300+ academics call for Biden to terminate all ISDS agreements

300+ academics call for Biden to terminate all ISDS agreements
Letter, signed by 300 US-based academics, calls for Biden to remove all ISDS mechanisms from FTAs and BITs

On 15th April 2024, over 300 US-based academics signed a letter sent to President Joe Biden, calling for the termination or withdrawal of all ISDS mechanisms from already agreed upon Free Trade Agreements (FTAs) and Bilateral Investment Treaties (BITs). 

 

Investor State Dispute Settlements (ISDS) are mechanisms often embedded in trade agreements between nations, or within supranational agreements. These are highly anti-democratic mechanisms that give corporate interests the power to supersede democratic decisions if they believe it has harmed past, present, or even future profits from their investments. 

 

Sovereign nations, when signatories to deals with ISDS, have a hugely reduced scope to introduce new policies and change or remove old policies if there is significant corporate investment. Disputes are settled outside of the host nations domestic judicial systems, and are decided by an unaccountable, three-person tribunal. Private lawyers, often (though in different instances) serve both as “arbitrators deciding cases” and “counsel representing investors in cases against governments”. Corporations, or individual investors, “seek taxpayer compensation for domestic measures; laws, regulations, and court decisions”, sometimes receiving huge sums. 

 

Whilst the President has expressed and shown opposition to the formulation of new trade deals with ISDS provisions, their existence within previously agreed FTAs and BITs still pose a major threat to both the democratic workings of sovereign nations, like the U.S.A, and also the proper application of environmental policies, which are often the subject of state-investor disputes. 

 

Multinational carbon majors commonly use embedded ISDS mechanisms in order to hamper attempts to reduce extractivist activities, like drilling or fracking, which often ends in large payouts to these multinationals. In fact, as reported by the International Institute for Sustainable Development in 2021, of the 46 arbitrations (at the time) recorded for carbon majors, 16 have landed in favour of the investor, and only 4 with the state (though 4 were discontinued, 9 are pending, and 13 were settled at the time of recording). According to this report, 33% of total ISDS arbitrations related to fossil fuels were initiated by major polluters like ExxonCorp, who has been awarded a total of $1.8 billion from just 7 ISDS initiated arbitrations. 

 

The 300+ US-based academics, largely law and economics professors, expressed their deep concern regarding the power of “foreign corporations and individual investors to bypass domestic courts and initiate proceedings against sovereign governments before tribunals composed of three party-appointed lawyers from the private sector”. They also suggest a number of “viable strategies for eliminating ISDS liability”. 

 

These include:

- Terminating BITs either unilaterally or bilaterally 

- Amending FTAs to remove the investment chapter 

- Remove only the ISDS provision bilaterally or multilaterally 

- Withdrawing consent to ISDS arbitration from BITs and FTAs

 

The topic of ISDS provisions, and their highly anti-democratic nature has been an issue consistently addressed by impACT International. Whether it be entities like Prospera superseding the democratic integrity of Honduras, the UK’s ascension to the CPTPP (which contains ISDS mechanisms), or mining companies like First Quantum, who have initiated arbitration against Panama for banning mining at the regions largest copper pit mine after protests - ISDS mechanisms are a threat not just to sovereign nations and democracy, but our global environment. impACT wishes to express it’s support: ISDS must be removed from FTAs and BITs.

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