The Corporate Courts v Climate Change

 One major obstacle to global sustainability is the investor-state dispute settlement (ISDS) system.

This gives transnational corporations the power to sue governments over actions—including policies to address climate change—that reduce the value of their foreign investments. Allowing corporations to continue to wield this power could undermine whatever agreements might be reached at Glasgow's COP26.

Clauses in more than 2,600 Free Trade Agreements (FTAs) and Bilateral Investment Treaties (BITs) allow foreign investors to bypass domestic courts and sue sovereign states in international tribunals for millions—and even billions—of dollars.

The World Bank's International Center for Settlement of Investment Disputes (ICSID) is the most commonly used of these arbitration tribunals, followed by the United Nations Commission on International Trade Law (UNCITRAL). Made up of highly paid, three-person panels of corporate lawyers, these tribunals should not be mistaken for courts of law. This privatized system has little regard for precedent, truth, or justice.

In their lawsuits, corporations most often cite protections in FTAs and BITs against "indirect expropriation." This is interpreted to mean regulations and other government actions that reduce the value of an investment. Hence, corporations can sue governments over the enforcement of environmental, health, and other public interest laws or measures arising from democratic or judicial processes. While investment tribunals cannot force a government to repeal laws and regulations, time-consuming, costly litigation and the threat of massive awards for damages often put a "chilling effect" on responsible policy-making.

The growth of legal actions brought by extractive industries has been exponential. Since 1995, when an extractive industry brought their first case under an international agreement, they have brought claims demanding at least $195 billion and won awards totaling at least $73.2 billion. Extractives corporations not only use the ISDS system the most, they also receive the largest monetary awards. Out of the 14 known awards for more than $1 billion, 11 pertain to oil, gas and mining.

There are at least 82 known pending ISDS cases brought by extractive industries. Of the 42 where information is available, the companies are demanding a total of $99.1 billion ($71.1 billion by mining companies and $28.1 billion by oil and gas companies).

Notably, there are 40 pending cases where the amounts being claimed are not available, so the figures above are only partial. But from the information available there are at least 14 pending cases for more than $1 billion, with ludicrous suits against Congo for $27 billion and Colombia for $16.5 billion topping the list. Another case in which a corporation is demanding $16 billion, TC v. USA, for the cancellation of the controversial Keystone pipeline by the Biden´s administration, is not included in the table below because it has not yet been registered at ICSID. 

The Institute for Policy Studies report Extraction Casino notes that for transnational extractive industries that pollute the planet and contribute to climate change, ISDS is "yet another opportunity to strike it rich through reckless, casino-style gambling, given the recourse they have to bring suits within a system in which the deck is heavily stacked in their favor, and produce a chilling effect on regulations and policies that address climate change."

Opinion | Missing From the Climate Talks: Corporate Powers to Sue Governments That Limit Pollution | Manuel Pérez Rocha (commondreams.org)