Investor-State Dispute Resolution: The Monster Lurking Inside Free Trade Agreements
We recently wrote about how the multilateral trade agreements have become a convenient way to avoid the democratic decision-making. An important feature of these treaties is the inclusion of a mechanism to resolve investor-state disputes, which techdirt discussed last year. The Huffington Post has an excellent article on how this measure is almost certain to be part of the negotiations Tafta imminent, whether for TPP and why it is very problematic:
resolution investor-state was a common element of the agreements negotiated with the United States and individual countries of the Free Trade Agreement of North America in 1994. But this resolution is not allowed in disputes with the United States and the EU, which are governed by the WTO. All trade agreements have some form of settling international disputes, but the direct business empowerment to take unilateral trade case against sovereign countries that are not part of the WTO treaty. Under WTO rules, a company must convince a sovereign country that has been treated unfairly, leaving the decision to bring the case before the WTO on trade in the hands of elected governments. Traditionally, the project of political emancipation of companies has been advocated as a way to protect companies from arbitrary governments or weak judicial systems in developing countries. But the expansion of practical relationships first world is exposed as false foundation. The rule of law in the United States and the EU are considered strong and judicial systems are among the most sophisticated in the world experts. Most cases against the United States under NAFTA have been rejected or abandoned before an international tribunal ruled.
As a result, he said, there were mechanisms investor-state dispute resolution in agreements with countries where the rule of law could not trust. This does not make sense in the case of the United States and the EU, the two legal systems are highly developed (some would say too.) The Huffington Post quotes Lori Wallach article, director of Global Trade Watch at Public Citizen, explaining what you think is really going on here:
"The dirty little secret of the [negotiation] is not primarily on trade, it would seek the elimination of consumer, health, safety, confidentiality, public policy strong environmental and both sides of the Atlantic, "said Lori Wallach, director of Global Trade Watch at Public Citizen." ... The most striking evidence the plan is to include the
infamous investor-state system that enables companies and individual investors to evade national laws and jurisdictions and drag the signatory governments of foreign courts. " A recent example of this kind of thing that could become more frequent if the solution of the investor-state is included in TAFTA and TPP is provided by Eli Lilly and Company. Techdirt As reported earlier this year, the pharmaceutical giant requires $ 100 million in compensation for what he calls "expropriation" by Canadian courts simply because he refused to pay Eli Lilly drug patent on the basis that not meet the requirements set by the law of the do.
A new report (pdf) of the United Nations Conference on Trade and Development (UNCTAD), said that IP Watch reveals the extent of the use of investor-state mechanisms to resolve conflict became
issues note reveals that 62 new cases were initiated in 2012, which is the largest number of known ISDS [settlement of investor-state] claims not filed within a year and confirms that foreign investors are turning more and more investor-state arbitration.
> ...
the end of 2012, the total number of known cases reached 518, and the total number of countries that responded to one or more ISDS claims increased to 95. The total caseload reached 244. Of this number, about 42 percent were in favor of the state and 31 percent in favor of the investor. About 27 percent of the cases were resolved.
Although this suggests that states are winning more often than investors, the cost of this operation is a waste of public finances, and ignores cases that never come to arbitration because governments simply give in. And if the state loses, the fines can be huge: the report notes that the year 2012 saw the largest endowment in the history of the colonization of the investor-state: $ 1.77 million in Occidental, in a dispute with Ecuador. 
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