Put like that, it sounds so reasonable.
But these tribunals are secret as in non-disclosed to the public, and also again mean a loss of national sovereignty: for eg no one country can decide that they would like to sell their fags in plain packages because that damages commercial interests. Which is why Philip Morris are suing the Canadian govt:
Philip Morris is currently suing the Australian government for enacting a law that requires all cigarettes to be plain packaged, which has been shown to reduce smoking in young people. Plain packaging requires health warnings to cover 75 percent of the packs front, with no branding except for the name of the cigarette. The tobacco industry has reacted in a predictable fashion, starting a multimillion dollar campaign against the law and suing the Australian government.
What is Philip Morris suing the government for? Are they arguing that plain packaging is ineffective or denying the link between branding and youth smoking? It wouldn’t be surprising, they’ve denied plenty of research before. But they are not suing the government for these reasons, they are suing for one thing and one thing only: profit.
Phillip Morris is using a popular instrument under public international law called an Investor-State Dispute Settlement (ISDS). This wonderfully pro-corporate mechanism was first introduced in 1959, in a trade agreement between Germany and Pakistan, and has since been implemented in thousands of trade and investment treaties around the world. It has become increasingly prominent since the 1990’s, and is a notable part of the North Atlantic Free Trade Agreement (NAFTA) of 1994.
Basically, this instrument allows foreign investors to sue governments through international law whenever the government passes a domestic law or new regulation that may hurt the companies profit rate. These regulations could be anything, from enforcing plain packaging of cigarettes to protecting the environment to even protecting the health of its citizens. The thinking behind this instrument was to encourage more foreign investment around the world; a sort of corporate insurance policy for political disruption.
Since the mid 90’s, however, the ISDS has been increasingly exploited by multi-national corporations to bully governments who are trying to protect their environment or people, like Australia. In the early nineties, there were hardly any ISDS cases filed; today there are nearly 60 cases filed annually and over 500 are currently in arbitration.
The ability of a corporation to sue a country with this instrument depends solely on what treaties their recognized governments have signed together. For example, while Philip Morris is an American company, they are using a 1993 trade agreement between Honk Kong and Australia which had an ISDS provision in it. To do this, Philip Morris had to rearrange its assets to become a Hong Kong investor because they could not sue under United States-Australia trade agreements. Now, Philip Morris Asia is suing Australia.
Another recent example comes between Germany and Sweden. After the Fukushima nuclear disaster in 2011, the German government, well known for its renewable energy programs, decided to shut down its nuclear power plants to focus on clean renewable, something that every government should be doing for the futures sake. Vattenfall, a Swedish utility company that had operated two nuclear plants in Germany, has sued for compensation through an ISDS provision.
This suit against Germany and many other countries has revealed the danger of this instrument that was created a half century ago. In Canada, after the Quebec government filed a moratorium on Hydraulic Fracturing for natural gas, Canadian energy company Lone Pine shifted its headquarters to the United States to sue its own country through the NAFTA agreement, which includes the ISDS provision. The United States and Canada had pushed for the ISDS to secure investments in politically unstable Mexico. This is not the first time Canadian government has been sued by corporations through NAFTA; they have lost seven out of nearly 20 cases, costing them at least $158 million to American companies.
ISDS cases notoriously lack transparency, and the handful of private industry lawyers who work on them are usually paid handsome rates of $700-1000 an hour. Three private attorneys are chosen for arbitration; one by the foreign investor, one by the government, and one by both parties. The investor or corporation has the right to select the rules and venue, such as the World Bank, International Chamber of Commerce, or the United Nations Commission on International Trade Law (UNCITRAL). Additionally, many of the selected attorneys alternate between positions of “suing” governments and “judging” cases, which critics argue is a major conflict of interest