Spain Hit by Trade Suits, a Bitter Foretaste of TTIP

[marmar]

By Don Quijones, Mexico and Spain, editor at Wolf Street. Originally published at Wolf Street


US brokerage firm Schwab Holdings and Malta-based OperaFund Eco-Invest Sicav have lodged a new international complaint against the Spanish State over its recent cuts to renewable energy subsidies. The case will be heard in the International Center for Settlement Investment, a Washington DC-based investment arbitration institution that is a member of the World Bank.

It is the 19th complaint to date against the Spanish state over its cuts to renewable energy subsidies, propelling Spain to third place in the global leader board of nations facing Investor-State Dispute Settlement (ISDS) suits. In fact, the only two countries facing more suits are the two bugbears of international capital Venezuela (24 complaints) and Argentina (20).

As I wrote in The Global Corporatocracy is Just a Pen Stroke Away From Completion, the “investor-state dispute settlement” provision is what would give the new generation of trade treaties such as Trans-Pacific Partnership (TPP), Transatlantic Trade and Investment Partnership (TTIP), and Trade in Services Agreement (TISA) their “claws and teeth.”

It effectively allows privately owned overseas corporations to sue entire nations if they feel that a law lost them money on their investment… Cases do not get heard in a court of law, under the scrutiny of a judge and jury, but rather in front of arbitration panels made up of three professional arbitrators — one representing the company, one representing the country and the other chosen by the first two to sit as president of the panel.

None of these arbitrators are trained judges; they are private individuals often representing some of the biggest international corporate law firms, mostly from the U.S. and Europe.

Turning Off the Free-Money Tap

Spain’s problems began in November 2011 when the former Socialist government began withdrawing its support for renewables. It had previously promoted renewable energy with very generous subsidies that lured energy companies from around the world to launch operations in Spain. But with the financial crisis biting hard, the Zapatero government announced a cut of 30% to subsidies paid to producers of solar energy. When the conservative Popular Party came into office one month later it deepened the cuts, arguing that consumers could no longer pay. .................(more)

http://www.nakedcapitalism.com/2015/08/don-quijones-spain-hit-by-trade-suits-a-bitter-foretaste-of-ttip.html

[Xipe Totec]

1. If I understand this correctly, foreign companies have more rights than domestic companies

So if a foreign company were to start a renewable energy project in the US which depended on US government 'incentives' (subsidies) that company would have the right to sue at the ICSI if the US government decided to end or reduce those subsidies. But if an American company were to start a renewable energy project on US soil which depended on those same subsidies, the American company would not have the right to demand that the government continue those subsidies.

So, the incentive would be to create companies outside national borders to insure the right to sue for government subsidies?

[ananda]

2. Ouch!

That pretty much nails it. Boy that sucks!

[pampango]

3. "in what can only be described as a master class in political hypocrisy, that same government cries

foul of a system of international justice that it continues to wholeheartedly support.

Fifteen businesses that had invested in Spanish solar energy lodged their first international claim, using the Energy Charter of the United Nations Commission on International Trade Law (UNCITRAL). This was only the second time that investors had used this legislation to bring charges against a member of the EU. Created in 1991 to encourage investment in the former Soviet bloc, the treaty aimed to provide investors with guarantees.

After that came a further 20 investors: sovereign funds such as that of Abu Dhabi, German municipalities and a Canadian civil service pension fund. Even major Spanish companies such as Abengoa and Isolux presented compensation demands, arguing that their solar energy plants belonged to affiliates in the Netherlands and Luxembourg…

No exact figures are available as to how much is at stake, but sources talk of billions of euros. In 2014 alone, Spanish consumers paid €6.5 billion in renewable subsidies.

Hypocrisy Unlimited

The Spanish government would much rather the cases were heard in the European Court of Justice, arguing that the cuts had been approved by democratically elected parliaments, that a reasonable profit is still to be made from renewable investments, and that above all, Spaniards have been affected just as much as foreign investors. But investors continue to seek redress through arbitration.

There are Spanish and foreign companies suing in this case. The suit is based on a UN (an FDR creation) law passed in 1991.

Spain joined the World Bank (another FDR creation) but does not want the suit to be arbitrated by the World Bank. Spain joined the EU and would prefer that the suit be handles by the European Court ofJustice.

If our far-right - AKA the tea party - and Europe's far-right get their way their will be no UN, no EU, no World Bank, no IMF (another FDR creation), no WTO (the descendant of GATT - another FDR creation), etc. and national sovereignty will reign supreme as it did before FDR. The importance of multilateral institutions will fade and disappear - as they did before FDR.