The Court That Rules The World
August 31, 2016 12:34 AM   Subscribe

International investors have a private court of appeal even in criminal matters - "A parallel legal universe, open only to corporations and largely invisible to everyone else, helps executives convicted of crimes escape punishment. [ISDS] operates unconstrained by precedent or any significant public oversight, often keeping its proceedings and sometimes even its decisions secret." (via)
"Companies and executives accused or even convicted of crimes have escaped punishment by turning to this special forum. Based on exclusive reporting from the Middle East, Central America, and Asia, BuzzFeed News has found the following:
  • A Dubai real estate mogul and former business partner of Donald Trump was sentenced to prison for collaborating on a deal that would swindle the Egyptian people out of millions of dollars — but then he turned to ISDS and got his prison sentence wiped away.
  • In El Salvador, a court found that a factory had poisoned a village — including dozens of children — with lead, failing for years to take government-ordered steps to prevent the toxic metal from seeping out. But the factory owners’ lawyers used ISDS to help the company dodge a criminal conviction and the responsibility for cleaning up the area and providing needed medical care.
  • Two financiers convicted of embezzling more than $300 million from an Indonesian bank used an ISDS finding to fend off Interpol, shield their assets, and effectively nullify their punishment.
When the US Congress votes on whether to give final approval to the sprawling Trans-Pacific Partnership, which President Barack Obama staunchly supports, it will be deciding on a massive expansion of ISDS. Donald Trump and Hillary Clinton oppose the overall treaty, but they have focused mainly on what they say would be the loss of American jobs. Clinton’s running mate, Tim Kaine, has voiced concern about ISDS in particular, and Sen. Elizabeth Warren has lambasted it. Last year, members of both houses of Congress tried to keep it out of the Pacific trade deal. They failed."
Secrets of a Global Super Court Part Two: The Billion-Dollar Ultimatum - "International corporations that want to intimidate countries have access to a private legal system designed just for them. And to unlock its power, sometimes all it takes is a threat."
posted by kliuless (39 comments total) 52 users marked this as a favorite
From part one, after a factory in El Salvador poisoned a whole town including children:
The factory’s owners, members of a prominent family in El Salvador who also hold US citizenship, fled to the US, which was asked to extradite two of them. The US refused, on the grounds that environmental crimes are not covered under the US–El Salvador extradition treaty.
Really makes me feel ashamed to be an American.
posted by spinda at 2:06 AM on August 31, 2016 [16 favorites]

Great. Another way the deck is stacked.
posted by Kirth Gerson at 3:32 AM on August 31, 2016 [2 favorites]

Under the ISDS framework, as Common Dreams has reported, multinationals are granted a parallel legal system through which they can sue governments, and therefore taxpayers, for loss of "expected future profit," with the power to overrule national laws and judicial systems. [emphasis mine]

What the everloving shit.
posted by CheesesOfBrazil at 4:24 AM on August 31, 2016 [15 favorites]

Rule of law folks rule of frigg'n law, ya' all been telling us to "follow the *Rule of Law*", now is that only for the rule that you approve?
posted by sammyo at 4:36 AM on August 31, 2016 [1 favorite]

There are no laws, only lions.
posted by I-Write-Essays at 4:37 AM on August 31, 2016 [2 favorites]

Expected future profits are a measure of damages, not a cause of action. If a government seizes property, it has to pay fair value, and assets are generally valued using discounted future cash flows. (Or, something like future profits)
posted by jpe at 4:52 AM on August 31, 2016 [2 favorites]

As the curtain gets pulled back, we see that the wizard isn't a puny, scared little fellow, but a rapacious monster that always wants more, more, more, indifferent to the death and despair that results.
posted by ccaajj aka chrispy at 4:53 AM on August 31, 2016 [19 favorites]

Why do they need that when they already have the World Court's ICSID?
(Or is that the same folks?)
The funeral home story has stuck with me ever since I read Hightower's 2001 book.
posted by MtDewd at 5:27 AM on August 31, 2016

The curtain has been pulled back for decades. People have been pointing at that rapacious monster for decades and warning that it is indifferent to the death and despair it creates and needs to be controlled somehow. It's just that no-one cares because ugh, hippies, and someone at the same protest smashed a Starbucks window which is just, I mean, I know some people intentionally poison villages for profit, but some things are beyond the pale.
posted by No-sword at 5:31 AM on August 31, 2016 [40 favorites]

Power makes rules to help itself of course.

How do we make that less attractive to the powerful? Or difficult?

Or even make it dangerous*

Public shaming of instances of overreach or downright heinous crimes?

What do the powerful fear most? the truth about their behaviour? loss of profits?

What exactly?

*in the sense of, I'm going to get savaged by public opinion, or my products will get boycotted
posted by colinprince at 5:53 AM on August 31, 2016 [1 favorite]

Don't worry, kids: the megacorps have their international extrajudicial court, but they'll never take our stilt-walkers with giant papier-mâché heads.
posted by scruss at 5:54 AM on August 31, 2016 [15 favorites]

Hopefully they transition their headquarters to a orbital platform quickly.
posted by demiurge at 6:11 AM on August 31, 2016 [1 favorite]

Why do they need that when they already have the World Court's ICSID?
(Or is that the same folks?)

This article series never actually indicates where Investor-State Dispute Settlement ("ISDS") occurs, but yes, the author is referring to the International Centre for Settlement of Investment Disputes ("ICSID") Convention and ICSID's arbitration panels. A completely bizarre and glaring omission in a series of such length and detail.
posted by longdaysjourney at 6:30 AM on August 31, 2016 [4 favorites]

As the world gets more globalized, venues for dealing with international disputes are only going to increase. The question is whether those organizations intend to serve the public. Obviously that is not the case, and it becomes much easier to do that when shrouded in secrecy. Its a wonder to me that any government would quietly accept the decision of this group if found in the wrong.
posted by lownote at 7:02 AM on August 31, 2016 [1 favorite]

Wow. I never thought I would support extra-judicial state kidnapping. But I kind of wonder if the quickest solution to Indonesia's issues would be simply to wait for the executives to show up in the country, detain them and then lose them in the system for a few years. Repeat until a set of executives who will actually follow the law show up.

Of course this will never happen, they have money. And Russia looks to be the only country that actually goes after moneyed opposition this way, and usually because the opposition is pointing out corruption, not benefiting from it.

But this really got my blood boiling. Enough to start breaking out the guillotines, even though I know where that leads.
posted by Hactar at 7:03 AM on August 31, 2016 [1 favorite]

Power makes rules to help itself of course.

How do we make that less attractive to the powerful? Or difficult?

A separation of powers is a good start. A democratic mandate helps as well. ISDS undermines both. It barely safeguards the independence of arbitrators and the claims process is about as resistant to public scrutiny as it could be. The Buzzfeed piece notes that it makes sense as a kind of collectivized insurance policy for (emerging) states where the rule of law is weak. But in TPP and TTIP it serves no public good. All it does is ratchet in place, beyond democratic scrutiny, the primacy of neo-liberal policy.

It is not unreasonable for business to want some kind of protection when investing abroad. But if mistrust is so great that it requires a wholly separate court to overcome, then perhaps a) don't invest there or b) get private insurance.
posted by dmh at 7:03 AM on August 31, 2016 [9 favorites]

What the everloving shit.

The law is something used to constrain little people - have enough power, enough money, or both, and it rarely applies to you. The TPP, among other things, aims to more thoroughly codify this.
posted by ryanshepard at 7:23 AM on August 31, 2016 [3 favorites]

All it does is ratchet in place, beyond democratic scrutiny, the primacy of neo-liberal policy.

That's what I see too. It appears to be a concerted effort over a drearily long period to create an extra-national set of rules that can't be modified by democratic action, entirely for the benefit of large corporate entities.
posted by sneebler at 7:26 AM on August 31, 2016 [7 favorites]

It's things like this that make me think maybe it really is best if we just burn it all down. But, then I realize that these codswallops won't be touched one bit by the flames.
posted by Thorzdad at 7:42 AM on August 31, 2016 [2 favorites]

The history of corporate personhood seems weird at first glance. Apparently the first corporate persons were completely the reverse of the situation today and the corporation, say Goldman Sachs, received legal "rights" solely because there was a responsible party like Lloyd Blankfein who was there to jail or to execute if the corporate person did something illegal. Some clever lawyers figured out how to flip that upside down somewhere along the way and I cannot figure out how it happened.

It's like the devil did it.
posted by bukvich at 7:44 AM on August 31, 2016 [3 favorites]

It all comes down to the golden rule, "whoever has the gold makes the rules."
posted by CheeseDigestsAll at 7:58 AM on August 31, 2016 [1 favorite]

Part Three: To Bankers, It's Not Just A Court System, It's A Gold Mine - "Even some ISDS lawyers and arbitrators think that using the system for this purpose is going too far. 'I see it as a new form of investing, which is, let's make them poorer, and we'll get rich', said Mark Cymrot, an attorney at BakerHostetler... entrepreneurial lawyers and financiers are now devising even more ways to profit from the system."

All it does is ratchet in place, beyond democratic scrutiny, the primacy of neo-liberal policy.

It all comes down to the golden rule, "whoever has the gold makes the rules."

"What 'the market wants' tends to mean what corporations and their bosses want. (Monbiot, 2016.)"
posted by kliuless at 8:42 AM on August 31, 2016 [7 favorites]

so it's not the the illuminati, or jewish conspiracy, or the tri-lateral commission? it's the ISDS. but it's real?
posted by j_curiouser at 9:15 AM on August 31, 2016 [1 favorite]

and banal?
re: entrepreneurial lawyers and financiers (neo)rentiers...
Indeed, one such deal came to light only when WikiLeaks released tens of thousands of US diplomatic cables. One of those cables described how Blue Ridge Investments LLC, a Bank of America subsidiary, bought an almost $180 million ISDS award that an American gas company originally had won against Argentina. Blue Ridge, the cable said, was rumored to have paid roughly 30% of the award’s value.

“‘Vulture fund’ Blue Ridge belongs to a new class of financial market players” that views ISDS “claims against Argentina as just another attractive class of assets to be appropriately discounted and traded,” a diplomatic officer in Buenos Aires wrote. Blue Ridge’s parent company, Bank of America, declined to comment.

Griffin said he expects large trading houses will soon emerge to trade ISDS and other legal cases “on an industrial scale.” Indeed, the industry seems to be moving in this direction already with firms such as ClaimTrading, which promises “secure immediate access” to “several billions of USD” to underwrite lawsuits. A managing director at the firm, John Mooren, said it connects clients looking to sue with the best-matched funder from a list of more than 30 financial institutions with which the firm often does business.
Algorithmic litigation financing - "This startup uses algorithms to help figure out which of other folks' lawsuits to invest in."

Marc Andreessen: Software Programs the World
We frequently have delegations from all over the US and the world who come in and ask: “What can we do to have our own Silicon Valley?”


So we go through it--you want rule of law, ease of migration, ease of trade, R&D investments, no non-competes, fluid labor laws, ability to start and fold companies quickly... and at some point, the visitors get this stricken look on their face... and at the end of it, they’re like “What if we want Silicon Valley, but can’t do any of those things?”

So I’d argue the formula is well known, it’s just that people don’t want to apply it, for all kinds of reasons... The good news is that it can be done, and then the other good news is that it is happening everywhere: South America, India, China, Middle East, Africa, Korea etc.
-Neoliberal values of software tycoons are eating the world
-Techno-boosters are reproducing some of the most atavistic features of American society
-Great openness requires greater governments
-"In the modern world it's a choice between inflation and socialism."
-Capitalism and Democracy: The Strain Is Showing
Confidence in an enduring marriage between liberal democracy and global capitalism seems unwarranted...

So what might take its place? One possibility[:] ... a global plutocracy and so in effect the end of national democracies. As in the Roman empire, the forms of republics might endure but the reality would be gone.

An opposite alternative would be the rise of illiberal democracies or outright plebiscitary dictatorships... [like] Russia and Turkey. Controlled national capitalism would then replace global capitalism. Something rather like that happened in the 1930s. It is not hard to identify western politicians who would love to go in exactly this direction.

Meanwhile, those of us who wish to preserve both liberal democracy and global capitalism must confront serious questions. One is whether it makes sense to promote further international agreements that tightly constrain national regulatory discretion in the interests of existing corporations... Above all... economic policy must be orientated towards promoting the interests of the many not the few; in the first place would be the citizenry, to whom the politicians are accountable. If we fail to do this, the basis of our political order seems likely to founder. That would be good for no one. The marriage of liberal democracy with capitalism needs some nurturing. It must not be taken for granted.
What's more scarce: money, or attention?
posted by kliuless at 9:45 AM on August 31, 2016 [18 favorites]

CTRL + F "TPP" Thanks for the clarifying explanations, fellow MeFites. I don't know much about TPP, but as soon as I started reading the comments here, I thought it sounded an awful lot like the kind of thing people talk about in regard to TPP.
posted by tippiedog at 9:57 AM on August 31, 2016 [1 favorite]

This is the sort of thing that makes "trade" deals an awful idea.

Trade is great. Trade is wonderful. Getting rid of tariffs can be seen as beneficial.

But modern "trade" deals aren't about trade, they're about empowering corporations, undermining hard won worker and environmental protections and preventing any future protections from being enacted, and generally enshrining the wealthy as above such petty things as mere laws.

TPP is wall to wall non-trade stuff like this.

If TPP was about trade I don't think anyone would really be objecting. But it's about "trade" instead, and that is what we object to.

I believe the USA should withdraw from all treaties that impose an ISDS or any other form of arbitration. Courts exist as they do for a reason, surrendering the right to go to a real court, not some shadowy fake court picked by a megacorp, is foolhardy in the extreme.
posted by sotonohito at 10:25 AM on August 31, 2016 [13 favorites]

See Also: Shadow Courts: The Tribunals that Rule Global Trade, by Haley Sweetland Edwards (of Time, formerly Washington Monthly).
posted by Prevailing Southwest at 11:26 AM on August 31, 2016 [4 favorites]

Prevailing Southwest just beat me to it - THIS is the reason to oppose TPP, not fears about open trade.
posted by twsf at 12:29 PM on August 31, 2016

Fucking ugh - capitalism. I was literally, as in two weeks ago, talking about the future where people will be investing in arbitrage between litigation finance and lawsuit insurance, as in, a fund that invests in both, and makes money on likely outcomes based on those warchests.

So much for the common weal. 'Civil society': I would say it was nice while we had it, but it was all a dream wasn't it?
posted by eclectist at 1:04 PM on August 31, 2016 [4 favorites]

I believe China has jailed visiting foreign corporate executives, Hactar, but afaik only for industrial espionage.

I doubt cross border kidnappings ever become a thing, just way too many opportunities for trouble. You know even CIA agents involved in kidnapping Imams keep encountering minor inconveniences in their travels. I imagine America's preference for simply assassinating brown people that make it nervous stems partially from these fundamental difficulties.*

* America could well halt our current assassination programs. If however we continue assassinating foreign political figures, then obviously all nations will gradually claim the same rights. Israel gave the US the idea. Russia already does so for dissidents. India would presumably feel justified in doing so in regional politics. China will follow suit.

It'll take the poorer countries who get hosed the worst by ISDSs much longer to adopt assassination. And they face a fundamental problem that, assuming you assassinate an ISDS plaintiff, then either you must deal with the wrath of a much richer country, or you must be secretive about it, which fails to deter their successor. In principle, it's possible to overcome this obstacle though, likely by pinning the assassination on the foreign country's domestic unions, ecological groups, etc. And the world should change in many more interesting ways first, so who knows. Assassinating ISDS plaintiffs sounds somewhat plausible though, just many decades out.

posted by jeffburdges at 1:52 PM on August 31, 2016 [2 favorites]

Just fyi, Gary Johnson supports TPP, making him a bad choice for a protect vote.

Vaguely relevant : Liveblogging the livestream: the Kim Dotcom appeal
posted by jeffburdges at 1:52 PM on August 31, 2016 [3 favorites]

There is a 404 in kliuless comment that might refer to :
Democracy And Capitalism May Be Headed For Divorce
posted by jeffburdges at 3:35 PM on August 31, 2016

I believe the USA should withdraw from all treaties that impose an ISDS or any other form of arbitration. Courts exist as they do for a reason, surrendering the right to go to a real court, not some shadowy fake court picked by a megacorp, is foolhardy in the extreme.

And I honestly think this kind of thing is the reason trade organizations and right-wing political groups are opposed to the UN and international criminal courts. They're trying to get their feet in various doors so they can claim they're legitimate sponsors of international rules.
posted by sneebler at 9:23 AM on September 1, 2016

But this really got my blood boiling. Enough to start breaking out the guillotines, even though I know where that leads.

posted by NiteMayr at 1:33 PM on September 1, 2016

Part Four: How America's Gift To Trade Treaties Can Come Back To Hammer It - "A secretive global legal system gives corporations leverage over the countries where they operate. Everyone said the United States didn't have anything to worry about, because American laws are fair to begin with. Everyone was wrong."

oh and fwiw, more on that 'algorithmic litigation financing' startup...
posted by kliuless at 11:11 PM on September 1, 2016 [1 favorite]

The end of big trade deals
This widespread failure of the trade liberalisation agenda is usually put down to a widespread turn in public opinion against free trade, now seen by many on both left and the populist right as a callous neoliberal plot to enrich capitalists at the expense of workers. (It is true that the compensatory support for workers who lost their jobs as a result of past agreements like NAFTA somehow failed to materialise.) Some trade advocates resort to the absurd argument that the failure of TTIP and TPP would put existing trade at risk. But there is very little support for proposals to roll back existing trade agreements, from NAFTA to Uruguay to the European single market. There is something in the trade negotiation process of these new deals that gets voters’ goat.

Let me nail up a thesis to the trade church door. Modern trade negotiations are illegitimate. In their current form they cannot possibly lead to a democratically acceptable result. That is why they are doomed to fail.
posted by tonycpsu at 8:41 AM on September 2, 2016 [1 favorite]

there is very little support for proposals to roll back existing trade agreements

On ISDS as a forum for abusive forms of litigation finance:*
It doesn't have to be this way. Investors could be forced to prove discrimination in national courts first before proceeding to arbitration. Or national courts could exercise judicial review over ISDS awards. The largest ISDS award in history, $50 billion to a web of companies all owned by Russian oil magnate Mikhail Khodorovsky, was actually set aside by a Dutch court in April, the first time that has happened in a treaty-based ISDS case. Arbitrators — who generally come from a very small group of international corporate lawyers — could be made independent of the process, with set salaries, security of tenure and no financial ties to litigants. The definition of investor could be tightened, giving only companies that contribute to economic development the right to access ISDS.

But the easiest way to fix ISDS is to throw it out. Several countries, including India, Indonesia and Ecuador, have told their trade partners they're considering terminating bilateral treaties because of ISDS. Some experts question whether the system is necessary even in the situations it was originally designed for.

"You're usually talking about very rich investors that have the power to purchase insurance against these kind of political risks," said Verheecke. "There's no reason why it should be the taxpayer [who] pays."
also btw...
-French Trade Minister Says U.S. Talks Dead as TTIP Wobbles
-Trade wars: Why the central pillar of global order is in danger of collapse as TTIP disintegrates
-Preventing Deglobalization
-Why does China want to wean public from iPhone?
posted by kliuless at 10:04 AM on September 2, 2016 [1 favorite]

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