Transform Trade reports expose British companies suing developing countries

Thursday October 13, 2022: The UK-based Transform Trade - People centred trade report and its associated legal research report – Foreign Investment, Human Rights and the Climate in the UK – Asymmetric Legal Protection – hit two powerful themes – people’s action is transforming international trade and can do much more; and British law enables British corporations to cruelly exploit ISDS in bilateral investment agreements for super profits.

The first report focuses on communities working in sectors that export to the UK and other global markets, and recommends reforms that build on current initiatives for ethical investment, more transparent supply chains, alternative ownership models like cooperatives, and better national legislation and UN agreements to reduce or eliminate unfair trade.

The second report reveals the hard edge of British capital in today’s global trading system.

“There is a huge disparity between the legal rights afforded to UK companies investing abroad, and the legal responsibilities placed on them to respect human rights and the climate in their overseas operations. This amounts to an unacceptable double standard in the treatment of corporations compared to those people whose rights are violated,” it concluded.

The UK has 93 Bilateral Investment Treaties (BITs) in force containing Investor-State Dispute Settlement (ISDS) provisions, with countries ranging from Singapore and China to impoverished Senegal, Bangladesh, and war-torn Yemen. Of the published ISDS cases the UK is the third most frequent home country of corporations seeking damages against other governments. In the last decade, UK corporations have brought 66 ISDS claims and the number is increasing. As well, the UK hosts the highest number of “third party funders” of ISDS cases, who finance other corporations to make ISDS claims.

ISDS claims are for alleged lost future profits because of a new government law or policy, can impoverish poor countries. Even the threat of ISDS claims often makes governments back away from action in the public interest.

In 2021 World Natural Resources brought a case against the Republic of Congo (recognised by the UN as a Least Developed Country) for US$450 million. In the same year, Anglo-American brought a case against Colombia over a Constitutional Court suspension of a coal mine expansion which involved diverting a river, impacting on the ecosystem and water supply to the local indigenous communities, who had initiated the court action.

In contrast, UK law relating to British companies upholding human rights when investing overseas is strikingly undeveloped, and in relation to climate change is almost non-existent. As a result in the last decade there have been only 17 such cases, and all failed at an early stage or were settled out of court.