Foreign Corporations could sue our governments

The TPP includes rights for foreign corporations to sue governments for millions of dollars in international tribunals if they can argue that a change in domestic law or policy at national, state or local level will ‘harm’ their investment, known as Investor-State Dispute Settlement (ISDS).

The tribunals consist of investment lawyers who are not independent judges but 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. Increasing numbers of cases against health, environment and even minimum wage laws show that ISDS can undermine democratic rights to regulate.

Public health campaigning has resulted a specific TPP clause to exclude future tobacco regulation from ISDS cases. This is a victory and should prevent future cases like the Philip Morris tobacco company case against our plain packaging law. But the need for the specific exclusion of tobacco regulation shows that the general “safeguards” for other public interest laws are weak, similar to clauses in other recent agreements, and will not prevent corporations from bringing cases.

There are many recent ISDS cases against health, environment and other public interest regulation. The US pharmaceutical company Eli Lilly is currently suing the Canadian government over a court decision which refused a patent for a medicine which was not more medically effective than existing medicines. The US Lone Pine mining company is suing the Canadian government because the Québec provincial government introduced environmental regulation of gas mining. The French Veolia company is suing the Egyptian government over a local government contract dispute in which they are claiming compensation for a rise in the minimum wage.

Environmental regulation of mining 

Under the North American Free Trade Agreement (NAFTA) US corporations have used ISDS to sue governments for tens of millions of taxpayers’ dollars over legitimate health and environment legislation. Currently, the US Lone Pine energy company is using ISDS provisions in NAFTA to sue the provincial government of Quebec for $250 million because it suspended shale gas mining pending an environmental study in response to community concerns.

In Australia, farmers and members of communities influenced the NSW government to regulate  coal mining and coal seam gas activity close to water tables, homes and agricultural land. ISDS in the TPP could enable foreign companies to sue state governments for damages over this kind of regulation.

Just two months after the Obama administration rejected TransCanada's bid to build the dangerous Keystone XL tar sands pipeline - a landmark victory for the movement to keep fossil fuels in the ground - the Canadian corporation announced it will retaliate by using ISDS in NAFTA, a TPP-like trade deal, j

More Information

Philip Morris tobacco ISDS decision December 2015: Kyla Tienhaara explains why ISDS cases still pose dangers

AFTINET fact sheet answering myths about ISDS (November 2015)

“Investor rights to sue governments pose real dangers,” The Conversation, (April 16, 2015)

ABC Radio National Background Briefing  The Devil in the Detail of Trade Agreements (September 2014)

Video: Dr Patricia Ranald giving evidence against ISDS at a 2014 Senate Inquiry, (August  2014) 

Australian High Court Chief justice French critical paper on ISDS and national court systems (July 2014)