The TPP allows foreign investors to sue our governments
The TPP includes rights for foreign investors to bypass national courts and 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).
Not a fair legal system
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. increasing numbers of cases against health, environment and even minimum wage laws show that ISDS can threaten democratic rights to regulate.
'Safeguards' wont work
Public health campaigning has resulted in a specific TPP clause to exclude future tobacco regular on from ISDS cases. This is a victory and should prevent future cases like the Philip Morris 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 and will not prevent corporations from bringing cases.
Increasing 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 is suing the Colombian government over plans to reduce the price of a patented medicine to treat leukaemia
Environment: The US Lone Pine mining company is suing the Canadian government because the Québec provincial government introduced environmental regulation of gas mining.
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.
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.
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 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 out in 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 have called for the Australian government to reveal the costs.
- Dr Kyla Tienhaara's report, commissioned by GetUp Canary in the Coalmine, on Canada's experience of ISDS (October 2016)
- Buzzfeed's four-part investigative series into the ISDS system Secrets of a Global Supercourt (September 2016)
- Dr Kyla Tienhaara’s response to the Philip Morris tobacco ISDS decision (The Age, December 2015)
- AFTINET myth-busters fact sheet on ISDS (November 2015)
- Dr Pat Ranald’s article “Investor rights to sue governments pose real dangers,” (The Conversation, April 2015)
- Australian High Court Chief Justice French’s critical paper on ISDS and national court systems (July 2014)
Updated August 2017