Multiple Countries Rejecting Investor State Dispute Settlement


Submitted by Janet Eaton on Thu, 2012-04-12 19:20

By Janet M Eaton, Phd.  April 12th, 2012

There appears to be a growing awareness that NAFTA-style foreign investor privileges and their private “investor-state dispute system [ISD] ,which have been among the most controversial aspects of past US  trade deals,  should be rejected in trade and investment agreements.

In particular this provision has emerged as a point of major contention in the Trans-Pacific Partnership (TPP) negotiations, with Julia Gillard’s Australian government  announcing last April that they would reject Investor – state arbitration in all trade agreements.  It seems that her government , was not only concerned about the loss of public policy sovereignty  but  was also taking seriously the advice of the  Australian Productivity Commission which concluded there were few clear benefits, and several worrying risks, associated with such provisions.” [1]

Following on the heels of Australia, Korea appeared poised to go the same route with polls showing  the opposition, which rejected  ISD, favoured to win the upcoming election; however, in the election held yesterday,  the governing  Conservatives managed to hold on to a slender majority so the jury is still out as regards South Korea.  [2] [3]  However one clue might be found in a recent April 6th claim by India that it plans to abolish the investor-state dispute system and renegotiate FTAs with South Korea, Singapore, and other countries. According to the English language newspaper, Indian Express,  New Delhi´s decision to abandon the ISD system is based on its first-hand experience with the potential threat foreign companies pose to public policy on the grounds of investment agreement violations.  [4]

Other countries that have concerns with, are opposed to, or have rejected,  ISD,  include the South African government which is  re- examining the ISD system after a policy of affirmative action for blacks, aimed at reducing economic disparities between white and black people, was targeted in 2007 by a multinational corporation; the Brazilian parliament which has  refused to ratify a number of investment agreements on the grounds that they infringe on legislative sovereignty and  Ecuador and Bolivia that have pulled out of the International Center for Settlement of Investment Disputes convention. [4]

Meanwhile  in the US and Canada, both President Obama and Prime Minister Harper are pushing Investor State Dispute settlement in their  frenzy to initiate  free trade deals in every corner of the world. In the case of Obama – this is in spite of his Presidential campaign promises to review NAFTA Ch 11 [investor state] and other harmful aspects of Free Trade Agreements in general and in spite of over 100 Congress persons and many progressive NGOs  support of  the TRADE [Trade Reform, Accountability, Development and Employment ] Act tabled by Representative Michael Michaud  [D- Maine] and Sen. Sherrod Brown (D-Ohio) [5]

In the case of Mr Harper – he ignores calls, from civil society, NGOs, Institutes, activists and three opposition parties, to renegotiate NAFTA Ch 11 while belittling  anyone who tries to make the case. . [6]

Hopefully this momentum to reject Investor State will eventually be powerful enough to influence the Harper government  to reject ISD because in the words of a statement of concern initiatied by Canadian academics with expertise relating to investment law, arbitration, and regulation:
“We have a shared concern for the harm done to the public welfare by the international investment regime, as currently structured, especially its hampering of the ability of governments to act for their people in response to the concerns of human development and environmental sustainability.” [7]


[1]  Good on Gillard – – Aussies reject investor-state in free trade agreements.  by Janet M Eaton

[2]  Obama Ignores Korean Request for ‘Investor State’ Changes to Trade Deal; US Implementation Rushed to Beat Korean Election
Submitted by Janet Eaton on Mon, 2012-03-19 20:33

[3] South Korea conservatives win parliamentary poll, boost for Park

[4]  India plans to abolish ISD clause in FTAs
posted 6-April-2012

[5] TRADE Act.

[6] NAFTA: Growing Resistance & Calls for Renegotiation & Oversight . An educational power point by Janet M Eaton.