People are freaking out about the Trans Pacific Partnership’s investor dispute settlement system. Why should you care?

Publication Type: 
Other Writing
Publication Date: 
March 26, 2015

The recent leak of a secret chapter of the Trans-Pacific Partnership’s Investor-State Dispute Settlement system (ISDS) is getting many people on both the left and the right upset. Left-wingers don’t like a system in which corporations can push back against government regulations. Right-wingers don’t like a system where U.N.-affiliated tribunals can overturn U.S. law. I asked Rachel Wellhausen, an assistant professor at the University of Texas at Austin who works on investor treaties, to explain the basics of ISDS.

HF — What is ISDS?

RW — ISDS, or Investor-State Dispute Settlement, is the international system whereby multinational corporations (MNCs) can sue the governments of countries in which they invest for violating their property rights. International treaties give MNCs access to ISDS, under which ad hoc international tribunals decide whether or not an MNC deserves compensation. There is no appeals system in place.

For example, an MNC just won $455 million in compensation from Venezuela, because in 2010 Venezuela nationalized and seized the MNC’s two bottling plants in the country. Another MNC is suing India over a retrospective tax bill, which the MNC says unlawfully devalued its property by reducing its share prices. An MNC recently lost a case against Uganda, where the tribunal found that Uganda’s regulation of transactions in the oil and gas industry was legitimate.

Read the full piece at The Washington Post