Comprised of three private attorneys, the extrajudicial tribunals are authorized to order unlimited sums of taxpayer compensation for health, environmental, financial and other public interest policies seen as frustrating the corporations' expectations. The amount is based on the "expected future profits" the tribunal surmises that the corporation would have earned in the absence of the public policy it is attacking. There is no outside appeal. Many of these attorneys rotate between acting as tribunal "judges" and as the lawyers launching cases against the government on behalf of the corporations. Under this system, foreign corporations are provided greater rights than domestic firms.
This extreme "investor-state" system already has been included in a series of U.S. "trade" deals, forcing taxpayers to hand more than $440 million to corporations for toxics bans, land-use rules, regulatory permits, water and timber policies and more. Under a similar pact, a tribunal recently ordered payment of more than $2 billion to a multinational oil firm. Just under U.S. deals, more than $34 billion remains pending in corporate claims against medicine patent policies, pollution cleanup requirements, climate and energy laws, and other public interest policies.
In the past few years, the number of such investor-state attacks has surged. From the 1960s – when this system was first established – until 2000, only 50 cases were initiated. Today, more than 500 cases have been launched. A whole industry of third-party financing and specialized law firms has sprung up to extract our taxpayer dollars and roll back key public interest policies using the investor-state system.
Deals like the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Free Trade Agreement (TAFTA) would vastly expand the investor-state threat, newly empowering thousands of foreign corporations to demand compensation for the policies on which we rely. But some countries are now beginning to challenge this outrageous system.