Corporate Sovereignty Provisions Called Into Question Around The World

from the ISDS-is-*so*-twentieth-century dept

A couple of weeks ago, we noted that Germany just threw a big spanner in the TTIP works by calling for corporate sovereignty provisions to be excluded. Although perhaps the most dramatic repudiation of investor-state dispute settlement (ISDS), it's by no means the only one. Indeed, the tide really seems turning, as country after country calls into question the need to put corporations on the same level as entire nations. For example, according to this report from the Yonhap News Agency, South Korea wants to re-visit the corporate sovereignty chapter in its trade agreement with the US:
South Korea plans to hold talks with the United States to rework the investor-state dispute (ISD) clause in their two-year-old free trade pact that has long been cited by critics as being unfair, a government source said Sunday.
That's possible because of the following prescient move by South Korea at the time of the trade agreement's signing:
To receive parliamentary approval, Seoul forwarded a proposal to lawmakers that promised a "reevaluation" of the ISD clause down the line.
One country that has already "re-evaluated" ISDS, and found it wanting, is South Africa, as Techdirt explained at the end of last year. But the Lexology site reports that it could soon be joined by another major economy:
According to the Netherlands Embassy in Jakarta, Indonesia has informed the Netherlands that it has decided to terminate the Bilateral Investment Treaty between the two nations from 1 July 2015. The Embassy also states that "the Indonesian Government has mentioned it intends to terminate all of its 67 bilateral investment treaties".
Once more, it seems that painful experiences of corporate sovereignty played their part in the decision:
it would not be surprising if the Churchill Mining Plc v Indonesia cases (ICSID Cases ARB/12/14 and 12/40) have prompted more sweeping action by the Indonesian Government. Churchill and Planet Mining Pty began arbitration against the Indonesian government in May 2012 at ICSID in Washington. On 24 February 2014 the ICSID Tribunal rejected Indonesia's jurisdictional challenges leaving Churchill free to proceed with a claim for damages of not less than US$1.05bn, excluding interest. This decision has caused outrage in Indonesia.
That outrage is understandable, since it will be the Indonesian public that will have to foot the billion-dollar bill if the ISDS tribunal rules against Indonesia. In a way, the almost unfettered power of corporate sovereignty has become its own worst enemy. The possibility of making claims for billions of dollars has naturally caught the attention of both the public and politicians in the nations affected, prompting many to re-consider the wisdom of agreeing to this kind of one-sided bargain.

If Indonesia does indeed start terminating its 67 bilateral investment treaties, we can expect other countries to take note and consider following suit. One knock-on effect will be that US insistence on putting corporate sovereignty provisions in TPP will begin to look distinctly out of place in a world where prudent nations are starting to move away from them.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

Filed Under: corporate sovereignty, indonesia, isds, south africa, south korea, tafta, tpp, ttip


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  1. icon
    John Fenderson (profile), 26 Mar 2014 @ 10:48am

    Re:

    Be honest? Who said that the primary beneficiaries wouldn't be US corporations? It's very clear that this is the case. That's the problem.

    "this is nothing but a giant rip off, designed to put countries in debt to the USA in one way or another."

    To the corporations, not the US. With that correction, I agree with you -- that's another reason these ISDS clauses should go away.

    Don't equate US corporations with the US. US corporations wouldn't be any more hesitant to use ISDS clauses against the US than they would against any other nation.

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