This summer there will a another international camping festival for hackers and makers, and those with an inquisitive mind, OHM 2013.
I will give a short talk about investor-to-state dispute settlement. The announcement:
Investor – state dispute settlement: a threat to democracy
Why this talk?
Consumer and environmental groups identify investor-to-state dispute settlement (ISDS) as the most important threat in upcoming EU trade agreements. Investor-to-state dispute settlement gives multinationals the possibility to sue states for special tribunals if changes in law may lead to lower profits than expected. This threatens environmental policies, access to medicines and the public interest. ISDS undermines democracy and may hamper copyright and patent law reform.
In 2012 Europeans massively protested against the Anti-Counterfeiting Trade Agreement (ACTA). ACTA threatened privacy, freedom of speech and access to medicine. ACTA could have made copyright and patent law reform impossible. In July 2012, the European Parliament overwhelmingly rejected ACTA. We now have to watch out for the return of ACTA-like provisions in other international agreements. But this is not the only threat we face. Investor-to-state dispute settlement is much less well known among digital activists, but it is just as threatening. I want to make the digital community aware of ISDS.
A lightning talk, just 5 minutes, an introduction on ISDS. A link to further reading. An invitation to discuss the issue further at the Noisy Square village at OHM.
In the presentation, I will have to explain a few things. What is ISDS: special rules and special tribunals. Special rules: International agreements give extra protection to foreign investors against expropriation. Over time, the scope of protection got broader and broader, from expropriation of a factory, to law changes that may make profits lower. Special tribunals: The tribunals consist of three lawyers. These tribunals fall outside the court system, are placed above the supreme courts of countries.
There are major problems: the ISDS system is ridden with conflicts of interest. Lawyers write investment plans for multinationals one day, and the next day they are “judges” in ISDS tribunals. I will give examples showing that multinationals can use ISDS to attack laws and decisions they do not like. The number of cases is rising sharply.
This moment in history: EU member states signed many bilateral investment treaties, but since the Lisbon Treaty, the EU is competent. From now on, the European Commission negotiates, the European Parliament has a veto. The parliament is critical about ISDS. Now is the time to get it right.
A major development, a game changer: the EU and US are going to negotiate a trade agreement, they want to create a single market. The European Commission wants ISDS in the trade agreement – while both the EU and US already have excellent protection against expropriation, and both have well respected courts. There are enormous EU < -> US investments, the scale of ISDS cases may be equally enormous.
This is a time not to be naive: the European Commission is aware of problems and wants to introduce safeguards. But specialized “courts” attract and create captive in-crowds. See the European Patent Office boards, or the US Court of Appeals for the Federal Circuit. Captive in-crowds can always find ways to route around safeguards. See for instance what the European Patent Office did with the exclusion of software patents.
There is only one real safeguard: exclusion of ISDS.
In societies based on the rule of law, strong institutions are essential. Captive institutions undermine democracy, the rule of law and the public interest.