Dear readers,
I wanted to share an important message from Professor Marley Weiss of the University of Maryland:
With apologies to the readers of this blog who already have been invited to sign onto this letter, I would like to invite those of you teaching at American law schools to click the link below and sign onto the Alliance for Justice letter urging Congressional leaders to reject the inclusion of so-called Investor-State Dispute Settlement (ISDS) provisions in upcoming free trade and investment agreements, especially the two big ones now under negotiation: the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and investment Partnership (TTIP) (US-EU).
Here is the link to the letter and the page to sign on:
http://org2.salsalabs.com/o/6539/p/dia/action3/common/public/?action_KEY=19342
The letter itself spells out many of the reasons why these provisions are objectionable. If you find objectionable the sort of pre-dispute, mandatory arbitration clauses of the sort often unilaterally imposed by big business upon consumers and employees, the ISDS system is analogous to such arbitration on steroids. A private panel of arbitrators, whose background is primarily in international trade and foreign investment law, and many of whom habitually represent foreign investors, will resolve a dispute in which the “foreign” investor challenges a host country law as “expropriating” or unfairly burdening the value or profitability of the investment. Almost any legal or regulatory change which operates to significantly decrease the profitability of a foreign-owned business can be challenged on this basis, especially if the change can be found to disproportionately disadvantage the business of the foreign investor, on a disparate impact-like theory of indirect discrimination, or on the theory that the investors’ reasonable expectations of regulatory stability have been thwarted.
There are many ISDS provisions, with many nuanced variations in the wording of the provision, and an incredibly rapidly burgeoning group of investor arbitration filings. Challenges have been brought to a wide range of environmental, consumer protection, health and safety and other bodies of law. It is clear that these clauses hold the potential to produce great mischief. Because the awards can impose billions if not trillions of dollars in government liability to the foreign corporation, even the threat of such an investor-state dispute is likely to deter many governments from adopting pro-consumer and pro-worker-oriented legislative or regulatory change.
In addition, the ISDS provision constitutes a highly discriminatory form of procedure under those free trade and investment agreements where such clauses have been adopted. The normal form of dispute resolution under these agreements is state-to-state, with the two country governments responsible for representing the interests of their citizens and reconciling competing interests within. When small businesses, exporters of goods or services, or when individuals claim they have been disadvantaged by a foreign country’s violation of its obligations under the chapters of these free trade and investment agreements covering trade in goods, services, environmental protection, labor rights, and other matters, the injured party has no right to pursue a claim on their own, and they have no right to individual relief for harm suffered as a result of the breach of the international agreement; foreign direct investors, on the other hand, under the typical ISDS clause, can pursue their own private right of action in an arbitral forum against the host state and recover for the damage to their individual investment resulting from the alleged breach of the investor protection chapter of the international trade and investment agreement.
I could say a lot more on this subject, but actually that article will be forthcoming, and I will be happy to share it with anyone interested once it is.
We are urging professors at American law schools to sign on; because this is aimed at American Congressional leaders, with apologies to our foreign colleagues, we are not seeking your signatures, although you may wish to pursue a similar initiative with your home government and/or the EU, since nearly everyone on this list lives in a country which would either be a party to the TPP or to the TTIP.
Thank you in advance to those of you who choose to sign on.
Best regards,
Marley Weiss
Marley S. Weiss
Professor of Law
University of Maryland Carey School of Law