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Case Studies: Investor-State Attacks on Public Interest Policies

By Public Citizen's Global Trade Watch

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The investor-state dispute settlement (ISDS) system, included in various “free trade” agreements (FTAs) and bilateral investment treaties (BITs), fundamentally shifts the balance of power among investors, States and the general public, creating an enforceable global governance regime that formally prioritizes corporate rights over the right of governments to regulate. ISDS provisions elevate individual multinational corporations and investors to the same status as sovereign governments, empowering them to privately enforce a public treaty by skirting domestic courts and directly “suing” signatory governments over public interest policies before extrajudicial tribunals.

The tribunals deciding these cases are composed of three corporate lawyers, unaccountable to any electorate. Some attorneys rotate between serving as “judges” and bringing cases for corporations against governments – such dual roles would be deemed unethical in most legal systems. Tribunals are not bound by precedent or the opinions of States, and their rulings cannot be appealed on the merits.

ISDS-enforced pacts provide foreign corporations broad substantive “rights” that even surpass the strong property rights afforded to domestic firms in nations such as the United States. This includes the “right” to a regulatory framework that conforms to foreign investors’ “expectations,” which ISDS tribunals have interpreted to mean that governments should not change regulatory policies once a foreign investment has been established.