January 5, 2015
By Amy Westervelt
Energy and mining companies are increasingly using a common element of free trade agreements to influence environmental and health policies and bolster claims to resources ranging from oil to gold to solar power. This final story in our series on borders and limits decodes how, when laws affecting the business of resource extraction come into play, companies can win multibillion dollar settlements in tribunal courts with little transparency.
If you’re a renter and your landlord refuses to provide the basics for a safe and livable home, you can take him to court, in most states. Under the terms of many international trade agreements, energy and natural resource companies can do roughly the same thing, only instead of suing a landlord for repairs or reimbursement, they sue countries, and they can win up to billions of dollars in damages.
Philip Morris is currently suing Australia, for example, over that country’s policy mandating plain-Jane packaging for cigarettes. Nine renewable energy companies are in the process of suing Spain for ratcheting down longstanding incentives for renewable energy development in that country. Over the past few years, dozens of suits have been brought by oil, gas, and mining companies against developing countries whose environmental policies are not conducive to resource extraction.
In a process known as international investment arbitration, companies file these lawsuits with one of a handful of international arbitration courts. Most often they turn to a court called the International Centre for Settlement of Investment Disputes, which is run by the World Bank and known as ICSID, or the United Nations’ Commission on International Trade Law, known as UNCITRAL. Investor-state disputes are settled in these courts behind closed doors, often without public record or comment.
Over the past few years, energy and mining companies have come under fire for heading to ICSID every time a government passes an environmental protection law that might hamper their business. “Among other things, arbitration takes the decisions over environmental policy out from the democratic structures established in a state and allows tribunals to scrutinize and second-guess whether measures adopted for environmental protection comply with vague standards in investment treaties,” said Marcos Orellana, director of the Human Rights and Environment Program at the Center for International Environmental Law in Washington, DC.
Regional Breakdown of Oil, Gas, and Mining Cases at ICSID
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