How Investor-State Dispute Resolution Threatens Access To Medicines, And Much Else

from the time-to-wake-up dept

A couple of weeks ago, we wrote about the growing importance of investor-state dispute resolution in so-called free trade agreements (FTAs). One of the most troubling aspects is how potentially it can be used to undo the hard-won gains for important areas like access to medicines. The US law professor Brook K. Baker, whose work we discussed last year, has written an excellent exploration of this under-appreciated risk. After an introduction running through the recent wins in the field of access to medicines — a topic that we’ve covered extensively here on Techdirt — he explains how big pharma could employ investor-state dispute resolution to thwart these and similar moves to protect health:

Using loose and imprecise standards addressing “minimum standards of treatment,” “indirect expropriation,” and “national treatment,” multinational pharmaceuticals might claim that denying patents, granting oppositions, revoking patents, issuing compulsory licenses, and registering generics while referencing clinical data or doing so before patent expiration all violate their legitimate expectations for profit. Although the “minimum standards of treatment” clause [used to justify recourse to investor-state dispute resolution] was originally designed to prevent grossly abusive and discriminatory courtroom adjudications totally outside the bounds of normative due process, it has morphed to decisions with a much more lenient standard that rewards investors even when they have been given a full panoply of due process safeguards. The expropriation standard, originally adopted to deter nationalization of businesses and seizures of real property has similarly morphed to prevent indirect expropriations, what we call regulatory takings in the U.S., where changes in government regulations — many designed to protect public health, environment, and other legitimate public interests — are challenged as having diluted the investor’s expectations of profit. Finally, the national treatment standard, though originally adopted to ensure that foreign investors are treated equivalently to domestic investors, is also morphing in new directions.

As this makes clear, what started out as a series of measures for a few special cases in order to protect Western companies in countries with weak legal systems and a high risk of tangible investments being expropriated by the state, has been twisted to an entirely different use: enabling deep-pocketed multinationals to circumvent any kind of legislation they don’t like, even in countries with fair and independent judiciaries.

Baker concludes by offering some advice for nations involved in FTA negotiations with clauses that that call for investor-state dispute resolution to be put in place:

India and other trade negotiators should heed the entreaties of trade, IP, and health activists who are warning against the inclusion of an Investment Clause in the EU-India FTA, the Trans-Pacific Partnership Agreement, and in the many other trade agreements that are underway or soon-to-be initiated. Preferably, investment chapters will be rejected in their entirety, as they are becoming a corporate sword of Damocles that hangs over the head of rich and poor governments alike. At the very least, IP should be totally defined out of “investments” and no investor claims whatsoever should be available for alleged frustration of IP-based expectations. IP right holders already have multiple forms of enforcement including private lawsuits, border seizures, criminal prosecution, and state-state dispute resolution. Enough is enough. Expanded and unbound investment rights for Big Pharma under the cover of underscrutinized investment chapters is a grave threat — a threat with deadly consequences to millions of patients who rely on governments’ rights to regulate IPRs and to use any and all TRIPS-compliant flexibilities to ensure affordable access to medicines for all.

Worrying, few are even aware that the investor-state dispute resolution option exists, let alone its unprecedented power to circumvent government policy and override judicial decisions. That makes it all-too easy for negotiators to agree to its inclusion in trade agreements as an apparently minor concession that can be used as a bargaining chip to obtain measures they care more about. Let’s hope that Baker’s excellent contribution to the debate will alert people to this crucial area, and encourage others to speak up about the very real danger investor-state dispute resolution represents to a wide range of public interest issues.

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Comments on “How Investor-State Dispute Resolution Threatens Access To Medicines, And Much Else”

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Beech says:

” violate their legitimate expectations for profit”

Something about that phrase just sends shivers down my spine. Now it’s becoming de facto illegal to do something that makes a company make less money than it had planned on. It seems like Scrooge McDuck’s wettest dream ever, “Oh no! Me money vault is looking a little low, guess it’s time to sue the government for not letting me make more!”

Ninja (profile) says:

Usually FTAs benefit one part and screw up the other even though this is quite subtle and not readily observable. But regardless, in terms of IP, usually the screwed over country has nothing to lose if they simply ignore the mechanisms described in this article. I mean we are talking about sovereignty here and some CORPORATE entity disputing something a COUNTRY decided. What would be the consequences for the country? None.

special-interesting (profile) says:

The recent trend in treaties has been to include an fully operating kitchen sink and a three car garage deep into the small print. This is done thorough unnecessary complexity born from secret back room negotiations (remember ACTA?) that find ways to insert such tricky pitfalls. These economic traps are of course benefiting only the few who can afford such a princely prize ?as such?. (literary kick.)

The ?investor-state dispute resolution? clause/paragraph is a magnificently princely prize. To force any nation to bow down to some outside (name it what you will) court would be the envy of any kingdom or tyrant. Its sure to have taken several high paid lawyers and diplomats a month or two to come up with the seemingly innocent name of ?investor-state dispute resolution? which slips by the ‘future problem radar’ we all have at some level.

For a nation to stay a nation it has to use its own courts. Their is no sovereignty without sovereignty. When any nation gives up on the right of its own destiny is it really an independent nation or just some vassal of another entity. The question is; What to name this entity? Who controls this globeilization thing? Why do we pander ?as such??

Its silly to depend on the impartiality of some outside court. Most nations have enough problems trying to keep a lid on corruption in their own courts let alone some super powerful world dominating trade relations court.

The tendency for every nation/kingdom/tyrant/democracy/communist-state to attempt at every angle/moment/way the suborning/corrupting/swaying of such a powerful body is 100% completely guaranteed as it would be addictive. Its a guaranteed way of loosing a chunk of international sovereignty ?as such?. (if not all)

Considering the current way of formulating and writing these Free Trade Agreements (FTA) its kind of silly to put in the word ?Free?. Sounds like another literary fiction license being used to promote… whatever is in the fine print of such treaties.

One might consider where and how these treaties are made. Huge multinational corporation representatives get together in sequestered (guarded) private locations and hash out the wording details. It should be, absolutely no surprise, that the fine print will come out in favor or this group.

Think of the power of such groups as entire cities are put under what amounts to prison lock-down during the negotiations and protesters are rounded up and put in jail. Don’t waste time considering the faint whimpers of impartiality from any corporate sponsored group ?as such?.

The names of such groups are irrelevant as they change and morph into whatever view thats acceptable. Power is its own aim and desire. Never let it out of the bag ?as such?.

Note; this essay kinda merged into/with another so see this article to fully grasp the idea ?as such.? )

Intent is all fine and nice but its the unintended meanings that can slip in when loosely worded law is endorsed/accepted/used. In the US its already a huge constitutional problem that many agencies have secret interpretations of loosely written legislation.

The term/phrase ?as such? is unknown presently and can not be defined. The danger is that language and individual word meanings change over time and some new definition might pop up. Its so loosly applied its easy to just stick it onto the end of any statement without it overtly changing the meaning/gist/idea of the sentence ?as such?.

The reverse might also be true? Adding the phrase ?as such? onto the end of a sentence/thought/idea/meaning might also mean that there was more implied than just what was conveyed. If the phrase ?as such? is added then what if another idea/thought/meaning ?wasn’t such?? Do we look deeper into the sentence to define ?such??

If we don’t let ?it? out of the bag ?as such? the how about when ?it? ?is not such?? The real hoodwink (bag over the head) would be defining what ?such? is. Judging from the integrity of the groups that fornicate such wording its likely to become some ‘gotcha’ clause.

The ?such? possibly described into this essay was that its not a good idea to blindly follow what someone/firm/corporation/government/etc says and to look at the fine print before signing anything stupid. However the proponents of TPP, ACTA, TRIPS and other international treaties would loudly (and likely) that they ?weren’t such?.

They would argue insistently and belligerently with white robes and halos over their heads that everything is fine and this is just an exception and not of any harm. (insert cigarette augment here) Relax. Take it eeeeeeeasy. Just sign here. It’ll all be over in a minuet.


?Preferably, investment chapters will be rejected in their entirety, as they are becoming a corporate sword of Damocles that hangs over the head of rich and poor governments alike.? Oops. Did we already sign the TRIPS agreement? Are the farm animals running loose already?

?,legitimate expectations for profit,? now thats a phrase that should be connected to the loss of Public Domain Rights through trademark and copyright law.

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