TransCanada Goes Legal On US Government Over The Rejection Of Keystone; Will It Wake Obama To The Problems Of Corporate Sovereignty?
from the wake-up dept
However, things got... interesting yesterday, as TransCanada initiated a corporate sovereignty claim against the US government over the rejection of the project. As we've been explaining, corporate sovereignty provisions in trade agreements (usually officially called "investor state dispute settlement" or "ISDS" -- in part because it's so boring many people ignore what it's really about) provide a way for foreign companies to effectively "sue" foreign governments over regulations they dislike -- including regulations that negatively impact "expected profits."
Even worse, it's not a real "court" that deals with these things, but a tribunal of folks, some of whom may have other dealings with the companies.
One of the most egregious examples of this is the ongoing corporate sovereignty claim made by drug maker Eli Lilly against the government of Canada, demanding $500 million, because Canadian patent laws rejected two Eli Lilly patents for not really doing anything new. Eli Lilly claimed that this "expropriated" its expected profit, and thus initiated a claim.
President Obama has been waving off concerns about corporate sovereignty/ISDS for a while now, noting that it's rarely been used against the US government, and that the US government had so far won all such claims. That's true. But, this is a big one -- and it might not end the same way. TransCanada is demanding $15 billion, claiming this is the "lost value" due to the rejection of the plan. And including these provisions in giant new agreements like the TPP (with Pacific rim countries) and TTIP (with Europe) will mean opening the floodgates.
Think about how crazy this is: Any time a company "invests" in plans to do something, that are later made impossible (or difficult) due to a regulatory decision, the (foreign) companies can basically demand payment. That puts a massive burden on any attempt to regulate anything in regards to how corporations act, even if new information has come to light, or people have recognized how existing regulations are problematic. These provisions will make it nearly impossible to even contemplate fixing copyright or patent laws, because companies will just make claims arguing that such changes destroy "expected" profits.
And now, big time champion of corporate sovereignty/ISDS, President Obama, is facing an ISDS claim that could cost American taxpayers $15 billion. Just for deciding that a giant oil pipeline isn't a good idea. Why would any country ever willingly submit itself to such conditions?