In the contracts between individuals a clause is very often introduced which points out which boards of arbitration may be consulted in case of controversy between the parties regarding the interpretation of or a failure to comply with the agreement by one of the parties. Most often a third office will be called in to assess the case, such as the Chamber of Commerce of the country in which the agreement is being signed, or that of Geneva, Stockholm or another chamber. At any rate, it is always pointed out that the document signed, as well as those arrangements not expressly provided for in the agreement, must comply with the laws of the state in which the work or delivery is provided.
A potential arbitration to solve any conflict between companies or between companies and signatory states is also mentioned in the Transatlantic Trade and Investment Partnership (TTIP), which has been under negotiation for four years between US delegates and officials of the EU Commission (wherever necessary in accordance with the instructions of the European Council). But existing or future laws are certainly not referred to. In other words, this aspect will be the reason for appealing to boards of arbitration and for their decisions, because the treaties aim at protecting the investments. According to the American proposal no appeal should be possible against these decisions, and three arbitrators will be appointed: one for each side and a third selected according to mutual agreement. To date, the European counterproposal is limited to the requirement that the arbitrators should be guaranteed to have no conflict of interest (but need they not to be paid by the customer?) and that there is the possibility of appealing to an arbitration board for its – binding – decision.
Such conditions are not new: Already in the sixties the German government signed similar contracts with about 130 countries in order to protect private (German!) investments. Although these were not all equal to each other, they all provided for the option of appealing to an arbitration board and for imposing sanctions and awarding damages to the “victim” in the case of violation of the interests of one party. The purpose of this was to counteract the effects legal uncertainties and the unreliability of some judicial systems, so as to guarantee the interests of those who had invested millions or even billions in this country.
In the currently ongoing negotiations it is also clearly expressed that it will be possible to contest “direct and indirect” expropriation of investments.
In this context it is necessary to think not only of conflicts between private firms or of explicit nationalisation. Every act of a government that carries a risk for earning opportunities envisaged by the investors, or which might diminish these, is a so-called “indirect” expropriation.
A few examples may illustrate this:
These are just a few examples of how easy it is for large global corporations to bring a charge against governments with respect to various agreements on “investment protection”. Above all, they make it clear that economic interests are given the preference even over democratic and legitimate laws of governments and parliaments.
The arbitration clause is under discussion since 1959 in a first version, but until 1995 it was applied only in exceptional cases. Since then, and especially since 2000, the use of such arbitration has increased exponentially, so that they are regarded as blackmail by legislators, and so that they have aroused distrust of decisions or laws which may affect the interests of powerful multinational corporations. Only a few countries, including Brazil, have refused to use the ISDS model for trade agreements, and South Africa even announced that it will withdraw from all trade agreements that provide for their use, even those it has already signed.
In the discussion about TTIP the issue of arbitration is not yet clear, and in Brussels it is believed that one will be able to change the clauses in one way or another. But despite the secrecy of the negotiations there are signs that Americans are adamant about keeping to their NAFTA-position.
It is obvious that the matter of the arbitration is essential. Even the American bishops, together with the European bishops, have published their own “recommendation” in which they determine, among other things, that the methods hitherto proposed may bring with them “... unlawful benefits for economic interests willing and ready to exploit the rules of arbitration or of judicial systems and to undermine important standards of environmental protection, rights of employees and human rights ... A disproportionate attention to harmonizing or simplifying the regulation of trade and investments cannot be the grounds for endangering proper and appropriate standards of safety, health and environment applied by federal, state or regional organisms locally ...”.
We do not know how this conflict will end and what a possible compromise might look like, if there is one. It is, however, certain that the compulsive avoidance of public courts and the blocking out of local or state laws will objectively restrict any and every constitutional state. The will of the citizens are bypassed more and more often, and the national laws are made subordinate to economic interests and decisions. •
(Translation Current Concerns)
* Dario Rivolta is an international political news columnist and an international trade consultant. He is a political scientist with area of expertise in social psychology. From 2001 to 2008, he was a member of the Italian Parliament. He was vice-president of the Foreign Affairs Commission, representative of the Italian Parliament at the European Council as well as at the Assembly of the Western European Union. During this time, he was also responsible for the international relations of the party.
An international tribunal has ordered the government of Canada to pay more than $17 million in damages to two oil companies following a breach of North American Free Trade Agreement regulations.
A spokeswoman for Natural Resources Canada says in an email the Feb. 20 decision awarded $13.9 million plus interest to ExxonMobil and $3.4 million plus interest to Murphy Oil.
Michelle Aron says Ottawa is reviewing the decision and considering its options in consultation with the government of Newfoundland and Labrador.
The ruling by the International Centre for Settlement of Investment Disputes follows a 2012 decision on oil projects off Newfoundland and Labrador.
The NAFTA panel previously found that research spending obligations imposed on ExxonMobil and Murphy Oil breached Article 1106 of the free-trade agreement.
The article prohibits governments from applying performance requirements as conditions of investment.
ExxonMobil declined comment and Murphy Oil couldn’t be reached.
Source: The Canadian Press as of 6 March 2015
km. Acceptance of TTIP, the so-called free trade agreement with the US, is decreasing within the European Union. According to the results of the latest – spring 2016 – Euro barometer survey, acceptance has fallen further in the EU and is on average now down to only 51% of respondents. In 8 countries it is below 50%: in France, Italy, Croatia, Slovakia, Slovenia, Luxembourg, Germany and Austria. The latter two show the lowest approval ratings: Germany just 25% and Austria not more than 20%.
Perhaps this is also due to the fact that in view of upcoming elections there are now renowned politicians from EU member states prominently criticising TTIP. The French State Secretary for Foreign Trade Matthias Fekl announced on 30 August that he wanted to apply for the termination of negotiations at the meeting of EU Trade Ministers on 23 September in Bratislava. A few days earlier, the French President Francois Hollande had expressed his opinion that the negotiations with the US were deadlocked and unbalanced. The German Minister for Economic Affairs and Energy Sigmar Gabriel has declared TTIP “de facto failed”. And on 31 August the Austrian Chancellor Christian Kern criticized not only TTIP, but also called into question the similar agreement with Canada CETA, for which negotiations have already been completed.
Austrian Chancellor initiated an internet survey among members of his party, which is terminated on September 18, and in which also non-party members can take part. The criticism of the agreement is clearly integrated into the questions:
One will have to wait for this. It is interesting in this context that the participants of the G-20 Summit in Hangzhou, China seem to have become “nervous”, so that the “Neue Zürcher Zeitung” wrote in its editorial on 6 September that the heads of states and governments were concerned that the “losers” of globalization were increasingly expressing “their displeasure in elections”. And the newspaper added: “The political leadership class is worried by this development because it sees itself being called into question.”
The leaders of the G 20 as well as the EU politicians who are now speaking out should, however, understand that criticism of globalization and of projects like TTIP or CETA does not stem primarily from a utilitarian motivation, i.e. is raised by the “losers”. Very many personalities throughout the world voice these criticisms, because they are very concerned that the current world economic and financial systems and their methods and attending ills, such as blatant injustice and devastating wars, might push all people of the planet into the abyss.
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