The Big Problem With The Trans-Pacific Partnership’s Super Court That We’re Not Talking About
A secretive super-court system called ISDS is threatening to blow up President Barack Obama’s highest foreign policy priority.
Investor-state dispute settlement — an integral part of the Trans-Pacific Partnership trade deal — allows companies to sue entire countries for costing them money when laws or regulations change. Cases are decided by extrajudicial tribunals composed of three corporate lawyers. Buzzfeed, in a multi-part investigation launched Sunday, called it “the court that rules the world.”
Although the ISDS process has existed for years, TPP would drastically expand it. The most common criticisms of the system are that it’s secret, that it’s dominated by unaccountable big-firm lawyers, and that global corporations use it to change sovereign laws and undermine regulations. That’s all true.
But here’s what most of the coverage and the critics are missing.
The ISDS system ― which is now written into over 3,000 international trade treaties, including NAFTA ― was designed to solve a specific problem. When corporations invest abroad, they fear that their factories might be nationalized or their products expropriated by governments that also control the local courts. ISDS is meant to give companies confidence that if a country seizes their accounts or factories, they’ll have a fair, neutral place to appeal.
But instead of helping companies resolve legitimate disputes over seized assets, ISDS has increasingly become a way for rich investors to make money by speculating on lawsuits, winning huge awards and forcing taxpayers to foot the bill.