ISDS up close and personal: Philip Morris, FUD vs TPP

[ucrdem]

Stiglitz warns in last week's HuffPo of the dangers of ISDS, by which the evil Kenyan is secretly plotting to enable the corporatocracy to strangle us in our sleep and topple the Statue of Libertarian, muhahaha. Writes Stiglitz, like Paul Revere with a thumbdrive full of news that TPP is coming:

This is not just a theoretical possibility. Philip Morris is suing Uruguay and Australia for requiring warning labels on cigarettes. Admittedly, both countries went a little further than the US, mandating the inclusion of graphic images showing the consequences of cigarette smoking.

The labeling is working. It is discouraging smoking. So now Philip Morris is demanding to be compensated for lost profits.

http://www.huffingtonpost.com/joseph-e-stiglitz/trade-agreements-amount-to-corporate-takeover_b_7302072.html

So the labeling is working, smoking is declining, the regulations haven't changed, but the fact that a US tobacco company is acting assholish is Obama's fault as usual, but never mind that. Let's see what's actually going on with this case:

Much of the concern about ISDS is the risk of companies using the mechanism to challenge legitimate regulations. Philip Morris International, for example, has challenged Australia’s plain packaging regulation under a 1993 Hong Kong-Australia Bilateral Investment Treaty. Though that case has not yet been fully adjudicated and Australia has made no changes to their regulation, we nonetheless are working to ensure that TPP includes important safeguards that protect against ISDS being used to challenge legitimate regulation. That is why the United States has put in place several layers of defenses to minimize the risk that U.S. agreements could be exploited in the manner to which other agreements among other countries are susceptible:

{snip}

• Full transparency in cases. Governments must make all pleadings, briefs, transcripts, decisions, and awards in ISDS cases publicly available, as well as open ISDS hearings to the public. One key objective of these provisions is to allow governments that are party to the agreement, as well as the public at large, to carefully monitor pending proceedings and more effectively make decisions about whether to intervene.

• Public participation in cases. Tribunals have the clear authority to accept amicus curiae submissions. In U.S. cases, amicus briefs have been submitted by a variety of NGOs, including the Sierra Club, Friends of the Earth, and Center for International Environmental Law. (Documents in all investor-State cases filed against the United States are available on the State Department website.)

• Mechanism for expedited review and dismissal of frivolous claims and claims outside the tribunal’s jurisdiction. This mechanism enables respondent countries, on an extremely expedited basis, to move to dismiss (1) frivolous or otherwise unmeritorious claims (akin to provisions under the Federal Rules of Civil Procedure) and (2) claims the tribunal is not empowered to resolve.

• Denial of benefits for sham corporations. This provision prevents the use of shell companies to access ISDS.

• Restriction on parallel claims. This provision prevents a party from pursuing the same claims both in ISDS proceedings and domestic courts (i.e., restricting “forum shopping”).

• Statute of limitations. A three-year statute of limitations protects respondents against old claims, which are difficult for governments to defend in part because access to documents and witnesses becomes more difficult over time.

• Challenge of awards. Both parties to an arbitration have the option to challenge a tribunal award.

• Consolidation. On request, tribunals may consolidate claims raising common questions of fact and law, which may increase efficiency, reduce litigation costs, and prevent strategic initiation of duplicative litigation.

• Interim review of ISDS awards. Parties to the arbitration are permitted to review and comment on a draft of the tribunal’s award before it is made final.

• Prudential exception. This exception provides that nothing prevents countries from taking measures to safeguard the stability of their financial systems. If such measures are challenged, this provision allows the respondent country and investor’s home country to jointly agree that the prudential exception applies and that decision is binding on the tribunal.

• Tax exception. This exception defines and limits the coverage of government tax measures under the investment provisions. In addition, this provision provides that if the respondent country and investor’s home country agree that a challenged measure is not expropriatory, that decision is binding on the tribunal.

• Mechanism for treaty Parties to issue binding decisions on how to interpret treaty provisions. A binding interpretation mechanism enables TPP countries to confer after the agreement has entered into force and to issue joint decisions on questions of treaty interpretation that bind all tribunals in pending and future cases.

• Independent experts on environmental, health, or safety matters. In most ISDS cases, the disputing parties retain and appoint the experts. This provision provides arbitral tribunals with the power to appoint experts of their own choosing on environmental, health, and safety matters to ensure maximal objectivity in the evaluation of claims challenging such measures.

• Limitations on obligations: Clear limiting rules and definitions, including guidance on interpretation on the obligations frequently subject to litigation, to safeguard against subjective or overbroad interpretation – for example, the incorporation of U.S. Supreme Court standards on indirect expropriation and a clear tying of the “minimum standard of treatment” obligation to requirements under customary international law (i.e. the general and consistent practice of states that they follow from a sense of legal obligation).

The case record is instructive. Tribunals adjudicating ISDS cases under U.S. agreements have consistently affirmed that government actions designed and implemented to advance legitimate regulatory objectives do not violate investment obligations. In the Chemtura v. Canada case, for example, an ISDS panel rejected a claim that the Canadian government’s actions to ban the use of chemical product breached Canada’s NAFTA obligations. In rejecting the investor’s claim, the tribunal showed deference to the government’s scientific and environmental regulatory determinations. Similarly in the Methanex v. the United States case, an ISDS panel underscored the right of governments to regulate for public purposes, including regulation that imposes economic burdens on foreign investors, and stated that investors could not reasonably expect that environmental and health regulations would not change.

{snip}

Despite having 50 ISDS agreements in place, the United States has never lost a case and nothing in our agreements has inhibited our response to the 2008 financial crisis, diluted the financial reforms we put in place, or has challenged signature reforms like the Affordable Care Act or any of the other new regulations that have been put in place over the last 30 years.

https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2015/march/investor-state-dispute-settlement-isds

.............................

So first of all, the Phillip Morris case is between two countries bound by a non-US FTA; secondly, it's had no effect on the regulations in question; third, TPP includes multiple safeguards to protect against similar litigation, and 4th, if "sovereignty" was ever a real issue, which I doubt, the record shows that the US has never lost an ISDS dispute, i.e., has so far managed to avoid surrendering its sovereignty to Philip Morris.

So maybe Joe has some catching up to do?

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Warning: the OP above contains

[Scootaloo]

1. Where does Stilgiz call Obama an "evil Kenyan"?

In fact, Obama is mentioned only once, noting that Stilgiz wrote a letter to him.

[ucrdem]

4. I added a warning label to help you out.

I know sarcasm can be hard to spot by the irony challenged.

[Scootaloo]

5. Oh yes, "just kidding."

[Hoyt]

2. Good point. Philip Morris had been at this for four years, and has gotten nowhere.

The laws have not been changed, and they won't be.

I understand academics get lazy with age, but Stiglitz should do the research before printing BS like this, or hang it up. He was pitiful on Bill Maher a few weeks ago.

[ucrdem]

3. Nobody ever went broke spreading repuke talking points, that's for damn sure.

Present company excepted naturally . . .