Corporate Sovereignty Lawyers Prepare To Sue Governments For Bringing In Measures To Tackle COVID-19 And Save Lives

from the priorities,-priorities dept

Regular readers of Techdirt will be all too familiar with the problem of corporate sovereignty — the ability of companies to sue entire countries for alleged loss of profits caused by government action. Also known as investor-state dispute settlement (ISDS), there have been indications that some countries are starting to drop ISDS from trade and investment treaties, for various reasons. But a worrying report from Corporate Europe Observatory suggests that we are about to witness a new wave of corporate sovereignty litigation. Hard though it may be to believe, these cases will be claiming that governments around the world should be reimbursing companies for the loss of profits caused by tackling COVID-19:

In the midst of a crisis like no other, the legal industry is preparing the ground for costly ISDS suits against government actions that address the health and economic impacts of the coronavirus pandemic. In written alerts and webinars law firms point their multinational clients to investment agreements’ vast protections for foreign investors as a tool to “seek relief and/or compensation for any losses resulting from State measures”

No claims have been filed yet, but experts are so worried about this threat that they have called for an immediate moratorium:

on all arbitration claims by private corporations against governments using international investment treaties, and a PERMANENT RESTRICTION on all arbitration claims related to government measures targeting health, economic, and social dimensions of the pandemic and its effects.

Law firms specializing in corporate sovereignty are already well advanced in their preparations for demanding money from governments because of the “damage” the pandemic response has inflicted on corporate profits. Corporate Europe Observatory links to numerous reports and client alerts from these ISDS firms, which spell out the grounds on which big claims might be filed. These include:

ISDS claims against government action to provide clean water for hand-washing

Challenging relief for overburdened public health systems

Lawsuits against action for affordable drugs, tests and vaccines

Investor attacks on government restrictions for virus-spreading business activities

ISDS suits against rent reductions and suspended energy bills for those in need

Disputes over debt relief for households and businesses

Legal action against financial crises measures

Tax justice on trial

Suing governments for not preventing social unrest

The idea that governments around the world struggling to contain the pandemic and save thousands of lives might also have to fight such ISDS claims in court, and even pay out billions in fines when funds are needed for rebuilding lives and businesses, is bad enough. But the fact that law companies evidently have no qualms about recommending the use of corporate sovereignty in these difficult circumstances is a hint of even worse to come.

If these kinds of ISDS actions succeed, and governments are ordered to make huge payments to companies because of national pandemic responses, it is highly likely that similar cases could and would be brought over action to tackle climate change. That in itself might discourage some countries from adopting urgently needed measures. And for those that do, there is the prospect of big fines at just the time when maximum resources will be needed to deal with the environmental, social and economic effects of a climate catastrophe.

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Comments on “Corporate Sovereignty Lawyers Prepare To Sue Governments For Bringing In Measures To Tackle COVID-19 And Save Lives”

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36 Comments
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That One Guy (profile) says:

'Our profits matter more than your citizens' lives.'

I can think of no possible way to make clear just how terrible an idea corporate sovereignty clauses are, and why they should be removed from all treaties it is possible to do so and never added to future ones, than making use of them during a global pandemic, suing governments for trying to keep people alive because the methods for doing so might impact company profits.

This comment has been deemed insightful by the community.
Toom1275 (profile) says:

Re: 'Our profits matter more than your citizens' lives.'

  • Using ISDS to avoid cleaning up environmental disasters
  • Using ISDS to block anti-smoking regulations
  • Using ISDS for "damages" caused by labelling quack drugs as such

We’ve long sinced passed the point of

suing governments for trying to keep people alive because the methods for doing so might impact company profits.

This comment has been deemed insightful by the community.
That One Guy (profile) says:

Re: Re: 'Our profits matter more than your citizens' lives.'

Oh incidents like that are bad enough, but when even a global pandemic isn’t enough to get the sharks to back off, and the actions taken can impact governments attempting to fight said pandemic it really highlights just how toxic corporate sovereignty is, how it should never have been included in any treaties or deals and should be scrubbed from any treaties that are currently infected by it.

Anonymous Coward says:

Re: Re: Re: The road to corporate sovereignty is paved with good intentions

So lawmakers around the world intend (or pretend to intend) to protect corporations from rogue governments. The lawmakers around the world do not intend any corporation to go rogue, so they do not prepare for that possibility in the law. The lawmakers do not expect any effects that they do not intend.

At the same, the common wisdom has become that the only responsibility of a corporation is to maximize the profit for its shareholders. In the short term. So a corporation is rogue by definition.

Courts apply the actual text of the law, right? Rather than the alleged good intentions of the lawmakers, right?

This comment has been deemed insightful by the community.
Anonymous Coward says:

Re: Re: Re:2 The road to corporate sovereignty is paved with good intenti

Protect corporations from rogue governments …..
who is protecting governments from rogue corporations?

One pov is that nations can revoke the corporate charter, but it is not used often if at all. Maybe they should start.

Anonymous Coward says:

Re: Re: Re:3 The road to corporate sovereignty is paved with good int

The situation is already analogous to a rich old man with a big family and a group of impoverished but young strong men essentially – with the rich old man the corporation and the men as the government. He brings a fishing boat for them to work on for profits.

The men already have the local monopoly on violence and could beat up the old man and steal his boat but there would be repurcussions even if he the old man was kindly and forgiving. His family would at best want nothing to do with those and even those unrelated would be reluctant to trade with the kind of person who would rob an old man.

It is fundamentally already a bilateral unbalanced coercion scenario where there is no intrinsic reason to trust either party nor an impartial arbitier, yet both may mutually benefit. Both are also capable of giving each other leonine contracts.

Rocky says:

Re: Re: Re:4 The road to corporate sovereignty is paved with good

And to complete your scenario with what is going on, the Old Man wants money from the men because they choose to stay home during a particularly severe storm all the while the Old Man railed against them that he was loosing money since no one was fishing.

Sounds legit…

This comment has been deemed insightful by the community.
Anonymous Coward says:

Do What's Right

"If these kinds of ISDS actions succeed, and governments are ordered to make huge payments to companies because of national pandemic responses, it is highly likely that similar cases could and would be brought over action to tackle climate change. That in itself might discourage some countries from adopting urgently needed measures. And for those that do, there is the prospect of big fines at just the time when maximum resources will be needed to deal with the environmental, social and economic effects of a climate catastrophe."

OR

Governments could finally wake the fuck up and just say "NO" to idiotically self-serving ISDS claims.

Anonymous Coward says:

Yes, the corporate entity is still in fact a designated affiliate of the same organization it always was.

The transnational corporation has in fact been impeached and continues to evade justice while filing nuisance lawsuits in jurisdictions it is harassing in it’s Islamic State, Taliban, or similar courts (as per its designation it demanded on itself and others).

I believe the corporation is still the same thing that throws a fit at the UN and then gets itself designated transnational criminals/terrorists like it has every single year I have been alive, or nearly every single year.

There is another similar group of corporations that does not actually produce the nuisance technology that is not on that list.

This comment has been deemed insightful by the community.
That Anonymous Coward (profile) says:

Oh look, a reason to seize the corporations and nationalize their holdings in the countries.

We lost money b/c you wanted people not to die PAY ME!!
Seems like a really good reason to take a few of them out to send a message… & hey you might manage to find all the places they’ve been hiding income so they don’t have to pay taxes to you.

Anonymous Coward says:

Re: Re:

Forced nationalization is like killing and butchering a crooked fraudster ripping you off and selling dodgy food door to door while you are household. The bastard may be guilty, but it is disproportionate but you have absolutely no right to complain afterwards that nobody visits you anymore and nobody wants to buy anything from your shop either.

Forced nationalization is a dogmatic move as opposed to a strategic one . It has only a history of failures and is the kind of thing which in a twisted Dantesque sort of karma leaves nations vulnerable enough to have to agree to IDS to get signficant investments.

Anonymous Coward says:

Re: Re: Re:

What kind of person would look at a lawsuit over greed vs. lives and make the claim ”Whoa, slown down. Let’s avoid punishing greed too much?" Answer: An idiot about to loose their own life.

Either by being so corrupt that they promote this disgusting lack of morals, or by being so dumb as to accept this disgusting lack of morals.

Down with the companies that go that far for profit. Jail and yes death for the shareholders who justify death for profit. Otherwise check your foot, you might just find an expiration date on it.

That Anonymous Coward (profile) says:

Re: Re: Re:

Perhaps they shouldn’t demand the right to sue countries if countries make rules that cost them money??

This is massive corporations, who limit their tax liability to extremely low levels, demanding a country pay them for losses caused by rules trying to stop the spread of a deadly virus.

I see nothing wrong with beating the shit out of the first couple corporations until this idea that our profits matter more than lives goes the fuck away.

But then I am crazy & think that corporate profits shouldn’t mean a fucking thing compared to mounting death tolls and suffering.

Anonymous Coward says:

When people get fed up with that abusive corporate sovereignty BS and start murdering all of those involved, no one worth listening to will shed a tear for them.

There are no more people deserving of punitive violence and death than those that created a system for the mega wealthy to straight up harm the people of multiple nations and those that now abuse it like this. People are really fed up these days the wealthy should recognize their greed will be their downfall. Much like when the French revolution cut the elite down to size for their abuses of power.

This comment has been deemed insightful by the community.
Scary Devil Monastery (profile) says:

Is anyone REALLY surprised?

…Because I’m not.
Governments dumb enough to sign to the ISDS will have to foot every loss made by a corporation – from the public purse. Unless the case for reimbursement fails to pass through the committee in charge of adjudication – which will no doubt remain impartial despite the fact that it consists exclusively of corporate executives.

David says:

Are you serious?

Hard though it may be to believe, these cases will be claiming that governments around the world should be reimbursing companies for the loss of profits caused by tackling COVID-19:

ISDS is a tool for international corporations that puts the guarantee for profits over legislative efforts, in particular legislative efforts that seek to establish corporate responsibility in an amount exceeding what is expected from U.S. corporations at home.

The demonstrated U.S. standard is reopening for commerce and business, the stiffs be damned.

If wimps like Europeans legislate against that approach, they deny corporations their rightful access to consumers.

And COVID-19 restrictions are really expansive and damaging in their effect on commerce.

This is exactly what ISDS laws have been designed for. There is absolutely no point in feigning surprise: this is the largest bag of cash ever waiting to be grabbed, and it’s the corporate lawyers’ job to grab it according to the international treatise terms they managed to get placed by their lobbyism-controlled government.

They invested in this, and now is payout time. You cannot really expect them not to take what they have been working for.

Anonymous Coward says:

Re: Are you serious?

"deny corporations their rightful access to consumers."

  • Ummmm, wut?

"They invested in this"
Are you serious – I do not care wtf they have invested in
That is not my problem. I feel no responsibility for any of their antics, why should I?

I do not see why corporations are coddled like some kind of infant child.

Anonymous Coward says:

Whenever I see a post about corporate sovereignty and ISDS, I feel the need to remind people of the way that a massive bullet was dodged in how the U.S. backed out of the Trans-Pacific Partnership (TPP), even if the reasons that the Trump Administration backed out were the wrong ones.

The TPP would’ve expanded ISDS and the U.S. model of draconian copyright and IP law to all the TPP member nations, including those who would look to join in afterward. This would’ve been bad for the Internet for reasons that I’m sure everyone on this site is well-acquainted with. The new CPTPP, which does not include the U.S. but rather every other nation that was previously going to be a part of the TPP, does not include the draconian copyright that the U.S. pushed for so hard in the first place, which is a win for them.

My information on corporate sovereignty and ISDS under the CPTPP is a bit fuzzy, as my main focus when everything was going on was on the original TPP, but suffice to say that if the original TPP had gone through and was in effect, ISDS and all, across all 12 of the nations that would’ve been members, the ability for corporations to push these ISDS lawsuits over COVID-19 measures would’ve been much worse.

When the subject of the trade war with China comes up and I see people saying that the U.S. made a massive mistake in not joining the TPP and that Trump was stupid for getting us out of it, I shake my head at the sheer revisionism present in that opinion. The stupidity was in the way that Trump ditched the TPP for the wrong reasons and then didn’t pursue a better, more transparently negotiated multilateral trade deal.

ECA (profile) says:

This is going to be STUPID..

" there have been indications that some countries are starting to drop ISDS from trade and investment treaties, for various reasons."

And how does a JUDGE, decide?
1 sided for the country/nation??
OR as the trade agreement said?? WE SIGNED IT, not really, it WASNT anyone with abit of common sense..

Let alone WHY in hell are the corps responsible for making international Trade agreements?? Dont we have a gov. for that??

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