Undermining our democracy
Like the TPP, the RCEP could contain rights for foreign corporations to bypass national courts and sue governments in unfair international tribunals. This system is called investor-state dispute settlement (ISDS).
The tribunals consist of investment lawyers who can continue to be practicing lawyers, with obvious conflicts of interest. Australia’s High Court Chief Justice and other legal experts have said that ISDS is not a fair legal system because it has no independent judges, no precedents and no appeals. There are over 850 outstanding cases, many against health, environment and other public interest laws.
Increasing numbers of ISDS cases against public interest legislation
Recent ISDS cases against health, environment and other public interest legislation include:
Public health: The Swiss pharmaceutical company Novartis sued the Colombian government over plans to reduce the price of a patented medicine to treat leukaemia
Environment: the US Bilcon company won millions of dollars of compensation from Canada of because its application for a quarry development was refused by a local government for environmental reasons
Workers wages: The French Veolia company is suing the Egyptian government over a contract dispute in which they are claiming compensation for a rise in the minimum wage.
Indigenous land rights: An ISDS tribunal ordered the Peruvian government to pay $24 million to the Canadian Bear Creek mining company because it cancelled a mining license after the company failed to obtain informed consent from Indigenous land owners about the mine, leading to mass protests. ISDS rewarded the company for ignoring Indigenous land rights.
Privatisation: Mexican transport company ADO has threatened Portugal with a €42 million ISDS case after it cancelled plans to privatise part of Lisbon's public transport network.
Philip Morris tobacco company vs Australia
Even if a government wins the case, defending it can take years and cost tens of millions of dollars. For example, tobacco companies lost their claim for compensation for Australia’s 2011 plain packaging legislation in Australia’s High Court. The US-based Philip Morris company did not accept this decision under Australian law. The company could not sue under the US-Australia FTA because that agreement had no ISDS clause. The company found a Hong Kong-Australia investment agreement containing ISDS, shifted some assets to Hong Kong, claimed to be a Hong Kong company and sued the Australian Government, claiming billions in compensation. It took over four years and millions in legal fees for the tribunal to decide the threshold issue in December 2015 that Philip Morris was not a Hong Kong company.
Although the tribunal in July 2017 eventually awarded a proportion of the legal and arbitration costs to Australia, the proportion and amount of the costs were blacked outin the tribunal’s cost decision. This is a failure of public accountability both by the tribunal and the Australian government, as taxpayers have a right to know the costs of defending ISDS cases. Community organisations called for the Australian government to reveal the costs. The government initially appealed an Australian Information Commissioner decision that it should reveal the costs, but finally revealed on July 2, 2018 that the legal costs were $39 million. The proportion of costs awarded to Australia has still not been revealed.
This confirms that, even if governments win ISDS cases, defending them takes years (in this case seven years before costs were awarded) and tens of millions of dollars.
- It's time to stop giving more rights to global corporations Sydney Morning Herald Patricie Ranald (June 14, 2018)
- The Case for Banning ISDS Friends of the Earth (April 2018)
- The hidden cost of RCEP and corporate trade deals in Asia, Transnational Institute (TNI) and others, December 2016
- Colombia hit with ISDS cases on mining regulation and medicine, AFTINET, Dec 2016
- Canary in the Coalmine, Dr Kyla Tienhaara / GetUp, October 2016
- Secrets of a Global Supercourt, Buzzfeed, September 2016
- The dismissal of plain cigarette packaging case good news for taxpayers, Dr Kyla Tienhaara, The Age, December 2015
- ISDS myth-busters, AFTINET, November 2015
- Investor rights to sue governments pose real dangers, Dr Pat Ranald, The Conversation, April 2015
- Investor-State Dispute Settlement — A Cut Above the Courts? Australian High Court Chief Justice French, July 2014
For all the latest news on the RCEP, follow this link.
Updated: March 2017