Eyes Wide Shut on ISDS - Bilcon v. Canada highlights NAFTA ISDS problems

[RiverLover]

Eyes wide shut on ISDS
4/22/15

The administration has been pushing for the inclusion of investor-state dispute settlement (ISDS) provisions in international treaties such as the Transatlantic Trade and Investment Partnership agreement with the EU, and the Trans-Pacific Partnership (TPP) agreement with eleven other countries along the Pacific. The ISDS provision allows foreign companies to sue their “host” governments though a specialized international arbitration mechanism that often grants protections exceeding those available in domestic courts. The arbitrators can order host countries to pay millions or even billions of dollars to foreign investors when government measures harm companies’ profits; and the fact that measures were taken in good faith and in the public interest is no defense to a government facing ISDS claims.

While the Obama administration has sought to downplay concerns about ISDS, the decision in Bilcon v. Canada highlights its very real problems.

The basic story in Bilcon is this: a company sought to develop a mining and marine terminal project in Canada, but it had to obtain approval from provincial and federal authorities. As part of that process, the company had to submit an environmental impact study (EIS) addressing the project’s potential impacts on the natural and human environment.

A panel of experts was appointed to review the EIS, collect public comments, and then issue a non-binding recommendation as to whether the officials should approve the project. Ultimately, the expert panel recommended that the project not proceed, citing among other things the project’s inconsistency with “core community values.” The relevant federal and provincial officials then rejected the project, on the basis of that recommendation.

Bilcon could have followed procedure and appealed the decision in Canada’s domestic courts. But the company, seeing an opportunity to circumvent the domestic process, sued Canada under the NAFTA’s ISDS process instead.

That strategy proved successful. The majority of the arbitrators opined that the advisory panel’s consideration of “core community values” went beyond the panel’s duty to consider impacts on the “human environment” taking into account the local “economy, life style, social traditions, or quality of life.” The arbitrators then proclaimed that the government’s decision to reject Bilcon’s proposed project based on the experts’ recommendation was a violation of the NAFTA. ...

...As the dissenting arbitrator in Bilcon stated, the decision represents “a remarkable step backwards in environmental protection.” But while it may have been the wrong outcome, it came at the right time. With fast track legislation now on the table, it is time for a frank acknowledgement of the threats ISDS poses to development and application of law as we know it in a domestic, democratic system.

http://thehill.com/blogs/congress-blog/foreign-policy/239560-eyes-wide-shut-on-isds

So the environment & the health of citizens lost to corporate profits. That's what ISDS in trade deals can do, and does.

Also a consideration, its the taxpayers who pay the legal costs to fight the case & then the fees awarded if the govt loses a NAFTA ISDS battle.

[guillaumeb]

1. Excellent post

Another example was over the gasoline additive MMT. Canada was sued for damages. See more at the link below:
https://www.globalpolicy.org/component/content/article/212/45381.html

Plus there was the case of MTBE, where Canada sued California. See more below:
http://www.sfgate.com/news/article/Canadian-Firm-Sues-California-Over-MTBE-970-2923389.php

These trade agreements will lead to a complete loss of sovereignty for signatories. Citizens will no longer be able to pass initiatives or lobby for laws that can be then overturned by appeal to a commission that is outside of the legal system of a country. Neither Obama nor Clinton ever talked about this.

[RiverLover]

4. Thank goodness that MTBE case went down in flames. That was ridiculous.

Most of them have been to date.

From The Hill 5/7~

...The Obama administration is trying to tamp down concern over how the system works, but Sachs said that legal scholars argue the provisions are cause for alarm.

Sachs said the ISDS policy is being used more aggressively worldwide and “it’s coming our way.”

Sen. Elizabeth Warren (D-Mass.) has raised the specter that the trade deal could lead to problems because it would allow foreign companies to challenge U.S. laws and win big settlements outside of the court system.

"With the number of ISDS cases exploding and more and more multinational corporations headquartered abroad, it is only a matter of time before such a challenge does serious damage here," she wrote in a recent Washington Post op-ed.

"Replacing the U.S. legal system with a complex and unnecessary alternative — on the assumption that nothing could possibly go wrong — seems like a really bad idea."

http://thehill.com/policy/finance/trade/241347-key-dem-obamas-trade-push-falling-short

[polly7]

2. Fuck NAFTA.

Last edited Sat May 9, 2015, 02:29 PM - Edit history (1)

NAFTA's Chapter 11 Makes Canada Most-Sued Country Under Free Trade Tribunals

Canada is the most-sued country under the North American Free Trade Agreement and a majority of the disputes involve investors challenging the country’s environmental laws, according to a new study.

The study from the left-leaning Canadian Centre for Policy Alternatives (CCPA) found that more than 70 per cent of claims since 2005 have been brought against Canada, and the number of challenges under a controversial settlement clause is rising sharply.

snip~

“Thanks to NAFTA chapter 11, Canada has now been sued more times through investor-state dispute settlement than any other developed country in the world,” said Scott Sinclair, who authored the study.

snip~

There are currently eight cases against the Canadian government asking for a total of $6 billion in damages. All of them were brought by U.S. companies.

http://www.huffingtonpost.ca/2015/01/14/canada-sued-investor-state-dispute-ccpa_n_6471460.html

The study notes that although NAFTA proponents claimed that ISDS was needed to address concerns about corruption in the Mexican court system, most investor-state challenges involve public policy and regulatory matters. Sixty three per cent of claims against Canada involve challenges to environmental protection or resource management measures.

Currently, Canada faces nine active ISDS claims challenging a wide range of government measures that allegedly interfere with the expected profitability of foreign investments. Foreign investors are seeking over $6 billion in damages from the Canadian government.

These include challenges to a ban on fracking by the Quebec provincial government (Lone Pine); a decision by a Canadian federal court to invalidate a pharmaceutical patent on the basis that it was not sufficiently innovative or useful (Eli Lilly); provisions to promote the rapid adoption of renewable energies (Mesa); a moratorium on offshore wind projects in Lake Ontario (Windstream); and the decision to block a controversial mega-quarry in Nova Scotia (Clayton/Bilcon).

Canada has already lost or settled six claims, paid out damages totaling over $170 million and incurred tens of millions more in legal costs. Mexico has lost five cases and paid damages of US$204 million. The U.S. has never lost a NAFTA investor-state case.

More: https://www.policyalternatives.ca/newsroom/news-releases/nafta-investor-state-claims-against-canada-are-out-control-study

My taxes help pay for this.

[RiverLover]

3. Thanks for this info polly7. I'd be screamin' mad if I lived there!!

At least UPS lost their suit ag your Canadian postal service for cutting into their profits. You had to pay for legal defense though.

Crazy! And now there's the TPP....this deal doubles the number of foreign companies who could avoid our courts & sue us...

[polly7]

5. You're welcome,

and yes I'm very angry about it all. Also for what it's done to tens of thousands of Mexican farmers who've ended up in complete poverty. These trade agreements are nothing but protections for corporate greed. The thing I worry most about is losing our health-care system and other social safety nets. I don't trust a single politician who advocates for any of these agreements - they're sellouts and traitors.

[Thespian2]

6. Yep.

And Stephen Harper and the lunatic conservatives are willing to keep pouring Canadian taxes into any corporation that wishes to sue...and they fully support the TTIP and TPP...so much for protecting Canada...


Of course, Harper has always been a mean-spirited George W. Bush wanna-be.

I still prefer living in Canada...though I am an American citizen...

[polly7]

8. Well Harper and his Cons will be gone in October,

hopefully we'll get someone in who cares about Canadians more than kissing Oligarchy ass.

[Thespian2]

10. We can hope so...

I think the voters are tired of paying Harper's bills...maybe everyone will follow Alberta's lead...

[polly7]

11. You bet!

If Alberta can do it, anyone can. I'm still sooo happy for their win.

[Dragonfli]

16. I can read the tea leaves regarding our NYS ban on fracking.

I guess we will have to get used to flaming water after Obama gets his way.

[pampango]

7. I don't have a problem with third-party arbitration. It was part of FDR's ITO as well.

It is unrealistic to expect other countries to negotiate mutually acceptable high standards and then appoint just one country as judge, jury and executioner when there are disputed under the agreement.

The critical aspects are what rules (just investor protection or a wide range of standards) the arbitration enforce and how do the panels operate - who selects the arbitrators, what rules do they use, how are decisions made?

If they protect investor rights, that's fine (the ITO did too) as long as they also protect labor rights, enforce business regulation and a commitment to full employment as the ITO did. The ITO did not address environmental standards but would have if FDR were alive today. With the demise of the ITO in congress (thank you, republicans) post-war trade was delinked from enforceable international labor standards, business regulations and a commitment to use trade to achieve full employment.

[RiverLover]

9. They should go through the countries' court systems. Not trump local laws based on some tribunal.

Its too hit or miss. Canada, for example, has gotten some crappy arbitrators.

Interesting info on the ITO, I think we could use that today.

[Enthusiast]

12. I think we know what kind of arbitrators we would see in this day and age.

Fuck that noise.

[pampango]

13. I'm not sure about enforcing labor or environmental standards through the Vietnamese court system

or that of any national government that did not already enforce such standards.

Negotiating high standards in labor and the environment may not achieve much if we then rely on national court systems to enforce these standards on their own companies. (If a national government wanted to enforce high standards on their companies, wouldn't they already be doing it?)

I think that is where FDR was coming from in the ITO with its arbitration to resolve trade disputes between countries rather than relying on national court systems.

[RiverLover]

14. No one has EVER used ISDS to help labor or the environment. Its only used to try to protect PROFITS

And one of NAFTA's biggest flaws is that those great protections for labor & the environment that were promised by Clinton are not enforced.

Governments don't even try.

http://citizen.org/Page.aspx?pid=4083

[pampango]

15. Agreed. Obama has said that it will be used to do that for labor and the environment in TPP.

If so it would resemble the ITO in that regard and would be a big change from NAFTA which, as you say, had no effective enforcement mechanisms for those 'great protections'. National governments ("don't even try&quot and courts involved did not enforce any of NAFTA's 'protections' either.

If TPP has no effective enforcement (and Obama is lying about that) whatever 'great protections' may be included in it will do no good. In that sense it is like any domestic law that is passed because it looks good. If the government does not enforce its provisions, not much is accomplished.