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2 Aug 2021

Nick Dearden, Global Justice Now

Opinion: Corporate courts vs the environment

'Corporate courts vs the environment', 2 August 2021

"Corporate courts were invented to protect the West’s control of the world against decolonisation. They are now undermining attempts to halt climate change.

Any day now, Italy expects to be ordered to hand millions of dollars over to an oil exploration corporation, following the Italian government’s decision to ban such exploration off its coast.

The ruling will be handed down not by a judge in anything approaching a normal Italian or European court, but rather by a secretive arbitration process open only to big business, with Italy having no right to appeal. These “corporate courts” stem back to the 1950s, created by rich countries and oil multinationals to protect Western interests against the decolonisation sweeping the world at that time...

...In essence, ISDS creates a “corporate court”, allowing multinational corporations from a trade partner country – in this case Britain – to sue a government in a tribunal for any law or regulation they regard as unfair. These cases are often heard in secret, overseen by corporate lawyers who don’t have to worry about the impact of their decisions on society, human rights or the environment – only investment law. These “courts” usually have no right of appeal, and they can only be utilised by foreign investors.

Corporate courts have been used by tobacco corporations to challenge governments which want to ensure cigarettes are sold only in plain packaging. They’ve been used to challenge increases to the minimum wage. But increasingly, they’re being used to challenge all manner of environmental regulations necessary to halt climate change. In fact, they’re becoming a major barrier to the climate action governments must undertake to keep our planet habitable...

...We now have enough cases on file to know just how serious a challenge these corporate courts are to our urgent need to halt climate change. Governments have been sued for placing a moratorium on fracking and for forcing power stations to improve their environmental standards. One tribunal ruled that the Canadian government had violated a corporation’s “rights” simply by carrying out an environmental impact assessment, a judgment that even one of the arbitrators said “will be seen as a remarkable step backwards in environmental protection”...

...In other words, these corporate courts allow corporations to make utterly irresponsible decisions without consequence. Fortunately, the backlash is well underway, with countries from Bolivia to South Africa to Indonesia ripping up bilateral trade deals that contain corporate courts, and refusing to sign new ones...

Meanwhile, across Europe a major campaign is underway to force governments to withdraw from the Energy Charter Treaty, one of the most egregious corporate court systems, responsible for many of the cases referred to here.

There are less than 100 days to go until the UN climate conference – COP26 – meets in Glasgow. Whatever commitments delegates make there could be seriously undermined unless we change the way our global trade system works. Abandoning the corporate court system should be a top priority."

Part of the following timelines

The Energy Charter Treaty

UK Trade Policy

Investor-State Dispute Settlement