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Global Corporate Ambulance Chasing: Law Firms Recruiting Corporations to Attack COVID-19 Policies in ISDS ‘Corporate Courts’

By Melanie Foley

Many governments have taken urgent actions to stem the COVID-19 pandemic, save lives, protect jobs, counter economic disaster and ensure people’s basic needs are met.

But now, multinational corporations are poised to launch a wave of attacks against governments to demand compensation from taxpayers for these COVID-19 policies using the Investor-State Dispute Settlement (ISDS) regime.

ISDS grants rights to multinational corporations to sue governments before a panel of three corporate lawyers. These lawyers can award the corporations unlimited sums to be paid by taxpayers, including for the loss of expected future profits, on claims that a nation’s policy violates their rights. Their decisions cannot be appealed.

With ISDS included in many trade and investment agreements, more than 1,000 ISDS attacks have been launched against climate, financial, mining, medicine, energy, pollution, water, labor, toxins, development and other non-trade domestic policies. Corporations have been awarded millions or even billions of taxpayer dollars, and some countries have chosen to revoke their democratically enacted policies in order to reduce their payouts. 

How do we know that COVID-19 policies are the next ISDS target?

The law firms that profit enormously from the ISDS system have been advertising to multinational corporations about the lucrative opportunities to use ISDS to attack government actions. And, specialist law journals have speculated that “the past few weeks may mark the beginning of a boom” of ISDS cases.

The law firms have specifically targeted pandemic policies such as restrictions on business activities to limit the spread of the virus and protect workers, requirements for manufacturers to produce ventilators, mandatory relief from mortgage payments or rent for households and businesses, measures to ensure access to clean water for hand washing and sanitation, and more. All of these policies apply equally to domestic and foreign companies. But thanks to ISDS, foreign multinational corporations can launch cases and rake in taxpayer money in compensation.

“It is unfortunately very likely that a whole spate of ISDS attacks on governments’ COVID responses will begin to be filed,” said Lori Wallach, director of Public Citizen’s Global Trade Watch in her weekly Rethinking Trade podcast. “And the reason why is, under this regime, an enormous amount of money can be made by both the lawyers and the corporations. It is a legalized raid on treasuries.”

Public Citizen and more than 600 organizations from around the world are sounding the alarm. These labor, consumer, environmental, development and other civil society organizations sent a letter in July to heads of government worldwide urging action to avoid this new ISDS threat. They outlined an array of practical steps governments could take to immediately suspend the use of ISDS over pandemic response measures, as well as to put an end to the risks of all ISDS cases forever.

The powerful and diverse group of organizations from the United States includes the AFL-CIO, CWA, the Presbyterian Church USA, the United Methodist Church, Greenpeace and the Sierra Club. International signers include Oxfam, Doctors Without Borders, Friends of the Earth International and Action Aid.

For many decades, the United States was a leading proponent of this system and forced it on their trading partners. But public outrage over ISDS has been growing for years and was one of the reasons why the Trans-Pacific Partnership (TPP) could not get support to pass in Congress.

And thanks to civil society’s campaigning, ISDS was largely eliminated in the new NAFTA. (The original 1995 NAFTA was the first trade pact to include ISDS.) The unusually large, bipartisan votes in the Senate and House for the new NAFTA set a new standard that to be politically viable, U.S. trade pacts can no longer include extreme ISDS terms.

The agreements the United States is currently negotiating with the United Kingdom and Kenya, while potentially damaging in other ways, are reportedly not going to have ISDS. Other countries also have taken steps to withdraw from ISDS, including Bolivia, Ecuador, South Africa, India and Indonesia.

“These coming COVID cases should be exhibits 1, 2 and 3 of why other countries should also exit the regime,” advised Wallach.

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