PHM-Exch> Investor-state dispute settlements (ISDS) enable TNCs making more money from losses

[Ryz Tyb]

>
> *ISDS enables making more money from losses *
>
> *Jomo Kwame Sundaram*
>
>
>
> KUALA LUMPUR: With the Covid-19 contagion from late 2019 spreading
> internationally this year, governments have responded, often in
> desperation. Meanwhile, predatory international law firms are encouraging
> multimillion-dollar investor-state dispute settlement (ISDS) lawsuits
> citing Covid-19 containment, relief and recovery measures.
>
>
>
> *Sharing the pain*
>
> Most governments failed to introduce sufficient precautionary measures
> early enough to prevent Covid-19 contagions from spreading. And when they
> did act, they often believed they had little choice but to impose
> nationwide ‘stay in shelter’ lockdowns to enforce preventive physical
> distancing.
>
> To enable businesses and households to survive the adverse effects of such
> lockdowns, governments have provided relief measures, for at least some of
> those believed to have been adversely affected, especially for businesses
> better able to lobby effectively.
>
> Meanwhile, there are already thousands of mainly bilateral investment
> treaties as well as bilateral and plurilateral trade agreements worldwide,
> enabling foreign investors to sue governments before private arbitration
> tribunals to profit from their wide-ranging treaty rights.
>
> Transnational corporations (TNCs) can claim staggering sums in damages for
> alleged investment losses, for either alleged expropriation, or more
> typically, indirect ‘damage’ caused by regulatory changes, in this case,
> Covid-19 government response measures.
>
> As some such measures try to share the burden of the crisis, e.g., with
> asset owners and other contracting parties, the international law firm Shearman
> & Sterling
> <https://www.shearman.com/perspectives/2020/04/covid-19-international-investment-protection?sc_lang=ja-JP> advises
> financial firms, “While helping debtors, these measures would inevitably
> impact creditors by causing loss of income”, referring to debt relief and
> restructuring efforts among others.
>
> Foreign registered real estate or property companies can also sue
> governments that protect lessees or tenants who cannot make their lease or
> rent payments as contractually scheduled after their operations are shut
> down or disrupted by emergency regulations imposed.
>
> Pharmaceutical and medical supplies companies can also appeal to such
> arbitration tribunals to claim losses due to price controls and ‘violated’
> intellectual property rights for Covid-19 tests, treatments, medical and
> protective equipment as well as vaccines.
>
>
>
> *Lucrative ISDS lawsuits*
>
> In recent months, international law firms have been encouraging ISDS
> lawsuits citing government measures to check contagion and mitigate their
> economic consequences, urging clients to invoke investment and trade
> agreements to claim for allegedly lost income or additional losses or costs
> due to new government policy measures.
>
> Another firm Ropes & Gray
> <https://www.ropesgray.com/en/newsroom/alerts/2020/04/COVID-19-Measures-Leveraging-Investment-Agreements-to-Protect-Foreign-Investments> advises:
> “Governments have responded to COVID-19 with a panoply of measures,
> including…limitations on business operations, and tax benefits. *Notwithstanding
> their legitimacy*, these measures can negatively impact businesses by
> reducing profitability, delaying operations or *being excluded from
> government benefits*…For companies with foreign investments, investment
> agreements could be a powerful tool to recover or prevent loss resulting
> from COVID-19 related government actions.” [my italics]
>
> Shearman & Sterling
> <https://www.shearman.com/perspectives/2020/04/covid-19-international-investment-protection?sc_lang=ja-JP> advises,
> “Some interventions will be protectionist—they will seek to support or
> benefit domestic enterprises (strategic or otherwise) but not foreign
> investors”, without mentioning their generally far lower tax contributions
> and generous investment incentives enjoyed.
>
>
>
> *Profiting from the pandemic *
>
> After advising clients to look out for discriminatory measures which
> could become the bases for such claims, law firm Sidley
> <https://www.sidley.com/en/insights/publications/2020/05/investment-treaty-claims-for-covid19-losses> warns
> governments that proceedings can be very costly as “it is not only the
> actually invested amounts that can be considered recoverable damages, but
> also lost future profits”.
>
> Such law firms remind their clientele that many of the more than thousand
> ISDS lawsuits filed worldwide have arisen during political or economic
> crises. Covid-19 pandemic response measures are now being widely studied as
> possible pretexts for another round of lawsuits.
>
> These corporate lawsuits can impose massive fiscal burdens on governments.
> As Pia Eberhardt <https://longreads.tni.org/cashing-in-on-the-pandemic>shows,
> legal costs average well over US$6 million per party, but can be much
> higher. Hence, such suits can drain government fiscal resources.
>
> Although it becomes much more expensive if governments lose, they still
> have to cover their own legal expenses even if they do not lose. As of
> 2018, governments had been ordered to pay US$88 billion for settlements
> made public.
>
> There is considerable scope for such cases given the still growing, broad
> range of government Covid-19 measures, e.g., foreign-owned water supply
> companies can sue governments for insisting that more public water supply
> sources be provided, or household water supplies remain uninterrupted, even
> if water bills are not settled, to enable more regular hand washing.
>
>
>
> *ISDS undemocratic, illegitimate*
>
> International investment law is generally independent of national
> legislatures and biased toward TNC interests. Investment agreements
> prescribe foreign investor rights and privileges very broadly, but their
> duties and obligations, usually rather minimally.
>
> Sovereign national societies, parliaments and governments have
> considerable scope for discretion in addressing complex political issues
> involving diverse social and economic interests. Also, national courts
> generally do not award damages for lost future profits as these are
> considered completely conjectural.
>
> But ISDS provides much more favourable treatment to powerful TNCs. Also,
> international arbitration tribunals ignore and undermine the legitimate
> scope for national courts, law-making and democratic government
> decision-making.
>
> The typically transnational arbitration tribunals that interpret such law
> generally ignore recent legal developments, which take more account of the
> rights and responsibilities of various other stakeholders in national
> societies. Thus, arbitration awards tend to be much more lucrative, for
> both TNCs and their lawyers, than ordinary national court decisions.
>
> A South Centre Southview
> <https://www.southcentre.int/wp-content/uploads/2020/08/SouthViews-Sornarajah-1.pdf> urges
> considering various measures in response to the threat such as terminating
> or suspending investment treaties, withdrawing consent to arbitration,
> statutorily prohibiting recourse to arbitration and appealing to TNCs’
> corporate moral responsibility
>
> Already, there are growing appeals for an immediate moratorium on ISDS
> lawsuits and to end ISDS proceedings involving Covid-19 emergency measures,
> while some countries, e.g., India, South Africa and Indonesia, had scrapped
> some of their bilateral investment treaties even before the crisis.
>
> The Southview opinion also chides the United Nations Commission on
> International Trade Law (UNCITRAL) for trifling with marginal reforms,
> instead of radically reconsidering the very illegitimacy of international
> investment arbitration itself.
> https://www.ksjomo.org/post/isds-enables-making-more-money-from-losses
>
>
>
<https://www.avast.com/sig-email?utm_medium=email&utm_source=link&utm_campaign=sig-email&utm_content=webmail>
Virus-free.
www.avast.com
<https://www.avast.com/sig-email?utm_medium=email&utm_source=link&utm_campaign=sig-email&utm_content=webmail>
<#DAB4FAD8-2DD7-40BB-A1B8-4E2AA1F9FDF2>
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://phm.phmovement.org/pipermail/phm-exchange-phmovement.org/attachments/20200819/2ebeb6ba/attachment-0001.html>