By Guest • Tuesday, October 17, 2017 – 05:07
Across the world, secretive courts are lowering environmental standards and awarding polluting companies billions of dollars of compensation taken out of the taxpayer’s pocket. Matt Grady from fairtrade campaigners Traidcraft explains how Brexit could be an opportunity to break the cycle.
Readers of a certain age will recognise this quote: “You take the blue pill, the story ends. You wake up in your bed and believe whatever you want to believe. You take the red pill, you stay in Wonderland, and I show you how deep the rabbit hole goes.”
This is the mysterious choice facing Neo in the movie The Matrix. Many people get through life metaphorically taking the blue pill, burying their head in the sand and avoiding the big challenges of society. Others opt for the red pill, actively trying to understand and tackle the barriers to a better world.
Regardless of whether you’re a blue or red pill kind of person, if I was to tell you that efforts to tackle climate change and protect the environment were undermined by secret courts it might pique your interest a little. If I told you that wealthy multinational corporations were able to challenge democratically elected government policies, even when implemented in the public interest, you might be lured a little deeper into the Matrix to find out more.
What if you discovered that not only could they have the policies overturned but that they might also successfully secure billions from public coffers in compensation? You might begin to wonder if I was making it up.
Unfortunately I’m not. There really are exclusive, secret tribunals where investors can sue if they think government policies might impact on their profits.
These Investor to State Dispute (ISDS) mechanisms include tribunals which are arbitrated by for-profit lawyers who one week could be advising a claimant and the next expected to give an unbiased verdict in a claim. A cynical mind might suggest there’s a connection between the facts that only investors, not states, can raise claims; that arbitrators are paid significant sums of money to sit on tribunal panels and that the majority of tribunals result in an award for the claimant or an early settlement.
Exposure to ISDS claims is an expensive business — even when a government successfully defends a case it is estimated to cost around $8m to defend. Where the government in question is a developing country with relatively small public budgets it’s easy to see how just the threat of a claim can stop a policy dead in its tracks.