Until recently investor-State dispute settlement (ISDS) cases were rare. This is the provision that allows companies to take governments to international arbitration panels to seek compensation if they feel their investment has been harmed by government action. There has now been a surge in filings by companies taking an ever broader view of what constitutes a legitimate cause for action. According to the OECD, 57 ISDS cases were filed against government in 2013, almost half of them in developed economies. What is disturbing is that ISDS has increasingly been stretched to cover regulatory actions rather than simple expropriation. Several recent cases illustrate this point.
Vattenfall, a Swedish energy company, is suing the German government for €3.7bn over the latter’s decision to phase out nuclear power in the wake of the Fukushima nuclear disaster. Canada was forced to revoke its ban on the toxic fuel additive MMT under challenge from the US company Ethyl. The US tobacco giant Philip Morris is suing the Australian government for billions of dollars over its public health policy that all cigarettes must now be sold in plain packaging. Argentina has been hit hard by several ISDS cases, msny of them related to the country’s decision to unpeg its currency from the US dollar in 2002, and has been forced to pay over $500m to settle 5 companies’ claims in October 2013. Ecuador has been ordered to pay Occidental Petroleum $1.77bn in damages for terminating the oil giant’s contract when the company broke Ecuadorian law. A separate tribunal threw out the claim by Ecuador for $19bn in damages against Chevronfor its contamination of the Amazonian rainforest over a period of two decades.
The use of ISDS by transnational corporations is now reaching epidemic proportions. Over 500 known cases have now been filed against at least 95 countries, of which over 400 have come in the last decade alone. A study by the LSE found that if Britain joined up to the ISDS in the current secret Transatlantic Trade and Investment Partnership (TTIP) negotiations, the UK would be exposed to an even greater number of disputes and costs than Canada suffered under the NAFTA, while being “highly unlikely” to bring in any additional investment . It is worth noting that no bilateral agreement with any industrialised nation has ever resulted in increased US investment.
TTIP is widely seen as an attempt to sideline emerging economies such as China, Brazil and India that are now challenging the hegemony of the core capitalist powers. Ultimately TTIP is an agreement designed to benefit US and EU transnationals seeking to expand their market access and to engineer the removal of regulations that restrict their profits. But public resistance is growing, particularly in Germany, while the Cameron government as usual is the stooge that follows the US lead. The increasingly strident call from civil society is to stop TTIP altogether and replace it with an alternative trade mandate that puts people and the planet before corporate profit.