Investor-to-state dispute settlement (ISDS of TPP) places investment tribunals above states, above democracies. This places the development of law beyond democratic scrutiny. At a national level, parliaments can change laws that do not work out well. This is not possible at the supranational level. The transfer of power is as good as definitive: it is practically impossible to withdraw from (deep integration) trade agreements.
TPP’s investment chapter, which includes investor-to-state dispute settlement, contains
– perverse incentives,
– unfair procedural advantages for the US,
– a most favoured nation (MFN) loophole,
– limited, broken safeguards regarding intellectual property (IP) rights.
The arbitrators will be paid for each day worked (under ICSID rules at least 3000 US dollars a day). This creates perverse incentives to accept frivolous cases, let cases drag on, let the only party that can initiate cases (foreign investors) win to stimulate more cases, and to please the officials who can appoint arbitrators.
The International Centre for Settlement of Investment Disputes (ICSID) is part of the World Bank; it is the most used ISDS forum. Under TPP, investors can choose this forum (article 9.18 (4)). -A. Wessels