the deal your elected representatives will have lost the ability to use your input to help shape that deal. That sounds like a lousy arrangement to me.

But often lost in the political buzz is what the legislation actually says. That’s partly because the deal’s been negotiated in almost complete secrecy. But policy experts and activists are now saying that one thing is clear: the TPP accelerates a new system of international law, one in which the private multinational corporation can overrule the once sovereign supreme court of any country involved.

MELINDA ST. LOUIS, PUBLIC CITIZEN: So in the Trans-Pacific Partnership, or in the TPP, it’s being sold as a trade agreement, but really there’s only a very small amount of it that has to do with what we think of as trade.

Melinda St. Louis is the international campaigns director with Public Citizen’s Global Trade Watch.

ST. LOUIS: What it really is is a mechanism to deliver special corporate rights.

She says that the deal instead enshrines the doctrine of corporate nationhood, whereby multinational corporations can sue governments to retrieve lost profits, even if those profits are theoretical. They do that through something called investor state dispute settlement, or ISDS.

ST. LOUIS: So it’s not a court. And it is not bound by the types of ethics that we think of in a court system. So these are three private lawyers. One day they might represent a company that is suing a government, and the next day they may sit as one of these so-called judges on an arbitration panel.

They’re private sector lawyers for the most part. They earn hundreds, if not $1000 an hour to be able to oversee these cases. And so there’s an incentive structure that means that these cases often go on very long, even if the country in the end, the government, is able to quote-unquote win, they still have to expend hundreds of thousands, millions of dollars in just legal fees, and also in paying the arbitration panels.

Unlike courts in the United States that have strict legal frameworks like precedent and a system of appeals, ISDS tribunals aren’t beholden to the same rules.

ST. LOUIS: In our court system typically you see a body of law emerge, and so there’s some, you have some stability in knowing the way provisions are going to be interpreted. That’s not the case under investor state dispute settlement. And so what you really see is almost a wild west out there, where on one arbitration panel will be looking at a set of facts and they will decide one way, and then the next year there may be a very similar fact pattern, and they decide completely differently. And they’re not bound by precedent, and there’s no appeal. And they’re not judges.

HEDGES: In 2012 the Transnational Institute published a long report on the shady and incestuous world of ISDS law firms, arbiters, and financial speculators. It called the nascent community a small club made up of mostly pro-business males from the rich North, 15 percent of whom have overseen more than 55 percent of these investment treaty disputes worldwide.

International arbitration doesn’t even look like a legal proceeding, the report entitled Profiting from Injustice says. An outsider would see two small groups of lawyers wearing lounge suits, occupying a hotel room or training room. On the other side of the room, a trio of types with possibly a bit more gray hair. There’s no audience, no usher, and little hint of pomp or ceremony. It could perhaps be mistaken for a training course, or a business meeting.

That’s because the ISDS legal system isn’t designed to give the public a voice. That’s also what AFL-CIO president Richard Trumka reiterated earlier this year in a speech he gave at the Peterson Institute.

RICHARD TRUMKA, PRESIDENT, AFL-CIO: Unlike the clunky labor provisions which require workers to wait for government action, the ISDS provisions can be used immediately by multinational firms to challenge efforts by TPP member countries. ISDS tilts the playing field away from democracy, from workers and consumers, and toward big business and multinational investors.

HEDGES: Since corporations through ISDS can bring cases against governments, but governments can’t bring cases against corporations, that means lawyers are much more interested in representing foreign investments because they hold the upper hand.

ST. LOUIS: So you are in much better shape to earn more as an arbitrator if you are biased toward the corporations or investors. Because you will be chosen by investors, because they are the ones that bring cases.

HEDGES: As a result, the sovereignty of countries both rich and poor is facing an onslaught of corporate lawsuits that want to change their domestic laws. In Australia, which is a member country of the ongoing TPP talks, the Asia subsidiary of the tobacco company Philip Morris International has challenged a 2011 Australian packaging law for cigarettes. That case angered Australians, who then pushed their trade negotiators to reject the TPP provision that allows for ISDS. Public opposition to the deal in Australia even spilled over into the realm of satire.

HOST, THE ROAST: I suppose if they are going to sue us, we should be able to sue them back. Jazz?

JAZZ TWEMLOW, THE ROAST: Well, that Philip Morris thing was just the tip of an iceberg that’s actually a giant, frozen shit. It basically means when the government’s making a new law, they won’t just have to consider Team Australia, but Team Foreign Shareholder as well.

ST. LOUIS: We do not want these investors to have another bite of the apple, to be able to go outside of our courts, and to be able to use this very rigged system that’s basically been written by them and for them.

HEDGES: While ISDS cases have exploded over the past 15 years, and while the Senate did just vote to approve the President’s fast-track authority, a fierce grassroots movement has also grown in opposition to the deal.

KEVIN ZEESE: We believe in democracy, not secrecy.

We want them to know that it’s not a secret to us. As you can see, we have protest signs along the front, we have them along the side, on their scaffolding. We’re really trying to show them that we know the secret’s out, and we’re going to do our best to stop them.

ST. LOUIS: This is actually a debate that we can win, and we can actually roll this back. I encourage people to get involved, and in this debate there’s a website called ISDS Corporate Attacks. We need to have a robust debate about these issues in order to be able to protect our democracy, and to protect our ability to protect our citizens.

HEDGES: For The Real News, Thomas Hedges, Washington.

End

DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.