Over 200 Economics & Law Professors Urge Congress To Reject Corporate Sovereignty Provisions In Trade Deals

from the more-of-this-please dept

We've written quite a lot for years about the massive problems with "corporate sovereignty" provisions in trade agreements -- so-called "investor state dispute settlement" (ISDS) provisions -- that allow companies to "sue" countries for regulations they feel are unfair. These aren't heard by courts, but rather by "tribunals" chosen by the companies and the countries. Some supporters of these provisions claim that there's really nothing wrong with them because they help encourage both investment in different countries and more stable and fair regulations.

If that's the case, though, why are over 200 economics and law professors signing a letter to Congress telling them to reject any trade agreements with these provisions?
Through ISDS, the federal government gives foreign investors – and foreign investors alone – the ability to bypass that robust, nuanced, and democratically responsive legal framework. Foreign investors are able to frame questions of domestic constitutional and administrative law as treaty claims, and take those claims to a panel of private international arbitrators, circumventing local, state or federal domestic administrative bodies and courts. Freed from fundamental rules of domestic procedural and substantive law that would have otherwise governed their lawsuits against the government, foreign corporations can succeed in lawsuits before ISDS tribunals even when domestic law would have clearly led to the rejection of those companies’ claims. Corporations are even able to re-litigate cases they have already lost in domestic courts. It is ISDS arbitrators, not domestic courts, who are ultimately able to determine the bounds of proper administrative, legislative, and judicial conduct.

This system undermines the important roles of our domestic and democratic institutions, threatens domestic sovereignty, and weakens the rule of law.

In addition to these fundamental flaws that arise from a parallel and privileged set of legal rights and recourse for foreign economic actors, there are various flaws in the way ISDS proceedings are meant to be conducted in the TPP. In short, ISDS lacks many of the basic protections and procedures of the justice system normally available in a court of law. There are no mechanisms for domestic citizens or entities affected by ISDS cases to intervene in or meaningfully participate in the disputes; there is no appeals process and therefore no way of addressing errors of law or fact made in arbitral decisions; and there is no oversight or accountability of the private lawyers who serve as arbitrators, many of whom rotate between being arbitrators and bringing cases for corporations against governments. Codes of judicial conduct that bind the domestic judiciary do not apply to arbitrators in ISDS cases.
The letter appears to have been organized by famed law professor Laurence Tribe and famed economist Joseph Stiglitz -- as an update to a very similar letter they sent last year -- with many fewer signatories.

Many of the people who signed are really well-respected (including some I consider friends), but both Tribe and Stiglitz are fairly well-known for where they come from on the political spectrum -- and it would have been nice to have found equal weight from other parts of the political spectrum to balance this letter out a bit. It's still a good letter, and one whose message I agree with, but I fear that many in Congress will just dismiss it as "another Tribe/Stiglitz letter." That's too bad, because it really is a good letter.
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Filed Under: corporate sovereignty, economists, isds, joseph stiglitz, laurence tribe, law professors, tpp, trade agreements


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  1. icon
    That One Guy (profile), 15 Sep 2016 @ 11:50pm

    Vote harder!

    Still waiting for you to get past the 'blame the public for the government's actions' stage and move on to the 'explain what the public should/should have done' step...

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