It’s a system called ISDS
…or Investor-State Dispute Settlement. Where profit trumps everything. Where the most powerful companies can challenge governments if they dare to put their people above company profits.
For example, in Argentina the government froze water prices in a financial crisis – to make sure it stayed affordable for the poorest communities.
In response water companies including Anglian Water used the ISDS system to sue the government for ‘lost profits’. Instead of ruling that people’s human right to water should come ahead of company profits, the tribunal ordered Argentina to pay out £251 million.
The situation in Argentina is far from unique – in fact, it’s just one of over 900 cases brought against countries so far.
But instead of hearing the warning bells, our government wants to hand over more power to big business by including these courts in new trade and investment deals after Brexit.
We can stop this from happening. Will you join more than 30,000 people and call for an end to the ‘red carpet courts’?
Why ISDS is a bad idea for poor countries…
It’s argued that ISDS will help them attract more foreign investment, but rather than doing this it has given big businesses a powerful tool to challenge policies in the public interest.
ISDS threatens governments’ ability to act in the public interest and undermines democracy.
Poor countries are forced to pay compensation with funds they could otherwise use for public services, like healthcare and education.
It hasn’t resulted in increased foreign investment and countries without ISDS, like Brazil, are among the biggest recipients.
Around the world, people are standing up against ISDS and countries, including South Africa and Ecuador, have cancelled deals with it.
The red carpet courts in action
Big businesses are using ISDS to sue countries for millions. Here are two examples:
Chevron vs. Ecuador
In Ecuador, decades of oil-drilling in the Amazon basin by oil giant Texaco (bought by Chevron in 2001) destroyed the livelihoods of small-holder farmers and indigenous people. After an 18 year-long battle, the communities finally won the right to compensation. Instead of paying, Chevron brought the case to an ISDS tribunal which ordered Ecuador to stop enforcement of the ruling and pay Chevron an undisclosed fee.
Vodafone vs. India
A growing number of companies are using ISDS to challenge governments for stamping out tax avoidance. One of them is Vodafone, which in 2012 bought a major telecoms company in India through offshore companies registered in the Cayman Islands. When the Indian government gave them a US$2 billion tax bill, Vodafone sued using ISDS – even though it had already received a risk insurance pay out. The case has been ongoing for five years and is yet to be concluded.
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