Senator Elizabeth Warren has noted that ISDS is a policy in the new TPP, and she, other lawmakers, environmentalists and human right activists object to ISDS for good reasons.
The full name of Investor-State Dispute Settlement sounds like a harmless process to settle disputes between a foreign government and a corporation that invests in that country. If the host country "violates" rights granted to the corporation under a trade agreement, then the investor may bring the matter before an "arbitration tribunal."
The U.S. is proud of our democracy and the rule of law so it is curious that this ISDS basically operates in direct opposition to our rule of law whenever possible.
Joseph E. Stiglitz (and other distinguished professors and former judges and justices) wrote a letter to Congressional leaders to state their opposition to ISDS based on impacts to our rule of law. The ISDS is a new legal system for only foreign investor/corporations, it is not available to "nations, domestic investors, or civil society groups alleging violations of treaty obligations." ISDS panels do not have to follow legal precedent and its decisions cannot be appealed to a court. The ISDS arbitrators are not public servants, but "highly paid corporate lawyers [who] go back and forth between representing corporations one day and sitting in judgment the next" in secret proceedings. Supporters of ISDS counter that arbitrations are generally confidential in order to foster resolution of disputes; however, this ignores that typical arbitration is between two parties of a dispute while ISDS affects the general public.
ISDS gives foreign investors an exemption from the rules of law and our judicial system. Foreign investors can skip courts and take their issues to a private tribunal to argue that government actions have de-valued their investments.
"Under investor-state, if a regulation gets in the way of a foreign investor’s ability to profit from its investment, the investor can sue a country for monetary damages based on both alleged lost profits and 'expected future profits.'There are no monetary limits to the potential award."As noted by Senator Warren, these "corporate courts" are on the rise around the globe. From 1959 to 2002, there were fewer than 100 ISDS claims worldwide. But in 2012 alone, there were 58 cases."
While ISDS tribunals are not based on precedent, prior cases are a good example of how ISDS can prevent effective actions to address climate change and climate justice, protect environmental resources and protect our health and safety. ISDS allows corporations to bully nations and people into changing or watering down policies in order to prevent ISDS actions. An investor/corporation claim or even the threat or concern about a claim can inhibit governments from passing effective measures to address matters of public concern that should be handled by government.