Obama and the TPP: Poll #1

[cali]

44. One more time. I didn't claim any such thing- though there have been some

troubling precedents set here in the U.S.:

Loewen Group (Funeral home conglomerate)

When a Mississippi state court jury ruled against the Loewen Group, a Canadian funeral home conglomerate, in a private contract dispute, Loewen launched an ISDS claim against the U.S. government under the North American Free Trade Agreement (NAFTA). In the underlying U.S. court ruling challenged by Loewen, a Mississippi jury determined that Loewen had engaged in anti-competitive and predatory business practices that “clearly violated every contract it ever had” with a local Mississippi funeral home. After Loewen rejected an offer to settle the case, the company was hit with a jury damages award requiring it to pay the local funeral home $500 million. Loewen sought to appeal. Under both U.S. federal and Mississippi state court procedures, a bond must be posted as part of the appeal process to ensure that a losing party does not seek to move its assets to avoid paying on the initial ruling. This procedural rule, as well as the uncertainties related to jury damage awards, pertains to domestic and foreign firms alike. After a failed bid to lower the bond, Loewen reached a settlement for approximately $85 million.76 But then Loewen launched a NAFTA case for $725 million, claiming that the requirement to post bond and the jury trial system violated the company’s investor rights under NAFTA. The tribunal explicitly ruled that court decisions, rules and procedures were government “measures” subject to challenge and review under the ISDS regime. The ruling made clear that foreign corporations that lose tort cases in the United States can ask ISDS tribunals to second-guess the domestic decisions and to shift the cost of their court damages to U.S. taxpayers. [p. 11]


Do you believe that what happens in other countries due to the ISDS process is irrelevant to this discussion?

. S.D. Myers (Trash company)

When Canada imposed a temporary ban on the export of a hazardous waste called polychlorinated biphenyls (PCB), considered by the U.S. EPA to be toxic to humans and the environment, U.S. waste treatment company S.D. Myers launched a case under NAFTA that resulted in an ISDS tribunal ordering Canada to pay the company almost $6 million. [p. 15]

. Insurance Bureau of Canada (Insurance cartel)

When an all-party committee of the provincial government of New Brunswick, Canada recommended that the province develop its own public auto insurance program, the private insurance industry used the threat of a NAFTA investor-state case to successfully lobby against the program. In response to public outcry over skyrocketing auto insurance premiums, the New Brunswick committee recommended a public plan that would achieve average premium reductions of approximately 20 percent. The Insurance Bureau of Canada, representing Canada’s largest insurers, immediately warned that the proposal could trigger NAFTA investor-state cases from foreign insurance providers in Canada as a NAFTA-prohibited “expropriation” of their market share. The proposal was soon scuttled, due in part, according to observers, to “aggressive threats of treaty litigation.”

Renco (Smelter)

When the Peruvian government denied a request from the U.S.-based Renco Group for a third extension of its deadline to comply with its contractual commitment to remediate environmental and health problems caused by its toxic metal smelting operation, Renco launched an $800 million ISDS case against the government under the U.S.-Peru FTA. After having already granted two extensions to the company, the government ordered the plant closed, pending compliance. Even though the smelter is now shut down because of bankruptcy, the mere filing of the ISDS case assisted Renco in its efforts to evade cases brought in U.S. courts against the firm on behalf of Peruvian children allegedly injured by the smelter’s emissions.

[T]he ISDS tribunal in the previously mentioned Occidental v. Ecuador case, brought under the U.S.-Ecuador BIT, ordered Ecuador’s government to pay $2.3 billion to the U.S. oil corporation – one of the largest-ever investor-state awards. The penalty imposed by the tribunal on Ecuador’s taxpayers was equivalent to the amount Ecuador spends on healthcare each year for over seven million Ecuadorians – almost half the population. The tribunal decided on the massive penalty after acknowledging that Occidental had broken the law, that the response of the Ecuadorian government (forfeiture of the firm’s investment) was lawful, and that Occidental indeed should have expected that response. But the tribunal then concocted a new obligation for the government (one not specified by the BIT itself) to respond proportionally to Occidental’s legal breach and, upon deeming themselves the arbiters of proportionality, determined that Ecuador had violated the novel investor-state obligation.

To calculate damages, the tribunal majority estimated the amount of future profits that Occidental would have received from full exploitation of the oil reserves it had forfeited due to its legal breach, including profits from not-yet-discovered reserves. The tribunal majority then substantially increased the penalty imposed on Ecuador by ordering the government to pay compound interest. It has become increasingly common for investor-state tribunals to order governments to pay compound rather than simple interest, often requiring that the interest be retroactively compounded from the moment of the challenged action or policy to the date of the tribunal’s decision, and prospectively until the date of payment.136 In the Occidental v. Ecuador case, these interest requirements alone cost the Ecuadorian government more than $500 million.

http://www.nakedcapitalism.com/2014/10/public-citizen-top-ten-pernicious-investor-state-dispute-settlement-lawsuits.html

Do you think all of these cases are irrelevant? I want to point out a couple of things: Brazil will not sign a trade agreement with the ISDS in place. Never have. They also haven't suffered for that position and have plenty of foreign trade. Why is the ISDS important to have in place in countries with sound judicial systems?

http://www.vox.com/2015/2/28/8124057/investor-state-dispute-settlement-elizabeth-warren


Justice Denied: Dispute Settlement in
Latin America's Trade and
Investment Agreements
Michael Mortimore



https://ase.tufts.edu/gdae/Pubs/rp/DP27Mortimore_StanleyOct09.pdf