By Chris Hamby and cross-posted from Buzzfeed
A secretive global legal system gives corporations leverage over the countries where they operate. Everyone said the United States didn’t have anything to worry about, because American laws are fair to begin with. Everyone was wrong. Part four of a BuzzFeed News investigation — click here for part one; here for part two and here for part three.
The crisis was setting off alarms at the highest levels of Bill Clinton’s White House. If the administration got this wrong, it could lose hundreds of millions of taxpayer dollars and spark a backlash against one of the president’s hard-won achievements, the North American Free Trade Agreement.
The Justice Department even warned that failure “could severely undermine our system of justice.”
All of this over a small-time spat in Mississippi between funeral home companies.
It was not the sort of thing that ordinarily catches the attention of top officials in the federal government, let alone causes them to panic. But one of the companies was based in Canada, and it had taken a groundbreaking step: It had filed the very first case against the US under a little-known provision of NAFTA that empowers foreign businesses to sue entire nations before a panel of private arbitrators, usually elite corporate attorneys. Designed to protect international companies when rogue governments seized their assets or flagrantly discriminated against them, this worldwide private justice system has morphed into a tool companies can use to force nations to fork over hundreds of millions or even billions of dollars for enforcing ordinary laws or regulations.
Since NAFTA took effect in 1994, that obscure legal channel, known as investor-state dispute settlement, or ISDS, has widened into a torrent of legal claims, many of them against countries that are poor or facing economic crises. The judgments of this global super court carry enormous power — in the US, they often carry the same authority as Supreme Court rulings — and there is no serious right to appeal.
ISDS has a towering champion, a backer with immense economic and diplomatic muscle: the United States of America.
This week, an 18-month BuzzFeed News investigation has for the first time revealed the system’s true reach and the dangers it poses: how businesses have used ISDS to intimidate nations into gutting their own laws and to get executives off the hook for crimes they’ve been convicted of committing, while some financial firms have found ways to transform this global legal system into a cash cow. Meanwhile, a backlash has turned political figures on the right and left against ISDS, and some countries are rejecting the trade and investment treaties that give ISDS its authority.
But ISDS has a towering champion, a backer with immense economic and diplomatic muscle: the United States of America. Indeed, President Barack Obama is asking Congress to usher in an enormous expansion of ISDS by ratifying a sprawling new trade deal, the Trans-Pacific Partnership, or TPP.
While trumpeting the virtues of ISDS to other countries, the US has only rarely bound itself to treaties with rich countries, the kind that have large corporations likely to launch major ISDS suits. The Trans-Pacific Partnership would radically change that, leaving the US vulnerable to claims from major companies of developed nations such as Japan and Australia…