ExxonMobil Shamefully Attacks EU’s Climate Action, Invoking Shadowy Corporate Courts
WASHINGTON D.C. — ExxonMobil recently filed a notice of arbitration to the European Commission targeting the EU’s Net-Zero Industry Act, which requires fossil fuel companies to take action on carbon capture and storage, according to reporting yesterday from the Financial Times. U.S. company ExxonMobil has reportedly filed the investor-state dispute settlement (ISDS) notice under the Energy Charter Treaty (ECT) via three of its European subsidiaries.
Global Trade Watch Director Melinda St. Louis issued the following statement:
“As governments around the world gather to take action to stem catastrophic climate change, we’ve learned that America’s largest oil company is once again using the shadowy ISDS system to attack governments that dare to take needed climate action. While ExxonMobil presents itself as a leader on carbon capture and storage, behind closed doors, the company threatens those same carbon capture policies with this legal challenge in corporate courts.
“Big Oil makes clear its priority time and time again — its profits will always come before human rights and a liveable planet. For a future free from fossil fuels, governments around the world must free themselves from the shackles of ISDS.”
Background
- The Energy Charter Treaty (ECT) has served as the basis of many controversial investor-state dispute settlement (ISDS) cases. ISDS is an arcane tool corporations use to sue governments in secret tribunals over climate, public health and other public interest policies. Public Citizen has documented many egregious ISDS cases, including an ECT case brought by Vattenfall against Germany, which resulted in reversing environmental permitting requirements for a coal-fired power plant.
- The EU and UK have both formally withdrawn from the ECT, on the basis that the treaty stood in the way of much-needed climate action. However, the treaty includes a 20-year “sunset period,” which means that countries that withdraw from the treaty are still subject to claims during that period. UK civil society organizations are calling on the UK and EU to suspend the ECT’s sunset clause between the governments ahead of the UK-EU summit on November 20 summit where energy and climate cooperation will be discussed.
- The U.S. has never been a signatory to the ECT, but U.S.-based ExxonMobil has filed its notice of arbitration via its subsidiaries in Belgium, Luxembourg and the UK – a common practice called “forum-shopping”, where multinational companies use subsidiaries to take advantage of investment treaties between third countries to launch ISDS claims.
- According to the most recent data, fossil fuel investors have launched ISDS claims against governments totaling at $443.8 billion, more than 37% of the total known amount of ISDS claims. This sum is equivalent to the estimated minimum amount of economic losses developing countries will face due to climate change in 2030, and is certainly an undercount, as one third of ISDS claims are not made public.
- Hundreds of civil society organizations have signed an open letter calling on governments to exit the ISDS system, as a necessary step to transition away from fossil fuels, calling ISDS a “threat to our collective future”.