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Powerful Members of Congress Oppose Special 'Corporate Court' Rights for European Firms

Yesterday, five members of the powerful Ways and Means Committee of the U.S. House of Representatives (Reps. Bill Pascrell, Lloyd Doggett, John Lewis, Linda Sánchez and Jim McDermott) stood up for working people by opposing the destructive “corporate courts” in the proposed trade and economic deal with Europe known as the “TTIP.”

President Trumka applauded Reps. Pascrell, Doggett and the other Ways and Means Democrats, saying:

“ISDS gives foreign investors extraordinary legal rights to challenge generally applicable public policies—including decisions about where to place toxic waste dumps, whether to increase minimum wages, and how to protect children from smoking and water pollution—in privatized ‘corporate courts.’ Giving foreign investors more rights than domestic businesses is no way to build shared prosperity.”

“Corporate courts” (officially known as ISDS, for investor-to-state dispute settlement) create a private system of justice for foreign forms that invest in the United States, setting these firms above all American citizens. This private system of justice allows foreign investors to bypass state and federal courts (the ones we ordinary citizens have to use) and bring complaints to a panel of three private lawyers. These lawyers, who are not accountable to the U.S. public in any way, do not have to follow the same strict code of conduct that U.S. judges do. This means they can sit on a panel to decide a case on one day, and represent a client suing our government the next day. 

It’s important to know these “corporate courts” do not apply U.S. law (the law that applies to us ordinary citizens). These panels are supposed to make decisions on the basis of the underlying treaty or agreement, and often are asked to apply what’s known as “customary international law.” But these panels often make it up as they go along, sometimes outright rejecting the international law standard—or even dismissing the opinions of the countries who wrote the deal as to what the deal means. Even worse, the right to appeal decisions of these runaway panels is so limited as to be nonexistent. The annulment committee at the World Bank’s ICSID, which serves as a sort of appeal mechanism for some corporate court cases, even has made clear that its job is “not to correct legal mistakes”!

The United States already has numerous “corporate court” deals with countries like Canada, Ecuador, Mexico, Oman, Peru and Singapore. And there are literally thousands more “corporate court” deals between other countries around the world. In many cases giant corporations use the power of the agreement to challenge useful public interest laws and policies regarding public health, water pollution and even minimum wage increases.

If foreign investors win their cases, they receive taxpayer monies, and there is no maximum amount they can win. In one case, a panel ordered Russia to pay the improbable sum of $50 billion. That’ll make a dent in any attempt to balance its budget!

The United States Trade Representative, which is responsible for writing these provisions into trade and investment deals like the TTIP and TPP, says these provisions only protect against actual expropriation of property and discriminatory treatment. That’s simply wrong. In numerous cases, governments have had to make enormous payouts for nondiscriminatory measures that foreign investors simply didn’t like. Under this process, foreign firms basically can hold countries for ransom—demanding to be compensated for expected “lost profits.” In one case, Mexican taxpayers had to pay a U.S.-based company more than $15 million because a local government denied a permit to build a toxic waste facility

Such local decisions are made every day all across America. Is it smart to put U.S. taxpayers on the hook to reimburse foreign firms every time some local permit is denied and a foreign company doesn’t make as much money as it planned to? That’s not how capitalism is supposed to work. 

In what kind of world does such a system make sense? Why should taxpayers have to reimburse foreign firms when those firms are required to clean up pollution their facility created or comply with export restrictions on toxic waste

Please join us in our fight against ISDS. Download our “corporate court” fact sheet here and share it with a family member or friend. You also can sign a petition demanding that there be no special rights for foreign investors in the TPP trade deal. And, if one of your representatives signed the letter opposing ISDS in the TTIP, contact him or her to say thanks.

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