ISDS is a trans-national system of kangaroo courts run by corporate lawyers for the purpose of protecting corporate profits. They allow foreign corporations to sue national governments and overrule any domestic regulations that reduce their profitability.
Some key features of these courts are:
- They usually meet in secret;
- Only trans-national corporations can lodge claims, typically against national governments;
- Ordinary citizens, domestic companies, trade unions, watchdogs and even national governments are barred from taking action through these courts;
- There are not usually presided over by qualified judges, the cases are heard by corporate lawyers;
- Court officials are paid by the hour, giving them a vested interest in awarding claims in order to attract more work;
- They operate independently of national judicial systems;
- There is usually no right of appeal.
ISDS first came to prominence as part of the North American Free Trade Agreement (NAFTA) in 1994, corporate courts have a deeply unpleasant history. In an early case, the US company Ethyl sued the Canadian Government to allow the use of a known human neurotoxin in its product. Despite the ingredient being banned in its home country, Ethyl was able to bully the Canadians into allowing them to use the neurotoxin.
A list of NAFTA cases and outcomes is available here.
In 2011, the tobacco giant Altria Group, owners of Philip Morris, took the Australian Government to court in an attempt to prevent the introduction of ‘plain packaging’ laws. Although the Australian High Court kicked out their claim, Alteria pursued it through the corporate court set up by a trade treaty that Australia had made with Hong Kong. Again they lost, but this time on a technicality, Alteria had not registered a company in Hong Kong at the time that the laws were introduced.
The legal costs, paid by the Australian taxpayer, amounted to Aus$50 million. This was enough of a victory for the tobacco companies. Using the threat of such court cases, they have bullied poorer countries such as Uruguay and Togo into backing down on anti-tobacco legislation.
The Stop-TTIP and Stop-CETA movements won some concessions on corporate courts. The Investment Court System (ICS) which is incorporated into the CETA treaty does, at least, require that cases are heard by real judges, rather than corporate lawyers. However, the judges will still be paid by the hour, creating a perverse incentive to find in favour of the corporate litigant.
According to the Deutscher Richterbund, Germany’s largest association of judges and public prosecutors:
“Neither the proposed procedure for the appointment of judges of the ICS nor their position meet the international requirements for the independence of courts.”