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By Robert A. Vella

On Thursday, of The Washington Post examined the most contentious and disturbing aspect of the Trans-Pacific Partnership (TPP) trade agreement that President Obama has been pushing along with his corporatist allies in the Republican Party.  A provision known as the Investor-State Dispute Settlement (ISDS) would essentially allow multinational corporations to circumvent the environmental, labor, and consumer laws of participatory countries by creating a super-national arbitration process where such businesses could seek compensatory damages for unrealized profits.  The effect of this provision would obviously subordinate the sovereignty of nation-states to an unelected global authority, and would weaken the ability of free peoples to govern themselves as they see fit.  Furthermore, corporate-friendly ISDS rulings would leave taxpayers financially liable.

Sargent referenced a letter recently sent to the Democratic and Republican leaders of Congress by five highly respected legal experts which expressed their grave concern about the ISDS as an affront to America’s system of justice and as “undermining” our nation’s “democratic norms:”

Our legal system rests on the conviction that every individual, regardless of wealth or power, has an equal right to bring a case to court. To protect and uphold the rule of law, our ideals of fairness and justice must apply in all situations and equally to everyone. ISDS, in contrast, is a system built on differential access. ISDS provides a separate legal system available only to certain investors who are authorized to exit the American legal system. Only foreign investors may bring claims under ISDS provisions. This option is not offered to nations, domestic investors, or civil society groups alleging violations of treaty obligations. Under ISDS regimes, foreign investors alone are granted legal rights unavailable to others — freed from the rulings and procedures of domestic courts.

ISDS also risks undermining democratic norms because laws and regulations enacted by democratically-elected officials are put at risk in a process insulated from democratic input. Equal application of the law is another critically important hallmark of our legal system — one that is secured through orderly development of the law. Court decisions are subject to appeal, ensuring that conflicting lower court decisions are resolved by a higher authority. Judges also must follow legal precedent. The goal is uniform application of the law regardless of which judge or court hears a case. This law development allows people, entities, and nations alike to order their behavior according to well-established legal principles.

The letter goes on to identify the mechanics of the ISDS as well as its practical motives:

In contrast, ISDS does not build in the development of the law. An ISDS arbitral panel’s decision cannot be appealed to a court. The ISDS provisions of which we are aware provide only limited — private — review through a process called annulment that does not permit decisions to be set aside based even on a “manifest error of law.” Moreover, ISDS arbitrators, like other arbitrators, do not make law because their decisions have no precedential value, and ISDS arbitrators in turn are not obliged to follow precedent in reaching their own decisions…

ISDS arbitrators are not public servants but private arbitrators. In many cases, there is a revolving door between serving on ISDS arbitration panels and representing corporations bringing ISDS claims. Yet, although such a situation would seem to call for more — not less — oversight and accountability, ISDS arbitrators’ decisions are functionally unreviewable.

Sargent’s opening paragraph contextualized the critique nicely:

For many liberal critics, the problem with the Trans-Pacific Partnership trade deal isn’t simply the worry that it could lead to more job loss by exposing American manufacturing to more import competition. Rather, they assert that the TPP is in many ways not even a trade agreement: Its real offense is in the areas of intellectual property and global dispute settlement, where the deal, they say, could further tilt the playing field towards major corporations.

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